EXHIBIT 10.3
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (the "Security Agreement")
made as of this 26th day of April, 2001, by The Singing Machine Company, Inc., a
Delaware corporation ("Borrower") in favor of LaSalle Business Credit, Inc.,
with an office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000
("Lender"):
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Borrower and Lender are parties to a certain Loan and
Security Agreement of even date herewith (as amended, amended and restated or
otherwise modified from time to time, the "Loan Agreement") and other related
loan documents of even date herewith (collectively, with the Loan Agreement, and
as each may be amended or otherwise modified from time to time, the "Financing
Agreements"), which Financing Agreements provide (i) for Lender to, from time to
time, extend credit to or for the account of Borrower and (ii) for the grant by
Borrower to Lender of a security interest in certain of Borrower's assets,
including, without limitation, its trademarks and trademark applications;
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, Borrower agrees as follows:
1. Incorporation of Financing Agreements. The Financing
Agreements and the terms and provisions thereof are hereby incorporated herein
in their entirety by this reference thereto. All terms capitalized but not
otherwise defined herein shall have the same meanings herein as in the Loan
Agreement.
2. Grant and Reaffirmation of Grant of Security Interests. To
secure the complete and timely payment and satisfaction of the Liabilities,
Borrower hereby grants to Lender, and hereby reaffirms its prior grant pursuant
to the Financing Agreements of, a continuing security interest in Borrower's
entire right, title and interest in and to all of its now owned or existing and
hereafter acquired or arising trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos, other business identifiers, prints and labels on which any of the
foregoing have appeared or appear, all registrations and recordings thereof, and
all applications (other than "intent to use" applications until a verified
statement of use is filed with respect to such applications) in connection
therewith, including, without limitation, the trademarks and applications listed
on Schedule A attached hereto and made a part hereof and the trademarks, and
renewals thereof, and all income, royalties, damages and payments now or
hereafter due and/or payable under or with respect to any of the foregoing,
including, without limitation, damages and payments for past, present and future
infringements of any of the foregoing and the right to xxx for past, present and
future infringements of any of the foregoing (all of the foregoing are sometimes
hereinafter individually and/or collectively referred to as the "Trademarks");
all rights corresponding to any of the foregoing throughout the world and the
goodwill of the Borrower's business connected with the use of and symbolized by
the Trademarks.
3. Warranties and Representations. Borrower warrants and
represents to Lender that:
(i) no Trademark has been adjudged invalid or unenforceable by
a court of competent jurisdiction nor has any such Trademark been
cancelled, in whole or in part and each such Trademark is presently
subsisting;
(ii) Borrower is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each Trademark,
free and clear of any liens, charges and encumbrances, including
without limitation, shop rights and covenants by Borrower not to xxx
third persons;
(iii) Borrower has no notice of any suits or actions commenced
or threatened with reference to any Trademark; and
(iv) Borrower has the unqualified right to execute and deliver
this Security Agreement and perform its terms.
4. Restrictions on Future Agreements. Borrower agrees that
until Borrower's Liabilities shall have been satisfied in full and the Financing
Agreements shall have been terminated, Borrower shall not, without the prior
written consent of Lender, sell or assign its interest in any Trademark or enter
into any other agreement with respect to any Trademark which would affect the
validity or enforcement of the rights transferred to Lender under this Security
Agreement.
5. New Trademarks. Borrower represents and warrants that,
based on a diligent investigation by Borrower, the Trademarks listed on Schedule
A constitute all of the federally registered Trademarks, and federal
applications for registration of Trademarks (other than "intent to use"
applications until a verified statement of use is filed with respect to such
applications) now owned by Borrower. If, before Borrower's Liabilities shall
have been satisfied in full or before the Financing Agreements have been
terminated, Borrower shall (i) become aware of any existing Trademarks of which
Borrower has not previously informed Lender, or (ii) become entitled to the
benefit of any Trademarks, which benefit is not in existence on the date hereof,
the provisions of this Security Agreement above shall automatically apply
thereto and Borrower shall give to Lender prompt written notice thereof.
Borrower hereby authorizes Lender to modify this Security Agreement by amending
Schedule A to include any such Trademarks.
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6. Term. The term of this Security Agreement shall extend
until the payment in full of Borrower's Liabilities and the termination of the
Financing Agreements. Borrower agrees that upon the occurrence of an Event of
Default, the use by Lender of all Trademarks shall be without any liability for
royalties or other related charges from Lender to Borrower.
7. Product Quality. Borrower agrees to maintain the quality of
any and all products in connection with which the Trademarks are used,
consistent with commercially reasonable business practices. Upon the occurrence
of an Event of Default, Borrower agrees that Lender, or a conservator appointed
by Lender, shall have the right to establish such additional product quality
controls as Lender, or said conservator, in its reasonable judgment, may deem
necessary to assure maintenance of the quality of products sold by Borrower
under the Trademarks.
8. Release of Security Agreement. This Security Agreement is
made for collateral purposes only. Upon payment in full of Borrower's
Liabilities and termination of the Financing Agreements, Lender shall take such
actions as may be necessary or proper to terminate the security interests
created hereby and pursuant to the Financing Agreements
9. Expenses. All expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by
Borrower. All fees, costs and expenses, of whatever kind or nature, including
reasonable attorneys' fees and legal expenses, incurred by Lender in connection
with the filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, reasonable
counsel fees, maintenance fees, encumbrances or otherwise in protecting,
maintaining or preserving the Trademarks or in defending or prosecuting any
actions or proceedings arising out of or related to the Trademarks shall be
borne by and paid by Borrower and until paid shall constittute Liabilities.
10. Duties of Borrower. Borrower shall have the duty (i) to
file and prosecute diligently any trademark applications pending as of the date
hereof or hereafter until Borrower's Liabilities shall have been paid in full
and the Financing Agreements have been terminated, (ii) to preserve and maintain
all rights in the Trademarks, as commercially reasonable and (iii) to ensure
that the Trademarks are and remain enforceable, as commercially reasonable. Any
expenses incurred in connection with Borrower's Liabilities under this Section
10 shall be borne by Borrower.
11. Lender's Right to Xxx. After an Event of Default, Lender
shall have the right, but shall in no way be obligated, to bring suit in its own
name to enforce the Trademarks and, if Lender shall commence any such suit,
Borrower shall, at the request of Lender, do any and all lawful acts and execute
any and all proper documents required by Lender in aid of such enforcement and
Borrower shall promptly, upon demand, reimburse and indemnify Lender for all
costs and expenses incurred by Lender in the exercise of its rights under this
Section 11.
12. Waivers. No course of dealing between Borrower and Lender,
nor any failure to exercise, nor any delay in exercising, on the part of Lender,
any right, power or privilege hereunder or under the Financing Agreements shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
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13. Severability. The provisions of this Security Agreement
are severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Security
Agreement in any jurisdiction.
14. Modification. This Security Agreement cannot be altered,
amended or modified in any way, except as specifically provided in Section 5
hereof or by a writing signed by the parties hereto.
15. Cumulative Remedies; Power of Attorney; Effect on
Financing Agreements. All of Lender's rights and remedies with respect to the
Trademarks, whether established hereby or by the Financing Agreements, or by any
other agreements or by law shall be cumulative and may be exercised singularly
or concurrently. Borrower hereby authorizes Lender upon the occurrence of an
Event of Default, to make, constitute and appoint any officer or agent of Lender
as Lender may select, in its sole discretion, as Borrower's true and lawful
attorney-in-fact, with power to (i) endorse Borrower's name on all applications,
documents, papers and instruments necessary or desirable for Lender in the use
of the Trademarks or (ii) take any other actions with respect to the Trademarks
as Lender deems to be in the best interest of Lender, or (iii) grant or issue
any exclusive or non-exclusive license under the Trademarks to anyone, or (iv)
assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks to anyone. Borrower hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney shall
be irrevocable until Borrower's Liabilities shall have been paid in full and the
Financing Agreements have been terminated. Borrower acknowledges and agrees that
this Security Agreement is not intended to limit or restrict in any way the
rights and remedies of Lender under the Financing Agreements but rather is
intended to facilitate the exercise of such rights and remedies. Lender shall
have, in addition to all other rights and remedies given it by the terms of this
Security Agreement and the Financing Agreements, all rights and remedies allowed
by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in Illinois.
16. Binding Effect; Benefits. This Security Agreement shall be
binding upon Borrower and its respective successors and assigns, and shall inure
to the benefit of Lender, its successors, nominees and assigns.
17. Governing Law. This Security Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois and
applicable federal law.
18. Headings. Paragraph headings used herein are for
convenience only and shall not modify the provisions which they precede.
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19. Further Assurances. Borrower agrees to execute and deliver
such further agreements, instruments and documents, and to perform such further
acts, as Lender shall reasonably request from time to time in order to carry out
the purpose of this Security Agreement and agreements set forth herein.
20. Survival of Representations. All representations and
warranties of Borrower contained in this Security Agreement shall survive the
execution and delivery of this Security Agreement and shall be remade on the
date of each borrowing under the Financing Agreements.
IN WITNESS WHEREOF, Borrower has duly executed this Security
Agreement as of the date first written above.
THE SINGING MACHINE COMPANY, INC.
By Xxxx Xxxxxx
------------------------------------------
Its President, Chief Operating Officer, Chief
Financial Officer, Secretary and Treasurer
Agreed and Accepted
As of the Date First Written Above
LASALLE BUSINESS CREDIT, INC.
By Xxxxx Xxxxxxxx
Its Vice President
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SCHEDULE A
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TRADEMARK REGISTRATIONS
-----------------------
Trademark Description U.S. Serial/Registration No. Date Registered
--------------------- ---------------------------- ---------------
THE SINGING MACHINE AND DESIGN 1274948 April 24, 1984
SINGING MACHINE AND DESIGN 1274947 April 24, 1984
THE SINGING MACHINE AND DESIGN 540673 June 03, 1993
Benelux
THE SINGING MACHINE AND DESIGN 2065315 May 19, 0000
Xxxxxxx
THE SINGING MACHINE AND DESIGN 414758 Xxxxx 00, 0000
Xxxxxxxxxxx
THE SINGING MACHINE AND DESIGN B1517912 June 03, 0000
Xxxxxx Xxxxxxx
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