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EXHIBIT 10.3.2.f
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PATENT AND TRADEMARK SECURITY AGREEMENT
PATENT AND TRADEMARK SECURITY AGREEMENT, dated as of March 26 , 1999,
made by TELXON CORPORATION ("TELXON" or the "BORROWER") the Persons listed on
the signature pages under the caption "Grantors" (the "Grantors") and the
Additional Grantors (as defined in Section 13(b)) to BANK ONE, NA successor by
merger to BANK ONE AKRON, NA ("Bank One") (as the same may be amended, amended
and restated, supplemented or otherwise modified from time to time, this
"AGREEMENT").
RECITALS
WHEREAS, the Borrower, the Lenders, including Bank One, from
time-to-time party to the Credit Agreement, the Issuer, the Swing Line Lender
and Bank of New York ("BNY"), as the Agent (the "AGENT"), on behalf of the
Lenders, the Issuer and the Swing Line Lender entered into that certain Credit
Agreement dated as of March 8, 1996, as amended by that certain Amendment No. 1
to the Credit Agreement dated as of August 6, 1996 ("AMENDMENT NO.1"), Amendment
No. 2 to the Credit Agreement dated as of December 16, 1996 and Amendment No. 3
to the Credit Agreement dated as of December 12, 1997 (as further amended,
modified or supplemented from time to time, the "CREDIT AGREEMENT").
WHEREAS, pursuant to Amendment No. 1 and the Intercreditor Agreement
dated as of August 6, 1996, by and between Bank One and the Agent , as
acknowledged by the Borrower (as the same may be amended, supplemented or
otherwise modified from time to time, the "INTERCREDITOR AGREEMENT"), Bank One
extended to Borrower a certain Twenty Million Dollar ($20,000,000.00) revolving
line of credit (as the same may be amended, supplemented or otherwise modified
from time to time, the "SWING LINE") which is evidenced by a certain Business
Purpose Revolving promissory Note dated August 4, 1998 and executed by Borrower
(as the same may be amended, supplemented or otherwise modified from time to
time, the "SWING LINE NOTE") and a Standby Letter of Credit No. 047769 dated
April 25, 1996 in the amount of $75,608.33 ("BANK ONE LETTER OF CREDIT"). The
Borrower granted Bank One a security interest in certain collateral pursuant to
the Bank One Security Agreement dated as of August 6, 1996 and the Amended and
Restated Security Agreement dated as of the same date as the Agreement..
WHEREAS, the Borrower and Bank One have heretofore entered into a
Waiver and Agreement, dated as of December 29, 1998 (the "ORIGINAL WAIVER") and
a Waiver Extension and Agreement, dated as of February 12, 1999 (the "ORIGINAL
WAIVER EXTENSION), with respect to certain matters relating to the compliance by
the Borrower with certain provisions of the Credit Agreement.
WHEREAS, the Borrower has requested that Bank One agree to a further
waiver of compliance by the Borrower with certain provisions of the Credit
Agreement, including an
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extension of the waiver granted in the Original Waiver as extended by the
Original Waiver Extension and to amend certain other provisions of the Credit
Agreement.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Bank One and the Borrower are entering into that certain Second
Further Consent and Agreement by and between Bank One and the Borrower dated as
of the date hereof (the "SECOND BANK ONE WAIVER").
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined;
WHEREAS, it is a condition precedent to the effectiveness of the Second
Bank One Waiver and the continued extension of credit under the Swing Line that
the Grantors shall have granted to Bank One, the security interests and liens
upon the Grantor's assets and property contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises, the covenants and
conditions set forth herein and in the Second Bank One Waiver, and for other
good and valuable consideration, the receipt and sufficiency are hereby
acknowledged, each of the Grantors hereby agrees with the Bank One as follows:
1. GRANT OF SECURITY. Each Grantor hereby assigns, pledges and grants to Bank
One a lien on and security interest in (except to the extent such assignment,
pledge or grant would violate the terms of any license agreement with any other
person in connection with any of the Patents and Trademarks, as defined below,
whether such Grantor is a licensee or licensor under any such license
agreement), the entire right, title and interest of such Grantor in and to the
following, whether now owned or hereafter acquired (the "PATENT AND TRADEMARK
COLLATERAL") which Security Interest shall be subordinate in all respects to the
Security Interest and Liens granted by the Borrower and certain of its
Subsidiaries to the Agent on behalf of the Lender, Issuer and Swing Line Lender
as security for the obligations of the Borrower and certain of its Subsidiaries
under the Credit Agreement and Loan Documents:
(a) All trademarks, service marks, trade names and trade dress and all
trademark and service xxxx registrations and applications for trademark or
service xxxx registration in the United States (except for "intent to use"
applications for trademark or service xxxx registrations filed pursuant to
Section l(b) of the Xxxxxx Act, unless and until an Amendment to Allege Use or a
Statement of Use under Sections l(c) and l(d) of said Act has been filed) and
throughout the world (including, without limitation, each trademark and service
xxxx registration and application for trademark and service xxxx registration
identified on Schedule I attached hereto and made a part hereof), and (i) all
renewals thereof, (ii) all income, royalties, damages and payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection therewith,
and damages and payments for past or future infringements thereof), (iii) the
right to xxx or otherwise recover for all past, present and future infringements
thereof, and (iv) all rights corresponding thereto throughout the world (but
only such rights as now exist or may come to exist under applicable
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local law), together, in each case, with the goodwill of the business connected
with the use of, and symbolized by each such trademark, service xxxx, trade name
and trade dress (all of the foregoing and other rights being, collectively, the
"TRADEMARKS");
(b) All letters patent of the United States or any other country, and
all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by the Company, including, but not
limited to, those described in Schedule I annexed hereto and made a part hereof,
and all reissues, continuations, continuations-in-part or extensions thereof and
all licenses thereof (all of the foregoing being herein referred to as the
"PATENTS"); and
(c) All license agreements with any other Person in connection with any
of the Patents and Trademarks or such other Person's names or marks, whether
such Grantor is a licensor or licensee under any such license agreement
(subject, in each case, to the terms of such license agreements), and the right
to prepare for sale, sell and advertise for sale, all inventory (as defined in
the Uniform Commercial Code in effect in the State of Ohio (the "OUCC"), to the
extent now or hereafter owned by each Grantor and now or hereafter covered by
such licenses (the "LICENSES").
2. SECURITY FOR OBLIGATIONS. The assignment and pledge of and grant of a
security interest in the Patent and Trademark Collateral by each Grantor
pursuant to this Agreement (collectively, the "SECURITY INTERESTS") secures the
payment of all obligations of the Borrower to Bank One now or hereafter existing
(and any other documents in respect of such obligations) under the Swing Line
(as the same may be amended, amended and restated, modified or supplemented from
time-to-time), whether for principal, interest, fees, expenses or otherwise (all
such obligations being the "SECURED OBLIGATIONS").
The Security Interests granted by this Agreement are granted in
conjunction with the security interests granted to Bank One in the Amended and
Restated Security Agreement between Borrower and Bank One executed
contemporaneously herewith..
3. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants on the
date hereof and on each date that representations and warranties are deemed made
by any Grantor or the Borrower under the Credit Agreement as follows:
(a) Such Grantor is the sole, legal and beneficial owner of the entire
right, title and interest in and to the federal registrations and applications
for registration of the Patents and Trademarks listed on Schedules I and II
hereto and the Licenses free and clear of any lien, security interest, option,
charge, pledge, registered user agreement, assignment (whether conditional or
not), or covenant, or any other encumbrance, except for the Security Interests
created or permitted by this Agreement or the Credit Agreement, and except for
any such encumbrances which do not have a material adverse impact on the
economic value of any of the federal registrations and applications for
registration of the Patents and Trademarks listed on Schedules I and II hereto,
and except as permitted by Section 5 of this Agreement. No effective
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financing statement or other instrument similar in effect covering all or any
part of the federal registrations and applications for registration of the
Patents and Trademarks listed on Schedules I and II hereto or the Licenses
purported to be granted by such Grantor hereunder is on file in any recording
office, including, without limitation, the United States Patent and Trademark
Office, except such as may have been filed in favor of Bank One relating to this
Agreement. No Grantor owns any material copyrights of the United States, or any
country, including, without limitation, applications or registrations which have
been recorded or registered (or are currently the subject of a pending
application) in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof, or any country or political
subdivision thereof.
(b) Set forth on Schedules I and II below the name of such Grantor is a
complete and accurate list of all of the federal registrations and applications
for federal registration of the Patents and Trademarks owned by such Grantor.
(c) Each federal patent and trademark and service xxxx registration and
application for registration of such Grantor identified on Schedules I and II is
subsisting and, to the best of such Grantor's knowledge, has not been adjudged
invalid, unregistrable or unenforceable, in whole or in part, and is, to the
best of such Grantor's knowledge, valid, registrable and enforceable. Each
License of such Grantor, to the best of such Grantor's knowledge, is subsisting
and has not been adjudged invalid or unenforceable, in whole or in part, and is,
to the best of such Grantor's knowledge, valid and enforceable. Such Grantor has
notified Bank One in writing of all prior uses of any federal registrations and
applications for registration of the Patents and Trademarks listed on Schedules
I and II hereto of which such Grantor is aware, which would in the reasonable
judgment of such Grantor lead to such Patents and Trademarks becoming invalid or
unenforceable, including prior unauthorized uses by third parties and uses which
were not supported by the goodwill of the business connected with such item.
(d) Such Grantor has not granted any license, release, covenant not to
xxx, or non-assertion assurance to any third person with respect to any part of
the federal registrations and applications for registration of the Patents and
Trademarks listed on Schedules I and II hereto which would materially interfere
with its business as currently carried on under any such registrations or
applications for registrations.
(e) Such Grantor has used reasonable and proper statutory notice in
connection with its use of each registered patent and trademark and service xxxx
listed on Schedules I and II, except inadvertent omissions thereof.
(f) Such Grantor has the unqualified right to enter into this Agreement
and to perform its terms.
(g) Except for (i) the appropriate filings with the United States
Patent and Trademark Office, and (ii) the appropriate filings under Article 9 of
the Uniform Commercial Code, no consent of any other Person (other than
licensors of any License to which any Grantor is a licensee), no authorization,
consent, approval or other action by, and no notice to or filing or recording
with, any governmental, administrative or judicial authority or regulatory body
is
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required in the United States either (x) for the granting by such Grantor of the
Security Interests granted hereby or for the execution, delivery or performance
of this Agreement by such Grantor, or (y) for the perfection of or the exercise
by Bank One of its rights and remedies hereunder, except where the failure to
obtain, take, give or make such authorizations, consents, approvals, actions,
notices or filings would not, and would not be reasonably likely to, have a
material adverse effect on the financial condition, operations, business,
properties or assets of the Grantors taken as a whole.
(h) The consummation of actions contemplated under or in connection
with the Credit Agreement, Swing Line Note or Bank One Letter of Credit to be
performed by such Grantor, will not impair the legal right of such Grantor to
use any of the federal registrations and applications for registration of the
Patents and Trademarks listed on Schedules I and II hereto.
(i) Such Grantor has no knowledge of the existence of any patent,
trademark, service xxxx, trade name or trade dress, or license agreement held or
claimed by any other Person that, if upheld, would preclude such Grantor from
distributing, marketing, selling or providing any product or service currently
distributed, marketed, sold or provided by it, as the case may be, under or in
connection with any of the federal registrations and applications for
registration of the Patents and Trademarks listed on Schedules I and II hereto
(except, in each case, to the extent that such Grantor has granted an exclusive
license to another person), or that would have a material adverse effect on the
financial condition, operations, business, properties or assets of the Grantors
taken as a whole, and such Grantor has no knowledge of any claim that is likely
to be made that if upheld would have a material adverse effect on the financial
condition, operations, business, properties or assets of the Grantors taken as a
whole.
(j) No material claim in any court or in the United States Patent and
Trademark Office has been made (and, as to any trademark, service xxxx, trade
name, or trade dress with respect to which such Grantor is a licensee, to the
best knowledge of such Grantor, no material claim has been made against the
third party licensor), and such Grantor has no knowledge of any material claim
that has been made or is likely to be made, that the use by such Grantor of any
Patent and Trademark Collateral does or may violate the rights of any Person.
(k) Such Grantor, to the best of its knowledge, has used consistent
standards of quality in manufacturing, distribution and marketing of each
product sold and provision of each service provided under or in connection with
any Patent and Trademark Collateral, and has taken whatever steps necessary to
ensure that all licensed users of any Patent and Trademark Collateral use such
consistent standards of quality.
4 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of such
Grantor, such Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Bank One may reasonably request, in order to (i) continue, perfect and
protect any Security Interest granted or purported to be granted hereby, or (ii)
enable Bank One to exercise and enforce its rights and remedies hereunder with
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respect to any part of the Patent and Trademark Collateral. Without limiting the
generality of the foregoing, each Grantor will execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Bank One may reasonably
request, in order to perfect and preserve the Security Interests granted or
purported to be granted hereby.
(b) Each Grantor hereby authorizes Bank One to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Patent and Trademark Collateral without the signature of such
Grantor where permitted by law. A carbon, photographic or other reproduction of
this Agreement or any financing statement covering the Patent and Trademark
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Grantor will furnish to Bank One from time to time statements
and schedules further identifying and describing the Patent and Trademark
Collateral and such other reports in connection with the Patent and Trademark
Collateral as Bank One may reasonably request, all in reasonable detail.
(d) Each Grantor agrees that, if, before the Secured Obligations have
been satisfied in full, it (i) obtains an ownership interest in any new patent,
trademark, service xxxx, trade name and trade dress, or patent, trademark or
service xxxx registration or application for patent, trademark or service xxxx
registration which is not now identified on Schedules I and II, (ii) enters into
any new license agreement, subject, in each case, to the terms of the license
agreements, or (iii) becomes entitled to the benefit of any patent, trademark,
service xxxx, trade name and trade dress (which is materially important to the
business of such Grantor), patent, trademark or service xxxx registration,
application for patent, trademark or service xxxx registration, license
agreement or license agreement renewal, (x) the provisions of Section 1 shall
automatically apply thereto, and (y) any such patent, trademark, xxxx,
registration, application, or license agreement, together with the goodwill of
the business connected with the use of the xxxx or symbolized by it, shall
automatically become part of the Patent and Trademark Collateral. Each Grantor
shall give prompt written notice to Bank One of each new patent, trademark or
service xxxx registration or application for registration. Each Grantor
authorizes Bank One to modify this Agreement by amending Schedules I and II to
include any such new patent, trademark or service xxxx registration, or
application for patent, trademark or service xxxx registration which becomes
part of the Patent and Trademark Collateral under this Section, or which, in the
reasonable business judgment of each such Grantor, is a material patent,
trademark or service xxxx registration or application for patent, trademark or
service xxxx registration. Each Grantor shall, where consistent with prudent
business practices, use best efforts to negotiate new license agreements subject
to the grant of the security interest created by this Agreement. Each Grantor
agrees that, if, before the Secured Obligations have been satisfied in full, it
obtains an ownership interest in any recorded copyright or pending copyright
application before the United States Copyright Office or in any similar office
or agency of the United States, any State thereof, or any other country or
political subdivision thereof ("COPYRIGHTS"), then the provisions of this
subsection shall be equally applicable to such
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copyrights and each Grantor authorizes Bank One to modify this Agreement by,
among other things, adding a new Schedule III to include any such Copyrights
under this Agreement.
(e) Each Grantor agrees (i) to prosecute diligently any patent,
trademark or service xxxx application that is part of Schedules I and II, (ii)
to file applications for registration of any patent, trademark or service xxxx
which is or becomes material to its business, (iii) to take all necessary steps
in any proceeding before the United States Patent and Trademark Office or in any
court, to maintain and protect each material patent, trademark, service xxxx,
trade name, trade dress and patent, trademark or service xxxx registration, and
each license agreement, and (iv) to participate in opposition, cancellation and
infringement proceedings in each case, such actions under clauses (i) through
(iv) above, to be taken as and to the extent Grantor, in the exercise of its
reasonable commercial judgment, deems necessary or desirable. Any expenses
incurred in connection with such activities shall be borne by such Grantor. If
any Grantor fails to comply with any of the foregoing duties, Bank One shall
have the right, but not the obligation, to effect compliance in the name of the
Grantor to the extent permitted by law, at the Grantor's expense.
(f) Except as may be permitted by the Credit Agreement, no Grantor
shall (i) abandon any patent, trademark or service xxxx registration or
application for patent, trademark or service xxxx registration, or any patent,
trademark, service xxxx or trade name, without the written consent of Bank One,
which consent shall not be unreasonably withheld, except where such abandonment
would not be reasonably likely to have a material adverse effect on the
financial condition, operations, business, properties or assets of the Grantors
taken as a whole, or (ii) take any action, or permit any action to be taken by
any other Persons to the extent such Persons are subject to its control, or fail
to take any action, which would materially and adversely affect the validity,
perfection, priority or enforcement of the rights transferred herein to Bank One
under this Agreement, and any such action or agreement if it shall be entered
into or taken, shall be null and void and of no effect whatsoever. Each Grantor
agrees to notify Bank One immediately and in writing if such Grantor learns (i)
that any material item of the Patent and Trademark Collateral may become
abandoned, or (ii) of any adverse determination or any development (including,
without limitation, the institution of any proceeding in the United States
Patent and Trademark Office or any court) regarding any material part of the
Patent and Trademark Collateral.
(g) In the event that any material item of the Patent and Trademark
Collateral is infringed or misappropriated by a third party, any Grantor having
any right, title or interest in such Patent and Trademark Collateral shall
promptly notify Bank One and shall, unless such Grantor shall reasonably
determine that such Patent and Trademark Collateral is of immaterial economic
value to such Grantor, take all reasonable steps and actions to defend against
and enjoin the infringement or misappropriation, and shall take such other
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect and enforce such Patent and Trademark Collateral. Any
expense incurred in connection with such activities shall be borne by such
Grantor.
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(h) Each Grantor shall continue to use reasonable and proper statutory
notice in connection with its use of each registered patent, trademark or
service xxxx. Each Grantor agrees (i) to maintain the quality of any and all
products or services of such Grantor used or provided in connection with the
Patent and Trademark Collateral, consistent with the quality of said products
and services as of the date hereof and (ii) to take all reasonable steps to
ensure that all licensees of any Patent and Trademark Collateral maintain
consistent standards of quality, consistent with the standards in effect on the
date hereof.
5. TRANSFERS AND OTHER LIENS. Each Grantor shall not, except as otherwise
permitted under the Credit Agreement:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of, or grant any option with respect to, the Patent and Trademark
Collateral, except that any Grantor may license the Patent and Trademark
Collateral (i) in the ordinary course of such Grantor's business, provided that
such Grantor, in the exercise of its reasonable commercial judgment, determines
that such license is necessary or desirable in the conduct of such Grantor's
business, or (ii) in connection with a sale or transfer of assets as provided in
the Credit Agreement, PROVIDED that such license shall be on terms reasonably
expected to maximize the gain to such Grantor resulting from the granting of
such license,
(b) create or suffer to exist any Lien upon or with respect to any of
the Patent and Trademark Collateral except for the Security Interests created by
this Agreement or the Security Interests created or permitted by the Credit
Agreement, or
(c) take any other action in connection with any of the Patent and
Trademark Collateral that would impair the value of the interest or rights
thereunder of such Grantor or that would impair the interest or rights of Bank
One.
Nothing in this Section 5 will prevent licenses by any Grantor to another
Grantor.
6. BANK ONE APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby irrevocably appoints
Bank One such Grantor's attorney-in-fact, with full authority in the place and
stead of such Grantor and in the name of such Grantor or otherwise, from time to
time in Bank One's discretion, subject to the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default, to take any action
and to execute any instrument that Bank One may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Patent and Trademark Collateral,
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above, and
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(c) to file any claims or take any action or institute any proceedings
which Bank One may deem necessary or desirable for the collection of any
payments relating to the Patent and Trademark Collateral or otherwise to enforce
the rights of Bank One with respect to any of the Patent and Trademark
Collateral.
7. BANK ONE MAY PERFORM. If any Grantor fails to perform any agreement contained
herein, Bank One may itself perform (subject to the Intercreditor Agreement), or
cause performance of, such agreement, and the expenses of Bank One incurred in
connection therewith shall be payable by such Grantor under Section 10(b). Bank
One or its designated representatives shall have the right, at any reasonable
time during normal business hours and from time to time, upon reasonable notice,
and without undue interruption to the business of such Grantor, to inspect the
premises of any Grantor and to examine the books, records and operations of any
Grantor (including, without limitation, any Grantor's quality control processes)
relating to the Patent and Trademark Collateral.
8. BANK ONE'S DUTIES. The powers conferred on Bank One hereunder are solely to
protect its interest in the Patent and Trademark Collateral and shall not impose
any duty upon it to exercise any such powers.
9. REMEDIES. If any Event of Default shall have occurred and be continuing and
subject to the Intercreditor Agreement:
(a) Bank One may exercise in respect of the Patent and Trademark
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to Bank One, in default under the OUCC (whether or not the
OUCC applies to the affected Patent and Trademark Collateral) and also may (i)
exercise any and all rights and remedies of any Grantor under or otherwise in
respect of the Patent and Trademark Collateral, (ii) require any Grantor to, and
each Grantor hereby agrees that it will at its expense and upon request of Bank
One forthwith, assemble all or any part of the documents embodying the Patent
and Trademark Collateral as directed by Bank One and make such documents
available to Bank One at a place to be designated by Bank One which is
reasonably convenient to both Bank One and such Grantor, (iii) occupy, for a
reasonable period and without obligation to such Grantor in respect of such
occupation, any premises owned or leased by any Grantor where documents
embodying the Patent and Trademark Collateral or any part thereof are assembled
in order to effectuate Bank One's rights and remedies hereunder or under law,
and (iv) without notice except as specified below, sell the Patent and Trademark
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Bank One's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as Bank One may deem commercially
reasonable. In the event of any sale, assignment, or other disposition of any of
the Patent and Trademark Collateral by any Grantor, the goodwill of the business
connected with and symbolized by any Patent and Trademark Collateral subject to
such disposition shall be included, and such Grantor shall supply to Bank One or
its designee such Grantor's know-how and expertise relating to the manufacture
and sale of products or the provision of services relating to any Patent and
Trademark Collateral subject to such disposition, and its customer lists and
other records relating to such Patent and Trademark Collateral and to the
distribution of such products and services. Each Grantor agrees
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that, to the extent notice of sale shall be required by law, at least ten days'
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. Bank One shall not be obligated to make any sale of Patent and
Trademark Collateral regardless of notice of sale having been given. Bank One
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) All payments received by any Grantor under or in connection with
any of the Patent and Trademark Collateral shall be received in trust for the
benefit of Bank One, shall be segregated from other funds of such Grantor and
shall, subject to the terms of the Intercreditor Agreement, be forthwith paid
over to Bank One in the same form as so received (with any necessary
endorsement).
(c) All payments made under or in connection with or otherwise in
respect of the Patent and Trademark Collateral and all cash proceeds received by
Bank One in respect of any sale of, collection from, or other realization upon
all or any part of the Patent and Trademark Collateral may be held by Bank One
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to Bank One pursuant to Section 10) pursuant to the
Intercreditor Agreement, in whole or in part by BNY, the Agent under the Credit
Agreement, for the ratable benefit of the Lenders, the Issuer and the Swing Line
Lender in accordance with the Credit Agreement, in such order as BNY or in the
event that the Inter-Credit Agreement is no longer in effect, Bank One may apply
the collateral to the Secured Obligations. Any surplus of such cash or cash
proceeds held by Bank One and remaining after payment in full of all the Secured
Obligations shall be paid over to the respective Grantors or to whomsoever may
be lawfully entitled to receive such surplus.
10. INDEMNITY AND EXPENSES. Without duplicating any amounts payable under
Sections 10.7, 11.5 and 11.10 of the Credit Agreement:
(a) Each Grantor agrees to indemnify Bank One from and against any and
all claims, losses and liabilities arising out of, or in connection with or
resulting from this Agreement or the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result from Bank One's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
(b) Each Grantor will upon demand pay to Bank One the amount of any and
all reasonable expenses, including, without limitation, the reasonable fees and
costs of its counsel and of any experts and agents, that Bank One may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Patent and Trademark Collateral, (iii) the exercise
or enforcement of any of the rights of Bank One hereunder or (iv) the failure by
any Grantor to perform or observe any of the provisions hereof.
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11. SECURITY INTEREST ABSOLUTE. All rights of Bank One and Security Interests
granted hereunder, and each of the Grantor's Obligations, shall, to the extent
permitted by law, be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement, the
Swing Line Note or Bank One Letter of Credit, or any agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to departure from, the Credit Agreement, Swing Line
Note or Bank One Letter of Credit, including, without limitation, any increase
in the Secured Obligations resulting from the extension of additional credit to
the Borrower or otherwise;
(c) any taking and holding of Patent and Trademark Collateral or
guarantees for all or any of the Secured Obligations; or any amendment,
alteration, exchange, substitution, transfer, enforcement, waiver,
subordination, termination or release of any Patent and Trademark Collateral or
such guarantees, or any nonperfection of any Patent and Trademark Collateral, or
any consent to departure from any such guaranty;
(d) any manner of application of Patent and Trademark Collateral, or
proceeds thereof, to all or any of the Secured Obligations, or the manner of
sale or other disposition of any Patent and Trademark Collateral;
(e) any consent by any Lender, the Issuer, the Swing Line Lender or the
Agent to the change, restructuring or termination of the corporate structure or
existence of any Grantor and any corresponding restructure of the Secured
Obligations, or any other restructure or refinancing of the Secured Obligations
or any portion thereof;
(f) any modification, compromise, settlement or release by the Agent or
any Lender, the Issuer or the Swing Line Lender, by operation of law or
otherwise (except any of the foregoing with respect to this Agreement),
collection or other liquidation of the Secured Obligations or the liability of
any Grantor, or of the Patent and Trademark Collateral, in whole or in part, and
any refusal of payment by the Agent or any Lender, the Issuer or the Swing Line
Lender, in whole or in part, from any obligor, any Grantor in connection with
any of the Secured Obligations, whether or not with notice to, or further assent
by, or any reservation of rights against, any Grantor; or
(g) any other circumstance (other than by operation of law) that might
otherwise constitute a defense available to, or a discharge of, the Grantor.
The granting of a Security Interest in the Patent and Trademark Collateral shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment of any of the Secured Obligations is rescinded or must
otherwise be returned by Bank One or any Lender, the Issuer or the Swing Line
Lender upon the insolvency, bankruptcy or reorganization of any Grantor or
otherwise, all as though such payment had not been made.
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12. WAIVER. Each Grantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Secured Obligations
(as that term is defined in this Agreement) and this Agreement and any
requirement that Bank One protect, secure, perfect or insure any Security
Interest or any property subject thereto or exhaust any right or take any action
against any Grantor or any other Person or any collateral.
13. AMENDMENTS, ETC.
(a) Except as provided in subsection (b) to this Section 13, no
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by Bank One, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure to exercise nor any delay in exercising, on the part
of Bank One, any right, power or privilege under this Agreement shall operate as
a waiver thereof; further, no single or partial exercise of any right, power or
privilege under this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b) Any patent and trademark security agreement supplement hereto shall
be in substantially the form of Exhibit A hereto (each a "PATENT AND TRADEMARK
SECURITY AGREEMENT SUPPLEMENT"), and upon the execution and delivery thereof by
any Person (i) such Person shall be referred to as an "ADDITIONAL GRANTOR" and
shall be and become a Grantor and each reference in this Agreement to "GRANTOR"
shall also mean and be a reference to such Additional Grantor, and (ii) the
supplements attached to each Patent and Trademark Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I and
II hereto, and Bank One may attach such supplements to such Schedule as
supplemented pursuant hereto.
14. ADDRESSES FOR NOTICES. All notices and other communications to any party
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, addressed to such party, in the case of any Telxon, at its
address referred to in Section 11.2 of the Credit Agreement, in the case of a
Grantor other than Telxon, at its address referred to on Schedule I to the
Subsidiary Guaranty or next to its signature in any Supplement to the Subsidiary
Guaranty, in the case of Bank One, at the address of Bank One referred to in
Section 11.2 of the Credit Agreement, or as to any party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall be effective (a) when received, if mailed or
delivered, or (b) when delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid.
15. CONTINUING SECURITY INTEREST; RELEASE AND REASSIGNMENT OF COLLATERAL.
(a) This Agreement shall create a continuing Security Interest in the
Patent and Trademark Collateral and shall (i) remain in full force and effect
until the cash payment in full of
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the Secured Obligations, the repayment of the Swing Line Note, the expiration or
cancellation of the Bank One Letter of Credit and the termination of the Swing
Line, (ii) be binding upon each Grantor, its successors and assigns, and (iii)
inure, together with the rights and remedies of Bank One hereunder, to the
benefit of Bank One and its successors, transferees and assigns, including, but
not limited to, those provided in the Credit Agreement. Upon the payment in full
of the Secured Obligations, the repayment of the Swing Line Note, the expiration
or cancellation of the Bank One Letter of Credit and the termination of the
Swing Line, this Agreement and the Liens granted to Bank One hereunder, shall
terminate. Without limiting the generality of the foregoing clause (iii) Bank
One may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (in accordance with the terms of the
Credit Agreement) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Bank One
herein or otherwise, in each case subject to and as provided for in Section 11.7
of the Credit Agreement.
(b) In the case of any Patent and Trademark Collateral pledged or
assigned, or in which a security interest is granted hereunder by any Grantor,
upon any sale, lease, transfer or other disposition of any item of Patent and
Trademark Collateral in accordance with the terms of the Credit Agreement (other
than sales of Inventory in the ordinary course of business), Bank One will, at
such Grantor's expense, execute and deliver to any Grantor, any such documents
as such Grantor shall reasonably request to evidence the release of such item of
Patent and Trademark Collateral from the assignment and security interest
granted hereby; provided, however, as to clause (a)(ii) above, that (x) at the
time of such request and such release no Event of Default (or event or condition
which upon notice or lapse of time or both would constitute an Event of Default)
shall have occurred and be continuing, (y) such Grantor shall have delivered to
Bank One, at least 10 Business Days prior to the date of the proposed release,
or such shorter period acceptable to Bank One under this Agreement, a written
request for release describing the item of Patent and Trademark Collateral and
the terms of the sale, lease, transfer or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith,
together with a form of release for execution by Bank One and a certification by
such Grantor to the effect that the transaction is in compliance with the Credit
Agreement and as to such other matters as Bank One may request, and (z) any
proceeds of any such sale, lease, transfer or other disposition required to be
applied to the prepayment of or reduction in the Swing Line in accordance with
the Intercreditor Agreement shall be so applied.
(c) Upon the cash payment in full of the Secured Obligations, the
Security Interests granted hereby shall terminate and all rights to the Patent
and Trademark Collateral shall revert and be reassigned to the respective
Grantors. Upon any such termination, Bank One will, at such Grantor's expense,
execute and deliver to each Grantor such documents as such Grantor shall
reasonably request to evidence such termination and reassignment.
16. TRANSACTIONS PERMITTED UNDER THE CREDIT AGREEMENT. Nothing contained in this
Agreement shall in any manner prohibit or restrict any Grantor or any of its
Subsidiaries from consummating any transaction, entering into any agreement or
otherwise taking any action expressly permitted under the Credit Agreement.
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17. SEVERABILITY. If any term or provision of this Agreement is or shall become
illegal, invalid or unenforceable in any jurisdiction, all other terms and
provisions of this Agreement shall remain legal, valid and enforceable in such
jurisdiction and such illegal, invalid or unenforceable provision shall be
legal, valid and enforceable in any other jurisdiction.
18. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
19. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PATENT AND TRADEMARK COLLATERAL ARE
GOVERNED BY THE LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION OTHER THAN
THE STATE OF OHIO. UNLESS OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT,
TERMS USED IN ARTICLE 8 OR 9 OF THE U.C.C. ARE USED HEREIN AS THEREIN DEFINED.
20. WAIVER OF TRIAL BY JURY. EACH GRANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES TO THE EXTENT PERMITTED BY LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
(This space intentionally left blank)
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
GRANTOR:
TELXON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Sr. V.P., Financial Operations
BANK ONE:
BANK ONE, NA
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
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