Exhibit 10.5
PATENT AND PATENT
APPLICATION SECURITY AGREEMENT
This Patent and Patent Application Security Agreement (the " PATENT
SECURITY AGREEMENT") is made the 1st day of September, 2004, by Dynamics
Research Corporation, a Massachusetts corporation with its principal executive
offices at 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "COMPANY"), and
Xxxxx Brothers Xxxxxxxx & Co., with offices at 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, as administrative agent for itself and for each of the
other Lenders (defined below) as may become parties to the Loan Agreement
(defined below) (the "Agent").
RECITALS
WHEREAS, pursuant to the Second Amended and Restated Loan Agreement
dated as of the date hereof (as same may be amended, modified or replaced from
time to time, the "LOAN AGREEMENT"), made by and among the Company and certain
affiliates of the Company (singly, a "BORROWER" and collectively, the
"BORROWERS"), the Agent, as administrative agent for a syndicate of Lenders (the
"LENDERS"), BankNorth, N.A., as Documentation Agent, KeyBank National
Association and Fleet National Bank, a Bank of America company, each as
Co-Syndication Agents, and such Lenders, the Agent and the Lenders have agreed
to make certain loans (hereinafter, the "LOANS") available to the Borrowers;
WHEREAS, under a certain Security Agreement of even date herewith (as
same may be amended, modified or replaced from time to time, the "SECURITY
AGREEMENT"), the Borrowers have created a security interest in each such
Borrower's assets to secure the liabilities and obligations of the Borrowers to
the Agent and the Lenders (as defined in the Loan Agreement) (hereinafter, the
"LIABILITIES");
WHEREAS, as a condition, among others, to the continuation of the
credit facilities contemplated by the Loan Agreement, and to further secure the
Liabilities, the parties hereto shall execute this Patent Security Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Company and the Agent agree as
follows:
1. To secure the Liabilities, the Company hereby grants a security
interest in favor of the Agent for the benefit of the Lenders, with
power of sale, in and to the following and all proceeds thereof:
a. All of the Company's now owned or existing or hereafter
acquired or arising letters patent, patent applications, and
the inventions and improvements therein disclosed, and any and
all divisions, reissues and continuations of said letters
patent including, without limitation the patents listed on
EXHIBIT A annexed hereto and made a part hereof, together with
any goodwill connected with and symbolized by any such
patents.
b. All renewals of any of the foregoing.
c. All income, royalties, damages and payments now and hereafter
due and/or payable under and with respect to any of the
foregoing, including, without limitation, payments under all
licenses entered into in connection therewith and damages and
payments for past or future infringements or dilutions
thereof.
d. The right to xxx for past, present and future infringements
and dilutions of any of the foregoing.
e. All of Company's rights corresponding to any of the foregoing
throughout the world.
All of the foregoing letters patent, patent applications described in
Subsection a, together with the items respectively described in
Subsections b through and including e are hereinafter individually
and/or collectively referred to as the "Patents".
2. Until this Patent Security Agreement is terminated, the Company shall
undertake the following with respect to each Patent to the extent
prudent in the exercise of its reasonable business judgment and
provided that any failure to do so does not have a material adverse
effect on the Company and its subsidiaries on a consolidated basis:
a. Pay all renewal fees and other fees and costs associated with
maintaining the Patents and with the processing of the
Patents.
b. At Company's sole cost, expense, and risk, pursue the prompt,
diligent, processing of each Application for Registration
which is the subject of the foregoing assignment and not
abandon or delay any such efforts.
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c. At Company's sole cost, expense, and risk, take any and all
action which Company deems desirable to protect the Patents,
including, without limitation, but subject to Company's
discretion, the prosecution and defense of infringement
actions.
3. Upon the occurrence of any Event of Default (as defined in the Loan
Agreement), and until such Event of Default is cured, the Agent acting
in its own name or in that of the Company may (but shall not be
required to) act in the Company's place and stead and/or in the Agent's
own right in connection with the obligations set forth in Section 2,
above.
4. The Company represents and warrants that:
a. The Patents listed on EXHIBIT A include all of the registered
Patents now owned by the Company.
b. No liens, claims or security interests have been granted by
the Company to any person or entity in such Patents other than
to the Agent or as otherwise permitted pursuant to the Loan
Agreement.
5. In order to further secure the Liabilities:
a. The Company shall give the Agent written notice (with
reasonable detail) within thirty (30) days following the
occurrence of any of the following:
i. The Company obtains rights to any new patents or
patent applications (other than Company's right to
sell products containing the patents of others in the
ordinary course of Company's business).
ii. The Company becomes entitled to the benefit of any
patents or patent applications, whether as licensee
or licensor (other than Company's right to sell
products containing the patents of others in the
ordinary course of Company's business).
iii. The Company enters into any new patent license
agreement.
b. The provisions of this Patent Security Agreement shall
automatically apply to any such additional property or rights
described in a, above, all of which shall be deemed to be and
treated as "Patents" within the meaning of this Patent
Security Agreement.
c. The Company hereby authorizes the Agent to modify this
agreement by amending EXHIBIT A to include any future patents
or patent applications, written notice of which is so given,
provided, however, the modification of said EXHIBIT A shall
not be a condition to the creation or perfection of the
security interest and Patent Security Agreement created
hereby.
6. Upon the occurrence and during the continuance of any Event of Default
(as defined in the Loan Agreement), the Agent may exercise all rights
and remedies of a secured party under the Uniform Commercial Code as
adopted in Massachusetts (Massachusetts
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General Laws, Chapter 106), with respect to the Patents, in addition to
which the Agent, subject to the terms of the Loan Agreement, may sell,
license, assign, transfer, or otherwise dispose of the Patents. Any
person may conclusively rely upon an affidavit of an officer of the
Agent that an Event of Default and demand has occurred and is
continuing and that the Agent is authorized to exercise such rights and
remedies.
7. Effective upon the occurrence and during the continuance of any Event
of Default (as defined in the Loan Agreement) the Company hereby
irrevocably constitutes and designates the Agent as and for the
Company's attorney in fact:
a. To exercise any of the rights exercisable and powers
referenced in Section 2.
b. To execute all and singular such instruments, documents, and
papers as the Agent determines to be appropriate in connection
with the exercise of such rights and remedies and to cause the
sale, license, assignment, transfer, or other disposition of
the Patents.
The within grant of a power of attorney, being coupled with an
interest, shall be irrevocable until the within Patent Security
Agreement is terminated.
8. Any use by the Agent of the Patents as authorized hereunder in
connection with the exercise of the Agent's right and remedies under
the within Patent Security Agreement and the Loan Agreement shall be
coextensive with Company's rights thereunder and with respect thereto
and without any liability for royalties or other related charges from
the Agent to the Company.
9. The Agent hereby grants to the Company the right, prior to notice from
the Agent following the occurrence and during the continuance of an
Event of Default (as defined in the Loan Agreement), to xxx for past,
present and future infringement of the Patents including the right to
seek injunctions and/or money damages, in an effort by the Company to
protect the Patents against encroachment by third parties. The Company
shall notify the Agent in writing of any such suit for enforcement of
the Patents against a particular party. All reasonable costs arising in
connection with any such suit for enforcement shall be borne by the
Company.
10. Following the earlier to occur of (x) the Collateral Release Event (as
defined in the Loan Agreement), or (y) the payment and satisfaction of
all Liabilities, and the termination of any obligation of the Agent or
any Lender to provide loans or financial accommodations under the
credit facility contemplated by the Loan Agreement, this Patent
Security Agreement shall terminate and the Agent shall promptly execute
and deliver to the Company, at the Company's cost and expense, all such
instruments as the Company reasonably may request to evidence such
termination and to the extent, if any, necessary to re-vest in the
Company full title to the Patents and the associated goodwill, subject
to any disposition thereof which may have been made by Agent pursuant
hereto or pursuant to the Loan Agreement.
11. The Company shall, at the request of the Agent, do any and all acts and
execute any and all documents reasonably required by the Agent in
connection with the protection, preservation, and enforcement of the
Agent's rights hereunder.
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12. The Company shall, upon demand, reimburse the Agent for all reasonable
costs and expenses incurred by the Agent in the exercise of any rights
hereunder (including, without limitation, reasonable fees and expenses
of counsel).
13. This Patent Security Agreement is intended to be supplemental of the
Security Agreement. All provisions of the Security Agreement shall
apply to the Patents, and the Agent shall have the same rights with
respect to any and all Patents granted the Agent to secure the
Liabilities hereunder as thereunder. In the event of a conflict between
this Patent Security Agreement and the Security Agreement, the terms of
this Patent Security Agreement shall control with respect to the
Patents, and the Security Agreement shall control with respect to all
other Collateral (as defined in the Loan Agreement).
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IN WITNESS WHEREOF, the Company and the Agent respectively have caused
this Patent Security Agreement to be executed by officers duly authorized so to
do on the date first above written.
Dynamics Research Corporation Xxxxx Brothers Xxxxxxxx & Co.,
(The "Company") (The "Agent")
By_________________________________ By________________________________
Title______________________________ Title_____________________________
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COMMONWEALTH OF MASSACHUSETTS
County of Suffolk
Then personally appeared before me _______________ who acknowledged
that such person is the duly authorized __________ of Dynamics Research
Corporation, and that such person executed the foregoing instrument as his free
act and deed on its behalf.
Witness my hand and seal this _____ day of September, 2004.
_________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
County of Suffolk
Then personally appeared before me _________________, who acknowledged
that such person is the duly authorized Vice President of Xxxxx Brothers
Xxxxxxxx & Co., and that such person executed the foregoing instrument as his
free act and deed on its behalf.
Witness my hand and seal this _____ day of September, 2004.
_________________________________
, Notary Public
My Commission Expires:
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EXHIBIT A
Company's now owned or existing or hereafter acquired or arising registered
patents and patent applications, including, without limitation:
PATENT NO. TITLE TO PATENT
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(1) 6,567,429 Wide area multi-service broadband network
(2) 6,387,724 Method of fabricating silicon-on-insulator sensor having
oxide sensing surface
(3) 6,212,672 Software development system with an executable
working model in an interpretable intermediate modeling
language
(4) 6,128,113 Transparent optical communications switch
(5) 5,119,111 Edge-type printhead with contact pads
(6) 5,081,471 True edge thermal printhead
(7) 5,077,564 Arcuate edge thermal print head
(8) 4,978,972 Modular thermal print head and method of fabrication
(9) 4,954,225 Method for making nozzle plates
(10) 4,912,468 Non-linear error correction system
(11) 4,881,087 Printhead structure and method of fabrication
(12) 4,875,281 Method of fabricating a printhead
(13) 4,839,001 Orifice plate and method of fabrication
(14) 4,810,852 High-resolution thermal printhead and method of fabrication
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