EXHIBIT 10.4
TRADEMARK SECURITY AGREEMENT
AGREEMENT dated as of January 20, 2006 made between Ovation Products
Corporation, a Delaware corporation ("Debtor"), and Andlinger & Company, Inc., a
Delaware corporation, and its successors, permitted assigns, and other legal
representatives ("Secured Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Debtor and Secured Party are parties to a Senior Secured
Convertible Note Purchase Agreement, dated January 20, 2006 (the "Purchase
Agreement") pursuant to which Secured Party has agreed to purchase a certain
Senior Secured Convertible Promissory Note (the "Note") from the Debtor;
WHEREAS, Secured Party's willingness to enter into the Purchase
Agreement and to purchase the Note is subject to the condition, among others,
that Debtor execute and deliver this Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and for one dollar
($1.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in addition to, and not in limitation of,
any rights of the Secured Party under the other Transaction Documents (as
defined in the Purchase Agreement), Debtor hereby agrees for the benefit of
Secured Party as follows:
1. DEFINITIONS.
1.1 Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Purchase Agreement or the Note.
1.2 "Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other transfer or disposition of any right,
interest, asset or property which constitutes Trademark Collateral, any value
received as a consequence of the ownership, possession, or use of any Trademark
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any right, interest, asset or property which constitutes
Trademark Collateral.
1.3 "PTO" shall mean the United States Patent and Trademark
Office.
1.4 "Trademarks" shall mean all of the trademarks, service
marks, designs, logos, indicia, trade names, corporate names, company names,
business names, fictitious business names, trade styles, elements of package or
trade dress, and/or other
source and/or product or service identifiers, and general intangibles of like
nature, used or associated with or appurtenant to the products, services and
business of the Debtor, including any and all goodwill associated with any
trademark or the license of any trademark, which (i) are set forth on Schedule A
attached hereto, or (ii) have been adopted, acquired, owned, held or used by the
Debtor and are now owned, held or used by the Debtor, in the Debtor's business,
or with the Debtor's products and services, or in which the Debtor has any
right, title or interest, or (iii) are in the future adopted, acquired, owned,
held and/or used by the Debtor in the Debtor 's business or with the Debtor's
products and services, or in which the Debtor in the future acquires any right,
title or interest.
1.5 "Trademark Collateral" shall mean all of the Debtor's
right, title and interest (to the extent Debtor has any such right, title or
interest) in and to all of the Trademarks, the Trademark Registrations, the
Trademark Rights, and all additions, improvements and accessions to,
substitutions for, replacements of, and all products and Proceeds (including
insurance proceeds) of any and all of the foregoing provided, however, that
Trademark Collateral shall exclude all rights of Debtor (except payment rights)
to the extent that the inclusion of such rights would cause a default by Debtor
under the terms of any agreement.
1.6 "Trademark Registrations" shall mean all past, present or
future federal, state, local and foreign registrations of the Trademarks (and
all renewals and extensions of such registrations), all past, present and future
applications for any such registrations of the Trademarks (and any such
registrations thereof upon approval of such applications), together with the
right (but not the obligation) to apply for such registrations (and prosecute
such applications), and to take any and all actions necessary or appropriate to
maintain such registrations in effect and/or renew and extend such
registrations.
1.7 "Trademark Rights" shall mean any and all past, present or
future rights in, to and associated with the Trademarks throughout the world,
whether arising under federal law, state law, common law, foreign law or
otherwise, including but not limited to the following: all such rights arising
out of or associated with the Trademark Registrations; the right (but not the
obligation) to register claims under any state, federal or foreign trademark law
or regulation; the right (but not the obligation) to sue or bring opposition or
cancellation proceedings for any and all past, present and future infringements
or dilution of or any other damages or injury to the Trademarks, the Trademark
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, dilution, damage
or injury.
1.8 "Use" of any Trademark shall include all uses of such
Trademark by, for or in connection with the Debtor or its business or for the
direct or indirect benefit of the Debtor or its business, including but not
limited to all such uses by the Debtor itself, by any of the affiliates of the
Debtor, or by any licensee or contractor of the Debtor.
2
2. GRANT OF SECURITY; COLLATERAL ASSIGNMENT.
2.1 Grant of Security Interest. As collateral security for the
complete and timely payment, performance and satisfaction of all Obligations (as
defined in the Security Agreement between Debtor and the Secured Party dated as
of the date hereof ("Security Agreement")), the Debtor hereby unconditionally
grants to the Secured Party, a continuing security interest in and lien on the
Trademark Collateral, and pledges, mortgages and hypothecates (but does not
transfer title to) the Trademark Collateral to the Secured Party.
2.2 Supplemental to Transaction Documents. The parties
expressly acknowledge and agree that the Debtor has delivered the Transaction
Documents pursuant to which the Debtor unconditionally granted to the Secured
Party a continuing security interest in and lien on the Collateral (as defined
in the Security Agreement) (including the Trademark Collateral). In no event
shall this Trademark Security Agreement, or the recordation of this Trademark
Security Agreement (or any document hereunder) with the PTO, adversely affect or
impair, in any way or to any extent, the Transaction Documents, the security
interest of the Secured Party in the Collateral (including the Trademark
Collateral) pursuant to the Transaction Documents, the attachment and perfection
of such security interest under the UCC (as defined in the Security Agreement),
or the present or future rights and interests of the Secured Party in and to the
Collateral under or in connection with the Transaction Documents, this Trademark
Security Agreement and/or the UCC. Any and all rights and interests of the
Secured Party in and to the Trademark Collateral (and any and all obligations of
the Debtor with respect to the Trademark Collateral) provided herein, or arising
hereunder or in connection herewith, shall only supplement and be cumulative and
in addition to the rights and interests of the Secured Party (and the
obligations of the Debtor) in, to or with respect to the Collateral (including
the Trademark Collateral) provided in or arising under or in connection with the
other Transaction Documents.
3. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants to, and covenants and agrees with, Secured Party, as follows (provided,
however, that, notwithstanding anything herein to the contrary, none of the
obligations and/or restrictions set forth in Section 3.1, 3.2 and 3.3 shall
apply to any Trademark Collateral that Debtor determines, in its reasonable
business judgment, is no longer necessary or material to the conduct of its
business or operations):
3.1 Title. The Debtor will take all reasonable actions
necessary to defend its right, title and interests in and to the Trademark
Collateral against claims of any third parties.
3.2 Maintenance of Trademark Collateral. The Debtor shall take
such reasonable actions (including but not limited to institution and
maintenance of suits, proceedings or actions) necessary to maintain, protect,
preserve, care properly for and enforce the Trademarks and the Trademark
Registrations, Trademark Rights and to preserve the Debtor's rights in the
Trademarks.
3
3.3 No Infringements. The Debtor shall use reasonable efforts
to protect against infringement or unauthorized or improper use of the
Trademarks. To the best of the Debtor's knowledge and belief, there is at
present no material infringement or unauthorized or improper use of the
Trademarks or the Trademark Registrations or the Trademark Rights related
thereto. In the event any such infringement or unauthorized or improper use by
any third party has been reasonably established by the Debtor, the Debtor shall
promptly notify the Secured Party and Secured Party shall have the right to sue
and recover therefor and to retain any and all damages so recovered or obtained.
3.4 Recording at PTO. Debtor acknowledges that Secured Party
may cause this Trademark Security Agreement and Schedule A along with any
amendments made thereto to be recorded with the PTO.
4. RIGHTS OF AND LIMITATIONS ON SECURED PARTY.
4.1 Debtor to Remain Liable. It is expressly agreed by Debtor
that Debtor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it relating to the Trademark
Collateral. Secured Party shall not have any obligation or liability under or in
relation to the Trademark Collateral by reason of the execution and delivery of
this Trademark Security Agreement and Secured Party's rights hereunder, or the
grant of a security interest by Debtor to Secured Party of, or the receipt by
Secured Party in accordance with this Trademark Security Agreement of, any
payment relating to any Trademarks, nor shall Secured Party be required or
obligated in any manner to perform or fulfill any of the obligations of Debtor
relating to the Trademark Collateral or be liable to any party on account of
Debtor's use of the Trademark Collateral.
4.2 Specific Enforcement. Due to the unique nature of the
Trademark Collateral, and in order to preserve its value, the Debtor agrees that
the Debtor's agreements, duties and obligations under this Trademark Security
Agreement shall be subject to specific enforcement and other appropriate
equitable orders and remedies.
5. REMEDIES UPON AN EVENT OF DEFAULT. During the continuance of
an Event of Default:
(a) Secured Party may declare all Obligations secured hereby
immediately due and payable and shall have all of the rights and remedies of a
secured party under the UCC or under other applicable law.
(b) Secured Party may notify any obligors with respect to the Trademark
Collateral of Secured Party's security interest and that such obligors are to
make payments directly to Secured Party. Secured Party may send this notice in
Debtor's name or in Secured Party's name, and at Secured Party's request Debtor
will join in Secured Party's notice, provide written confirmation of Secured
Party's security interest and request that payment be sent to Secured Party.
Secured Party may enforce this obligation
4
by specific performance. Secured Party may collect all amounts due from such
obligors. Upon and after notification by Secured Party to Debtor pursuant to
this Section 5(b), Debtor shall hold any proceeds and collections of any of the
Trademark Collateral in trust for Secured Party and shall not commingle such
proceeds or collections with any other of Debtor's funds, and Debtor shall
deliver all such proceeds to Secured Party immediately upon Debtor's receipt
thereof in the identical form received and duly endorsed or assigned to Secured
Party.
(c) Secured Party will give to the Debtor reasonable notice of the time
and place of any public sale of Trademark Collateral or of the time after which
any private sale or other intended disposition thereof is to be made. Such
requirement of reasonable notice shall be met if such notice is delivered to the
address of the Debtor set forth in the Purchase Agreement at least ten (10) days
before the time of the proposed sale or disposition. Any such sale may take
place from Debtor's location or such other location as Secured Party may
designate. Debtor shall remain liable for any deficiency in payment of the
Obligations after any such sale.
(d) For the purpose of enabling Secured Party to exercise the rights
and remedies hereunder and only for such purpose, the Debtor hereby irrevocably
appoints Secured Party as its true and lawful attorney-in-fact with full power
of substitution, effective upon the occurrence and during the continuation of an
Events of Default, to take any of the foregoing actions in the name of the
Debtor to carry out the terms of this Trademark Security Agreement and to
protect, enforce, preserve or perfect Secured Party's rights hereunder. Such
power of attorney is irrevocable until the termination of this Trademark
Security Agreement and shall be deemed to be coupled with an interest.
6. LIABILITY FOR USES OF TRADEMARK COLLATERAL. The Debtor shall be
liable for any and all uses or misuses of and the practice, manufacture, sales
(or other transfers or dispositions) of any of the Trademark Collateral by the
Debtor and its affiliates. The Debtor shall also be exclusively liable for any
claim, suit, loss, damage, expense or liability arising out of or in connection
with the fault, negligence, acts or omissions of the Debtor (regardless of
whether such fault, negligence, acts or omissions occurred or occur prior to or
after the applicable license termination).
7. LICENSE AGREEMENT OBLIGATIONS. Nothing in this Trademark Security
Agreement shall relieve the Debtor from any performance of any covenant,
agreement or obligation of the Debtor under any license agreement now or
hereafter in effect licensing any part of the Trademark Collateral, or from any
liability to any licensee or licensor under any such license agreement or to any
other party, or shall impose any liability on Secured Party for any act or
omission of the Debtor in connection with any such license agreement.
8. GENERAL PROVISIONS. This Trademark Security Agreement is
supplemental to the Security Agreement. In the event of any irreconcilable
conflict between the provisions of this Trademark Security Agreement and the
Security
5
Agreement, the provisions most advantageous to Secured Party and most
restrictive to Debtor shall govern.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, Debtor has caused this Trademark Security Agreement to
be executed by its duly authorized officer as of the date first written above.
WITNESS: OVATION PRODUCTS CORPORATION
[Executed] By: /s/ William E. Lockwood
-----------------------
Name: William E. Lockwood
Title: President
STATE:
COUNTY: January 20, 2006
Then personally appeared the above-named William E. Lockwood and stated
that he is a duly authorized President of Ovation Products Corporation (the
"Corporation") and acknowledged the foregoing instrument to be his free act and
deed, and the free act and deed of said Corporation, before me,
/s/ Carolyn A. Power
--------------------
Notary Public - New Hampshire
My Commission Expires: January 26, 2010
7