EXHIBIT 10.4
PATENT AND TRADEMARK SECURITY AGREEMENT
THIS PATENT AND TRADEMARK SECURITY AGREEMENT (the "Agreement"), dated
as of October 23, 1998, is made by and between POORE BROTHERS, INC., a Delaware
corporation, POORE BROTHERS ARIZONA, INC., an Arizona corporation, POORE
BROTHERS DISTRIBUTING, INC., an Arizona corporation, and TEJAS PB DISTRIBUTING,
INC., an Arizona corporation (individually and collectively, the "Debtor"),
whose address and principal place of business is 3500 South La Cometa Drive,
Goodyear, Arizona 85338, and NORWEST BUSINESS CREDIT, INC., a Minnesota
corporation (the "Secured Party"), whose address and principal place of business
is 3300 North Central Avenue, M.S. 9025, Phoenix, Arizona 85012-2501.
RECITALS:
WHEREAS, the Debtor and the Secured Party have entered into a Credit
and Security Agreement of even date herewith (as the same may hereafter be
amended, supplemented or restated from time to time, the "Credit Agreement")
setting forth the terms on which the Secured Party may now or hereafter make
certain loans or other financial accommodations to or for the account of the
Debtor;
WHEREAS, as a further condition to making any loan or other financial
accommodation under the Credit Agreement or otherwise, the Secured Party has
required the execution and delivery of this Agreement by the Debtor;
NOW, THEREFORE, in consideration of the mutual covenants contained in
the Credit Agreement and herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Definitions. All terms defined in the Recitals hereto or in the
Credit Agreement that are not otherwise defined herein shall have the meanings
given to them therein. 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 Credit 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, and including specifically, but not limited to, the Obligations (as
defined in the Credit Agreement).
"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" attached hereto and incorporated herein by this reference.
"Trademarks" means all of the Debtor's right, title and interest in and
to trademarks, service marks, trade dress, collective membership marks, the
respective goodwill associated with each, and licenses thereunder, all as
presently existing or hereafter arising or acquired, including, without
limitation, the marks listed on Exhibit "B" attached hereto and incorporated
herein by this reference.
2. Security Interest. The Debtor hereby irrevocably pledges and assigns
to, and grants the Secured Party a security interest, with power of sale to the
extent permitted by law (the "Security Interest"), in, to and under the Patents
and the Trademarks to secure the prompt payment and performance of the
Obligations.
3. Representations, Warranties and Agreements. The Debtor hereby
represents, warrants and agrees as follows:
(a) Existence; Authority. Each Debtor is a corporation, duly
formed, validly existing and in good standing under the laws of its state of
incorporation and is duly qualified to transact business in each jurisdiction
where the nature of its business requires such qualification. Each Debtor has
the corporate power and corporate authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. This Agreement
has been duly and validly authorized by all necessary action, corporate or
otherwise on behalf of each Debtor. 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 valid, binding and legally
enforceable obligation. The correct names of the Debtor are Poore Brothers,
Inc., Poore Brothers Arizona, Inc., Poore Brothers Distributing, Inc. and Tejas
PB Distributing, Inc. 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 or any other Person.
(b) Patents. Exhibit "A" accurately lists all Patents owned or
controlled by the Debtor as of the date hereof and accurately reflects the
existence and status of registrations pertaining to the Patents as of the date
hereof.
(c) Trademarks. Exhibit "B" accurately lists all Trademarks
owned or controlled by the Debtor as of the date hereof and accurately reflects
the existence and status of Trademarks and all registrations pertaining thereto
as of the date hereof.
(d) Title. 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 and the
Permitted Liens. The Debtor (i) will have, at the time the Debtor acquires any
rights 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 the Permitted Liens, and (ii)
will keep all Patents and Trademarks free and clear of all security interests,
liens and encumbrances except the Security Interest and the Permitted Liens.
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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.
(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.
(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 and
all affidavits and renewals possible with respect to issued registrations. 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, nor fail to file any
required affidavit in support thereof, without first providing the Secured
Party: (i) sufficient written notice, as provided in the Credit Agreement, to
allow the Secured Party to timely pay any such maintenance fees or annuity 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, 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.
(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 after any notice
required pursuant to subsection (h), 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,
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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 termination of the Credit Agreement as provided therein and
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 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) an Event of Default, as defined in the Credit Agreement, shall
occur; or (b) the Debtor shall fail promptly 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 false or misleading
in any material respect when made.
6. Remedies. Upon the occurrence of, and during the continuation of any
Event of Default, Secured Party may, without notice (except as set forth in the
Credit Agreement) or demand upon Debtor, declare any part or all of the
Obligations immediately due and payable and Secured Party shall have the
following rights and remedies, to the extent permitted by applicable law, in
addition to all other rights and remedies of a secured party under the UCC:
(a) The Secured Party may exercise any or all remedies
available under the Credit 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 Secured Party shall commence any suit for
such enforcement, the Debtor shall, at the request of Secured Party, do any and
all lawful acts and execute any and all proper documents required by Secured
Party in aid of such enforcement.
(d) The Secured Party may transfer to or register in the name
or Secured Party or any of its nominees all or any of the Patents and
Trademarks.
(e) The Secured Party may exercise any and all rights of
collection, conversion and exchange and any and all other rights, privileges,
options or powers of Debtor pertaining or relating to the Patents and
Trademarks, as though Secured Party were the absolute owner thereof.
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(f) The Secured Party may collect and receive any payments,
license fees, royalties, dividends or distributions of any kind whatsoever with
respect to the Patents and Trademarks and apply the same in satisfaction of the
Obligations.
(g) The Secured Party may sell all or any of the Patents and
Trademarks, either at public auction or private sale, with or without demand for
performance or advertisement of the time or place of sale or the adjournment
thereof or otherwise, and deliver the Patents and Trademarks sold to the
purchaser or purchasers, without right of redemption (all of which are hereby
waived by Debtor), for cash, credit or other property, for immediate or future
delivery, and for such price and on such terms as Secured Party in its sole
discretion may determine. Secured Party reserves the right to reject any and all
bids at any auction or sale which, in its discretion, it shall deem inadequate.
At any auction or sale, Secured Party may bid for and purchase, free from any
right of equity or redemption (which are hereby waived by Debtor, to the extent
permitted by law), any of the Patents and Trademarks that are offered for sale
and Secured Party, upon compliance with the terms of sale, may hold, retain and
dispose of the purchased Patents and Trademarks without further accountability
therefor.
In the event that Secured Party has and exercises remedies under the UCC
pursuant to and in accordance with the terms of this Section 6, any notice of
sale required by law shall be deemed "commercially reasonable" if such notice is
given at least ten (10) days prior to the time of such sale. Secured Party shall
not have any duty to exercise any of the rights, privileges, options or powers
conferred on Secured Party under this Agreement or to sell or otherwise dispose
of the Patents and Trademarks and shall not be responsible for any failure or
delay in so doing.
7. Miscellaneous. 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 right or remedy.
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 the State of
Arizona, without regard to its 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
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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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IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed this Patent and Trademark
Security Agreement as of the date written above.
SECURED PARTY:
NORWEST BUSINESS CREDIT, INC.,
a Minnesota corporation
By:____________________________
Name: Darcy Della Flora
Title: Vice President
DEBTOR:
POORE BROTHERS, INC.,
a Delaware corporation
By:____________________________
Name: Thomas W. Freeze
Title: Vice President
POORE BROTHERS ARIZONA, INC.,
an Arizona corporation
By:____________________________
Name: Thomas W. Freeze
Title: Vice President
POORE BROTHERS DISTRIBUTING,
INC., an Arizona corporation
By:____________________________
Name: Thomas W. Freeze
Title: Vice President
TEJAS PB DISTRIBUTING, INC., an
Arizona corporation
By:____________________________
Name: Thomas W. Freeze
Title: Vice President
_______________________________
Witness
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STATE OF ARIZONA )
)
County Of Maricopa )
The foregoing instrument was acknowledged before me this __
day of November, 1998 by Thomas W. Freeze, the Vice President of POORE BROTHERS,
INC., a Delaware corporation, on behalf of the corporation.
________________________________
Notary Public
Commission Expiration Date:
___________________________
STATE OF ARIZONA )
)
County Of Maricopa )
The foregoing instrument was acknowledged before me this __
day of November, 1998 by Thomas W. Freeze, the Vice President of POORE BROTHERS
ARIZONA, INC., an Arizona corporation, on behalf of the corporation.
________________________________
Notary Public
Commission Expiration Date:
___________________________
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STATE OF ARIZONA )
)
County Of Maricopa )
The foregoing instrument was acknowledged before me this __
day of November, 1998 by Thomas W. Freeze, the Vice President of POORE BROTHERS
DISTRIBUTING, INC., an Arizona corporation, on behalf of the corporation.
________________________________
Notary Public
Commission Expiration Date:
__________________________
STATE OF ARIZONA )
)
County Of Maricopa )
The foregoing instrument was acknowledged before me this __
day of November, 1998 by Thomas W. Freeze, the Vice President of TEJAS PB
DISTRIBUTING, INC., an Arizona corporation, on behalf of the corporation.
________________________________
Notary Public
Commission Expiration Date:
__________________________
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STATE OF ARIZONA )
)
County Of Maricopa )
The foregoing instrument was acknowledged before me this __
day of November, 1998 by Darcy Della Flora, a Vice President of NORWEST BUSINESS
CREDIT, INC., a Minnesota corporation, on behalf of the corporation.
________________________________
Notary Public
Commission Expiration Date:
__________________________
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EXHIBIT A
---------
UNITED STATES ISSUED PATENTS
----------------------------
Title Patent Number Issue Date
----- ------------- ----------
FOREIGN ISSUED PATENTS
----------------------
Title Country Patent Number Issue Date
----- ------- ------------- ----------
EXHIBIT B
---------
UNITED STATES TRADEMARK APPLICATIONS,
-------------------------------------
ISSUED TRADEMARKS, AND SERVICE MARKS
------------------------------------
REGISTRATIONS
-------------
Mark Registration Number Registration Date
---- ------------------- -----------------
[GRAPHIC OMITTED]
1,911,595 August 15, 1995
[GRAPHIC OMITTED]
1,911,595 August 15, 1995
POORE BROTHERS 2,117,466 December 2, 1997
IF WE DIDN'T TELL YOU - YOU
WOULDN'T KNOW! 2,137,865 February 17, 1998
TEXAS STYLE (and logo) 1,453,343 February 14, 1991
TEXAS STYLE 1,467,561 February 14, 1991
APPLICATIONS
------------
Mark Mark Type Application Serial Number File Date
---- --------- ----------- ------------- ---------
Case No.
--------
AN INTENSELY DIFFERENT TASTE Trademark 4927.34 75/455,988 March 24, 1998
3