INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT ("Agreement"), is entered
into as of December 14, 2000, between FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), with a place of business located at 2450 Colorado
Avenue, Suite 3000 West, Santa Monica, California 90404 and EVANS & SUTHERLAND
COMPUTER CORPORATION, a Utah corporation ("Borrower"), with its chief executive
office located at 600 Komas Drive, Salt Lake City, Utah 84108.
A. Debtor and Foothill are, contemporaneously herewith, entering into
that certain Loan and Security Agreement ("Loan Agreement") and other
instruments, documents and agreements contemplated thereby or related
thereto (collectively, together with the Loan Agreement, the "Loan
Documents"); and
B. Debtor is the owner of certain intellectual property, identified
below, in which Debtor is granting a security interest to Foothill.
NOW THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth and for other
good and valuable consideration, the parties hereto mutually agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. The following terms, as used in this Agreement, have
the following meanings:
"Code" means the California Uniform Commercial Code, as amended
and supplemented from time to time, and any successor statute.
"Collateral" means:
(i) Trademarks: Each of the trademarks and rights and interest
which are capable of being protected as trademarks (including
trademarks, service marks, designs, logos, indicia, trade names,
corporate names, company names, business names, fictitious business
names, trade dress, trade styles, and other source or business
identifiers, and applications pertaining thereto), which are
presently, or in the future may be, owned, created, acquired, or used
(whether pursuant to a license or otherwise) by Debtor, in whole or in
part, and all trademark rights with respect thereto throughout the
world, including all proceeds thereof (including license royalties and
proceeds of infringement suits), and rights to renew and extend such
trademarks and trademark rights, and the associated goodwill;
(ii) All of Debtor's right to the trademark registrations and
trademark applications listed on Schedule A, attached hereto, as the
same may be updated from time to time;
(iii) All of Debtor's right, title and interest to register
trademark claims under any state or federal trademark law or
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regulation of any foreign country and to apply for, renew, and extend
the trademark registrations and trademark rights, the right (without
obligation) to sue or bring opposition or cancellation proceedings in
the name of Debtor or in the name of Foothill for past, present, and
future infringements of the trademarks, registrations, or trademark
rights and all rights (but not obligations) corresponding thereto in
the United States and any foreign country, and the associated
goodwill;
(iv) Patents: Each of the patents and patent applications which
are presently, or in the future may be owned, issued, acquired, or
used (whether pursuant to a license or otherwise) by Debtor, in whole
or in part, and all patent rights with respect thereto throughout the
world, including all proceeds thereof (including license royalties and
proceeds of infringement suits), foreign filing rights, and rights to
extend such patents and patent rights;
(v) All of Debtor's right, title, and interest, in and to the
patents and patent applications listed on Schedule B, attached hereto,
as the same may be updated hereafter from time to time;
(vi) All of Debtor's right, title, and interest in all patentable
inventions, and to file applications for patent under federal patent
law or regulation of any foreign country, and to request reexamination
and/or reissue of the patents, the right (without obligation) to sue
or bring interference proceedings in the name of Debtor or in the name
of Foothill for past, present, and future infringements of the
patents, and all rights (but not obligations) corresponding thereto in
the United States and any foreign country;
(vii) Copyrights: Each of the common law copyrights, copyright
registrations, copyright applications, and works protectable by
copyright, whether published or unpublished, which are presently, or
in the future may be, owned, created, authored (as a work for hire),
acquired, or used (whether pursuant to a license or otherwise) by
Debtor, in whole or in part, and all copyright rights with respect
thereto and all registrations therefor or hereafter granted or applied
for, throughout the world, including all proceeds thereof (including
license royalties and proceeds of infringement suits) and rights to
renew and extend such copyrights and copyright rights;
(viii) All of Debtor's right, title, and interest, in and to the
copyright registrations and copyright applications listed on Schedule
C, attached hereto, as the same may be updated hereafter from time to
time;
(ix) All of Debtor's right, title, and interest to register all
common law copyrights, copyright registrations, copyright
applications, and works protectable by copyright, whether published or
unpublished, and copyrights under any federal copyright law or
regulation of any foreign country and to apply for, renew, and extend
the copyright registrations and copyright rights, the right (without
obligation) to sue in the name of Debtor or in the name of Foothill
for past, present, and future infringements of the copyrights and all
rights (but not obligations) corresponding thereto in the United
States and any foreign country;
(x) All general intangibles relating to the foregoing; and,
(xi) All proceeds of any and all of the foregoing (including,
without limitation, license royalties and proceeds of infringement
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suits) and, to the extent not otherwise included, all payments under
insurance, or any indemnity, warranty, or guaranty payable by reason
of loss or damage to or otherwise with respect to the Collateral.
"Obligations" means all obligations, liabilities, and
indebtedness of Debtor to Foothill, whether direct, indirect,
liquidated, or contingent, and whether arising under this Agreement,
the Loan Agreement, any other of the Loan Documents, or otherwise,
including all costs and expenses described in Section 12.8 hereof.
1.2 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular,
references to the singular include the plural, and the term "including" is
not limiting. The words "hereof," "herein," "hereby," "hereunder," and
other similar terms refer to this Agreement as a whole and not to any
particular provision of this Agreement. Any initially capitalized terms
used but not defined herein shall have the meaning set forth in the Loan
Agreement. Any reference herein to any of the Loan Documents includes any
and all alterations, amendments, extensions, modifications, renewals, or
supplements thereto or thereof, as applicable. Neither this Agreement nor
any uncertainty or ambiguity herein shall be construed or resolved against
Foothill or Debtor, whether under any rule of construction or otherwise. On
the contrary, this Agreement has been reviewed by Debtor, Foothill, and
their respective counsel, and shall be construed and interpreted according
to the ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of Foothill and Debtor.
2. GRANT OF SECURITY INTEREST.
Debtor hereby grants to Foothill a first-priority security interest in all
of Debtor's right, title, and interest in and to the Collateral to secure the
Obligations.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Debtor hereby represents, warrants, and covenants that:
3.1 Trademarks; Service Marks; Patents; Copyrights.
(i) A true and complete schedule setting forth all federal,
state, and foreign trademark and service mark registrations and
applications with respect to the trademarks and service marks which
Debtor is using, or intends to use, and does not intend to abandon,
and those trademarks and service marks owned or controlled by Debtor
or licensed to Debtor, together with a summary description and such
information as may be reasonably requested by Foothill, with respect
to the filing or issuance thereof and expiration dates is set forth on
Schedule A;
(ii) A true and complete schedule setting forth all United States
and foreign patents and patent applications owned or controlled by
Debtor or licensed to Debtor, together with a summary description and
such information as may be reasonably requested by Foothill with
respect to the filing or issuance thereof and expiration dates is set
forth on Schedule B;
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(iii) A true and complete schedule setting forth all United
States copyright registrations and applications owned or controlled by
Debtor or licensed to Debtor, together with a summary description and
such information as may be reasonably requested by Foothill with
respect to the filing or issuance thereof and expiration dates is set
forth on Schedule C;
3.2 Validity; Enforceability. To Debtor's knowledge, each of the
patents and registered service marks, trademarks, and copyrights listed on
the attached Schedules A, B, and C, is valid and enforceable, and Debtor is
not presently aware of any present claim by any third party that any of
such patents, service marks, trademarks, or copyrights are invalid or
unenforceable, or that the use of any such patents, service marks,
trademarks, or copyrights violates the rights of any third person, or of
any basis for any such claims;
3.3 Title. Debtor is the sole and exclusive owner of the entire and
unencumbered right, title, and interest in and to each of the patents,
registered service marks, trademarks, and copyrights listed on the attached
Schedules A, B, and C, free and clear of any liens, charges, and
encumbrances, including pledges, assignments, licenses, shop rights, and
covenants by Debtor not to sue third persons;
3.4 Notice. Debtor has used and will continue to use proper statutory
notice in connection with its use of each of the patents, service marks,
trademarks, and copyrights;
3.5 Quality. Debtor has used and will continue to use consistent
standards of high quality (which may be consistent with Debtor's past
practices) in the manufacture, sale, and delivery of products and services
sold or delivered under or in connection with the service marks and
trademarks, including, to the extent applicable, in the operation and
maintenance of its merchandising operations, and will continue to maintain
the validity of the service marks and trademarks, as long as such service
marks and trademarks are being used;
3.6 Perfection of Security Interest. Except for the filing of a
financing statement with the Secretary of State of the State of Utah and
filings with the United States Patent and Trademark Office and United
States Copyright Office and filings with any foreign patent, trademark, and
copyright offices necessary to perfect the security interests created
hereunder, no authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
either for the grant by Debtor of the security interest hereunder or for
the execution, delivery, or performance of this Agreement by Debtor or for
the perfection of or the exercise by Foothill of its rights hereunder to
the Collateral in the United States.
4. AFTER-ACQUIRED SERVICE MARK, TRADEMARK, COPYRIGHT, OR PATENT RIGHTS.
If Debtor shall obtain rights to any new patents (including any reissues,
divisions, or continuations), or registrations for service marks, trademarks, or
copyrights, or file or become entitled to the benefit of any patent application
(including any reissue, division, or continuation) or any application for the
registration of a service mark, trademark, or copyright, the provisions of this
Agreement shall automatically apply thereto. Debtor shall give prompt notice in
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writing to Foothill with respect to any such new patents, registrations or
applications, or renewals or extensions thereof. Debtor shall bear any expenses
incurred in connection with future patents or patent applications, service mark
applications or registrations, trademark applications or registrations, or
copyright applications or registrations.
5. LITIGATION AND PROCEEDINGS.
Debtor shall commence and diligently prosecute in its own name, as the real
party in interest, for its own benefit, and its own expense, such suits,
administrative proceedings, or other action for infringement or other damages as
are in its reasonable business judgment necessary to protect the Collateral.
Debtor shall provide to Foothill any information with respect thereto requested
by Foothill. Foothill shall provide at Debtor's expense all necessary
cooperation in connection with any such suits, proceedings, or action,
including, without limitation, joining as a necessary party. Following Debtor's
becoming aware thereof, Debtor shall notify Foothill of the institution of, or
any adverse determination in, any proceeding in the United States Patent and
Trademark Office, or any United States, state, or foreign court regarding
Debtor's claim of ownership in any of the patents, service marks, trademarks, or
copyrights, its right to apply for the same, or its right to keep and maintain
such patent, service mark, trademark, or copyright rights.
6. POWER OF ATTORNEY.
Debtor grants Foothill power of attorney, having the full authority, and in
the place of Debtor and in the name of Debtor, from time to time following an
Event of Default in Foothill's discretion, to take any action and to execute any
instrument which Foothill may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, as may be subject to
the provisions of this Agreement: to endorse Debtor's name on all applications,
documents, papers, and instruments necessary for Foothill to use or maintain the
Collateral; to ask, demand, collect, sue for, recover, impound, receive, and
give acquittance and receipts for money due or to become due under or in respect
of any of the Collateral; to file any claims or take any action or institute any
proceedings that Foothill may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce Foothill's rights with respect to
any of the Collateral and to assign, pledge, convey, or otherwise transfer title
in or dispose of the Collateral to any person.
7. RIGHT TO INSPECT.
Subject to Debtor's applicable security clearance requirements, Debtor
grants to Foothill and its employees and agents the right to visit Debtor's
plants and facilities which manufacture, inspect, or store products sold under
any of the patents, trademarks, or copyrights, and to inspect the products and
quality control records relating thereto at reasonable times during regular
business hours.
8. EVENTS OF DEFAULT.
Any of the following events shall be an Event of Default:
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8.1 Loan Agreement. An Event of Default shall occur as defined in the
Loan Agreement;
8.2 Misrepresentation. Any representation or warranty made herein by
Debtor or in any document furnished to Foothill by Debtor under this
Agreement is incorrect in any material respect when made or when
reaffirmed; and
8.3 Breach. Debtor fails to observe or perform any covenant,
condition, or agreement to be observed or performed pursuant to the terms
hereof which materially and adversely affects Foothill.
9. SPECIFIC REMEDIES.
Upon the occurrence of any Event of Default, Foothill shall have, in
addition to, other rights given by law or in this Agreement, the Loan Agreement,
or in any other Loan Document, all of the rights and remedies with respect to
the Collateral of a secured party under the Code, including the following:
9.1 Notification. Foothill may notify licensees to make royalty
payments on license agreements directly to Foothill;
9.2 Sale. Foothill may sell or assign the Collateral and associated
goodwill at public or private sale for such amounts, and at such time or
times as Foothill deems advisable. Any requirement of reasonable notice of
any disposition of the Collateral shall be satisfied if such notice is sent
to Debtor five days prior to such disposition. Debtor shall be credited
with the net proceeds of such sale only when they are actually received by
Foothill, and Debtor shall continue to be liable for any deficiency
remaining after the Collateral is sold or collected. If the sale is to be a
public sale, Foothill shall also give notice of the time and place by
publishing a notice one time at least five days before the date of the sale
in a newspaper of general circulation in the county in which the sale is to
be held. To the maximum extent permitted by applicable law, Foothill may be
the purchaser of any or all of the Collateral and associated goodwill at
any public sale and shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion
of the Collateral sold at any public sale, to use and apply all or any part
of the Obligations as a credit on account of the purchase price of any
collateral payable by Foothill at such sale.
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING
EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES. 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 FOOTHILL, IN ANY OTHER
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COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF DEBTOR
AND FOOTHILL 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
10. DEBTOR AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. DEBTOR AND FOOTHILL 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.
11. CONFIDENTIALITY
11.1 Confidential Information. For purposes of this Agreement, the
term "Confidential Information" means any pending patent applications owned
or controlled by Debtor or licensed to Debtor, and any proprietary
information concerning the Collateral as defined in Section 1.1 above,
which is designated, marked or otherwise identified by appropriate stamp or
legend by Debtor as "Confidential" at the time of disclosure, including but
not limited to, pending patent applications, written or oral information,
data, drawings, processes, methods, formulations, source code, manuals, and
other documents.
11.2 Foothill's Obligations. Foothill agrees, (i) to maintain in
confidence any and all Confidential Information obtained from Debtor; (ii)
to make every reasonable effort to prevent the disclosure of the
Confidential Information to others; and, (iii) to use the Confidential
Information only in connection with preparing, financing, and servicing the
Loan Agreement, except in the case of default of the Loan Agreement, except
in the case of default of the Loan Agreement, Foothill may disclose
Confidential Information to third parties in connection with a foreclosure
and sale of the Collateral, but shall use reasonable efforts to preserve
such confidentiality.
11.3 Exclusions. This Agreement does not make Foothill responsible
for: (i) information which was in the public domain prior to Foothill's
receipt of the same pursuant to this Agreement, which subsequently becomes
part of the public domain by publication or otherwise, except by the
wrongful act of Foothill; (ii) information which Foothill can show by
written documentation was in its possession prior to its receipt of
Debtor's Confidential Information pursuant to this Agreement and which was
not acquired directly or indirectly from Debtor; and, (iii) information
which Foothill can show by written documentation was received by Foothill
from a third party who did not acquire the information directly or
indirectly from Debtor and who did not require Foothill to hold the
information in confidence.
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12. GENERAL PROVISIONS.
12.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Debtor and Foothill.
12.2 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the
parties; provided, however, that Debtor may not assign this Agreement or
any rights or duties hereunder without Foothill's prior written consent and
any prohibited assignment shall be absolutely void. Foothill may assign
this Agreement and its rights and duties hereunder and no consent or
approval by Debtor is required in connection with any such assignment.
12.3 Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire
Agreement.
12.4 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Debtor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
12.5 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the
purpose of determining the legal enforceability of any specific provision.
12.6 Amendments in Writing. This Agreement can only be amended by a
writing signed by both Foothill and Debtor.
12.7 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed
to be an original, and all of which, when taken together, shall constitute
but one and the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as delivery of a
manually executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver
a manually executed counterpart of this Agreement but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
12.8 Fees and Expenses. Debtor shall pay to Foothill on demand all
costs and expenses that Foothill pays or incurs in connection with the
negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement, including: (a) reasonable attorneys' and
paralegals' fees and disbursements of counsel to Foothill; (b) costs and
expenses (including reasonable attorneys' and paralegals' fees and
disbursements) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with this Agreement and the transactions
contemplated hereby; (c) costs and expenses of lien and title searches; (d)
taxes, fees, and other charges for filing this Agreement at the United
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States Patent and Trademark Office, or for filing financing statements, and
continuations, and other actions to perfect, protect, and continue the
security interest created hereunder; (e) sums paid or incurred to pay any
amount or take any action required of Debtor under this Agreement that
Debtor fails to pay or take; (f) costs and expenses of preserving and
protecting the Collateral; and (g) costs and expenses (including reasonable
attorneys' and paralegals' fees and disbursements) paid or incurred to
enforce the security interest created hereunder, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions of this
Agreement, or to defend any claims made or threatened against Foothill
arising out of the transactions contemplated hereby (including preparations
for the consultations concerning any such matters). The foregoing shall not
be construed to limit any other provisions of this Agreement or the Loan
Documents regarding costs and expenses to be paid by Debtor. The parties
agree that reasonable attorneys' and paralegals' fees and costs incurred in
enforcing any judgment are recover-able as a separate item in addition to
fees and costs incurred in obtaining the judgment and that the recovery of
such attorneys' and paralegals' fees and costs is intended to survive any
judgment, and is not to be deemed merged into any judgment.
12.9 Notices. Except as otherwise provided herein, all notices,
demands, and requests that either party is required or elects to give to
the other shall be in writing and shall be governed by the provisions of
Section 12 of the Loan Agreement.
12.10 Termination By Foothill. After termination of the Loan Agreement
and when Foothill has received payment and performance, in full, of all
Obligations, Foothill shall execute and deliver to Debtor a termination of
all of the security interests granted by Debtor hereunder.
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12.11 Integration. This Agreement, together with the other Loan
Documents, reflect the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Rhonda Foreman
---------------------------------------------
Rhonda Foreman
Senior Vice President
EVANS & SUTHERLAND COMPUTER
CORPORATION, a Utah corporation
By: /s/ R. Gaynor
---------------------------------------------
Richard J. Gaynor
Vice President and Chief Financial Officer
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On December 14, 2000, before me, Greta Johnson, personally appeared Rhonda
Foreman and Richard Gaynor, 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.
/s/ Greta Johnson
---------------------------------------------
Notary Public
Greta Johnson
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