Exhibit 10.5
PATENT AND LICENSE SECURITY
AGREEMENT
This PATENT AND LICENSE SECURITY
AGREEMENT (this “ Agreement ”), dated as of
December 22, 2008, is by and between GTC BIOTHERAPEUTICS, INC.
(“ Grantor ”) and GENERAL ELECTRIC CAPITAL
CORPORATION (“ Grantee ”).
W I T N E S
S E T H :
WHEREAS, Grantor and Grantee entered
into that certain Amended and Restated Master Security Agreement,
dated as of December 29, 2006 (as amended as of the date
hereof and as further amended, restated, supplemented or otherwise
modified from time to time, the “ Security Agreement
”);
WHEREAS, Grantor and Grantee desire
to amend the Security Agreement, and have entered or will enter
into that certain Consent and Amendment No. 3 to Amended and
Restated Master Security Agreement dated as of December 22,
2008 (as it may be amended, restated, supplemented or otherwise
modified from time to time, the “ Security Agreement
Amendment ”);
WHEREAS, in order to induce Grantee
to enter into the Security Agreement Amendment and to continue to
make the loans and other credit accommodations as provided for in
the Security Agreement, Grantor has agreed to pledge the Patent
Collateral (as defined below) to Grantee in accordance herewith, in
each case to secure the Indebtedness (as defined in the Security
Agreement); and
WHEREAS, this Agreement is required
by the terms of the Security Agreement Amendment.
NOW, THEREFORE, in consideration of
these premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Defined Terms .
(i) Unless otherwise defined herein,
capitalized terms used herein which are defined in the Security
Agreement shall have the meanings specified in the Security
Agreement.
(ii) The words “hereof”,
“herein”, and “hereunder” and words of like
import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and
Section and schedule references are to this Agreement unless
otherwise specified.
(iii) All terms defined in this
Agreement in the singular shall have comparable meanings when used
in the plural, and vice versa , unless otherwise
specified.
(iv) “ Default ”
means the occurrence of either of the following events:
(a) any default by Grantor under the terms of the Security
Agreement or any other Debt Document; or (b) any Event of
Default.
2. Security Interest in
Patents . As security for prompt payment in full of all of the
Indebtedness, Grantor hereby grants to Grantee a second priority
security interest, having priority over all other security
interests (other than the security interest in favor of LFB (as
defined below)) in all of Grantor’s now owned or existing and
hereafter acquired or arising (collectively, the “ Patent
Collateral ”):
(i) patents and patent applications,
and the inventions and improvements described and claimed therein,
including, without limitation, those patents and patent
applications listed on Schedule A , and (a) the
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (b) all income, royalties,
damages and payments now and hereafter due and/or payable under and
with respect thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and
payments for past or future infringements thereof, and (c) the
right to sue for past, present and future infringements thereof
(all of the foregoing patents and applications, together with the
items described in the foregoing clauses (a)-(c) ,
being sometimes hereinafter individually and/or alone or in
conjunction with the non-US Patents identified in Schedule C
collectively referred to as the “ Patents
”);
(ii) license agreements with any
other party in connection with any Patents or such other
party’s patents or patent applications, whether Grantor is a
licensor or licensee under any such license agreement, including,
but not limited to, the license agreements listed on
Schedule B , and the right upon the occurrence and
during the continuance of a Default to use the foregoing in
connection with the enforcement of the rights of Grantee under the
Security Agreement (all of the foregoing being hereinafter referred
to collectively as the “ Licenses ”).
Notwithstanding the foregoing provisions of this
Section 2 , the Licenses shall not include any license
agreement which by its terms prohibits (which prohibition is
enforceable under applicable law) the grant of the security
interest contemplated by this Agreement for so long as such
prohibition continues; it being understood that upon request
of Grantee, Grantor will in good faith use reasonable efforts to
obtain consent for the creation of a security interest in favor of
Grantee in Grantor’s rights under such license agreement;
and
(iii) Non-US Patents and Licenses,
including, without limitation, those listed on Schedule C
.
3. Restrictions on Future
Agreements . Grantor will not, without Grantee’s prior
written consent, enter into any agreement, including, without
limitation, any license agreement, which is inconsistent with this
Agreement, and Grantor further agrees that it will not take any
action, and will not permit any action to be taken by others
subject to its control, including licensees, or fail to take any
action, which would affect the validity or enforcement of the
rights transferred to Grantee, under this Agreement or any other
Debt Document or the rights associated with those Patents which are
necessary or desirable in the operation of Grantor’s
business.
4. New Patents . Grantor
represents and warrants that the Patents and Licenses listed on
Schedules A , B and C , collectively, include
all of the patents, patent applications now owned by Grantor, and
all license agreements in force as of the date hereof with any
other party in connection with any Patents or such other
party’s patents or patent applications, whether
Grantor
- 2 -
is a licensor or licensee under any such license
agreement. If, prior to the termination of this Agreement, Grantor
shall (i) obtain rights to any new patentable inventions or
license agreements or any patents or patent applications in
connection therewith or (ii) become entitled to the benefit of
any patent, patent application or any reissue, division,
continuation, renewal, extension or continuation-in-part related to
any Patent or any improvement on any Patent, the provisions of
Section 2 shall automatically apply thereto, and Grantor shall
give to Grantee prompt written notice thereof. Grantor hereby
authorizes Grantee to modify this Agreement by (a) amending
Schedules A , B or C , as the case may be, to
include any future patents, patent applications and license
agreements in connection with patents and patent applications that
are Patents or Licenses under Section 2 or under this
Section 4, and (b) filing, in addition to and not in
substitution for, this Agreement, a short form of this Agreement
containing on Schedules A , B or C
thereto, as the case may be, such future patents, patent
applications and license agreements which are Patents or Licenses,
as the case may be, under Section 2 or this Section 4.
Notwithstanding the foregoing, Grantor agrees that Grantee’s
security interest shall extend to all of the collateral listed in
Section 2 and this Section 4, regardless of whether
Grantee actually amends Schedules A , B or C ,
respectively.
5. Royalties . Grantor hereby
agrees that the use by Grantee of the Patents and Licenses as
authorized hereunder shall be coextensive with Grantor’s
rights thereunder and with respect thereto and without any
liability for royalties or other related charges from Grantee to
Grantor.
6. Nature and Continuation of
Grantee’s Security Interest . This Agreement is made for
collateral security purposes only. This Agreement shall create a
continuing security interest in the Patents and the Licenses and
shall remain in full force and effect until the Indebtedness has
been paid in full and the Security Agreement terminated, at such
time the rights granted to Grantee hereunder shall also
terminate.
7. Right to Inspect; Further
Assignments and Security Interests . Grantee shall have the
right, in accordance with the terms and conditions of the Security
Agreement, to inspect the premises of Grantor and to examine the
books, records and operations of Grantor relating to the Patents.
Grantor agrees not to sell or assign its respective interests in,
or grant any license under (other than granting any license in the
ordinary course of business), the Patents without the prior written
consent of Grantee.
8. Duties of Grantor .
Grantor shall have the duty to the extent desirable in the conduct
of Grantor’s business and consistent with Grantor’s
current business practices or Grantor’s reasonable business
judgment: (i) to prosecute diligently any patent application
that is part of the Patents pending as of the date hereof or
thereafter until the termination of this Agreement; (ii) to
make application on such unpatented but patentable inventions as
Grantor deems appropriate; (iii) to take reason
