CONDITIONAL ASSIGNMENT AND
TRADEMARK SECURITY AGREEMENT
THIS CONDITIONAL ASSIGNMENT AND TRADEMARK SECURITY AGREEMENT (the
"Agreement"), dated as of August 13, 1999, between OPTICARE EYE HEALTH CENTERS,
INC., a Connecticut corporation (the "Grantor"), and BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., in its capacity as agent for the "Lenders" and the "LC
Issuer" referred to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Grantor owns the trademarks, trademark applications, service
marks and service xxxx applications listed on Schedule I annexed hereto.
WHEREAS, the Grantor and certain affiliates of the Grantor
(collectively, the "Borrowers") and Opticare Health Systems, Inc., a Delaware
corporation (the "Parent"), are parties to that certain Amended and Restated
Loan and Security Agreement, dated as of even date herewith (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Loan Agreement"), with the financial institutions from time to time party
thereto (the "Lenders"), Bank Austria, AG, as LC Issuer (in such capacity, the
"LC Issuer") and the Agent, pursuant to which, among other things, and subject
to the terms and conditions contained therein, the Lenders will make available
to the Borrowers term loans in an aggregate original principal amount of Twenty
One Million Five Hundred Thousand Dollars ($21,500,000) and a revolving credit
facility providing for revolving loans of up to Twelve Million Seven Hundred
Thousand Dollars ($12,700,000) (collectively, the "Loans"); and
WHEREAS, the Lenders, the LC Issuer and the Agent have required, as a
condition to their entry into the Loan Agreement and the making of the Loans and
the other extensions of credit pursuant to the terms thereof, that Grantor and
certain of its affiliates (collectively, the "Guarantors") execute and deliver
to the Agent that certain Guaranty, dated as of August 13, 1999 (as the same may
be amended, restated, supplemented, or otherwise modified from time to time, the
"Guaranty"), to guarantee the obligations of each Guarantor and each Borrower;
and
WHEREAS, the Lenders, the LC Issuer and the Agent have further
required, as a condition to their entry into the Loan Agreement and the making
of the Loans and the other extensions of credit pursuant to the terms thereof,
that Grantor execute and deliver to the Agent this Agreement to secure the
obligations of the Grantor under the Loan Agreement, the Guaranty, and each of
the agreements, documents and instruments executed and delivered in connection
therewith; and
WHEREAS, the Borrowers desire to obtain the Loans and the other
extensions of credit under the Loan Agreement, and the Grantor has determined
that it is and will be in the best interest and to the direct advantage of such
Grantor to assist the Borrowers in borrowing money and obtaining other
extensions of credit from the Lenders and the LC Issuer in order to further the
business of the Grantor, and the Grantor has therefore agreed to make and
execute this
Agreement in favor of the Agent to induce the Lenders, the LC Issuer and the
Agent to enter into the Loan Agreement and to extend to the Borrowers the credit
contemplated thereby;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, it is hereby agreed as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
have the meanings set forth in the Loan Agreement.
2. Grant of Security Interest
(a) Grantor hereby grants to the Agent, for the benefit of the
Agent, the Lenders and the LC Issuer, a continuing security interest in all of
Grantor's right, title, and interest in the following (the "Trademark
Collateral"), whether now owned or hereafter acquired or arising, in order to
secure the due and punctual payment and performance of all the Secured
Obligations (as hereinafter defined):
(i) All "Trademarks" (as defined below), whether now owned or
hereafter arising or acquired by Grantor, including each trademark
identified on Schedule I hereto. For purposes of this Agreement,
"Trademarks" shall mean all trade names, trademarks, service marks, and
logos (registered and unregistered) and state, federal, and foreign
trademark and service xxxx registrations and state, federal and foreign
registration applications (in use and intent to use) and all renewals
and divisions thereof, all income, royalties, damages, and payments now
or hereafter due and/or payable with respect thereto, the right to
recover for all past, present, and future infringements thereof, all
other rights of any kind whatsoever accruing thereunder or pertaining
thereto, all rights corresponding thereto throughout the world,
together, in each case, with the product lines and goodwill of the
business connected with the use of, and symbolized by, each such
Trademark and all proceeds of the foregoing; and
(ii) All agreements providing for the grant of any right in or to
any Trademark (whether Grantor is the licensee or the licensor
thereunder) including but not limited to those agreements on Schedule
II hereto and all proceeds of the foregoing (the "Trademark Licenses").
(b) This security interest is granted in conjunction with the
security interest granted to the Agent under the Loan Agreement. The rights and
remedies of the Agent with respect to the security interest granted hereby are
in addition to those set forth in the Loan Agreement, and those which are now or
hereafter available to the Agent as a matter of law or equity. Each right,
power, and remedy of the Agent provided for herein or in the Loan Agreement, or
now or hereafter existing at law or in equity shall be cumulative and concurrent
and shall be in addition to every right, power, or remedy provided for herein.
The exercise by the Agent of any one or more of the rights, powers, or remedies
provided for in this Agreement or in
2
the Loan Agreement or now or hereafter existing at law or in equity shall not
preclude the simultaneous or later exercise by the Agent of any or all other
rights, powers, or remedies.
3. Secured Obligations. The collateral assignment contained herein
shall secure the due and punctual payment of (i) the Obligations, as defined in
the Loan Agreement, and (ii) any and all other indebtedness, liabilities, and
obligations of the Grantor to the Agent, the Lenders and the LC Issuer of every
kind and nature (including, without limitation, interest, charges, expenses,
attorneys' fees, and other sums chargeable to the Grantor by the Agent and
future advances made to or for the benefit of the Grantor), whether arising
under this Assignment, the Loan Agreement, or any other Loan Document
(collectively, the "Secured Obligations").
4. Modification of Agreement
This Agreement may not be changed, waived or terminated except
in accordance with the amendment provisions of the Loan Agreement.
Notwithstanding the foregoing, Grantor authorizes the Agent, upon notice to
Grantor, to modify this Agreement in the name of and on behalf of Grantor
without obtaining Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule I to add any right,
title, or interest in any Trademark owned or subsequently acquired by Grantor.
5. Representations and Warranties
(a) Schedule I hereto contains a true and accurate list of all
Grantor's Trademark registrations and applications.
(b) Grantor is the sole owner of the Trademarks and Trademark
Licenses, free and clear of all liens, claims and encumbrances, other than the
lien created by the Loan Agreement and this Agreement; the records of the United
States Patent and Trademark Office currently reflect that Grantor is the owner
of all Trademark registrations and applications; and none of the Trademark
Collateral has been licensed by Grantor to any third party, except for the
Trademark Licenses listed on Schedule II.
(c) To the best of Grantor's knowledge, each Trademark is valid,
subsisting, unexpired, and enforceable, and to the extent necessary to maintain
its rights thereto, Grantor has used and continues to use the appropriate
statutory notice of registration in connection with its use of all federally
registered Trademarks.
(d) No holding, decision, or judgment has been rendered in any
action or proceeding limiting, canceling, or questioning the validity of
Grantor's rights in any Trademark and no such action or proceeding is pending
or, to the best of Grantor's knowledge, threatened. To the best of Grantor's
knowledge, there is no subsisting material breach or default under any Trademark
License.
(e) To the best of Grantor's knowledge, (i) the conduct of
Grantor's business does not infringe upon any trademark or other intellectual
property right owned or controlled by a
3
third party and (ii) except as previously disclosed in writing to the Agent, no
third party is infringing upon any of the Trademark Collateral.
6. Covenants of Grantor
(a) Except for Trademarks which are no longer in use, or shall no
longer be used, in connection with its business, Grantor will not do any
commercially reasonable act or omit to do any commercially reasonable act (and
not permit any licensees or sublicensees of Grantor to do any commercially
reasonable act) whereby any Trademark of Grantor will become abandoned,
invalidated, or unenforceable, and Grantor shall diligently pursue each
Trademark application unless it shall reasonably determine that a registration
is not likely to issue or the costs associated with such registration process
will not be commercially justified by the sales of the related product, and
shall maintain each Trademark registration in full force and effect. In the
event that any Trademark owned by, or, to the extent permitted by the related
Trademark License, licensed to, Grantor, is infringed or diluted by a third
party, Grantor shall promptly take all commercially reasonable actions to stop
such infringement or dilution and protect its exclusive rights in such
Trademark.
(b) Grantor agrees to promptly report to the Agent on an annual
basis and, in the event of a continuing Event of Default, on a quarterly basis
(i) the filing of any application for registration of any Trademark (whether
such application is filed by Grantor or through any agent, employee, licensee,
or designee) and (ii) the registration of any Trademark. Grantor agrees to
execute and deliver to the Agent an amendment to this Agreement covering such
new applications or registrations for Trademarks in form appropriate for
recordation in the United States Patent and Trademark Office.
(c) Without the prior written consent of the Agent, Grantor shall
not (i) sell, assign (by operation of law or otherwise), or otherwise dispose of
any of the Trademark Collateral or any rights therein (except as contemplated by
paragraph (c)(iii)), (ii) grant any lien or security interest in any of the
Trademark Collateral (except for the lien created by this Agreement and the Loan
Agreement, or (iii) license any of the Trademark Collateral to any third party,
except that, unless an Event of Default has occurred and is continuing, Grantor
may grant non-exclusive licenses of any of the Trademarks to a third party in
the ordinary course of business; provided that the Agent shall receive a
security interest in any fees, royalties, and payments with respect to all and
any such licenses.
7. Grant of License
(a) Grantor hereby grants to the Agent a non-exclusive,
royalty-free right and license, with rights of sublicense, in and to the
Trademark Collateral, and a sublicense in and to Grantor's rights under
Trademark Licenses to the extent permitted under the terms of such Trademark
Licenses, to use such Trademark Collateral or operate under such Trademark
Licenses, effective upon the occurrence and during the continuance of an Event
of Default, in connection with the enforcement of the Agent's rights and
remedies hereunder and under the Loan Agreement. Without limiting the generality
of the foregoing, the Agent shall have the
4
right, pursuant to the foregoing license and sublicense, to use the Trademark
Collateral in connection with the foreclosure upon any of the Collateral granted
hereunder or under the Loan Agreement.
(b) The license granted pursuant to Section 7(a) is conditional
upon the requirement that the goods sold and services rendered by the Agent
under the Trademark Collateral shall be of a nature and quality substantially
consistent with those theretofore offered under such Trademarks by Grantor.
8. Remedies Upon Default; Power of Attorney
(a) Upon the occurrence and during the continuance of a Default
or an Event of Default under the Loan Agreement, and subject to the notice
provisions therein, the Trademarks shall be assigned, transferred, set over, and
delivered to the Agent or its designee, and Grantor hereby irrevocably
constitutes and appoints the Agent and any officer, agent or employee 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 Grantor and in
the name of Grantor or the Agent's own name or the name of the Agent's designee,
upon the occurrence of an Event of Default, (i) to complete, date, execute, and
file, or cause to be filed, the Assignment attached hereto as Exhibit A and
incorporated hereby by reference (the "Assignment") in the United States Patent
and Trademark Office and in all other applicable offices, and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purpose of the Assignment, (ii) to collect proceeds
of any Trademark Collateral, (iii) in any transaction authorized by the Loan
Agreement, convey any Trademark Collateral to any purchaser thereof, payment or
discharge of taxes or liens levied or placed upon or threatened against any
Trademark Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by the Agent in its sole discretion, and
such payments made by the Agent to become the obligations of Grantor to the
Agent, due and payable immediately without demand. The Agent's authority
hereunder shall include, without limitation, the authority to endorse and
negotiate any checks or instruments constituting proceeds of any Trademark
Collateral in the name of Grantor, execute and give receipt for any certificate
of ownership or any document (constituting Trademark Collateral), sign Grantor's
name on all financing statements or any other documents necessary or appropriate
by the Agent to preserve, protect or perfect the security interest in any
Trademark Collateral (to the extent permitted by Applicable Law) and to file the
same, prepare, file, and sign Grantor's name on any notice of Lien, and prepare,
file, and sign Grantor's name on a proof of claim in bankruptcy or similar
document against any customer of Grantor with respect to any claim of Grantor
comprising part of any Trademark Collateral, and to take any other actions
arising from or incident to the powers granted to the Agent in the Loan
Agreement.
(b) Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue of this power of attorney. This power
of attorney is a power coupled with an interest and shall be irrevocable.
5
(c) In addition to the foregoing, upon the occurrence of a
Default or an Event of Default, the Agent shall have all rights and remedies of
a secured party under the applicable Uniform Commercial Code and as provided in
the Loan Agreement and as otherwise available at law and equity.
9. Waiver. Each and every right and remedy granted to the Agent
under this Agreement, or any other document delivered hereunder or in connection
herewith or allowed it by law or in equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Agent to exercise,
and no delay in exercising, any right or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by the Agent of any right or
remedy preclude any other or future exercise thereof or the exercise of any
other right or remedy. No waiver by the Agent of any Event of Default shall
constitute a waiver of any subsequent Event of Default.
10. Survival. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of the Loan Documents.
The terms and provisions of this Agreement shall continue in full force and
effect until all of the Commitments have been terminated, all of the Secured
Obligations have been paid in full and the Agent has terminated this Agreement
in writing, whichever last occurs; provided, that Grantor's obligations under
Section 13 shall survive the repayment of the Secured Obligations and the
termination of this Agreement. At the time of such termination of this
Agreement, the Agent, upon the Grantor's request and at the Grantor's expense,
shall execute and deliver such instruments and documents as are reasonably
necessary to terminate the security interest granted hereby.
11. Assignments; Successors and Assigns. This Agreement shall be
binding upon the Grantor and its respective permitted successors and assigns and
shall inure to the benefit of the Agent, the Lenders and the LC Issuer and their
respective successors and assigns; provided, that no Grantor may transfer or
assign any or all of its rights or obligations hereunder without the prior
written consent of the Agent.
12. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement. Any signature page to this Agreement may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
13. Expense Reimbursement. The Grantor agrees to reimburse the Agent
for all costs and expenses incurred by the Agent (including attorneys' fees and
disbursements) to: (a) commence, defend or intervene in any court proceeding;
(b) file a petition, complaint, answer, motion or other pleading, or to take any
other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) relating to the Trademark Collateral or this Agreement, the Notes or
any of the other Loan Documents; (c) protect, collect, license, sell, take
possession of, or liquidate any of the Trademark Collateral; (d) attempt to
enforce any security interest in any of the Trademark Collateral or to seek any
advice with respect to such enforcement; and (e) enforce
6
any of the Agent's rights to collect any of the Secured Obligations. The Grantor
also agrees to pay, and to save harmless the Agent from any delay in paying any
taxes, if any, which may be payable in connection with the execution and
delivery of this Agreement, the Guaranty or any of the other Loan Documents, or
the recording of any thereof, or in any modification hereof or thereof. The
Grantor's obligations under this Section 13 shall survive the termination of
this Agreement.
14. Severability. If any provision of this Agreement or the
application thereof to any party hereto or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to any other party hereto or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
15. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing, and shall be deemed to have been made
or give when (a) delivered to the Grantor in the manner and at the address
provided for in Section 14.7 of the Loan Agreement and (b) when delivered to the
Agent in the manner and at the address as provided in Section 14.7 of the Loan
Agreement. The Grantor hereby irrevocably appoints the Parent as its agent for
purposes of receiving any notice under this Agreement or in connection with any
other Loan Document.
16. Time of the Essence. Time is of the essence in this Agreement.
17. Governing Law; Consent to Jurisdiction. THIS AGREEMENT, AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THE GRANTOR HEREBY (A) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK,
NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT; AND (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST THE
GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. THE GRANTOR HEREBY IRREVOCABLY
APPOINTS THE PARENT AS ITS AUTHORIZED AGENT AND ATTORNEY-IN-FACT TO RECEIVE ON
BEHALF OF THE GRANTOR AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW YORK. SUCH SERVICE MAY
BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE GRANTOR, IN CARE
OF THE PARENT, IN ACCORDANCE WITH SECTION 15 HEREOF AND THE GRANTOR HEREBY
IRREVOCABLY
7
AUTHORIZES AND DIRECTS THE PARENT TO ACCEPT SUCH SERVICE ON ITS BEHALF AND
AGREES THAT THE FAILURE OF THE AGENT TO GIVE ANY NOTICE OF ANY SUCH SERVICE TO
THE GRANTOR SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR OF ANY
JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.
18. Waiver of Jury Trial. AFTER REVIEWING THIS PROVISION
SPECIFICALLY WITH ITS RESPECTIVE COUNSEL, THE GRANTOR AND THE AGENT HEREBY
KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR ARISING OUT OF, UNDER, IN
CONNECTION WITH, OR RELATING TO THIS SECURITY AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE GRANTOR OR THE AGENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE LC ISSUER TO MAKE THE
LOANS AND OTHER FINANCIAL ACCOMMODATIONS TO THE BORROWERS.
-------------
Initials
19. No Punitive Damages. The Agent and the Grantor (on behalf of
itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any dispute, whether such dispute is resolved through
arbitration or judicially.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
("Grantor")
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
Attest: /s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer
[CORPORATE SEAL]
("Agent")
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., as Agent
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
By: /s/ Xxxxx Xxxx
-----------------------------------
Name: Xxxxx Xxxx
Title: Vice President
9
