Exhibit 10.4

 

PATENT SECURITY AGREEMENT

THIS PATENT SECURITY AGREEMENT (this “Security Agreement”) is made as of this
22nd day of May, 2007, by RESISTANCE TECHNOLOGY, INC., a Minnesota corporation
(the “Grantor”), in favor of LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (the “Bank”), with an office at 3500 IDS Center, 80 South
8th Street, Minneapolis, MN 55402.

RECITALS:

A.           The Grantor owns the patents and patent applications listed on
Schedule A annexed hereto; and

B.            The Grantor, certain of its affiliates and the Bank are parties to
a certain Loan and Security Agreement dated on or about the date hereof (as
amended, amended and restated or otherwise modified from time to time, the “Loan
Agreement”) and other related loan documents of even date herewith
(collectively, with the Loan Agreement, and as each may be amended or otherwise
modified from time to time, the “Loan Documents”), which Loan Documents provide
for, among other things, (i) Bank from time to time to extend credit to or for
the account of the Grantor, and (ii) the grant by Grantor to the Bank of a
security interest in certain of Grantor’s assets, including, without limitation,
its patents and patent applications;

AGREEMENTS:

NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Grantor agrees as follows:

1.            Incorporation of Loan Documents. The Loan Documents and the terms
and provisions thereof are hereby incorporated herein in their entirety by this
reference thereto. All terms capitalized but not otherwise defined herein shall
have the same meanings herein as in the Loan Agreement.

2.            Grant of Security Interest. To secure the complete and timely
payment and satisfaction of the Obligations, Grantor hereby grants to the Bank,
and hereby reaffirms its prior grant pursuant to the Loan Documents of, a
continuing security interest in all of Grantor’s right, title and interest in,
to and under the following (all of the following items or types of property
being herein collectively referred to as the “Patents”), whether presently
existing or hereafter created or acquired:

(a)           each patent, patent application and license agreement (together
with any renewals, continuations or extensions thereof) referred to in Schedule
A annexed hereto; and

(b)           all proceeds of the foregoing and all proceeds associated with any
claim by Grantor against third parties for past, present or future infringement
thereof.

3.            Warranties and Representations. To induce the Bank to enter into
the Loan Agreement and to extend the loans and other financial accommodations
provided for therein, Grantor warrants and represents to Bank that:

 

 

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(a)           no registered patent listed in Schedule A has been adjudged
invalid or unenforceable by a court of competent jurisdiction nor has any such
patent been cancelled, in whole or in part, and each such patent (unless listed
as expired) is presently subsisting;

(b)           Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Patents, free and clear of
any liens, charges and encumbrances, including without limitation, shop rights
and covenants by Grantor not to sue third persons;

(c)           Grantor has no notice of any suits or actions commenced or
threatened with reference to any Patents; and

(d)           Grantor has the unqualified right to execute and deliver this
agreement and perform its terms.

4.            Restrictions on Future Agreements. Grantor agrees that until the
Obligations shall have been satisfied in full and the Loan Documents shall have
been terminated, Grantor shall not, without the prior written consent of Bank,
sell or assign its interest in any of the Patents, or enter into any other
agreement with respect to any Patents which would affect the validity or
enforcement of the rights transferred to Bank under this Security Agreement.

5.            Royalties; Terms. The term of this Security Agreement shall extend
until the earlier of (a) the expiration of each of the patents and patent
applications constituting Patents, and (b) the payment in full of the
Obligations and the termination of the Loan Agreement. Grantor that following
the occurrence and during the continuance of an Event of Default under the Loan
Agreement, the use by Bank (consistent with its role and rights as a secured
party) of all Patents shall be without any liability for royalties or other
related charges from Bank to Grantor.

6.            New Patents. Grantor represents and warrants that, based on a
diligent investigation by Grantor, the Patents listed on Schedule A constitute
all of the federally registered patents, and federal applications for
registration of patents now owned by Grantor. If, before the Obligations shall
have been satisfied in full or before the Loan Documents have been terminated,
Grantor shall (a) become aware of any existing registered Patents of which
Grantor has not previously informed the Bank, or (b) become entitled to the
benefit of any registered Patents, which benefit is not in existence on the date
hereof, the provisions of this Security Agreement above shall automatically
apply thereto and Grantor shall give to the Bank prompt written notice thereof.
Grantor hereby authorizes the Bank to modify this Security Agreement by amending
Schedule A to include any such Patents.

7.            Release of Security Agreement. This Security Agreement is made for
collateral purposes only and effects no present transfer of title as to any
Patents. Upon payment in full of the Obligations and termination of the Loan
Agreement, Bank shall execute and deliver such documents and take such actions
as may be reasonably necessary or proper to terminate the security interests
created hereby and pursuant to the Loan Documents.

8.            Expenses. All reasonable expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by Grantor.
All reasonable fees, costs and expenses, of whatever kind or nature, including
reasonable attorneys’ fees and legal expenses, incurred by Bank in connection
with the filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, reasonable
counsel fees, maintenance fees, encumbrances or otherwise in protecting,
maintaining or preserving the Patents or in defending or prosecuting any actions
or proceedings arising out of or related to the Patents shall be borne by and
paid by the Grantor.

 

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9.            Duties of Grantor. Grantor shall have the duty (a) to file and
prosecute with commercially reasonable diligence any patent applications pending
as of the date hereof or hereafter until the Obligations shall have been paid in
full and the Loan Agreement has been terminated, (b) to preserve and maintain
all rights in the Patents Collateral, as commercially reasonable, and (c) to
ensure that the Patents is and remains enforceable. Any expenses incurred in
connection with the obligations of Grantor under this Section 10 shall be borne
by Grantor.

10.          Bank’s Right to Sue. After the occurrence of an Event of Default
that is continuing, Bank shall have the right, but shall in no way be obligated,
to bring suit in its own name, or in the name of Grantor, to enforce the Patents
and, if Bank shall commence any such suit, Grantor shall, at the request of
Bank, do any and all lawful acts and execute any and all proper documents
reasonably required by Bank in aid of such enforcement and the Grantor shall
promptly, upon demand, reimburse and indemnify Bank for all costs and expenses
incurred by Bank in the exercise of its rights under this Section 11.

11.          Waivers. No course of dealing between Grantor and Bank, nor any
failure to exercise, nor any delay in exercising, on the part of Bank, any
right, power or privilege hereunder or under the Loan Documents 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.

12.          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 Security
Agreement in any jurisdiction.

13.          Modification. This agreement cannot be altered, amended or modified
in any way, except as specifically provided in Section 6 hereof or by a writing
signed by the parties hereto.

14.          Cumulative Remedies; Power of Attorney; Effect on Loan Agreement.
All of Bank’s rights and remedies with respect to the Patents, whether
established hereby or by any other agreements or by law, shall be cumulative and
may be exercised singularly or concurrently. Grantor hereby authorizes Bank
after the occurrence of an Event of Default that is continuing, to make,
constitute and appoint any officer or agent of Bank as Bank may select, in its
sole discretion, as Grantor’s true and lawful attorney-in-fact, with power to
(a) endorse Grantor’s name on all applications, documents, papers and
instruments necessary or desirable for Bank in the use of the Patents, or (b)
grant or issue any exclusive or non-exclusive license under the Patents to
anyone, or (c) assign, pledge, convey or otherwise transfer title in or dispose
of the Patents to anyone. Grantor hereby ratifies all that such attorney shall
lawfully do or cause to be done in accordance with the terms hereof, except for
the gross negligence or willful misconduct of such attorney. This power of
attorney shall be irrevocable until the Obligations shall have been paid in full
and the Loan Documents have been terminated. Grantor acknowledges and agrees
that this Security Agreement is not intended to limit or restrict in any way the
rights and remedies of Bank under the Loan Documents, but rather is intended to
facilitate the exercise of such rights and remedies. Bank shall have, in
addition to all other rights and remedies given it by the terms of this Security
Agreement and the Loan Documents, all rights and remedies allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in Illinois.

15.          Binding Effect; Benefits. This Security Agreement shall be binding
upon be binding upon and shall inure to the benefit of Grantor and Bank, and
their respective successors, nominees and assigns.

 

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16.          Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois and applicable
federal law.

17.          Headings. Paragraph headings are used herein for convenience only
and shall not modify the provisions which they precede.

18.          Further Assurances. Grantor agrees to execute and deliver such
further agreements, instruments and documents, and to perform such further acts,
as Bank shall reasonably request from time to time in order to carry out the
purpose of this Security Agreement and agreements set forth herein.

19.          Survival of Representations. All representations and warranties of
Grantor contained in this Security Agreement shall survive the execution and
delivery of this agreement and shall be remade on the date of each borrowing
under the Loan Agreement.

[Remainder of page intentionally left blank;

signature page follows]

 

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IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to be duly
executed by its duly authorized officer thereunto as of this 22nd day of May,
2007.

 

 

RESISTANCE TECHNOLOGY, INC.
a Minnesota corporation

 

 

By:   

/s/   Scott Longval

 

Name:   

Scott Longval

 

Title: 

Chief Financial Officer

 

 

Agreed to and accepted

as of the date first written above:

 

LASALLE BANK NATIONAL ASSOCIATION,

a national banking association,

 

By:  

/s/   Peter L. Eaton

Name:   

Peter L. Eaton

Title: 

Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE PAGE TO PATENT SECURITY AGREEMENT

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SCHEDULE A

 

Patent Registrations and Applications

 

Registrations:

Serial
Number

Patent
Number

Description of Patent Applied For

Filing Date

Issue Date

 

06/784331

4636768

COMPRESSION CONNECTION FOR POTENTIOMETER LEADS

October 4, 1985

January 13, 1987

 

 

07/127446

4835833

METHOD OF MOUNTING A POTENTIOMETER

December 2, 1987

June 6, 1989

 

 

07/332514

5001762

MINIATURE MODULAR VOLUME CONTROL AND INTEGRATED CIRCUIT ASSEMBLY FOR USE WITH A
HEARING AID

March 31, 1989

March 19, 1991

 

 

 

 

 

07/331646

5014037

POTENTIOMETER MOUNTING MECHANISM

March 10, 1989

May 7, 1991

 

 

07/640052

5157371

POTENTIOMETER RETENTION MECHANISM AND METHOD OF MOUNTING

January 11, 1991

October 20, 1992

 

 

 

08/287720

5500901

FREQUENCY RESPONSE ADJUSTING DEVICE

August 9, 1994

March 19, 1996

 

 

08/476857

5784470

BATTERY DOOR AND FACEPLATE ARRANGEMENT FOR A COMPLETELY IN THE CANAL HEARING AID
DEVICE

June 7, 1995

July 21, 1998

 

 

 

 

08/514153

5687242

HEARING AID CONTROLS OPERABLE WITH BATTERY DOOR

August 11, 1995

November 11, 1997

 

 

 

09/538699

6690806

VARIOUS DIRECTIONAL/OMNI-DIRECTIONAL HEARING AID MICROPHONE AND HOUSING
STRUCTURES

March 30, 2000

February 10, 2004

 

 

 

 

 

29/120266

D438860

MINIATURE MICROPHONE HOUSING AND SWITCH

March 16, 2000

March 13, 2001

 

 

 

 

 

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29/120267

D438196

MINIATURE MICROPHONE HOUSING AND SWITCH

March 16, 2000

February 27, 2001

 

 

09/805585

6678386

PROGRAMMABLE MODULE

March 13, 2001

January 13, 2004

 

29/234815

D525617

OVER THE EAR HEADSET

July 22, 2005

July 25, 2006

 

29/234816

D527377

UNDER THE EAR HEADSET

 

July 22, 2005

August 29, 2006

07034431

4743833

VOLTAGE REGULATOR

 

April 3, 1987

May 10, 1988

08273200

5463692

SANDWICH SWITCH CONSTRUCTION FOR A HEARING AID

 

July 11, 1994

October 31, 1995

08747757

5818324

WIRE COIL POTENTIOMETER WIPER

 

November 13, 1996

October 6, 1998

09130039

6597793

DIRECTIONAL/OMNI-DIRECTIONAL HEARING AID MICROPHONE AND HOUSING

 

August 6, 1998

July 22, 2003

 

 

Applications:

Serial
Number

Description of Patent Applied For

Filing Date

 

10/931683

HEARING AID CIRCUIT REDUCING FEEDBACK

 

September 1, 2004

09809744

ACOUSTIC SWITCH ELECTRONIC SWITCHING CAPABILITY

 

March 15, 2001

09974732

HEARING AID

 

October 9, 2001

11/274770

EARSET MICROPHONE [CONFIRM OWNERSHIP]

November 15, 2005

 

29/263291

PUSH-TO-TALK COMMUNICATOR HOUSING [CONFIRM OWNERSHIP]

July 20, 2006

 

 

09/472492

HEARING AID SYSTEM [CONFIRM OWNERSHIP]

December 17, 1999

 

60/426243

MEMS MICROPHONE [CONFIRM OWNERSHIP]

November 14, 2002

 

 

 

 

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