TRADEMARK AND PATENT SECURITY AGREEMENT
THIS TRADEMARK AND PATENT SECURITY AGREEMENT (the "Agreement") is made as
of the 8th day of October, 2003, between MERRIMAC INDUSTRIES, INC., having an
office at 00 Xxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, XX 00000 ("BORROWER"), and THE CIT
GROUP/BUSINESS CREDIT, INC., having an office at 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("LENDER").
1. SECURITY INTEREST.
WHEREAS, Borrower has adopted, used and is using, and is the owner of the
entire right, title, and interest in and to the trademarks, trade names, service
marks, designs, registrations and applications therefor described in Schedule A
annexed hereto, and the patents and applications therefor described in Schedule
B annexed hereto and made a part hereof; and
WHEREAS, Lender has agreed to enter into or has entered into financing
arrangements, pursuant to a Financing Agreement (the "FINANCING AGREEMENT"), and
Term Loan Promissory Note A (as defined in the Financing Agreement) and the Term
Loan Promissory Note B (as defined in the Financing Agreement) (all of the
foregoing, together with this Agreement, and all other related documents,
agreements, instruments or notes, as the same may now exist or may hereafter be
amended or supplemented, are collectively referred to herein as the
"AGREEMENTS").
NOW, THEREFORE, in order to induce Lender to enter into the Agreements and
in consideration thereof, Borrower hereby grants to Lender a security interest
in: (a) all of Borrower's now existing or hereafter acquired right, title, and
interest in and to: all of Borrower's trademarks, trade names, and service
marks, and all designs and general intangibles of a like nature, now existing or
hereafter adopted or acquired; all applications, registrations and recordings
relating to the foregoing in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any state thereof, any
political subdivision thereof or in any other countries, all whether now owned
or hereafter acquired by Borrower, and all reissues, extensions and renewals and
licenses thereof, including, but not limited to, those trademarks, service
marks, designs and applications described in Schedule A annexed hereto and made
a part hereof (collectively, the "TRADEMARKS"); (b) the goodwill of the business
symbolized by each of the Trademarks, including, without limitation, all
customer lists and other records relating to the distribution of products or
services bearing the Trademarks; (c) all of Borrower's now existing or hereafter
acquired right, title and interest in and to: all of Borrower's interests in any
patents; all applications, registrations and recordings relating to such patents
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state thereof, any political subdivision
thereof or in any other countries and all reissues, continuations,
continuations-in-part, extensions and renewals and licenses thereof, including,
without limitation, those patents, applications, registrations and recordings
described in Schedule B annexed hereto and made a part hereof (collectively, the
"PATENTS"); and (d) any and all proceeds of any of the foregoing, including,
without limitation, any claims by Borrower against third parties for
infringement of the Trademarks, Patents or any licenses with respect thereto
(all of the foregoing are collectively referred to herein as the "COLLATERAL").
2. OBLIGATIONS SECURED.
The security interests granted to Lender in this Agreement shall secure the
prompt and indefeasible payment and performance of all now existing and future
obligations, liabilities and indebtedness of Borrower to Lender of every kind,
nature and description, direct or indirect, absolute or contingent, whether
arising under this Agreement, the other Agreements, or any other agreement,
document or instrument or by operation of law or otherwise, including, without
limitation, "Obligations" as defined in the Financing Agreement (all the
foregoing hereinafter collectively referred to as "OBLIGATIONS").
3. WARRANTIES AND COVENANTS.
Borrower hereby covenants, represents and warrants that (all of such
covenants, representations and warranties being continuing in nature so long as
any of the Obligations are outstanding):
A. Borrower will pay and perform all of the Obligations according to their
terms.
B. All of the existing and hereafter acquired (i) trademark registrations
and applications described or required to be described in Schedule A and (ii)
letters patent and patent applications described or required to be described in
Schedule B are, to Borrower's knowledge, and shall remain, valid and subsisting
in full force and effect, and Borrower owns and will remain the owner of sole,
full, and clear title thereto, and has and will have the right and power to make
the assignment and grant the security interests granted hereunder. Borrower
will, at Borrower's expense, perform all acts and execute all documents
necessary to maintain valid and subsisting U.S. (or foreign, as applicable)
registration of all trademarks which are then in use in commerce and U.S.
patents (or foreign patents, as applicable) for all inventions which are then in
use, including, without limitation, the filing of any use affidavits, renewal
affidavits and applications and other maintenance filings. The Collateral is not
subject to any liens, claims, mortgages, assignments, licenses, security
interests, or encumbrances of any nature whatsoever except the security
interests granted hereunder, and the licenses, if any, which are specifically
described in Schedule C hereto.
C. Other than as provided in the last sentence of Section 3B hereof,
Borrower will not assign, sell, mortgage, lease, transfer, pledge, hypothecate,
grant a security interest in or lien upon, encumber, or grant an exclusive or
non-exclusive license relating to the Collateral, except to Lender, or otherwise
dispose of any of the Collateral without the prior written consent of Lender;
provided, however, that with respect solely to the granting of an exclusive or
non-exclusive license relating to the Collateral, such consent will not be
unreasonably withheld.
D. Borrower will, at Borrower's expense, perform all acts and execute all
documents, including, without limitation, security agreements in form suitable
for filing with the United States Patent and Trademark Office substantially in
the form of Exhibits 1 and 2 hereof, requested at any time by Lender to
evidence, perfect, maintain, record, or enforce the security interest in the
Collateral granted hereunder or to otherwise further the provisions of this
Agreement. Borrower hereby authorizes Lender to execute and file one or more
financing statements (or similar documents) with respect to the Collateral
signed only by Lender. Borrower further authorizes Lender, at Borrower's
expense, to have this or any other similar security agreement filed with the
Commissioner of Patents and Trademarks or other appropriate federal, state or
government office or similar office of any other country or political
subdivision thereof, and Borrower shall execute such documents, and take such
further actions as Lender may request to facilitate the terms and provisions of
this section.
E. Borrower will, concurrently with the execution and delivery of this
Agreement, execute and deliver to Lender five (5) originals of a Power of
Attorney in the form of Exhibit 3 annexed hereto for the implementation of the
assignment, sale or other disposition of the Collateral pursuant to Lender's
exercise of the rights and remedies granted to Lender hereunder, subject to any
applicable Government Limitations (as defined in the Financing Agreement).
Borrower hereby releases Lender from any claims, causes of action and demands at
any time arising out of or with respect to any actions taken or omitted to be
taken by Lender under the powers of attorney granted herein, other than actions
taken or omitted to be taken through the gross negligence or willful misconduct
of Lender; provided however, Lender's decision not to take any action or
exercise its remedies hereunder shall not constitute gross negligence or willful
misconduct.
F. Lender may, in its sole discretion, pay any amount or do any act which
Borrower fails to pay or do as required hereunder or as requested by Lender to
maintain and preserve the Collateral, defend, protect, record, amend or enforce
the Obligations, the Collateral, or the security interest granted hereunder,
including, but not limited to, paying all filing or recording fees, court costs,
collection charges and reasonable attorneys' fees. Borrower will be liable to
Lender for any such payment, which payment shall be deemed a borrowing by
Borrower
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from Lender, and shall be payable on demand together with interest at the
default rate of interest set forth in the Financing Agreement and shall be part
of the Obligations secured hereby.
G. As of the date hereof, Borrower does not own any Trademarks or Patents
or have any Trademarks or Patents registered, or subject to pending
applications, in the United States Patent and Trademark Office or any similar
office or agency in the United States or any other country or any political
subdivision thereof other than those described in Schedules A and B annexed
hereto.
H. Borrower shall notify Lender in writing of (i) the filing of any
application for the registration of a Trademark or Patent with the United States
Patent and Trademark Office or any similar office or agency in the United
States, any state therein or any other country or any political subdivision
thereof and (ii) the filing of any assignment of any Patent or Trademark that
Borrower may acquire from a third party with the United States Patent and
Trademark Office or any similar office or agency in the United States, any state
therein or any other country or political subdivision thereof, within thirty
(30) days of such filing. Upon request of Lender, Borrower shall execute and
deliver to Lender any and all assignments, agreements, instruments, documents,
and such other papers as may be requested by Lender to evidence the security
interests of Lender in such Trademark or Patent, and Borrower hereby constitutes
Lender its attorney-in-fact to execute and file all such writings for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Obligations are paid in full.
I. Borrower has not abandoned any of the Trademarks or Patents set forth on
the Schedules hereto. Except to the extent that Lender, upon prior written
notice of Borrower, shall consent, Borrower (either itself or through licensees)
will continue to use the Trademarks on each and every trademark, class of goods,
and services applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain the Trademarks in full
force, free from any claim of abandonment for nonuse, and Borrower will not (and
will not permit any licensee to) do any act, nor omit to do any act, whereby the
Trademarks or Patents may become abandoned, canceled, invalidated,
unenforceable, avoided, or avoidable. Except to the extent that Lender, upon
prior written notice by Borrower, shall consent, Borrower will not (and will not
permit any licensee to) do any act, or omit to do any act, whereby the Patents
may become abandoned or dedicated. Borrower shall notify Lender immediately if
Borrower knows or has reason to know of any reason why any application,
registration, or recording of any Trademark or Patent may become abandoned,
dedicated, canceled, invalidated, unenforceable, avoided, or avoidable.
J. Borrower will take all necessary steps and render any assistance, as
Lender may determine is necessary, to Lender in any proceeding before the United
States Patent and Trademark Office, any federal or state court, or any similar
office or agency in the United States or any state therein or any other country
to maintain such application and registration of the Trademarks or Patents as
Borrower's exclusive property and to protect Lender's interest therein,
including, without limitation, filing of renewals, affidavits of use, affidavits
of incontestability and opposition, interference, and cancellation proceedings
(except to the extent that dedication, abandonment or invalidation is permitted
under subparagraph 3I hereof).
K. Borrower will promptly notify Lender if Borrower (or any affiliate or
subsidiary thereof) learns of any use by any person of any term or design likely
to cause confusion with any Trademark or of any use by any person of any other
process or product which infringes upon any Patent or Trademark. If requested by
Lender, Borrower, at Borrower's expense, shall take such action, or shall join
with Lender in such action as Lender, in Lender's discretion, may deem advisable
for the protection of Lender's interest in and to the Trademarks or Patents.
L. Borrower assumes all responsibility and liability arising from the use
of the Trademarks or Patents, and Borrower hereby indemnifies and holds Lender
harmless from and against any claim, suit, loss, damage, or expense (including
reasonable attorneys' fees) arising out of any alleged defect in any product
manufactured, promoted, or sold by Borrower (or any affiliate or subsidiary
thereof) in connection with any Trademark and Patent or out of the manufacture,
promotion, labeling, sale or advertisement of any such product by Borrower (or
any affiliate or subsidiary thereof). Borrower agrees that Lender does not
assume, and shall have no responsibility for, the payment of any sums due or to
become due under any agreement or contract included in the
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Collateral or the performance of any obligations to be performed under or with
respect to any such agreement or contract by Borrower, and Borrower hereby
agrees to indemnify and hold Lender harmless with respect to any and all claims
by any person relating thereto.
M. In any action or proceeding instituted by Lender in connection with any
matters arising at any time out of or with respect to this Agreement, Borrower
will not interpose any counterclaim of any nature other than compulsory
counterclaims.
N. Prior to an Event of Default, Lender hereby acknowledges Borrower's
exclusive nontransferable right to use the Trademarks and the goodwill of the
business symbolized by the marks for Borrower's own benefit. Borrower will
maintain the quality of the products and services associated with the Trademarks
at a level consistent with the quality at the time of this Agreement, other than
in the ordinary course of business consistent with past practice. Borrower will
not change the quality of the products or services associated with the
Trademarks without the Lender's prior written consent. Borrower hereby grants to
Lender the right to visit Borrower's plant and facilities which manufacture or
store products sold under any of the Trademarks and to inspect the products and
quality-control records relating thereto at any time during regular business
hours, or at such other times as Lender may reasonably request.
4. EVENTS OF DEFAULT.
All Obligations shall, at Lender's option, become immediately due and
payable without notice of demand upon the occurrence of any of the following
events of default ("Events of Default"):
A. Borrower fails to pay or perform any Obligations when due, subject to
any applicable cure periods related thereto which are contained in the Financing
Agreement.
B. Borrower defaults in the observance or performance of any agreements,
covenants or conditions contained herein or in any of the Agreements or in any
other document or instrument referred to herein or therein, subject to any
applicable cure periods related thereto which are contained in the Financing
Agreement.
C. Any present or future representation or warranty made by or on behalf of
the Borrower, whether contained herein or in any of the other Agreements or in
any other document or instrument referred to herein or therein in connection
with any of the transactions contemplated herein or therein, shall be false or
incorrect in any material respect, subject to any applicable cure periods
related thereto which are contained in the Financing Agreement.
D. An "Event of Default" shall occur under the Financing Agreement
5. RIGHTS AND REMEDIES.
Upon the occurrence of any such Event of Default and at any time thereafter
until such time as it has been waived in writing by Lender, in addition to all
other rights and remedies of Lender, whether provided under law, the Agreements
or otherwise, and after expiration of any grace period, Lender shall have the
following rights and remedies which may be exercised without notice to, or
consent by, Borrower except as such notice or consent is expressly provided for
hereunder:
A. Lender may require that neither Borrower nor any affiliate or subsidiary
of Borrower make any use of the Trademarks or any marks similar thereto or any
Patent for any purpose whatsoever. Subject to any applicable Government
Limitations, Lender may make use of any Trademarks or Patents for the sale of
goods, or rendering of services in connection with enforcing any other security
interest granted to Lender by Borrower or any subsidiary of Borrower.
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B. Subject to any applicable Government Limitations, Lender may, at any
time and from time to time, grant such license or licenses relating to the
Collateral for such term or terms, on such conditions, and in such manner, as
Lender shall in its sole discretion deem appropriate. Such license or licenses
may be general, special, or otherwise, and may be granted on an exclusive or
non-exclusive basis throughout all or any part of the United States of America,
its territories and possessions, and all foreign countries.
C. Subject to any applicable Government Limitations, Lender may assign,
sell, or otherwise dispose of the Collateral or any part thereof, either with or
without special conditions or stipulations, except that Lender agrees to provide
Borrower with ten (10) days prior written notice of any proposed disposition of
the Collateral. Lender shall have the power to buy the Collateral or any part
thereof, and Lender shall also have the power to execute assurances and perform
all other acts, which Lender may, in Lender's sole discretion, deem appropriate
or proper to complete such assignment, sale or disposition. In any such event,
Borrower shall be liable for any deficiency.
D. In addition to the foregoing, in order to implement the assignment,
sale, or other disposition of any of the Collateral pursuant to subparagraph 5C
hereof, Lender may at any time execute and deliver on behalf of Borrower,
pursuant to the authority granted in the Powers of Attorney described in
subparagraph 3E hereof, one or more instruments of assignment of the Trademarks
or Patents (or any application, registration, or recording relating thereto), in
form suitable for filing, recording or registration. Borrower agrees to pay
Lender on demand all costs incurred in any such transfer of the Collateral,
including, but not limited to, any taxes, fees, attorneys' fees, together with
interest thereon at the default rate of interest provided in the Financing
Agreement.
E. Lender may apply the proceeds actually received from any such license,
assignment, sale, or other disposition of Collateral first to the reasonable
costs and expenses thereof, including, without limitation, reasonable attorneys'
fees and all legal, travel, and other expenses which may be incurred by Lender.
Thereafter, Lender may apply any remaining proceeds to such of the Obligations
as Lender may in its sole discretion determine. Borrower shall remain liable to
Lender for any expenses or obligations remaining unpaid after the application of
such proceeds, and Borrower will pay Lender on demand any such unpaid amount,
together with interest thereon at the default rate of interest provided in the
Financing Agreement.
F. In the event that any such license, assignment, sale or disposition of
the Collateral (or any part thereof) is made after the occurrence of an Event of
Default, Borrower shall, subject to any applicable Government Limitations,
supply to Lender or Lender's designee Borrower's knowledge and expertise
relating to the manufacture and sale of the products and services bearing the
Trademarks or to which the Patents relate and Borrower's customer lists and
other records relating to the Trademarks and Patents and the distribution
thereof.
G. Lender may (without assuming any obligations or liability thereunder),
at any time, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of Borrower in, to and under any
one or more license agreements with respect to the Collateral, and take or
refrain from taking any action with respect thereto, and Borrower hereby
releases Lender from, and agrees to hold Lender free and harmless from and
against any claims arising out of, or any action taken or omitted to be taken
with respect to, any such license agreement.
H. Nothing contained in this Agreement shall be construed as requiring
Lender to take any of the actions or exercise any of the rights and remedies
referenced herein at any time. All of Lender's rights and remedies, whether
provided under law, the Agreements, this Agreement, or otherwise, shall be
cumulative and none is exclusive. Such rights and remedies may be enforced
alternatively, successively, or concurrently.
6. MISCELLANEOUS.
A. Any failure or delay by Lender to require strict performance by Borrower
of any of the provisions, warranties, terms and conditions contained herein or
in any other agreement, document, or instrument, shall not affect Lender's right
to demand strict compliance and performance therewith, and any waiver of any
default shall not waive or affect any other default, whether prior or subsequent
thereto, and whether of the same or
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of a different type. None of the warranties, conditions, provisions, and terms
contained herein or in any other agreement, document, or instrument shall be
deemed to have been waived by any act or knowledge of Lender, its agents,
officers, or employees, except by an instrument in writing, signed by an officer
of Lender and directed to Borrower, specifying such waiver.
B. All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been duly given or made: if by hand, immediately
upon delivery; if by telecopy, telex or telegram, immediately upon sending; if
by any nationally recognized overnight delivery service, one day after dispatch;
and if mailed by certified mail, return receipt requested, forty-eight (48)
hours after mailing. All notices, requests and demands are to be given or made
to the respective parties at the following addresses (or to such other addresses
as either party may designate by notice in accordance with the provisions of
this paragraph):
If to Borrower: Merrimac Industries, Inc.
00 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx,
Chief Financial Officer
Fax No.: (000) 000-0000
If to Lender: The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Regional Credit Manager - Merrimac Industries, Inc.
Fax No.: (000) 000-0000
With a courtesy copy of any material notice to CIT's counsel at:
Stradley, Ronon, Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn.: Xxxxxxx X. Xxxxx, Esquire
Fax No.: (000) 000-0000
C. In the event any term or provision of this Agreement conflicts with any
term or provision of the Financing Agreement, the term or provision of the
Financing Agreement shall control.
D. In the event that any provision hereof shall be deemed to be invalid by
any court of competent jurisdiction, such invalidity shall not affect the
remainder of this Agreement or the application of such remaining provisions to
persons or circumstances other than to those which it is held invalid, and this
Agreement will be construed and enforced as if such invalid provisions had never
been inserted.
E. This Agreement shall be binding upon and for the benefit of the parties
hereto and their respective legal representatives, successors and assigns;
provided however, Borrower shall not assign its rights or obligations hereunder
without Lender's prior written consent. No provision hereof shall be modified,
altered or limited except by a written instrument expressly referring to this
Agreement signed by the party to be charged thereby.
F. The security interest granted to Lender hereunder shall terminate and be
released and the Collateral will be reassigned to Borrower, at Borrower's sole
expense, upon termination of the Financing Agreement and indefeasible payment in
full to Lender of all Obligations thereunder and hereunder. Lender will
thereupon execute such release and other documents as Borrower may reasonably
request, at Borrower's sole expense, to evidence such termination and
reassignment.
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G. The validity, interpretation and effect of this Agreement, together with
the associated assignments for security referenced as Exhibits 1 and 2 hereof,
shall be governed by the laws of the United States of America and the laws of
the State of New York without giving effect to any conflict of law principles.
Borrower hereby irrevocably consents and submits in advance to the non-exclusive
jurisdiction of the courts of the Southern District of New York, to hear and
determine any claims or disputes pertaining directly or indirectly to this
Agreement, the other Agreements or to any matter arising therefrom in any such
action or proceeding. Borrower hereby waives personal service of the summons and
complaint, or other process or notice of motion or other application or papers
issued therein, and agrees that service of such summons and complaint or other
process or papers may be made outside the Southern District of New York by
registered or certified mail, return receipt requested, addressed to the
Borrower at the address set forth herein or in such other manner as may be
permissible under the rules of said courts.
H. The parties hereto waive trial by jury in any action or proceeding of
ANY KIND or nature in any court whether arising out of, under or by reason of
this Agreement, the other Agreements or any matter or proceeding relating
thereto.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower and
Lender have executed this Agreement as of the day and year first above written.
Borrower:
MERRIMAC INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx,
Chief Financial Officer and
Vice President, Finance
Lender:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: AVP
8
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 8th day of October, 2003, before me personally came Xxxxxx X.
Xxxxxx, to me known, who being duly sworn, did depose and say, that he is the
Chief Financial Officer and Vice President-Finance of MERRIMAC INDUSTRIES, INC.,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxx Xxxxxx
-------------------------
Notary Public
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