mis_8k0118ex107.htm


    
      Exhibit
        10.7

      


       

      PATENT
        AND TRADEMARK SECURITY AGREEMENT

       

    

    This
      Agreement, dated as of January 14, 2008, is made by and between MAGNETECH
      INDUSTRIAL SERVICES, INC., an Indiana corporation having a business location
      at
      the address set forth below under its signature (the “Debtor”), and Wells Fargo
      Bank, National Association (the “Secured Party”), acting through its Wells Fargo
      Business Credit operating division, having a business location at the address
      set forth below under its signature.

     

    RECITALS:

     

    The
      Debtor, together with certain affiliates of the Debtor, and the Secured Party
      are parties to 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 extend credit to or for the account of the Debtor.

     

    As
      a
      condition to extending credit to or for the account of the Debtor, 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 Loan Documents 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 Indebtedness (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.

     

    “Security
      Interest” has the meaning given in Section 2.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Trademarks”
      means all of the Debtor’s right, title and interest in and to:
      (i) trademarks, service marks, collective membership marks, registrations
      and applications for registration for each, and the respective goodwill
      associated with each, (ii) licenses, fees or royalties with respect to
      each, (iii) the right to sue for past, present and future infringement,
      dilution and damages therefor, (iv) 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 (the “Security Interest”), with
      power of sale to the extent permitted by law, in the Patents and in the
      Trademarks to secure payment of the Obligations.  As set forth in the
      Credit Agreement, the Security Interest is coupled with a security interest
      in
      substantially all of the personal property of the Debtor.  This
      Agreement grants only the Security Interest herein described, is not intended
      to
      and does not affect any present transfer of title of any trademark registration
      or application and makes no assignment and grants no right to assign or perform
      any other action with respect to any intent to use trademark application, unless
      such action is permitted under 15 U.S.C. §1060.

     

    3.           Representations,
      Warranties and Agreements.  The Debtor represents, warrants and
      agrees as follows:

     

    (a)           Existence;
      Authority.  The Debtor is a corporation
      duly organized, validly existing and in good standing under the laws of its
      state of incorporation, and this Agreement has been duly and validly authorized
      by all necessary corporate action on the part of the Debtor.

     

    (b)           Patents.  Exhibit
      A accurately lists all Patents owned or controlled by the Debtor as
      of
      the date hereof, or to which the Debtor has a right as of the date hereof to
      have assigned to it, and accurately reflects the existence and status of
      applications and letters patent pertaining to the Patents as of the date
      hereof.  If after the date hereof, the Debtor owns, controls or has a
      right to have assigned to it any Patents not listed on Exhibit
      A, or if Exhibit A ceases to accurately reflect the
      existence and status of applications and letters patent pertaining to the
      Patents, then the Debtor shall within sixty (60) days provide written notice
      to
      the Secured Party with a replacement Exhibit A, which upon acceptance by the
      Secured Party shall become part of this Agreement.

     

    (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 applications and registrations
      pertaining thereto as of the date hereof; provided, however, that
Exhibit B need not list common law marks (i.e., Trademarks for
      which there are no applications or registrations) which are not material to
      the
      Debtor’s or any Affiliate’s business(es).  If after the date hereof,
      the Debtor owns or controls any Trademarks not listed on Exhibit B
(other than common

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    law
      marks
      which are not material to the Debtor’s or any Affiliate’s business(es)), or if
Exhibit B ceases to accurately reflect the existence and status
      of applications and registrations pertaining to the Trademarks, then the Debtor
      shall promptly provide written notice to the Secured Party with a replacement
      Exhibit B, which upon acceptance by the Secured Party shall
      become part of this Agreement.

     

    (d)           Affiliates.  As
      of the date hereof, no Affiliate owns, controls, or has a right to have assigned
      to it any items that would, if such item were owned by the Debtor, constitute
      Patents or Trademarks.  If after the date hereof any Affiliate owns,
      controls, or has a right to have assigned to it any such items, then the Debtor
      shall promptly either: (i) cause such Affiliate to assign all of its rights
      in such item(s) to the Debtor; or (ii) notify the Secured Party of such
      item(s) and cause such Affiliate to execute and deliver to the Secured Party
      a
      patent and trademark security agreement substantially in the form of this
      Agreement.

     

    (e)           Title.  The
      Debtor has absolute title to each Patent and each Trademark listed on Exhibits
      A
      and B, free and clear of all Liens except Permitted Liens.  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 Liens except Permitted Liens, and (ii) will keep all
      Patents and Trademarks free and clear of all Liens except Permitted
      Liens.

     

    (f)           No
      Sale.  Except as permitted in the
      Credit Agreement, the Debtor will not assign, transfer, encumber or otherwise
      dispose of the Patents or Trademarks, or any interest therein, without the
      Secured Party’s prior written consent.

     

    (g)           Defense.  The
      Debtor will at its own expense and using commercially reasonable efforts,
      protect and defend the Patents and Trademarks against all claims or demands
      of
      all Persons other than those holding Permitted Liens.

     

    (h)           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 obtain letters patent or trademark registrations
      and
      all affidavits, maintenance fees, annuities, and renewals possible with respect
      to letters patent, trademark registrations and applications
      therefor.  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 or renewal in support thereof, without
      first providing the Secured Party:  (i) sufficient written
      notice, of at least thirty (30) days, to allow the Secured Party to timely
      pay
      any such maintenance fees or annuities which may become due on any Patents
      or
      Trademarks, or to file any affidavit or renewal 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 or renewal, should
      such be necessary or desirable.

     

    (i)           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 (h), 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 or take
      steps to prevent such intended abandonment 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
      or
      prevent such intended abandonment.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (j)           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 and disbursements) incurred
      by the Secured Party in connection with or as a result of the Secured Party’s
      taking action under subsection (i) or exercising its rights under Section 6,
      together with interest thereon from the date expended or incurred by the Secured
      Party at the Default Rate.

     

    (k)           Power
      of Attorney.  To facilitate the Secured
      Party’s taking action under subsection (i) 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.

     

    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.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    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 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.  All
      notices to be given to Debtor under this Agreement shall be given in the manner
      and with the effect provided in the Credit Agreement.  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

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    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 Wisconsin 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 BANK, NATIONAL ASSOCIATION

              	 	
                
                  MAGNETECH SERVICES, INC.

                

              	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                By:

              	 	 	
                By:

              	 /s/
                John A. Martell
	
                Its:

              	
                Vice
                  President

              	 	
                Its:

              	 CEO
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                Wells
                  Fargo Bank, National Association

              	 	
                
                  Magnetech Industrial Services, Inc.

                

              	 
	
                100
                  East Wisconsin Avenue

              	 	
                
                  1125 S. Walnut Street

                

              	 
	
                MAC
                  N9811-143

              	 	
                
                  South
                    Bend, Indiana 46619

                

              	 
	
                Milwaukee,
                  Wisconsin  53202

              	 	 	 	 


      

      
 

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

     

    
       

      
        	
                STATE
                  OF

              	 Indiana	
                )

              	 	 	 
	 	 	
                )

              	 	 	 
	
                COUNTY
                  OF

              	 St.
                Joseph	
                )

              	 	 	 


      

       

      
         

        The
          foregoing instrument was acknowledged before me this ___ day of January,
          2008,
          by John A. Martell, the President of Magnetech Industrial Services, Inc.,
          an
          Indiana corporation, on behalf of the corporation.

      

      


      
        	 	 /s/
                James M. Lewis
	 	
                Notary
                  Public

              
	 	 	 
	 	
                My
                  commission:

              	 expires
                2/9/2008
	 	 	 


      

    

     

     

    
      
         

        
          	
                  STATE
                    OF

                	 	
                  )

                	 	 	 
	 	 	
                  )

                	 	 	 
	
                  COUNTY
                    OF

                	 	
                  )

                	 	 	 


        

         

        The
          foregoing instrument was
          acknowledged before me this ___ day of January, 2008, by Lynn A. Gruber,
          a Vice
          President of Wells Fargo Bank, National Association, on behalf of the
          association.

         

        
          	 	 
	 	
                  Notary
                    Public

                
	 	 	 
	 	
                  My
                    commission:

                	 
	 	 	 


        

      

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      


       

      EXHIBIT
        A

       

      UNITED
        STATES ISSUED PATENTS

       

      
        	 	 	 	 	 
	
                PATENT

              	
                COUNTRY

              	
                PATENT
                  NO.

              	
                ISSUE
                  DATE

              	
                STATUS

              	 	 
	
                ELECTROMAGNET

              	
                US

              	
                5,410,289

              	
                4/25/1995

              	
                Issued

              	 	 
	
                FUEL
                  IGNITOR

              	
                US

              	
                6,739,308

              	
                5/24/2004

              	
                Issued

              	 	 


      

      
 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      EXHIBIT
        B

       

      UNITED
        STATES ISSUED TRADEMARKS

       

      


       

      


      
        	
                MARK

              	
                COUNTRY

              	
                SERIAL
                  NO./REG. NO.

              	
                FILING
                  DATE/REG. DATE

              	
                STATUS

              
	
                MAGNETRAC

              	
                US

              	
                2,801,915

              	
                01/06/2004

              	
                Registered