Exhibit 10.41

 

JUNIOR SUBORDINATED

TRADEMARK AND LICENSE SECURITY AGREEMENT

 

JUNIOR SUBORDINATED TRADEMARK AND LICENSE SECURITY AGREEMENT (“Agreement”) dated
as of October 25, 2004, made by PW EAGLE, INC., a Minnesota corporation, having
its chief executive office at 1550 Valley River Drive, Eugene, Oregon 97440
(“Borrower”) and CHURCHILL CAPITAL PARTNERS IV, L.P., a Delaware limited
partnership (“Lender”).

 

W I T N E S S E T H

 

WHEREAS, Borrower and Lender have entered into that certain Junior Subordinated
Note Purchase Agreement of even date herewith (as the same may hereafter be
amended or otherwise modified from time to time, the “Note Purchase Agreement”),
pursuant to which Lender has, subject to certain conditions precedent, agreed to
purchase the Junior Subordinated Notes of the Company (the “Notes”); and

 

WHEREAS, Lender has required as a condition, among others, to purchasing the
Notes, in order to secure the prompt and complete payment, observance and
performance of all of Borrower’s obligations and liabilities hereunder, under
the Note Purchase Agreement, and under all of the other instruments, documents
and agreements executed and delivered by Borrower to Lender in connection with
the Note Purchase Agreement (all such obligations and liabilities being
hereinafter referred to collectively as the “Obligations”), that Borrower
execute and deliver this Agreement to Lender for its benefit;

 

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

 

1. Defined Terms.

 

(a) Unless otherwise defined herein, the capitalized terms used herein which are
defined in the Note Purchase Agreement shall have the meanings specified in the
Note Purchase Agreement.

 

(b) The words “hereof,” “herein” and “hereunder” and words of like import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section and schedule references are
to this Agreement unless otherwise specified.

 

(c) All terms defined in this Agreement in the singular shall have comparable
meanings when used in the plural, and vice versa, unless otherwise specified.

 

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2. Security Interest in Trademarks. To secure the complete and timely payment,
performance and satisfaction of all of the Obligations, Borrower hereby grants
to Lender, a third priority security interest, having priority over all other
security interests (except for Permitted Liens, including Liens securing the
Senior Debt and Liens securing the obligations under the Senior Subordinated
Note Purchase Agreement), with power of sale to the extent permitted by
applicable law, in all of Borrower’s now owned or existing and filed and
hereafter acquired or arising and filed:

 

(i) trademarks, registered trademarks and trade mark applications, trade names,
service marks, registered service marks and service mark applications including,
without limitation, the registered trade marks, trademark applications,
registered service marks and service applications listed on Schedule A, and (a)
all renewals thereof, (b) all income, royalties, damages and payments now and
hereafter due and/or payable with respect thereto, including, without
limitation, payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements or dilutions thereof, (c)
the right to sue for past, present and future infringements and dilutions
thereof, and (d) all of Borrower’s rights corresponding thereto throughout the
world (all of the foregoing registered trademarks, trademark applications,
registered service marks and service mark applications, together with the items
described in clauses (a)-(d) in this paragraph 2(i), being sometimes hereinafter
individually and/or collectively referred to as the “Trademarks”);

 

(ii) the goodwill of Borrower’s business connected with and symbolized by the
Trademarks; and

 

(iii) license agreements with any other party in connection with any Trademarks
or such other party’s trademarks, registered trademarks and trademark
applications, trade names, service marks, registered service marks and service
mark applications, whether Borrower is a licensor or licensee under any such
license agreement, including but not limited to, the license agreements listed
on Schedule B, and the right upon the occurrence and during the continuance of
an Event of Default to use the foregoing in, connection with the enforcement of
Lender’s rights under the Note Purchase Agreement (all of the foregoing being
hereinafter referred to collectively as the “Licenses”). Notwithstanding the
foregoing provisions of this Section 2, the Licenses shall not include any
license agreement which by its terms prohibits the grant of the security
interest contemplated by this Agreement.

 

3. Restrictions on Future Agreements. Borrower will not, without Lender’s prior
written consent, enter into any agreement, including, without limitation, any
license agreement, which is inconsistent with this Agreement, and Borrower
further agrees that it will not take any action, and will use its best efforts
not to permit any action to be taken by others subject to its control, including
licensees, or fail to take any action, which would in any material respect
affect the validity or enforcement of the rights transferred to Lender

 

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under this Agreement or the rights associated with those Trademarks which are
material to the operation of Borrower’s business.

 

4. New Trademarks. Borrower represents and warrants that the Trademarks and
Licenses listed on Schedules A and B, respectively, include all of the
trademarks, trademark registrations, trademark applications, tradenames, service
marks, service mark registrations, service mark applications and license
agreements in connection with trademarks, registered trademarks, trademark
applications, tradenames, service marks, registered service marks and service
mark applications now owned or held by Borrower. If, prior to the termination of
this Agreement, Borrower shall (i) obtain rights to any new trademarks,
trademark registrations, trademark applications, trade names, service marks,
service mark registration, service mark applications or license agreements in
connection with trademarks, registered trademarks, trademark applications, trade
names, service marks, registered service marks or service mark applications or
(ii) become entitled to the benefit of any trademark, trademark registration,
trademark application, trade name, service mark, service mark registration or
service mark application, the provisions of Section 2 shall automatically apply
thereto and Borrower shall give to Lender prompt written notice thereof.
Borrower hereby authorizes Lender to modify this Agreement by (i) amending
Schedules A or B, as the case may be, to include any future trademarks,
trademark registrations, trademark applications, trade names, service marks,
service mark applications and license agreements in connection with trademarks,
registered trademarks, trademark applications, service marks, service mark
registrations, service mark applications and trade names that are Trademarks or
Licenses under Section 2, or under this Section 4, and (ii) filing, in addition
to and not in substitution for, this Agreement, a duplicate original of this
Agreement containing on Schedules A or B, thereto, as the case may be, such
future trade marks, trademark applications, trade names, service marks, service
mark applications and license agreements in connection with trademarks,
registered trademarks, trademark applications, service marks, registered service
marks, service mark applications and trade names which are Trademarks or
Licenses under Section 2 or this Section 4.

 

5. Royalties. Borrower hereby agrees that the use by Lender of the Trademarks
and Licenses as authorized hereunder shall be co-extensive with Borrower’s
rights thereunder and with respect thereto and without any liability for
royalties or other related charges from Lender to Borrower.

 

6. Nature and Continuation of Lender’s Security Interest. This Agreement is made
for collateral security purposes only. This Agreement shall create a continuing
security interest in the Trademarks and Licenses and shall remain in full force
and effect until the Obligations have been paid in full and the Note Purchase
Agreement terminated.

 

7. Right to Inspect; Further Assignments and Security Interests. Lender shall
have the right, at any reasonable time and from time to time, to inspect
Borrower’s premises and to examine Borrower’s books, records and operations
relating to the Trademarks, including, without limitation, Borrower’s quality
control processes; provided, that in conducting such inspections and
examinations, Lender shall use its best efforts not to disturb

 

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unnecessarily the conduct of Borrower’s ordinary business operations and
provided further, that if no Event of Default has occurred and is continuing,
Lender shall give Borrower at least 24 hours prior written notice of such
inspection. From and after the occurrence of an Event of Default, and subject to
the terms of the Note Purchase Agreement, the Senior Subordination Agreement and
the Junior Subordination Agreement, Borrower agrees that Lender or a conservator
appointed by Lender, shall have the right to establish such reasonable
additional product quality controls as Lender or such conservator, in its sole
judgment may deem necessary to assure maintenance of the quality of products
sold by Borrower under the Trademarks. Borrower agrees (i) not to sell or assign
its respective interests in, or grant any license under, the Trademarks without
the prior written consent of Lender, which consent shall not be unreasonably
withheld or delayed, (ii) to maintain the quality of any and all products in
connection with which the Trademarks are used, consistent with the quality of
said products as of the date hereof, and (iii) not to change the quality of such
products in any material respect without the prior written consent of Lender,
which consent shall not be unreasonably withheld or delayed.

 

8. Duties of Borrower. Borrower shall have the duty, to the extent desirable in
the normal conduct of Borrower’s business and consistent with Borrower’s current
business practices (i) to prosecute diligently any trademark applications or
service mark applications that are part of the Trademarks pending as of the date
hereof or thereafter until the termination of this Agreement, (ii) to make
applications for trademarks and service marks as Borrower deems appropriate, and
(iii) to take reasonable steps to preserve and maintain all of Borrower’s rights
in the trademark applications, service mark applications and trademark and
service mark registrations that are part of the Trademarks. Any expenses
incurred in connection with the foregoing shall be borne by Borrower. Borrower
shall not abandon any material trademark or service mark which is the subject of
a registered trademark, service mark or application therefor and which is or, to
Borrower’s knowledge, shall be necessary or economically desirable in the
operation of the Borrower’s business. Borrower agrees to retain an experienced
trademark attorney reasonably acceptable to Lender (Fredrikson & Byron, P.A.
being acceptable to Lender) for the filing and prosecution of all such
applications and other proceedings. Lender shall not have any duty with respect
to the Trademarks. Without limiting the generality of the foregoing, Lender
shall not be under any obligation to take any steps necessary to preserve rights
in the Trademarks and Licenses against any other parties, but may do so at its
option during the continuance of an Event of Default, and all reasonable
expenses incurred in connection therewith shall be for the sole account of
Borrower and added to the Obligations secured hereby.

 

9. Lender’s Right to Sue. From and after the occurrence and during the
continuance of an Event of Default, and subject to the terms of the Note
Purchase Agreement, the Senior Subordination Agreement and the Junior
Subordination Agreement, Lender shall have the right but shall not be obligated,
to bring suit to enforce the Trademarks and the Licenses and, if Lender shall
commence any such suit, Borrower shall, at the request of Lender, do any and all
lawful acts and execute any and all proper documents required by Lender in aid
of such enforcement. Borrower shall, upon demand, promptly reimburse and
indemnify Lender for all costs and reasonable expenses incurred by Lender in the
exercise of

 

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its rights under this Section 9, (including, without limitation, all attorneys’
and paralegals’ fees). If, for any reason whatsoever, Lender is not reimbursed
with respect to the costs and expenses referred to in the preceding sentence,
such costs and expenses shall be added to the Obligations secured hereby.

 

10. Waivers. No course of dealing between Borrower and Lender, and no failure to
exercise or delay in exercising on the part of Lender any right, power or
privilege hereunder or under the Note Purchase Agreement shall operate as a
waiver of any of Lender’s rights, powers or privileges. No single or partial
exercise of any right, power or privilege hereunder or under the Note Purchase
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

 

11. Lender’s Exercise of Rights and Remedies upon Default. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of an Event of Default, Lender
may exercise any of the rights and remedies provided in this Agreement, the Note
Purchase Agreement, or any other agreement executed in connection therewith,
subject to the Senior Subordination Agreement and the Junior Subordination
Agreement. Without limiting the generality of the foregoing, Borrower
acknowledges and agrees that (i) the Trademarks and Licenses comprise a portion
of the Collateral and Lender shall have the right to exercise its rights under
the Note Purchase Agreement with respect to the Trademarks and Licenses to the
same extent as with respect to all other items of Collateral described therein,
and (ii) from and after the occurrence and during the continuance of an Event of
Default, Lender or its nominee may use the Trademarks and Licenses to complete
the manufacture of, assemble, package, distribute, prepare for sale and sell the
Inventory, or otherwise in connection with the conduct of Borrower’s business.

 

12. Severability. The provisions of this 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.

 

13. Modification. This Agreement cannot be altered, amended or modified in any
way, except as specifically provided in Sections 2 and 4 hereof or by a writing
signed by the parties hereto.

 

14. Cumulative Remedies; Power of Attorney. All of Lender’s rights and remedies
with respect to the Trademarks and the Licenses, whether established hereby, by
any other agreements or by law, shall be cumulative and may be exercised
singularly or concurrently. Borrower hereby irrevocably appoints Lender as
Borrower’s attorney-in-fact, with full authority in the place and stead of
Borrower and in the name of Borrower or otherwise to carry out the acts
described below. Subject to the terms of the Note Purchase Agreement, the Senior
Subordination Agreement and the Junior Subordination Agreement,

 

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upon the occurrence and during the continuance of an Event of Default and the
giving by Lender of written notice to Borrower of Lender’s intention to enforce
its rights and claims against Borrower, Borrower hereby authorizes Lender to, in
its sole discretion (i) endorse Borrower’s name on all applications, documents,
papers and instruments necessary or desirable for Lender in the use of the
Trademarks and the Licenses, (ii) take any other actions with respect to the
Trademarks and the Licenses as Lender deems is in its best interest, (iii) grant
or issue any exclusive or nonexclusive license under the Trademarks to anyone on
commercially reasonable terms, and (iv) assign, pledge, convey or otherwise
transfer title in or dispose of the Trademarks to anyone on commercially
reasonable terms. Lender shall take no action pursuant to subsection (i), (ii),
(iii) or (iv) of this Section 14 without taking like action with respect to the
entire goodwill of Borrower’s business connected with the use of, and symbolized
by, such Trademarks, Borrower hereby ratifies all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is coupled with an interest and shall be irrevocable until this Agreement shall
have been terminated pursuant to Section 6. Borrower acknowledges and agrees
that this Agreement is not intended to limit or restrict in any way the rights
and remedies of Lender under the Note Purchase Agreement, but rather is intended
to facilitate the exercise of such rights and remedies. Lender shall have, in
addition to all other rights and remedies given it by the terms of this
Agreement, all rights and remedies allowed by law and the rights and remedies of
a secured party under the Uniform Commercial Code as enacted in any jurisdiction
in which the Trademarks may be located or deemed located.

 

15. Binding Effect; Benefits. This Agreement shall be binding upon Borrower and
its successors and assigns, and shall inure to the benefit of Lender and its
nominees, successors and assigns. Borrower’s successors and assigns shall
include, without limitation, a receiver, trustee or debtor-in-possession of or
for Borrower; provided, however, that Borrower shall not voluntarily assign its
obligations hereunder without the prior written consent of Lender.

 

16. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as distinguished from the conflicts of law
provisions) and decisions of the State of Minnesota.

 

17. Notices. All notices or other communications hereunder shall be given in the
manner and to the addresses set forth in the Note Purchase Agreement.

 

18. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.

 

19. Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Junior
Subordinated Trademark and License Security Agreement on the day and year first
above written.

 

PW EAGLE, INC., a Minnesota corporation By:  

/s/ Dobson West

   

Name:

 

Dobson West

   

Title:

 

Secretary

Accepted and agreed to as of this 25th day of

October, 2004.

CHURCHILL CAPITAL PARTNERS IV, L.P. By: Churchill Capital IV, L.L.C, its General
Partner By: Churchill Capital, Inc., as Managing Agent By:  

/s/ Mark McDonald

   

Name:

 

Mark McDonald

   

Title:

 

Partner

 

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STATE OF MINNESOTA    )      ) SS COUNTY OF HENNEPIN    )

 

The foregoing Junior Subordinated Trademark and License Security Agreement was
executed and acknowledged before me this 25th day of October, 2004, by
                    , personally known to me to be the                      of
PW EAGLE, INC., a Minnesota corporation, on behalf of such corporation.

 

(SEAL)

 

/s/

Notary Public

My commission expires: 

   

 

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Schedule A

to Junior Subordinated Trademark and License Security Agreement

 

[Revised Schedule will be attached.]

 

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Schedule B

to Junior Subordinated Trademark and License Security Agreement

 

[Revised Schedule will be attached.]

 

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