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TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as
of February 27, 1997, is made by each of MIDCOM COMMUNICATIONS INC., a
Washington corporation ("Midcom"), ADVAL, INC., an Oregon corporation ("AdVal"),
ADVAL DATA CORPORATION, an Oregon corporation ("AdVal Data"), ADVANCED NETWORK
DESIGN, a California corporation ("A.N.D."), CEL-TECH INTERNATIONAL CORP., a
Washington corporation ("Cel-Tech"), and PACNET INC., a Washington corporation
("PacNet"; collectively, with Midcom, AdVal, AdVal Data, A.N.D., and Cel-Tech,
the "Debtors"), in favor of FOOTHILL CAPITAL CORPORATION, a California
corporation ("Secured Party").
RECITALS
A. The Debtors and Secured Party have entered into that certain Loan and
Security Agreement, dated as of even date herewith (as amended, restated,
modified, renewed or extended from time to time, the "Loan Agreement"), pursuant
to which Secured Party has agreed to make certain financial accommodations to
the Debtors, and each Debtor has granted to Secured Party a security interest in
(among other things) all of the general intangibles of such Debtor.
B. Pursuant to the Loan Agreement and as one of the conditions
precedent to the obligations of Secured Party under the Loan Agreement, each
Debtor has agreed to execute and deliver this Agreement to Secured Party for
filing with the United States Patent and Trademark Office and with any other
relevant recording systems in any domestic or foreign jurisdiction, and as
further evidence of and to effectuate Secured Party's existing security
interests in the trademarks and other general intangibles described herein.
ASSIGNMENT
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, each Debtor hereby agrees in favor of
Secured Party as follows:
1. Definitions; Interpretation.
(a) Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
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"Proceeds" means whatever is receivable or received from or
upon the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involun tary, of any Trademark Collateral, including
"proceeds" as defined at UCC Section 9306, all insurance proceeds and all
proceeds of proceeds. Proceeds shall include (i) any and all accounts, chattel
paper, instruments, general intangibles, cash and other proceeds, payable to or
for the account of any Debtor, from time to time in respect of any of the
Trademark Collateral, (ii) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to or for the account of any Debtor from time to
time with respect to any of the Trademark Collateral, (iii) any and all claims
and payments (in any form whatsoever) made or due and payable to any Debtor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Trademark Collateral by any
Person acting under color of governmental authority, and (iv) any and all other
amounts from time to time paid or payable under or in connection with any of the
Trademark Collateral or for or on account of any damage or injury to or
conversion of any Trademark Collateral by any Person.
"PTO" means the United States Patent and Trademark Office and
any successor thereto.
"Secured Obligations" means all liabilities, obligations, or
undertakings owing by each Debtor to Secured Party of any kind or description
arising out of or outstanding under, advanced or issued pursuant to, or
evidenced by the Loan Agreement, the other Loan Documents, or this Agreement,
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, voluntary or involuntary, whether
now existing or hereafter arising, and including all interest (including
interest that accrues after the filing of a case under the Bankruptcy Code) and
any and all costs, fees (including attorneys fees), and expenses which any one
or more of the Debtors is required to pay pursuant to any of the foregoing, by
law, or otherwise.
"Trademark Collateral" has the meaning set forth in Section 2.
"Trademarks" has the meaning set forth in Section 2.
"UCC" means the Uniform Commercial Code as in effect from time
to time in the State of California.
"United States" and "U.S." each mean the United States of
America.
(b) Terms Defined in UCC. Where applicable and except
as otherwise defined herein, terms used in this Agreement shall have the
meanings ascribed to them in the UCC.
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(c) Interpretation. In this Agreement, except to the
extent the context otherwise requires:
(i) Any reference to a Section or a Schedule
is a reference to a section hereof, or a schedule hereto, respectively,
and to a subsection or a clause is, unless otherwise stated, a
reference to a subsection or a clause of the Section or subsection in
which the reference appears.
(ii) The words "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a whole
and not merely to the specific Section, subsection, paragraph or clause
in which the respective word appears.
(iii) The meaning of defined terms shall be
equally applicable to both the singular and plural forms of the terms
defined.
(iv) The words "including," "includes" and
"include" shall be deemed to be followed by the words "without
limitation."
(v) References to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto.
(vi) References to statutes or regulations
are to be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or
regulation referred to.
(vii) Any captions and headings are for
convenience of reference only and shall not affect the construction of
this Agreement.
(viii) Capitalized words not otherwise
defined herein shall have the respective meanings ascribed to them in
the Loan Agreement.
(ix) In the event of a direct conflict
between the terms and provisions of this Agreement and the Loan Agreement, it is
the intention of the parties hereto that both such documents shall be read
together and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of the Loan Agreement shall
control and govern; provided, however, that the inclusion herein of additional
obligations on the part of any Debtor and supplemental rights and remedies in
favor of Secured Party (whether under California law or applicable federal law),
in each case in respect of the Trademark Collateral, shall not be deemed a
conflict in the Loan Agreement.
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2. Security Interest.
(a) Assignment and Grant of Security Interest. To
secure the payment and performance of the Secured Obligations, each Debtor
hereby assigns, transfers, and conveys to Secured Party, and hereby grants a
security interest to Secured Party in, all of such Debtor's right, title and
interest in, to and under the following property, whether now existing or
hereafter acquired or arising, and whether registered or unregistered
(collectively, the "Trademark Collateral"):
(i) all state (including common law),
federal and foreign trademarks, service marks and trade names,
corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, together with and including
all licenses therefor held by that Debtor (unless otherwise prohibited
by any license or related licensing agreement under circumstances where
the granting of the security interest would have the effect under
applicable law of the termination or permitting termination of the
license for breach and where the licensor is not an affiliate of a
Debtor), and all registrations and recordings thereof, and all
applications filed or to be filed in connection therewith, including
registrations and applications in the PTO, any State of the United
States or any other country or any political subdivision thereof, and
all extensions or renewals thereof, including without limitation any of
the foregoing identified on Schedule A hereto (as the same may be
amended, modified or supplemented from time to time), and the right
(but not the obligation) to register claims under any state or federal
trademark law or regulation or any trademark law or regulation of any
foreign country and to apply for, renew and extend any of the same, to
xxx or bring opposition or cancellation proceedings in the name of that
Debtor or in the name of Secured Party for past, present or future
infringement or unconsented use thereof, and all rights arising
therefrom throughout the world (collectively, the "Trademarks");
(ii) all claims, causes of action and rights to xxx
for past, present or future infringement or unconsented use of any
Trademarks and all rights arising therefrom and pertaining thereto;
(iii) all general intangibles related to or arising
out of any of the Trademarks and all the goodwill of that Debtor's
business symbolized by the Trademarks or associated therewith; and
(iv) all products and Proceeds of any and all of the
foregoing.
(b) Continuing Security Interest. Each Debtor agrees
that this Agreement shall create a continuing security interest in the Trademark
Collateral which shall remain in effect until terminated in accordance with
Section 17.
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3. Further Assurances; Appointment of Secured Party as
Attorney-in-Fact. Each Debtor at its expense shall execute and deliver, or cause
to be executed and delivered, to Secured Party any and all documents and
instruments, in form and substance satisfactory to Secured Party, and take any
and all action, which Secured Party may reasonably request from time to time, to
perfect and continue perfected, maintain the priority of or provide notice of
Secured Party's security interest in the Trademark Collateral and to accomplish
the purposes of this Agreement. Secured Party shall have the right, in the name
of each Debtor, or in the name of Secured Party or otherwise, without prior
notice to or assent by that Debtor, and each Debtor hereby irrevocably
constitutes and appoints Secured Party (and any of Secured Party's officers or
employees or agents designated by Secured Party) as that Debtor's true and
lawful attorney-in-fact with full power and authority, (i) to sign the name of
Debtor on all or any of such documents or instruments and perform all other acts
that Secured Party deems necessary or advisable in order to perfect or continue
perfected, maintain the priority or enforceability of or provide notice of
Secured Party's security interest in, the Trademark Collateral, and (ii) to
execute any and all other documents and instruments, and to perform any and all
acts and things for and on behalf of Debtor, which Secured Party may deem
necessary or advisable to maintain, preserve and protect the Trademark
Collateral and to accomplish the purposes of this Agreement, including (A) after
the occurrence and during the continuance of any Event of Default, to defend,
settle, adjust or institute any action, suit or proceeding with respect to the
Trademark Collateral, (B) after the occurrence and during the continuance of any
Event of Default, to assert or retain any rights under any license agreement for
any of the Trademark Collateral, and (C) after the occurrence and during the
continuance of any Event of Default, to execute any and all applications,
documents, papers and instruments for Secured Party to use the Trademark
Collateral, to grant or issue any exclusive or non-exclusive license with
respect to any Trademark Collateral (it being understood that so long as no
Event of Default has occurred and is continuing, that Debtor may grant or issue
licenses in the ordinary course of business with respect to the Trademark
Collateral), and to assign, convey or otherwise transfer title in or dispose of
the Trademark Collateral. The power of attorney set forth in this Section 3,
being coupled with an interest, is irrevocable so long as this Agreement shall
not have terminated in accordance with Section 17. To the extent Secured Party
takes any action under this Section 3, Secured Party will endeavor in good faith
to provide notice to the relevant Debtor of such action, but any failure of
Secured Party to do so shall not result in any liability to Secured Party
whatsoever unless and to the extent such failure arose from the willful
misconduct, gross negligence, or bad faith of Secured Party.
4. Representations and Warranties. Each Debtor represents and
warrants to Secured Party as follows:
(a) No Other Trademarks. Schedule A sets forth a true
and correct list of all of the existing Trademarks that currently are
registered, or for which any currently pending application for registration has
been filed with the PTO or any corresponding or similar trademark office of any
other U.S. or foreign jurisdiction, and that are owned or held (whether pursuant
to a license or otherwise) or used by that Debtor.
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(b) Trademarks Subsisting. Each of the Trademarks
listed in Schedule A is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and, to the best of that Debtor's knowledge,
each of the Trademarks is valid and enforceable.
(c) Ownership of Trademark Collateral; No Violation.
(i) That Debtor has rights in and good and defensible title to the existing
Trademark Collateral, (ii) with respect to the Trademark Collateral shown on
Schedule A hereto as owned by it, that Debtor is the sole and exclusive owner
thereof, free and clear of any Liens and rights of others (other than the
security interest created hereunder), including licenses, registered user
agreements and covenants by that Debtor not to xxx third persons, and (iii) with
respect to any Trademarks for which that Debtor is either a licensor or a
licensee pursuant to a license or licensee agreement regarding such Trademark,
each such license or licensing agreement is in full force and effect, that
Debtor is not in default of any of its obligations thereunder and, other than
the parties to such licenses or licensing agreements, no other Person has any
rights in or to any of the Trademark Collateral. To the best of that Debtor's
knowledge, the past, present and contemplated future use of the Trademark
Collateral by that Debtor has not, does not and will not infringe upon or
violate any right, privilege or license agreement of or with any other Person.
(d) No Infringement. To the best of that Debtor's
knowledge, no material infringement or unauthorized use presently is being made
of any of the Trademark Collateral by any Person.
(e) Powers. That Debtor has the unqualified right,
power and authority to pledge and to grant to Secured Party a security interest
in all of that Debtor's right, title, and interest in and to the Trademark
Collateral pursuant to this Agreement, and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person except as already obtained.
5. Covenants. So long as any of the Secured Obligations remain
unsatisfied, each Debtor agrees that it will comply with all of the covenants,
terms and provisions of this Agreement, the Loan Agreement and the other Loan
Documents, and each Debtor will promptly give Secured Party written notice of
the occurrence of any event that could have a material adverse effect on any of
the Trademarks or the Trademark Collateral, including any petition under the
Bankruptcy Code filed by or against any licensor of any of the Trademarks as to
which that Debtor is a licensee.
6. Future Rights. For so long as any of the Secured
Obligations shall remain outstanding, or, if earlier, until Secured Party shall
have released or terminated, in whole but not in part, its interest in the
Trademark Collateral, if and when any Debtor shall obtain rights to any new
Trademarks, or any reissue, renewal or extension of any Trademarks, the
provisions of Section 2 shall automatically apply thereto and that Debtor shall
give to Secured Party prompt notice thereof. Each Debtor shall do all things
deemed necessary or advisable by Secured Party to ensure the validity,
perfection, priority and enforceability of the security interests of Secured
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Party in such future acquired Trademark Collateral. Each Debtor hereby
authorizes Secured Party to modify, amend or supplement the Schedules hereto and
to re-execute this Agreement from time to time on that Debtor's behalf and as
its attorney-in-fact to include any future Trademarks which are or become
Trademark Collateral and to cause such re-executed Agreement or such modified,
amended or supplemented Schedules to be filed with the PTO.
7. Secured Party's Duties. Notwithstanding any provision
contained in this Agreement, Secured Party shall have no duty to exercise any of
the rights, privileges or powers afforded to it and shall not be responsible to
any Debtor or any other Person for any failure to do so or delay in doing so.
Except for the accounting for moneys actually received by Secured Party
hereunder or in connection herewith, Secured Party shall have no duty or
liability to exercise or preserve any rights, privileges or powers pertaining to
the Trademark Collateral.
8. Remedies. Secured Party shall have all rights and remedies
available to it under the Loan Agreement and applicable law (which rights and
remedies are cumulative) with respect to the security interests in any of the
Trademark Collateral or any other Collateral. Each Debtor agrees that such
rights and remedies include the right of Secured Party as a secured party to
sell or otherwise dispose of its Collateral after default, pursuant to UCC
Section 9504. Each Debtor agrees that Secured Party shall at all times have such
royalty-free licenses, to the extent permitted by law, for any Trademark
Collateral that is reasonably necessary to permit the exercise of any of Secured
Party's rights or remedies upon or after the occurrence of (and during the
continuance of) an Event of Default with respect to (among other things) any
tangible asset of any Debtor in which Secured Party has a security interest,
including Secured Party's rights to sell inventory, tooling or packaging which
is acquired by any Debtor (or its successors, permitted assignees, or trustees
in bankruptcy). In addition to and without limiting any of the foregoing, upon
the occurrence and during the continuance of an Event of Default, Secured Party
shall have the right but shall in no way be obligated to bring suit, or to take
such other action as Secured Party deems necessary or advisable, in the name of
any Debtor or Secured Party, to enforce or protect any of the Trademark
Collateral, in which event each Debtor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement. To the extent that Secured Party shall elect
not to bring suit to enforce such Trademark Collateral, each Debtor agrees to
use all reasonable measures and its diligent efforts, whether by action, suit,
proceeding or otherwise, to prevent the infringement, misappropriation or
violation thereof by others and for that purpose agrees diligently to maintain
any action, suit or proceeding against any Person necessary to prevent such
infringement, misappropriation or violation.
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9. Binding Effect. This Agreement shall be binding upon, inure
to the benefit of and be enforceable by each Debtor and Secured Party and their
respective successors and permitted assigns.
10. Notices. All notices and other communications hereunder to
or from Secured Party or any Debtor shall be in writing and shall be mailed,
sent or delivered in accordance with the Loan Agreement.
11. GOVERNING LAW AND VENUE; JURY TRIAL WAIVER. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
ASSIGNMENT AND SECURITY INTERESTS HEREUNDER IN RESPECT OF ANY PROPERTY ARE
GOVERNED BY FEDERAL LAW, IN WHICH CASE SUCH CHOICE OF CALIFORNIA LAW SHALL NOT
BE DEEMED TO DEPRIVE SECURED PARTY OF SUCH RIGHTS AND REMEDIES AS MAY BE
AVAILABLE UNDER FEDERAL LAW. THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR,
AT THE SOLE OPTION OF SECURED PARTY, IN ANY OTHER COURT IN WHICH SECURED PARTY
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH DEBTOR AND SECURED PARTY
WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.
EACH DEBTOR AND SECURED PARTY HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH DEBTOR AND SECURED PARTY REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
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12. Entire Agreement; Amendment. This Agreement, together with
the Schedules hereto, contains the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior drafts and communications
relating to such subject matter. Neither this Agreement nor any provision hereof
may be modified, amended or waived except by the written agreement of the
parties as provided in the Loan Agreement. Notwithstanding the foregoing,
Secured Party may re-execute this Agreement or modify, amend or supplement the
Schedules hereto as provided in Section 6 hereof.
13. Severability. If one or more provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to any party, such invalidity, illegality or
unenforceability in such jurisdiction or with respect to such party shall, to
the fullest extent permitted by applicable law, not invalidate or render illegal
or unenforceable any such provision in any other jurisdiction or with respect to
any other party, or any other provisions of this Agreement.
14. Counterparts. This Agreement may be executed in any number
of coun terparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
15. Loan Agreement. Each Debtor acknowledges that the rights
and remedies of Secured Party with respect to the security interest in the
Trademark Collateral granted hereby are more fully set forth in the Loan
Agreement and the other Loan Documents and all such rights and remedies are
cumulative.
16. No Inconsistent Requirements. Each Debtor acknowledges
that this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
each Debtor agrees that, subject to Section 1(c)(ix), all such covenants, terms
and provisions are cumulative and all shall be performed and satisfied in
accordance with their respective terms.
17. Termination. Upon the indefeasible payment in full of the
Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, this Agree ment shall
terminate and Secured Party shall execute and deliver such documents and instru
ments and take such further action reasonably requested by the Debtors, at the
Debtors' expense, as shall be necessary to evidence termination of the security
interest granted by any Debtor to Secured Party hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in Los Angeles, California.
MIDCOM COMMUNICATIONS INC.,
a Washington corporation
By_________________________
Title:_____________________
ADVAL, INC.,
an Oregon corporation
By_________________________
Title:_____________________
ADVAL DATA CORPORATION,
an Oregon corporation
By_________________________
Title:_____________________
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ADVANCED NETWORK DESIGN,
a California corporation
By_________________________
Title:_____________________
CEL-TECH INTERNATIONAL CORP.,
a Washington corporation
By_________________________
Title:_____________________
PACNET INC.,
a Washington corporation
By_________________________
Title:_____________________
FOOTHILL CAPITAL CORPORATION,
a California corporation
By_________________________
Title:_____________________
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On April __, 1997, before me, ______________________________, Notary
Public, personally appeared ______________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
____________________
Signature
[SEAL]
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STATE OF _________ )
) ss
COUNTY OF __________ )
On April __, 1997, before me, ______________________________, Notary
Public, personally appeared ______________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
____________________
Signature
[SEAL]
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SCHEDULE A
to the Trademark Security Agreement
U.S. Trademarks of Each Debtor
Registration
Debtor Registration No. Date Owner Registered Xxxx
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A-1.
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SCHEDULE B
to the Trademark Security Agreement
Foreign Trademarks of Each Debtor
Registration
Debtor Country Registration No. Date Owner Registered Xxxx
------ ------- ---------------- ---- ----- ---------------
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A-2.
