Patent and Trademark Security Agreement - Select Comfort Corp., Select Comfort Retail Corp., Select Comfort Direct Corp. Select Comfort SC Corp., Direct Call Centers Inc., Selectcomfort.com Corp. and Medallion Capital Inc.
PATENT AND TRADEMARK SECURITY AGREEMENT
This Patent and Trademark Security Agreement is entered into as of
September 28, 2001 by and among each of SELECT COMFORT CORPORATION, a Minnesota
corporation (the "Company"), AND SELECT COMFORT RETAIL CORPORATION, SELECT
COMFORT DIRECT CORPORATION, SELECT COMFORT SC CORPORATION, DIRECT CALL CENTERS,
INC., AND SELECTCOMFORT.COM CORPORATION, all of which are Minnesota
corporations, (the "Subsidiaries") (the Company and the Subsidiaries being
individually and collectively referred to herein as "Debtor"), and MEDALLION
CAPITAL, INC. ("Secured Party").
Whereas, the execution and delivery of this Agreement is a condition to the
Secured Party extending credit to Debtor;
Now, therefore, each Debtor jointly and severally agrees with Secured Party
as follows:
1. DEFINITIONS. All terms defined in the Loan Agreement of even date
herewith between the Debtor and Secured Party (the "Loan Agreement") which are
not otherwise defined herein shall have the meanings stated in the Loan
Agreement. In addition, the following terms have the meanings set forth below:
"Obligations" means each and every debt, liability and obligation of every
type and description arising under or in connection with any Loan Document (as
defined in the Loan Agreement) which the Debtor may now or at any time hereafter
owe to the Secured Party, whether such debt, liability or obligation now exists
or is hereafter created or incurred and whether it is or may be direct or
indirect, due or to become due, absolute or contingent, primary or secondary,
liquidated or unliquidated, independent, joint, several or joint and several.
"Patents" means all of the Debtor's right, title and interest in and to
patents or applications for patents, fees or royalties with respect to each, and
including without limitation the right to sue for past infringement and damages
therefor, and licenses thereunder, all as presently existing or hereafter
arising or acquired, including without limitation the patents listed on Exhibit
A and any divisions, continuations, continuations-in-part, reissues or
corresponding foreign patents and patent applications.
"Trademarks" means all of the Debtor's right, title and interest in and to
trademarks, service marks, collective membership marks, any registrations or
applications for registration therefor, together with the respective goodwill
associated with each, fees or royalties with respect to each, including without
limitation the right to sue for past infringement and damages therefor, and
licenses thereunder, all as presently existing or hereafter arising or acquired,
including, without limitation, the marks listed on Exhibit B and any divisions
or renewals thereof or corresponding foreign trademark registrations and
applications.
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2. SECURITY INTEREST. The Debtor hereby irrevocably pledges and assigns to,
and grants to the Secured Party a security interest, with power of sale to the
extent permitted by law, (the "Security Interest") in the Patents and in the
Trademarks to secure payment and performance of the Obligations. As set forth in
greater detail in the Security Agreement, the Security Interest in the
Trademarks is coupled with a security interest in substantially all of the
assets (without regard to real property) of the Debtor.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Debtor hereby
represents, warrants and agrees as follows:
(a) EXISTENCE, AUTHORITY. The Debtor is a corporation, having full
power to and authority to make and deliver this Agreement. The execution,
delivery and performance of this Agreement by the Debtor have been duly
authorized by all necessary action of the Debtor's board of directors, and
if necessary its stockholders, and do not and will not violate the
provisions of, or constitute a default under, any presently applicable law
or its articles of incorporation or bylaws or any agreement presently
binding on it. This Agreement has been duly executed and delivered by the
Debtor and constitutes the Debtor's lawful, binding and legally enforceable
obligation. The correct legal name of the Debtor is as set forth at the
beginning of this Agreement. Except for any financing statement required to
be filed under the applicable Uniform Commercial Code (the "UCC") and any
filing or recording of this Agreement in the U.S. Patent and Trademark
Office, the authorization, execution, delivery and performance of this
Agreement do not require notification to, registration with, or consent or
approval by, any federal, state or local regulatory body or administrative
agency.
(b) PATENTS. All of the Patents identified in Exhibit A are owned or
controlled by the Debtor as of the date hereof and the information in
Exhibit A accurately reflects the existence and status of the Patents
listed therein as of the date hereof.
(c) TRADEMARKS. All of the Trademarks identified in Exhibit B are
owned or controlled by the Debtor as of the date hereof and the information
in Exhibit B accurately reflects the existence and status of Trademarks
listed therein as of the date hereof.
(d) TITLE. Except as set forth in Exhibit C, the Debtor has absolute
title to each Patent and each Trademark listed on Exhibits A and B, free
and clear of all security interests, liens and encumbrances, except the
Security Interest. Except as set forth in Exhibit C, the Debtor (i) will
have, at the time the Debtor acquires ownership in Patents or Trademarks
hereafter arising, absolute title to each such Patent or Trademark, free
and clear of all security interests, liens and encumbrances, except the
Security Interest, and (ii) except for licenses entered into hereafter in
the ordinary course of business for fair consideration and which do not
cause material harm to the Secured Party as holder of the Note, will keep
all Patents and Trademarks free and clear of all security interests, liens
and encumbrances except the Security Interest.
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(e) NO SALE. The Debtor will not sell or otherwise dispose of the
Patents or Trademarks, or any interest therein, without the Secured Party's
prior written consent, except (i) as permitted in Section 3(d)(ii) above,
and (ii) sale or disposition of Patents or Trademarks that provide no
material continuing benefit to Debtor.
(f) DEFENSE. The Debtor will at its own expense, and using its best
efforts, protect and defend the Patents and Trademarks against all claims
or demands of all persons other than the Secured Party, which would cause
material harm to the Secured Party.
(g) MAINTENANCE. The Debtor will at its own expense maintain the
Patents and the Trademarks to the extent reasonably advisable in its
business including, but not limited to, filing all applications to register
or obtain letters patent, file all affidavits and renewals, and pay all
annuities and maintenance fees possible with respect to issued
registrations and letters patent. The Debtor covenants that it will not
abandon nor fail to pay any maintenance fee or annuity due and payable on
any Patent or Trademark (except for those that provide no material
continuing benefit to Debtor), nor fail to file any required affidavit in
support thereof, without first providing the Secured Party: (i) sufficient
written notice to allow the Secured Party to timely pay any such
maintenance fees or annuity or take such other action which may become due
on any of said Patents or Trademarks, or to file any affidavit with respect
thereto, and (ii) a separate written power of attorney or other
authorization to pay such maintenance fees or annuities, or to file such
affidavit, or take such other action, should such be necessary or
desirable.
(h) SECURED PARTY'S RIGHT TO TAKE ACTION. If the Debtor fails to
perform or observe any of its covenants or agreements set forth in this
Section 3, and if such failure continues for a period of ten (10) calendar
days after the Secured Party gives the Debtor written notice thereof (or,
in the case of the agreements contained in subsection (g), immediately upon
the occurrence of such failure, without notice or lapse of time), or if the
Debtor notifies the Secured Party that it intends to abandon a Patent or
Trademark, the Secured Party may (but need not) perform or observe such
covenant or agreement on behalf and in the name, place and stead of the
Debtor (or, at the Secured Party's option, in the Secured Party's own name)
and may (but need not) take any and all other actions which the Secured
Party may reasonably deem necessary to cure or correct such failure.
(i) COSTS AND EXPENSES. Except to the extent that the effect of such
payment would be to render any loan or forbearance of money usurious or
otherwise illegal under any applicable law, the Debtor shall pay the
Secured Party on demand the amount of all moneys expended and all costs and
expenses (including reasonable attorneys' fees) incurred by the Secured
Party in connection with or as a result of the Secured Party's taking
action under subsection (h) or exercising its rights under Section 6,
together with interest thereon from the date expended or incurred by the
Secured Party at the highest rate then applicable to any of the
Obligations.
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(j) POWER OF ATTORNEY. To facilitate the Secured Party's taking action
under subsection (h) and exercising its rights under Section 6, the Debtor
hereby irrevocably appoints (which appointment is coupled with an interest)
the Secured Party, or its delegate, as the attorney-in-fact of the Debtor
with the right (but not the duty) from time to time to create, prepare,
complete, execute, deliver, endorse or file, in the name and on behalf of
the Debtor, any and all instruments, documents, applications, financing
statements, and other agreements and writings required to be obtained,
executed, delivered or endorsed by the Debtor under this Section 3, or,
necessary for the Secured Party, after an Event of Default, to enforce or
use the Patents or Trademarks or to grant or issue any exclusive or
non-exclusive license under the Patents or Trademarks to any third party,
or to sell, assign, transfer, pledge, encumber or otherwise transfer title
in or dispose of the Patents or Trademarks to any third party. The Debtor
hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof. The power of attorney granted herein shall terminate
upon the payment and performance of all Obligations.
4. DEBTOR'S-USE OF THE PATENTS AND TRADEMARKS. The Debtor shall be
permitted to control and manage the Patents and Trademarks, including the right
to exclude others from making, using or selling items covered by the Patents and
Trademarks and any licenses thereunder, in the same manner and with the same
effect as if this Agreement had not been entered into, so long as no Event of
Default occurs and remains unwaived or uncured.
5. EVENTS OF DEFAULT. Each of the following occurrences shall constitute an
event of default under this Agreement (herein called "Event of Default"): (a) a
Default, as defined in the Loan Agreement, shall occur; or (b) the Debtor shall
fail promptly (including any applicable grace period) to observe or perform any
covenant or agreement herein binding on it; or (c) any of the representations or
warranties contained in Section 3 shall prove to have been incorrect in any
material respect when made.
6. REMEDIES. Upon the occurrence of an Event of Default and at any time
thereafter during its continuance, the Secured Party may, at its option, take
any or all of the following actions:
(a) The Secured Party may exercise any or all remedies available under
the Loan Agreement.
(b) The Secured Party may sell, assign, transfer, pledge, encumber or
otherwise dispose of the Patents and Trademarks.
(c) The Secured Party may enforce the Patents and Trademarks and any
licenses thereunder, and if the Secured Party shall commence any suit for
such enforcement, the Debtor shall, at the request of the Secured Party, do
any and all lawful acts and execute any and all proper documents required
by the Secured Party in aid of such enforcement.
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7. MISCELLANEOUS. This Agreement and Secured Party's rights under this
Agreement or under applicable law may be enforced by Secured Party, at its
discretion, against any one or more of the parties referred to above which are
encompassed within the term Debtor, without any need to bring any enforcement
action against the other parties who are encompassed within the term Debtor.
This Agreement has been duly and validly authorized by all necessary action,
corporate or otherwise. This Agreement can be waived, modified, amended,
terminated or discharged, and the Security Interest can be released, only
explicitly in a writing signed by the Secured Party. A waiver signed by the
Secured Party shall be effective only in the specific instance and for the
specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any of the Secured Party's rights or remedies. All
rights and remedies of the Secured Party shall be cumulative and may be
exercised singularly or concurrently, at the Secured Party's option, and the
exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other. The Secured Party
shall not be obligated to preserve any rights the Debtor may have against prior
parties, to realize on the Patents and Trademarks at all or in any particular
manner or order, or to apply any cash proceeds of Patents and Trademarks in any
particular order of application. This Agreement shall be binding upon and inure
to the benefit of the Debtor and the Secured Party and their respective
participants, successors and assigns and shall take effect when signed by the
Debtor and delivered to the Secured Party, and the Debtor waives notice of the
Secured Party's acceptance hereof. The Secured Party may execute this Agreement
if appropriate for the purpose of filing, but the failure of the Secured Party
to execute this Agreement shall not affect or impair the validity or
effectiveness of this Agreement. A carbon, photographic or other reproduction of
this Agreement or of any financing statement signed by the Debtor shall have the
same force and effect as the original for all purposes of a financing statement.
This Agreement shall be governed by the internal law of Minnesota without regard
to conflicts of law provisions. If any provision or application of this
Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can be
given effect and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained herein or
prescribed hereby. All representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Obligations.
THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BASED ON OR PERTAINING TO THIS AGREEMENT.
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In Witness Whereof, the parties have executed this Patent and Trademark
Security Agreement as of the date first written above.
SELECT COMFORT CORPORATION MEDALLION CAPITAL, INC.
By: /s/ Mark A. Kimball By: /s/ Dean R. Pickerell
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Mark A. Kimball, Senior Vice President Dean R. Pickerell, Executive Vice President
SELECT COMFORT RETAIL CORPORATION
By: /s/ Mark A. Kimball
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Mark A. Kimball, Senior Vice President
SELECT COMFORT DIRECT CORPORATION
By: /s/ Mark A. Kimball
------------------------------------------
Mark A. Kimball, Senior Vice President
SELECT COMFORT SC CORPORATION
By: /s/ Mark A. Kimball
------------------------------------------
Mark A. Kimball, Senior Vice President
DIRECT CALL CENTERS, INC.
By: /s/ Mark A. Kimball
------------------------------------------
Mark A. Kimball, Senior Vice President
SELECTCOMFORT.COM CORPORATION
By: /s/ Mark A. Kimball
------------------------------------------
Mark A. Kimball, Senior Vice President
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STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 28th day of
September, 2001, by Mark A. Kimball, the Senior Vice President of each of the
foregoing Minnesota corporations, on behalf of each such corporation.
/s/ Laura L. Krenz
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Notary Public
STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 28th day of
September, 2001, by Dean R. Pickerell, the Executive Vice President of Medallion
Capital, Inc.
/s/ Laura L. Krenz
----------------------------------
Notary Public
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