EXHIBIT 10.7
PATENT SECURITY AGREEMENT
This Patent Security Agreement ("Agreement") is made this 20th day of
March, 2002, by BLONDER TONGUE INVESTMENT COMPANY, a Delaware corporation,
having a mailing address of One Xxxx Xxxxx Xxxx, Xxx Xxxxxx, Xxx Xxxxxx 00000
("Surety") and delivered to COMMERCE BANK, N.A. having a mailing address of 0000
Xxxxx 00 Xxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000 ("Lender").
BACKGROUND
A. This Agreement is being executed contemporaneously with that certain
Surety Agreement of even date herewith between Surety and Lender (as it may be
supplemented, restated, superseded, amended or replaced from time to time, the
"Surety Agreement"), under which Surety is guarantying the repayment by Blonder
Tongue Laboratories, Inc. ("Borrower") to Lender of the Obligations under that
certain Loan and Security Agreement between Borrower and Lender dated the date
hereof ("Loan Agreement"). As security for the Obligations, Surety has agreed to
grant Lender a security interest in Surety's Patent Collateral (as defined
herein), and under which Lender is entitled to foreclose or otherwise deal with
such assets under the terms and conditions set forth herein. Capitalized terms
not defined herein shall have the meanings given to such terms in the Surety
Agreement or Loan Agreement as applicable.
B. Surety has rights with respect to: (i) the United States Letters Patents
and the inventions described and claimed therein set forth on Schedule A hereto
(hereinafter referred to collectively as the "Patents"); (ii) the application
for Letters Patents and the inventions described and claimed therein set forth
on Schedule A hereto and any United States Letters Patents which may be issued
upon any of said applications (hereinafter referred to collectively as the
"Applications"); (iii) any reissues, extension, division or continuation of the
Patents or Applications (such reissues, extension, divisions and continuations
being herein referred to collectively as the "Reissued Patents"); and (iv) all
future royalties or other fees paid or payments made to Surety in respect of the
Patents including, without limitation, any royalties due or owing from Borrower
to Surety (hereinafter referred to collectively as the "Royalties") (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights"). Notwithstanding the foregoing
or any representation to the contrary in this Agreement, as of the date hereof,
Surety's interest (ownership or otherwise) in the Patent Rights is not of record
with the United States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed
incorporated by reference and made a part hereof, and in consideration of the
premises and mutual promises herein contained, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
1. In consideration of the Surety Agreement, and for other good, valuable
and sufficient consideration, the receipt of which is hereby acknowledged, and
to secure repayment of the Obligations, Surety grants to Lender a lien on and
security interest in all of the Patent Rights and all proceeds thereof and all
Surety's right, title, interest, claims and demands that Surety has or may have
in profits and damages for past and future infringements of the Patent Rights
(such rights, interest, claims and demand being herein called the "Claims") (the
Patent Rights and Claims are collectively referred to as the "Patent
Collateral").
2. Surety hereby covenants and agrees to maintain the Patent Collateral as
permitted under applicable law in full force and effect until all of Surety's
Obligations are indefeasibly paid and satisfied in full.
3. Surety represents, warrants and covenants to Lender that:
(a) Except as set forth in the Section 3(d) below, Surety is the sole
and exclusive owner of the entire and unencumbered right, title and interest in
and to the Patent Collateral as set forth on Schedule "A".
(b) The Patent Collateral is subsisting and has not been adjudged
invalid or unenforceable;
(c) All of the Patent Rights are registered, valid and enforceable;
(d) All of the Patent Collateral is free and clear of any liens,
charges and encumbrances including, without limitation, pledges, assignments,
licenses (other than to Surety, Borrower and Lender hereunder) and covenants by
Surety not to xxx third persons;
(e) Surety has no notice of any suits or actions commenced or
threatened against it, or notice of claims asserted or threatened against it,
with reference to the Patent Collateral;
(f) Surety has the corporate power and authority to enter into this
Agreement and perform its terms;
(g) Surety has complied with, and will continue for the duration of
this Agreement to comply with the requirements set forth in 35 U.S.C. Sec. 1 et
seq. and any other applicable statutes, rules and regulations in connection with
its use of the Patent Collateral except where failure to comply would not have a
material adverse effect on Surety or its property; and
(h) Surety has used and will continue to use for the duration of this
Agreement, consistent standards of quality in services or products leased or
sold under the Patent Collateral and hereby grants to Lender and its employees
and agents the right (with no obligation of any kind upon Lender to do so) to
visit Surety's affiliates, franchises or management locations and to inspect the
use of the Patent Collateral and quality control records relating thereto at
reasonable times during regular business hours to ensure Surety's compliance
with this paragraph 3(h).
4. Surety further covenants that:
(a) Until all the Obligations are indefeasibly paid and satisfied in
full and the Revolving Credit is terminated, Surety will not enter into any
agreement, including, without limitation, license agreements or options, which
are inconsistent with Surety's obligations under this Agreement, Borrower's
obligations under the Loan Agreement, or which restrict or impair Lender's
rights hereunder.
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(b) If Surety acquires rights to any new United States Letters
Patents, the provisions of this Agreement shall automatically apply thereto and
such Letters Patents shall be deemed part of the Patent Collateral. Surety shall
give Lender written notice thereof along with an amended Schedule "A."
5. So long as this Agreement is in effect and so long as Surety has not
received notice from Lender that an Event of Default has occurred under the Loan
Agreement and that Lender has not elected to exercise its rights hereunder: (i)
Surety shall continue to have the exclusive right to use the Patent Collateral;
and (ii) Lender shall have no right to use the Patent Collateral or issue any
exclusive or non-exclusive license with respect thereto, or assign, pledge or
otherwise transfer title in the Patent Collateral to anyone else.
6. Surety agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Patent Collateral to any entity or
person other than Lender, Borrower or any other subsidiary of Borrower that has
guaranteed the Obligations without the prior written consent of Lender.
7. Anything herein contained to the contrary notwithstanding, if and while
an Event of Default exists under the Loan Agreement, Surety hereby covenants and
agrees that Lender, as the holder of a security interest under the Uniform
Commercial Code, as now or hereafter in effect in the State of New Jersey, may
take such action permitted hereunder, in its exclusive discretion, to foreclose
upon the Patent Collateral covered hereby. For such purposes, while an Event of
Default exists, Surety hereby authorizes and empowers Lender to make, constitute
and appoint any officer or agent of Lender as Lender may select, in its
exclusive discretion, as Surety's true and lawful attorney-in-fact, with the
power to endorse Surety's name on all applications, documents, papers and
instruments necessary for Lender to use the Patent Collateral or to grant or
issue any exclusive or non-exclusive license under the Patent Collateral to
anyone else, or necessary for Lender to assign, pledge, convey or otherwise
transfer title in or dispose of the Patent Collateral to anyone else including,
without limitation, the power to execute a Patent Assignment in the form
attached hereto as Exhibit 1. Surety hereby ratifies all that such attorney or
agent shall lawfully do or cause to be done by virtue hereof, except for the
gross negligence or willful misconduct of such attorney or agent. This power of
attorney shall be irrevocable for the life of this Agreement, the Surety
Agreement, and until all of the Obligations are indefeasibly paid and satisfied
in full and the Revolving Credit is terminated.
8. This Agreement shall be subject to the terms, provisions, and conditions
set forth in the Surety Agreement and may not be modified without the written
consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted to Lender under the Loan Documents. In the event
of an inconsistency between this Agreement and Loan Documents, the language of
this Agreement shall control.
10. Upon Surety's performance of all of the obligations under the Surety
Agreement and after all of the Obligations are indefeasibly paid and satisfied
in full and the Revolving Credit is terminated, Lender shall, at Surety's
expense, execute and deliver to Surety all documents reasonably necessary to
terminate Lender's security interest in the Patent Collateral.
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11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
Lender in connection with the preparation of this Agreement and all other
documents relating hereto and the consummation of this transaction, 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 costs otherwise incurred in protecting,
maintaining, preserving the Patent Collateral, or in defending or prosecuting
any actions or proceedings arising out of or related to the Patent Collateral,
in each case in accordance with the terms of this Agreement, shall be borne and
paid by Surety on demand by Lender and until so paid shall be added to the
principal amount of the Obligations to Lender and shall bear interest at the
otherwise applicable rate prescribed in the Loan Agreement.
12. Subject to the terms of this Agreement, Surety shall have the duty to
prosecute diligently any application and/or registration with respect to the
Patent Collateral pending as of the date of this Agreement or thereafter, until
the Obligations are indefeasibly paid and satisfied in full and the Revolving
Credit is terminated to preserve and maintain all rights in the Patent
Collateral, and upon reasonable request of Lender, Surety shall make federal
application on registerable but unregistered Patent Collateral belonging to
Surety and licensed to Surety unless Surety determines in good faith that such
unregistered Patent Collateral does not have any material value. Any reasonable
expenses incurred in connection with such applications shall be borne
exclusively by Surety. Surety shall not abandon any Patent Collateral without
the prior written consent of Lender.
13. Surety shall have the right to bring suit in its own name to enforce
the Patent Collateral, in which event Lender may, if Surety reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have been
satisfied, in its sole discretion, that it is not thereby incurring any risk of
liability because of such joinder. Surety shall promptly, upon demand, reimburse
and indemnify Lender for all damages, costs and expenses, including reasonable
attorneys' fees and costs, incurred by Lender in the fulfillment of the
provisions of this paragraph.
14. Upon the occurrence of an Event of Default under the Loan Agreement or
Surety Agreement, Lender may, without any obligation to do so, complete any
obligation of Surety hereunder, in Surety's name or in Lender's name, but at the
expense of Surety.
15. No course of dealing between Surety and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, and all of Lender's
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Surety Agreement, or by any other future agreements between
Surety and Lender or by law, shall be cumulative and may be exercised singularly
or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
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18. Surety irrevocably agrees to consent to the jurisdiction of the state
and federal courts of the jurisdiction set forth in Section 9.1 of the Loan
Agreement, without regard to its otherwise applicable principles or conflicts of
law.
19. SURETY AND LENDER BY ITS ACCEPTANCE HEREOF) HEREBY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING
OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO OR UNDER THE SURETY AGREEMENT OR WITH RESPECT TO ANY CLAIMS ARISING OUT
OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY
PROPOSED RENEWAL EXTENSION, AMENDMENT, MODIFICATION, RESTRUCTURE, FORBEARANCE,
WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY THE SURETY
AGREEMENT.
20. Surety hereby agrees that it will, within thirty (30) days of the date
of this Agreement, file all agreements and/or documents required to record
Surety's interest (ownership or otherwise) in the Patent Rights with the United
States Patent and Trademark Office.
IN WITNESS WHEREOF, the parties hereto have executed this Patent Security
Agreement, under seal, the day and year first above written.
SURETY:
BLONDER TONGUE INVESTMENT COMPANY
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President and CEO
(Corporate Seal)
Address: c/o Blonder Tongue Laboratories, Inc.
Xxx Xxxx Xxxxx Xxxx
Xxx Xxxxxx, XX 00000
Attn: President
APPROVED AND ACCEPTED:
COMMERCE BANK, N. A.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Vice President
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CORPORATE ACKNOWLEDGMENT
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UNITED STATES OF AMERICA :
COMMONWEALTH OF PENNSYLVANIA : SS
COUNTY OF PHILADELPHIA :
On this 20th day of March, 2002, before me personally appeared XXXXX X.
XXXXXX, to me known and being duly sworn, deposes and says that he is the
President and CEO of BLONDER TONGUE INVESTMENT COMPANY, the corporation
described in the foregoing Agreement; that he knows the seal of the corporation;
that the seal so affixed to the Agreement is such corporate seal; that he signed
the Agreement and affixed the seal of the corporation thereto as such officer
pursuant to the authority vested in him by law; that the within Agreement is the
voluntary act of such corporation; and he/she desires the same to be recorded as
such.
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Notary Public
My Commission Expires:
SCHEDULE A TO PATENT SECURITY AGREEMENT
---------------------------------------
APPLICATION/ REGISTRATION
PATENTS REGISTRATION NO. COUNTRY DATE
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EXHIBIT 1 TO PATENT SECURITY AGREEMENT
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PATENT ASSIGNMENT
WHEREAS, BLONDER TONGUE INVESTMENT COMPANY, a Delaware corporation
("Grantor"), is the registered owner, holder or user of: (i) the United States
Letters Patents and the inventions which are registered in the United States
Patent and Trademark Office and set forth on Schedule A hereto (hereinafter
referred to collectively as the "Patents"); (ii) the application for Letters
Patents and the inventions described and claimed therein set forth on Schedule A
hereto and any United States Letters Patents which may be issued upon any of
said applications (hereinafter referred to collectively as the "Applications");
(iii) any reissues, extension, division or continuation of the Patents or
Applications (such reissues, extension, divisions and continuations being herein
referred to collectively as the "Reissued Patents"); and (iv) all future
royalties or other fees paid or payments made to Surety in respect of the
Patents (hereinafter referred to collectively as the "Royalties") (the Patents,
Applications and the Reissued Patents and the Royalties being herein referred to
collectively as the "Patent Rights").
WHEREAS, ____________________________ ("Grantee"), having a place of
business at ________________________________________________ is desirous of
acquiring the Patent Rights;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor, its
successors and assigns, does hereby transfer, assign and set over unto Grantee,
its successors, transferees and assigns, all of its present and future right,
title and interest in and to the Patent Rights and all proceeds thereof and all
Surety's right, title, interest, claims and demands that Surety has or may have
in profits and damages for past and future infringements of the Patent Rights.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be
executed as of the _____day of _________________, 200___.
BLONDER TONGUE INVESTMENT
COMPANY
Witness: _____________________ By:___________________________
As Attorney-in-fact
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF ________________ : SS
COUNTY OF ____________________ :
On this the ____ day of ________________, 200___ before me a Notary Public
for the said County and State, personally appeared
__________________________________ known to me or satisfactorily proven to me to
be attorney-in-fact on behalf of BLONDER TONGUE INVESTMENT COMPANY ("Grantor"),
and he/she acknowledged to me that he/she executed the foregoing Patent
Assignment on behalf of Grantor, and as the act and deed of Grantor for the
purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
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(Individual Notary)
My Commission Expires:
_______________, ________
SCHEDULE A TO PATENT ASSIGNMENT
-------------------------------
APPLICATION/ REGISTRATION
PATENTS REGISTRATION NO. COUNTRY DATE
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