Exhibit 10.37
[ONLY REFERS TO U.S. TRADEMARKS]
TRADEMARK COLLATERAL SECURITY AGREEMENT
THIS AGREEMENT is made on the 14th day of August, 2000 by and between
BREAKING WAVES, INC., a New York corporation, having a mailing address at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 ("Borrower") and CENTURY BUSINESS CREDIT
CORPORATION, having a mailing address at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Lender").
BACKGROUND
Borrower and Lender have entered into a Factoring Agreement of even date
herewith (as amended and supplemented from time to time, the "Factoring
Agreement"). In order to induce Lender to execute and deliver the Factoring
Agreement, Borrower agreed to execute and deliver to Lender this Trademark
Collateral Security Agreement ("Security Agreement"). This Security Agreement,
covering Trademarks (as hereinafter defined), is being executed
contemporaneously with the Factoring Agreement under which Lender is granted a
lien on and security interest in, inter alia, machinery, equipment formulations,
manufacturing procedures, quality control procedures and product specifications
("Other Assets") relating to products sold under the Trademarks, whereby Lender
shall have the right to foreclose simultaneously on the Trademarks and the Other
Assets in the event of the occurrence and continuance of a default hereunder or
an event of default under the Factoring Agreement.
NOW, THEREFORE, in consideration of the premises, Borrower and Lender
hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Factoring Agreement shall have their defined meanings when used herein and the
following terms shall have the following meanings, unless the context otherwise
requires:
"Account" shall have the meaning assigned to it under Section 9-106 of the
Code;
"Code" shall mean the Uniform Commercial Code as the same may from time to
time be in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2 of this
Security Agreement.
"Event of Default" shall mean an event of default under the Factoring
Agreement.
"General Intangibles" shall have the meaning assigned to it under Section
9-106 of the Code.
"Licenses" shall mean the trademark license agreements pursuant to which
Borrower is the licensor designated on Schedule I hereto, as any of the same may
from time to time be amended or supplemented.
"Obligations" shall have the meaning assigned to it in the Factoring
Agreement.
"Proceeds" shall have the meaning assigned to it under Section 9-306 of the
Code, and in any event, shall include, but not be limited to, (i) any and all
proceeds of any insurance, indemnity, warranty or guarantee payable to Borrower
from time to time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to Borrower from time
to time in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority), and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Receivables" shall have the meaning assigned to it in the Factoring
Agreement.
"Security Agreement" shall mean this Security Agreement, as the same may
from time to time be amended or supplemented.
"Trademarks" shall mean the registered trademarks and pending applications
shown in the attached Schedule A, and those trademarks which are hereafter
adopted or acquired by Borrower, and all right, title and interest therein and
thereto, and all registrations, applications, and recordings thereof, including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States and any State thereof, all whether now owned or hereafter acquired
by Borrower.
2. Grant of Security Interest. As collateral security for the prompt
payment of the Obligations, Borrower hereby grants and conveys to Lender a
security interest in and to (a) the entire right, title and interest of Borrower
in and to the Trademarks, including the registrations and applications
appurtenant thereto, listed in Schedule A hereto (as the same may be amended
pursuant hereto from time to time), and in and to any and all trademarks, and
registrations and applications appurtenant thereto, hereafter acquired or filed
by Borrower, including without limitation all renewals thereof, all proceeds of
infringement suits, the rights to xxx for past, present and future infringements
and all rights corresponding thereto in the United States [and any foreign
country] and the goodwill of the business to which each of the Trademarks
relates and (b) all of Borrower's right, title and interest in, to and under the
following:
(i) all Licenses;
(ii) all Receivables, contract rights and General Intangibles arising
under or relating to each and every License (including, without limitation,
(A) all moneys due and to become due under any License, (B) any damages
arising out of or for breach or default in respect of any such License, (C)
all other amounts from time to time paid or payable under or in connection
with any such License, and (D) the right of Borrower to terminate any such
License or to perform and to exercise all remedies thereunder); and,
(iii) to the extent not otherwise included, all Proceeds and products
of any or all of the foregoing. All of the property referred to in this
paragraph 2 is hereinafter collectively called the "Collateral."
3. Representations and Warranties. Borrower covenants and warrants that as
of the date of this Security Agreement:
(a) The Trademarks are subsisting and have not been adjudged invalid
or unenforceable;
(b) To the best of Borrower's knowledge, each of the Trademarks is
valid and enforceable;
(c) There is no outstanding claim that the use of any of the
Trademarks violates the rights of any third person;
(d) Borrower is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks,
free and clear of any liens, charges and encumbrances, (including without
limitation pledges, assignments, licenses, registered user agreements and
covenants by Borrower not to xxx third persons), except for the Licenses
referred to in Schedule I attached hereto;
(e) Borrower has the right to enter into this Security Agreement and
perform its terms;
(f) Borrower has used, and will continue to use for the duration of
this Security Agreement, proper statutory notice, where appropriate, in
connection with its use of the Trademarks; and
(g) Borrower has used, and will continue to use for the duration of
this Security Agreement, consistent standards of quality in its manufacture
of products sold under the Trademarks.
4. Right of Inspection. Borrower hereby grants to Lender and its employees
and agents the right to visit Borrower's plants and facilities which
manufacture, inspect or store products sold under any of the Trademarks, and to
inspect the products and quality control relating thereto at reasonable times
during regular business hours. Borrower shall use its best efforts to do any and
all acts required by Lender to ensure Borrower's compliance with paragraph 3(g)
above.
5. New Trademarks. (a) If, before the Obligations shall have been paid in
full, Borrower shall obtain rights to any new trademarks, the provisions of
paragraph 2 shall automatically apply thereto and Borrower shall give Lender
prompt written notice thereof. (b) Borrower grants Lender a power-of-attorney,
irrevocable so long as the Factoring Agreement is in existence, to modify this
Security Agreement by amending Schedule A to include any future trademarks,
including trademark registrations or applications appurtenant thereto covered by
this Security Agreement.
6. Covenants. Borrower covenants and agrees with Lender that from and after
the date of this Security Agreement and until the Obligations are fully
satisfied:
(a) Further Documentation; Pledge of Instruments. At any time and from
time to time, upon the written request of Lender, Borrower will promptly
and duly execute and deliver any and all such further instruments and
documents and take such further action as Lender may reasonably deem
desirable in obtaining the full benefits of this Security Agreement and of
the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Code with
respect to the liens and security interests granted hereby. Borrower also
hereby authorizes Lender to file any such financing or continuation
statement without the signature of Borrower to the extent permitted by
applicable law. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged to Lender
hereunder, duly endorsed in a manner satisfactory to Lender.
(b) Maintenance of Trademarks. Borrower will not do any act, or omit
to do any act, whereby the Trademarks or any registration or application
appurtenant thereto, may become abandoned, invalidated, unenforceable,
avoided, avoidable, or will otherwise diminish in value, and shall notify
Lender immediately if it knows of any reason or has reason to know of any
ground under which this result may occur. Borrower shall take appropriate
action at its expense to halt the infringement of the Trademarks and shall
properly exercise its duty to control the nature and quality of the goods
offered by any licensees in connection with the Licenses set forth in
Schedule I.
(c) Indemnification. (A) Borrower assumes all responsibility and
liability arising from the use of the Trademarks, and Borrower hereby
indemnifies and holds Lender harmless from and against any claim, suit,
loss, damage or expense (including reasonable attorneys' fees) arising out
of Borrower's operations of its business from the use of the Trademarks.
(B) In any suit, proceeding or action brought by Lender under any License
for any sum owing thereunder, or to enforce any provisions of such License,
Borrower will indemnify and keep Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, set off,
counterclaim, recoupment or reduction or liability whatsoever of the
obligee thereunder, arising out of a breach of Borrower of any obligation
thereunder or arising out of any other agreement, indebtedness or liability
at any time owing to or in favor of such obligee or its successors from
Borrower, and all such obligations of Borrower shall be and remain
enforceable against and only against Borrower and shall not be enforceable
against Lender.
(d) Limitation of Liens on Collateral. Borrower will not create,
permit or suffer to exist, and will defend the Collateral against and take
such other action as is necessary to remove any lien, security interest,
encumbrance, claim or right, in or to the Collateral, and will defend the
right, title and interest of Lender in and to any of Borrower's rights
under the Licenses and to the Proceeds thereof against the claims and
demands of all persons whomever.
(e) Limitations on Modifications of Licenses. Borrower will not (i)
amend, modify, terminate or waive any provision of any License in any
manner which might materially adversely affect the value of such License or
the Trademarks as Collateral, without the written consent of Lender, (ii)
fail to exercise promptly and diligently each and every material right
which it may have under each License (other than any right of termination),
without the prior written consent of Lender, or (iii) fail to deliver to
Lender a copy of each material demand, notice or document sent or received
by it relating in any way to any License or Trademark.
(f) Notices. Borrower will advise Lender promptly, in reasonable
detail, (i) of any lien or claim made or asserted against any of the
Collateral, (ii) of any material change in the composition of the
Collateral, and (iii) of the occurrence of any other event which would have
a material adverse effect on the value of any of the Collateral or on the
security interests created hereunder.
(g) Limitation on Further Uses of Trademarks. Borrower will not
assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a
security interest in or lien upon, encumber, grant an exclusive or
non-exclusive license, or otherwise dispose of any of the Collateral,
without prior written consent of Lender.
7. Lender's Appointment as Attorney-in-Fact.
(a) Borrower hereby irrevocably constitutes and appoints Lender and
any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Borrower and in the name of Borrower or in its own
name, from time to time in Lender's discretion, for the purposes of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Security Agreement and, without limiting the generality of the foregoing,
hereby gives Lender the power and right, on behalf of Borrower, to do the
following:
(i) Upon the occurrence and continuance of an Event of Default,
to ask, demand, collect, receive and give acquittances and receipts
for any and all moneys due and to become due under any License and, in
the name of Borrower or its own name or otherwise, to take possession
of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any License and
to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by Lender for
the purpose of collecting any and all such moneys due under any
License whenever payable;
(ii) To pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the
terms of this Security Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(iii) Upon the occurrence and continuance of an Event of Default,
(A) to direct any party liable for any payment under any of the
Licenses to make payment of any and all moneys due and to become due
thereunder directly to Lender or as Lender shall direct; (B) to
receive payment of and receipt for any and all moneys, claims and
other amounts due and to become due at any time in respect of or
arising out of any Collateral; (C) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (D) to
defend any suit, action or proceeding brought against Borrower with
respect to any Collateral; (E) to settle, compromise, or adjust any
suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as Lender may deem
appropriate; and (F) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do, at Lender's option all acts and
things which Lender deems necessary to protect, preserve or realize
upon the Collateral and Lender's security interest therein, in order
to effect the intent of this Security Agreement, all as fully and
effectively as Borrower might do.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Notwithstanding the foregoing, Borrower further agrees to execute
any additional documents which Lender may require in order to confirm this power
of attorney, or which Lender may deem necessary to enforce any of its rights
contained in this Security Agreement.
(b) The powers conferred on Lender hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Lender shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and neither
it nor any of its officers, directors, employees or agents shall be
responsible to Borrower for any act or failure to act, except for its own
gross negligence or willful misconduct.
(c) Borrower also authorizes Lender to execute, in connection with the
sale provided for in paragraph 10(b) of this Security Agreement, any
endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral.
8. Execution of Power of Attorney. Concurrently with the execution and
delivery hereof, Borrower is executing and delivering to Lender, in the form of
Schedule II hereto, ten (10) originals of a Power of Attorney for the
implementation of the assignment, sale or other disposal of the Trademarks
pursuant to paragraph 7 hereof.
9. Performance by Lender of Borrower's Obligations. If Borrower fails to
perform or comply with any of its agreements contained herein and Lender, as
provided for by the terms of this Security Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
reasonable expenses of Lender incurred in connection with such performance or
compliance shall be payable by Borrower to Lender on demand and shall constitute
Obligations secured hereby.
10. Remedies, Rights Upon Event of Default.
(a) If an Event of Default shall occur and be continuing:
(i) All payments received by Borrower under or in connection with
any of the Collateral shall be held by Borrower in trust for Lender,
shall be segregated from other funds of Borrower and shall forthwith
upon receipt by Borrower, be turned over to Lender, in the same form
as received by Borrower (duly endorsed by Borrower to Lender, if
required); and
(ii) Any and all such payments so received by Lender (whether
from Borrower or otherwise) may, in the sole discretion of Lender, be
held by Lender as collateral security for, and/or then or at any time
thereafter applied in whole or in part by Lender against all or any
part of the Obligations in such order as Lender shall elect. Any
balance of such payments held by Lender and remaining after payment in
full of all the Obligations shall be paid over to Borrower or to
whomsoever may be lawfully entitled to receive the same.
(b) If any Event of Default shall occur and be continuing, Lender may
exercise in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code. Borrower shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all amounts to which Lender is entitled.
Borrower shall also be liable for the reasonable fees of any attorneys
employed by Lender to collect any such deficiency and also as to any
reasonable attorney's fees incurred by Lender with respect to the
collection of any of the Obligations and the enforcement of any of Lender's
respective rights hereunder.
11. Termination. At such time as Borrower shall completely pay in full all
of the Obligations and the Factoring Agreement is terminated, this Security
Agreement shall terminate and Lender shall execute and deliver to Borrower all
such releases, deeds, assignments and other instruments as may be necessary or
proper to re-vest in Borrower full title to the Trademarks, subject to any
disposition thereof which may have been made by Lender pursuant hereto.
12. Notices. Any notice to Lender shall be deemed to have been duly given
when deposited in the mail, first class, postage prepaid, addressed to Lender at
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxx. Any
notice to Borrower hereunder shall be deemed to have been duly given when
deposited in the mail, first class postage prepaid, addressed to BREAKING WAVES,
INC. at 000 XXXX 00XX XXXXXX, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxx
Xxxxxxx.
13. No Waiver. 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 Factoring Agreement 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.
14. Cumulative Remedies. All of Lender's rights and remedies with respect
to the Collateral, whether established hereby or by the Factoring Agreement, or
by any other agreements or by law, shall be cumulative and may be exercised
singularly or concurrently.
15. 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 Agreement in any
jurisdiction.
16. No Modification Except in Writing. This Security Agreement is subject
to modification only by a writing signed by the parties, except as provided in
paragraphs 5 and 7.
17. Successors and Assigns. The benefits and burdens of this Security
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.
18. Governing Law. The validity and interpretation of this Security
Agreement and the rights and obligations of the parties shall be governed by the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
WITNESS: BREAKING WAVES, INC.
/s/____________________ By:/s/ Xxxxxx Xxxxxxxx
XXXXXX XXXXXXXX
PRESIDENT
WITNESS: CENTURY BUSINESS CREDIT
CORPORATION
_________________________ By:/s/_______________________
Name:
Title:
SCHEDULE A
Schedule A to a Trademark Collateral Security Agreement dated August 14,
2000, by and between BREAKING WAVES, INC., and CENTURY BUSINESS CREDIT
CORPORATION.
Reg. No. or Reg. or
Application No. Xxxx Country Filing Date
1803781 Breaking Waves USA
2001786 Small Waves USA
2046136 All Waves USA
Pending Coral Cove USA
SCHEDULE I
LICENSES
NONE
