PATENT AND TRADEMARK SECURITY AGREEMENT
This Agreement, dated as of June 28, 2001, is made by and between
VARI-L COMPANY, INC., a Colorado corporation whose address and principal
place of business is 4895 Peoria Street, Denver , Colorado 80239 (the
"Debtor"), and WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation
whose address and principal place of business is Wells Fargo Business
Credit, Inc., MAC C7300-300, 1740 Broadway, Denver, Colorado 80274 (the
"Secured Party").
RECITALS
The Debtor and the Secured Party have entered into a Credit and
Security Agreement of even date herewith (as the same may hereafter be
amended, supplemented or restated from time to time, the "Credit
Agreement") setting forth the terms on which the Secured Party may now or
hereafter make certain loans or other financial accommodations to or for
the account of the Debtor.
As a further condition to making any loan or other financial
accommodation under the Credit Agreement or otherwise, the Secured Party
has required the execution and delivery of this Agreement by the Debtor.
ACCORDINGLY, in consideration of the mutual covenants contained in
the Credit Agreement and herein, the parties hereby agree as follows:
1. DEFINITIONS. All terms defined in the Recitals hereto or in
the Credit Agreement that are not otherwise defined herein shall have the
meanings given to them therein. In addition, the following terms have the
meanings set forth below:
"Obligations" means each and every debt, liability and
obligation of every type and description arising under or in
connection with any Loan Document (as defined in the Credit
Agreement) which the Debtor may now or at any time hereafter owe to
the Secured Party, whether such debt, liability or obligation now
exists or is hereafter created or incurred and whether it is or may
be direct or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, independent, joint,
several or joint and several, and including specifically, but not
limited to, the Obligations (as defined in the Credit Agreement).
"Patents" means all of the Debtor's right, title and interest in
and to patents or applications for patents, fees or royalties with
respect to each, and including without limitation the right to sue
for past infringement and damages therefor, and licenses thereunder,
all as presently existing or hereafter arising or acquired, including
without limitation the patents listed on Exhibit A.
"Trademarks" means all of the Debtor's right, title and interest
in and to trademarks, service marks, collective membership marks, the
respective goodwill associated with each, and licenses thereunder,
all as presently existing or hereafter arising or acquired,
including, without limitation, the marks listed on Exhibit B.
2. SECURITY INTEREST. The Debtor hereby irrevocably pledges
and assigns to, and grants the Secured Party a security interest, with
power of sale to the extent permitted by law (the "Security Interest"), in
the Patents and in the Trademarks to secure payment of the Obligations.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Debtor
hereby represents, warrants and agrees as follows:
a. EXISTENCE; AUTHORITY. The Debtor is a corporation, having
full power to and authority to make and deliver this Agreement. The
execution, delivery and performance of this Agreement by the Debtor
have been duly authorized by all necessary action of the Debtor's
board of directors, and if necessary its stockholders, and do not and
will not violate the provisions of, or constitute a default under,
any presently applicable law or its articles of incorporation or
bylaws or any agreement presently binding on it. This Agreement has
been duly executed and delivered by the Debtor and constitutes the
Debtor's lawful, binding and legally enforceable obligation. The
correct name of the Debtor is Vari-L Company, Inc. The
authorization, execution, delivery and performance of this Agreement
do not require notification to, registration with, or consent or
approval by, any federal, state or local regulatory body or
administrative agency.
(b) PATENTS. Exhibit A accurately lists all Patents owned or
controlled by the Debtor as of the date hereof and accurately
reflects the existence and status of registrations pertaining to the
Patents as of the date hereof.
(c) TRADEMARKS. Exhibit B accurately lists all Trademarks
owned or controlled by the Debtor as of the date hereof and
accurately reflects the existence and status of Trademarks and all
registrations pertaining thereto as of the date hereof.
(d) TITLE. The Debtor has absolute title to each Patent and
each Trademark listed on Exhibits A and B, free and clear of all
security interests, liens and encumbrances, except the Security
Interest. The Debtor (i) will have, at the time the Debtor acquires
any rights in Patents or Trademarks hereafter arising, absolute title
to each such Patent or Trademark free and clear of all security
interests, liens and encumbrances, except the Security Interest, and
(ii) will keep all Patents and Trademarks free and clear of all
security interests, liens and encumbrances except the Security
Interest.
(e) NO SALE. The Debtor will not sell or otherwise dispose of
the Patents or Trademarks, or any interest therein, without the
Secured Party's prior written consent.
(f) DEFENSE. The Debtor will at its own expense, and using its
best efforts, protect and defend the Patents and Trademarks against
all claims or demands of all persons other than the Secured Party.
(g) MAINTENANCE. The Debtor will at its own expense maintain
the Patents and the Trademarks to the extent reasonably advisable in
its business including, but not limited to, filing all applications
to register and all affidavits and renewals possible with respect to
issued registrations. The Debtor covenants that it will not abandon
nor fail to pay any maintenance fee or annuity due and payable on any
Patent or Trademark, nor fail to file any required affidavit in
support thereof, without first providing the Secured Party: (i)
sufficient written notice, as provided in the Credit Agreement, to
allow the Secured Party to timely pay any such maintenance fees or
annuity which may become due on any of said Patents or Trademarks, or
to file any affidavit with respect thereto, and (ii) a separate
written power of attorney or other authorization to pay such
maintenance fees or annuities, or to file such affidavit, should such
be necessary or desirable.
(h) SECURED PARTY'S RIGHT TO TAKE ACTION. If the Debtor fails
to perform or observe any of its covenants or agreements set forth in
this Section 3, and if such failure continues for a period of ten
(10) calendar days after the Secured Party gives the Debtor written
notice thereof (or, in the case of the agreements contained in
subsection (g), immediately upon the occurrence of such failure,
without notice or lapse of time), or if the Debtor notifies the
Secured Party that it intends to abandon a Patent or Trademark, the
Secured Party may (but need not) perform or observe such covenant or
agreement on behalf and in the name, place and stead of the Debtor
(or, at the Secured Party's option, in the Secured Party's own name)
and may (but need not) take any and all other actions which the
Secured Party may reasonably deem necessary to cure or correct such
failure.
(i) Costs and Expenses. Except to the extent that the effect
of such payment would be to render any loan or forbearance of money
usurious or otherwise illegal under any applicable law, the Debtor
shall pay the Secured Party on demand the amount of all moneys
expended and all costs and expenses (including reasonable attorneys'
fees) incurred by the Secured Party in connection with or as a result
of the Secured Party's taking action under subsection (h) or
exercising its rights under Section 6, together with interest thereon
from the date expended or incurred by the Secured Party at the
highest rate then applicable to any of the Obligations.
(j) POWER OF ATTORNEY. To facilitate the Secured Party's
taking action under subsection (h) and exercising its rights under
Section 6, the Debtor hereby irrevocably appoints (which appointment
is coupled with an interest) the Secured Party, or its delegate, as
the attorney-in-fact of the Debtor with the right (but not the duty)
from time to time to create, prepare, complete, execute, deliver,
endorse or file, in the name and on behalf of the Debtor, any and all
instruments, documents, applications, financing statements, and other
agreements and writings required to be obtained, executed, delivered
or endorsed by the Debtor under this Section 3, or, necessary for the
Secured Party, after an Event of Default, to enforce or use the
Patents or Trademarks or to grant or issue any exclusive or non-
exclusive license under the Patents or Trademarks to any third party,
or to sell, assign, transfer, pledge, encumber or otherwise transfer
title in or dispose of the Patents or Trademarks to any third party.
The Debtor hereby ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof. The power of attorney granted
herein shall terminate upon the termination of the Credit Agreement
as provided therein and the payment and performance of all
Obligations (as defined therein).
4. DEBTOR'S USE OF THE PATENTS AND TRADEMARKS. The Debtor
shall be permitted to control and manage the Patents and Trademarks,
including the right to exclude others from making, using or selling items
covered by the Patents and Trademarks and any licenses thereunder, in the
same manner and with the same effect as if this Agreement had not been
entered into, so long as no Event of Default occurs and remains uncured.
5. EVENTS OF DEFAULT. Each of the following occurrences shall
constitute an event of default under this Agreement (herein called "Event
of Default"): (a) an Event of Default, as defined in the Credit
Agreement, shall occur; or (b) the Debtor shall fail promptly to observe
or perform any covenant or agreement herein binding on it; or (c) any of
the representations or warranties contained in Section 3 shall prove to
have been incorrect in any material respect when made.
6. REMEDIES. Upon the occurrence of an Event of Default and at
any time thereafter, the Secured Party may, at its option, take any or all
of the following actions:
(a) The Secured Party may exercise any or all remedies
available under the Credit Agreement.
(b) The Secured Party may sell, assign, transfer, pledge,
encumber or otherwise dispose of the Patents and Trademarks.
(c) The Secured Party may enforce the Patents and Trademarks
and any licenses thereunder, and if Secured Party shall commence any
suit for such enforcement, the Debtor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all
proper documents required by Secured Party in aid of such
enforcement.
7. MISCELLANEOUS. This Agreement has been duly and validly
authorized by all necessary action, corporate or otherwise. This
Agreement can be waived, modified, amended, terminated or discharged, and
the Security Interest can be released, only explicitly in a writing signed
by the Secured Party. A waiver signed by the Secured Party shall be
effective only in the specific instance and for the specific purpose
given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any of the Secured Party's rights or remedies. All rights
and remedies of the Secured Party shall be cumulative and may be exercised
singularly or concurrently, at the Secured Party's option, and the
exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other. The
Secured Party shall not be obligated to preserve any rights the Debtor may
have against prior parties, to realize on the Patents and Trademarks at
all or in any particular manner or order, or to apply any cash proceeds of
Patents and Trademarks in any particular order of application. This
Agreement shall be binding upon and inure to the benefit of the Debtor and
the Secured Party and their respective participants, successors and
assigns and shall take effect when signed by the Debtor and delivered to
the Secured Party, and the Debtor waives notice of the Secured Party's
acceptance hereof. The Secured Party may execute this Agreement if
appropriate for the purpose of filing, but the failure of the Secured
Party to execute this Agreement shall not affect or impair the validity or
effectiveness of this Agreement. A carbon, photographic or other
reproduction of this Agreement or of any financing statement signed by the
Debtor shall have the same force and effect as the original for all
purposes of a financing statement. This Agreement shall be governed by
the internal law of Colorado without regard to conflicts of law
provisions. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which
can be given effect and this Agreement shall be construed as if the
unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the
Obligations. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Patent and
Trademark Security Agreement as of the date written above.
WELLS FARGO BUSINESS CREDIT, INC. VARI-L COMPANY, INC.
By:/s/Debra L. Tracy By:/s/Richard P. Dutkiewicz
Its Vice President Its Vice President of Finance
and Chief Financial Officer
STATE OF COLORADO )
)
CITY AND COUNTY OF DENVER)
The foregoing instrument was acknowledged before me this 28th day of
June, 2001, by Richard P. Dutkiewicz, the Vice President of Finance and
Chief Financial Officer of Vari-L Company, Inc., a Colorado corporation,
on behalf of the corporation.
/s/Kristi Sue Murray
Notary Public
My commission expires 6/3/2005
STATE OF COLORADO )
)
CITY AND COUNTY OF DENVER)
The foregoing instrument was acknowledged before me this 28th day of
June, 2001, by Debra L. Tracy, a Vice President of Wells Fargo Business
Credit, Inc., a Minnesota corporation, on behalf of the corporation.
/s/Kristi Sue Murray
Notary Public
My commission expires 6/3/2005