INTELLECTUAL PROPERTY SECURITY AGREEMENT
EXHIBIT
10.39
THIS
INTELLECTUAL PROPERTY SECURITY AGREEMENT (the “Agreement”),
dated
as of October 31, 2006, is made by MODTECH
HOLDINGS, INC.,
a
Delaware corporation (the “Grantor”),
in
favor of LAURUS MASTER FUND, LTD. (“Laurus”).
WHEREAS,
pursuant to that certain Securities Purchase Agreement dated as of the
date
hereof by and between the Grantor and Laurus (as from time to time amended,
restated, supplemented and/or otherwise modified, the “Securities
Purchase Agreement”),
Laurus has agreed to provide financial accommodations to the
Grantor;
WHEREAS,
Laurus is willing to enter into the Securities Purchase Agreement, but
only upon
the condition, among others, that the Grantor shall have executed and delivered
to Laurus this Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor hereby agrees
as
follows:
Section
1 DEFINED
TERMS.
(a) When
used
herein the following terms shall have the following meanings:
“Copyrights”
means
all works capable of copyright under the laws of the United States, any
other
country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings
thereof,
and all applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office, and
the right
to obtain all renewals of any of the foregoing.
“Copyright
Licenses”
means
all written agreements relating to any Copyright, including agreements
providing
the grant of rights to manufacture, distribute, exploit and sell materials
derived from any Copyright, and whether Grantor is named as licensor, licensee
or otherwise.
“General
Intangibles”
shall
have the meaning provided thereto in Section 9-102 of the UCC, as amended,
restated or otherwise modified from time to time.
“IP
Licenses”
shall
mean Copyright Licenses, Patent Licenses and Trademark Licenses.
“Patents”
means
(a) all letters patent of the United States, any other country or any political
subdivision thereof, and all reissues and extensions of such letters patent,
(b)
all applications for letters patent of the United States or any other county
and
all divisions, continuations and continuations-in-part thereof, and (c)
all
rights to obtain any reissues or extensions of the foregoing.
“Patent
Licenses”
means
all agreements, whether written or oral, relating to any Patent, including
agreements providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a
Patent,
and whether Grantor is named as licensor, licensee or otherwise.
“Trademarks”
means
(a) all trademarks, trade names, corporate names, business names, fictitious
business names, trade styles, services marks, logos, domain names and other
source or business identifiers, and all goodwill associated therewith,
now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of
the
United States, any State thereof or any other country or political subdivision
thereof, or otherwise, and all common-law rights thereto, and (b) the right
to
obtain all renewals thereof.
“Trademark
Licenses”
means,
collectively, each agreement, whether written or oral, relating to any
Trademark, including agreements providing for the grant by or to any Grantor
of
any right to use any Trademark, and whether Grantor is named as licensor,
licensee or otherwise.
(b) All
capitalized terms used but not otherwise defined herein have the meanings
given
to them in the Purchase Agreement.
Section
2 GRANT
OF SECURITY INTEREST IN INTELLECTUAL PROPERTY COLLATERAL.
To
secure the complete and timely payment of all the Obligations of the Grantor
now
or hereafter existing from time to time, the Grantor hereby grants to Laurus
a
continuing first priority security interest in all of the Grantor’s right, title
and interest in, to and under the following, whether presently existing
or
hereafter created or acquired (collectively, the “Collateral”):
(a) all
of
its Patents and Patent Licenses to which it is a party including those
referred
to on Schedule
I
hereto;
(b) all
of
its Trademarks and Trademark Licenses to which it is a party including
those
referred to on Schedule
II
hereto;
(c) all
of
its Copyrights and Copyright Licenses to which it is a party including
those
referred to on Schedule
III
hereto;
(d) all
renewals, reissues, continuations or extensions of the foregoing;
(e) all
goodwill of the business connected with the use of, and symbolized by,
each
Patent, each Patent License, each Trademark, each Trademark License, each
Copyright and each Copyright License; and
(f) all
products and proceeds of the foregoing, including, without limitation,
any claim
by the Grantor against third parties for past, present or future (i)
infringement or dilution of any Patent or Patent licensed under any Patent
License, (ii) injury to the goodwill associated with any Patent or any
Patent
licensed under any Patent License, (iii) infringement or dilution of any
Trademark or Trademark licensed under any Trademark License, (iv) injury
to the
goodwill associated with any Trademark or any Trademark licensed under
any
Trademark License, (v) infringement or dilution of any Copyright or Copyright
licensed under any Copyright License, and (vi) injury to the goodwill associated
with any Copyright or any Copyright licensed under any Copyright
License.
2
Section
3 REPRESENTATIONS
AND WARRANTIES.
Each
Grantor represents and warrants that:
(a)
Such
Grantor does not have any interest in, or title to, any Patent, Trademark,
Copyright or any IP License, except as set forth in Schedule
I,
Schedule
II
and
Schedule
III,
respectively, hereto.
(b) Except
as
set forth in Schedule
I,
Schedule
II
and
Schedule
III,
the
Grantor either is the sole owner of the Patents, Trademarks and Copyrights,
or
has the sole right to use the Patents, Trademarks and Copyrights, free
and clear
of all liens or other encumbrances.
(c) Except
as
set forth on Schedule 3(c), each of the Patents, Trademarks and Copyrights
is
valid and enforceable, and there is no claim that the use of any of them
violates the rights of any third party.
(d) The
IP
Licenses are in full force and effect, and the Grantor is not in breach
or
default under any of the IP Licenses.
(e) This
Agreement is effective to create a valid and continuing first priority
lien on
and perfected security interests in favor of Laurus in all of the Grantor’s
Patents, Trademarks, Copyrights and IP Licenses and such perfected security
interests are enforceable as such as against any and all creditors of,
and
purchasers from, the Grantor.
(f) Upon
the
filing of (i) appropriate financing statements, all action necessary to
perfect
Laurus’ first priority lien on the Grantor’s Patents, Trademarks and IP Licenses
shall have been duly taken and (ii) the security interest in the Copyrights
with
the Copyright Office, all action necessary to perfect Laurus’ first priority
lien on the Grantor’s Copyrights shall have been duly taken.
Section
4 COVENANTS.
Each
Grantor covenants and agrees with Laurus that from and after the date of
this
Agreement:
(a) Such
Grantor shall notify Laurus promptly (and in any event within three (3)
Business
Days following such occurrence) if it knows or has reason to know that
any
application or registration relating to any Patent, Trademark or Copyright
(now
or hereafter existing) may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent
and
Trademark Office, the United States Copyright Office or any court) regarding
the
Grantor’s ownership of or right to use any Patent, Trademark or Copyright, its
right to register the same, or to keep and maintain the same.
3
(b) In
no
event shall the Grantor, either directly or through any agent, employee,
licensee or designee, file an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office,
the
United States Copyright Office or any similar office or agency without
giving
Laurus prior written notice thereof, and, upon request of Laurus, the Grantor
shall execute and deliver a supplement hereto (in form and substance
satisfactory to Laurus) to evidence Laurus’ lien on such Patent, Trademark or
Copyright, and the General Intangibles of the Grantor relating thereto
or
represented thereby.
(c) Other
than for those Trademarks and/or trademarks owned by a third party and
subject
to a Trademark License set forth on Schedule 4(c) hereto, such Grantor
shall
take all actions necessary or requested by Laurus to continue to use all
Trademarks (and all trademarks owned by a third party and subject to a
Trademark
License) and maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of the Patents or
Trademarks (now or hereafter existing), including the filing of applications
for
renewal, affidavits of use, affidavits of noncontestability and opposition
and
interference and cancellation proceedings. Such Grantor hereby acknowledges
that
those Trademark and/or trademarks owned by a third party and subject to
a
Trademark License which are set forth on Schedule 4(c) are not necessary
for the
continued operation of such Grantor’s business.
(d) In
the
event that any of the Collateral is infringed upon, misappropriated or
diluted
by a third party, the Grantor shall notify Laurus promptly after the Grantor
learns thereof. Such Grantor shall, unless it shall reasonably determine
that
such Collateral is in no way material to the conduct of its business or
operations, promptly shall take such actions as Laurus shall reasonably
deem
appropriate under the circumstances to protect such Collateral.
(e) At
any
time and from time to time, upon the written request of Laurus and at the
sole
expense of the Grantor, the Grantor shall promptly and duly execute and
deliver
any and all such further instruments and documents and take such further
action
as Laurus may reasonably request (i) to obtain the full benefits of this
Agreement, (ii) to protect, preserve and maintain Laurus’ rights in the
Collateral and under this Agreement, and/or (iii) to enable Laurus to exercise
all or any of the rights and powers herein granted.
Section
5 MASTER
SECURITY AGREEMENT.
The
security interests granted pursuant to this Agreement are granted in conjunction
with the security interests granted to Laurus by the Grantor pursuant to
the
Master Security Agreement. Each Grantor and Laurus hereby acknowledges
and
affirms that the rights and remedies of Laurus with respect to the security
interest in the Collateral made and granted hereby are more fully set forth
in
the Master Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
Section
6 REINSTATEMENT.
This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against any Grantor for liquidation
or
reorganization, should any Grantor become insolvent or make an assignment
for
the benefit of any creditor or creditors or should a receiver or trustee
be
appointed for all or any significant part of any Grantor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any
time
payment and performance of the Obligations, or any part thereof, is, pursuant
to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or
returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof,
is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
4
Section
7 EXECUTION
OF POWER OF ATTORNEY.
Concurrently with the execution and delivery hereof, the Grantor (a) shall
execute and deliver to Laurus, in the form of Exhibit
A
hereto,
ten (10) originals of a Power of Attorney for the implementation of the
assignment, sale or other disposal of the Trademarks pursuant to Section
5
hereof and (b) shall execute and deliver to Laurus, in the form of Exhibit
B
hereto,
ten (10) originals of a Power of Attorney for the implementation of the
assignment, sale or other disposal of the Copyrights pursuant to Section
5
hereof. Laurus shall not exercise its rights under the foregoing Powers
of
Attorney unless an Event of Default shall have occurred and be continuing.
Section
8 INDEMNIFICATION.
(a)
Each Grantor assumes all responsibility and liability arising from the
use of
the Patents, Trademarks and/or Copyrights and the Grantor hereby indemnifies
and
holds Laurus harmless from and against any claim, suit, loss, damage or
expense
(including reasonable attorneys’ fees) arising out of the Grantor’s operations
of its business from the use of the Patents, Trademarks and/or Copyrights.
(b)
In any suit, proceeding or action brought by Laurus under any IP License
for any
sum owing thereunder, or to enforce any provisions of such IP License,
Grantor
will indemnify and keep Laurus 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 the applicable Grantor 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 the Grantor, and all such obligations
of
the Grantor shall be and remain enforceable against and only against the
Grantor
and shall not be enforceable against Laurus.
Section
9 NOTICES.
Whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or
served
upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect
to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given
in the
manner, and deemed received, as provided for in the Securities Purchase
Agreement.
Section
10 TERMINATION
OF THIS AGREEMENT.
Subject
to Section
6
hereof,
this Agreement shall terminate upon indefeasible payment in full in cash
of all
Obligations and irrevocable termination of the Securities Purchase
Agreement.
[Signature
Page to Follow]
5
IN
WITNESS WHEREOF, the Grantor has caused this Intellectual Property Security
Agreement to be executed and delivered by its duly authorized officer as
of the
date first set forth above.
MODTECH HOLDINGS, INC. | ||
|
|
|
By: | ||
|
||
Name: | ||
Title: |
|
|
|
ACCEPTED AND ACKNOWLEDGED BY: | |||
LAURUS MASTER FUND, LTD. | |||
By: | |||
Name:
Title:
|
6
STATE
OF
____________ )
) ss:
COUNTY
OF
__________ )
On
the
____ day of ___________, 2006, before me personally came _______________________
to me known, who being by me duly sworn, did depose and say s/he is the
______________ of Modtech Holdings, Inc., the corporation described in
and which
executed the foregoing instrument; and that s/he signed her/his name thereto
by
order of the board of directors of said corporation.
Notary
Public
My
Commission Expires:
|
7
SCHEDULE
I
TO
I. PATENT
REGISTRATIONS
|
|||
Grantor
|
Patent
|
Reg.
No.
|
Date
|
None.
|
|||
II. PATENT
APPLICATIONS
|
|||
Grantor
|
Patent
|
Application
No.
|
Date
|
None.
|
|||
III. PATENT
LICENSES
|
|||||
Grantor
|
Patent
|
Reg.
No.
|
Date
|
Exclusivity
|
Type
of License
|
None.
|
|||||
8
SCHEDULE
II
TO
Trademark
|
Owner
|
Status
|
Application/
Registration
Number
|
Filing
Date
|
||||
Modcrete
|
Modtech
Holdings,
Inc.
|
Abandoned
2/11/05
|
78/208,029
|
1/28/03
|
||||
|
|
|
|
|
||||
Modtech
Telecom
|
Modtech
Holdings,
Inc.
|
Abandoned
12/9/04
|
76/371,867
|
2/14/02
|
||||
|
|
|
|
|
||||
United
Modular
|
Modtech
Holdings,
Inc.
|
Registered
7/23/02
|
2,598,642
|
12/7/99
|
||||
|
|
|
|
|
||||
Modtech
|
Modtech
Holdings,
Inc.
|
Registered
3/25/03
|
2,699,855
|
1/18/02
|
||||
|
|
|
|
|
||||
United
Modular
Technology
|
Modtech
Holdings,
Inc.
|
Abandoned
4/18/02
|
75/866,601
|
12/7/99
|
||||
|
|
|
|
|
||||
The
Right Space,
At
the Right
Time,
For the
Right
Price
|
Modtech
Holdings,
Inc.
|
Pending
|
78/680,057
|
7/27/05
|
All
trademarks are applied for and registered only in the United States. The
Company
has not licensed any trademarks from third parties or licensed any of its
trademarks to third parties. The Company currently only uses the trademarks
"Modtech" and "The Right Space, At the Right Time, For the Right Price"
in its
business. The other marks are no longer in use.
By
letter
dated April 4, 2006, Modular Technology, Inc., an Arizona Corporation,
asserted
through its attorneys that the Company’s use of the xxxx “MODTECH” violated its
rights to the xxxx “MOD TECH” in Arizona. The Company has not responded to the
letter or received any further communications from Modular Technology,
Inc. or
its attorneys.
9
SCHEDULE
III
TO
Copyrights/Title
|
Owner
|
Status
|
Registration
Number
|
Registration
Date
|
||||
Architectural
Plans
&
Drawings
for 2
story
relocatable classroom
building
30' x 33'
|
Modtech
Holdings,
Inc.
|
Registered
|
VA-1-160-334
|
9/26/02
|
||||
Architectural
Plans
&
Drawings
for 2
story
relocatable classroom
buildings
48' x 40' expandable to 216' x 40'
|
Modtech
Holdings,
Inc.
|
Registered
|
VA-1-149-006
|
9/25/02
|
||||
Architectural
Plans
&
Drawings
for
relocatable
classroom
building 30' x 32'
expandable
to 270' x 32'
|
Modtech
Holdings,
Inc.
|
Registered
|
VA-1-149-005
|
9/25/02
|
||||
Architectural
Plans
&
Drawings
for
relocatable
classroom buildings 24' x 40' expandable to 144' x 40'
|
Modtech
Holdings,
Inc.
|
Registered
|
VA-1-147-591
|
9/23/02
|
||||
Architectural
Plans
&
Drawings
for 24' x 40'
relocatable
building
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
VA-902-842
|
7/20/98
|
||||
Architectural
Plans
&
Drawings
for 24' x 40'
relocatable
building
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
VA-902-841
|
7/20/98
|
||||
Architectural
Plans
&
Drawings
for 24' x 40'
relocatable
building
for
model PC266
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
VA-880-041
|
4/15/98
|
||||
Architectural
Plans
&
Drawings for 24' x 40' classroom : model PC24
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
VAu-391-214
|
3/17/98
|
||||
Architectural
work for
24'
x 40' classroom : model PC24
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
VAu-391-215
|
3/17/98
|
||||
Architectural
Plans
&
Drawings for
24'
x 40' classroom floor plan
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
VAu-404-099
|
3/17/98
|
||||
Architectural
Plans
&
Drawings for 24' x 40' classroom foundation plan
|
Modtech,
Inc.
(predecessor
to
Modtech
Holdings,
Inc.)
|
Registered
|
Vau-404-100
|
3/17/98
|
The
Company has not licensed any of its copyrights from or to third
parties.
10
EXHIBIT
A
SPECIAL
POWER OF ATTORNEY
STATE
OF NEW YORK
|
)
|
) ss:
|
|
COUNTY
OF NEW YORK
|
)
|
KNOW
ALL
MEN BY THESE PRESENTS, that Modtech Holdings, Inc., a corporation formed
under
the laws of Delaware with its principal office at 0000 Xxxxxxx Xxxxxx,
Xxxxxx,
Xxxxxxxxxx 00000 (“Company”),
pursuant to an Intellectual Property Security Agreement dated as of ____________
___, 2006 (as amended, modified, restated and/or supplemented from time
to time,
the “Agreement”),
hereby appoints and constitutes Laurus Master Fund, Ltd., with offices
at c/o
M&C Corporate Services Limited, X.X. Xxx 000 XX, Xxxxxx House, Xxxxxx Town,
South Church Street, Grand Cayman, Cayman Islands (the “Laurus”), its true and
lawful attorney, with full power of substitution, and with full power and
authority to perform the following acts on behalf of Company:
I.
|
Assigning,
selling or otherwise disposing of all right, title and interest
of Company
in and to the Trademarks listed on Schedule
I
of
the Agreement, the trademarks which are added to the same subsequent
hereto, and all registrations and recordings thereof, and all
pending
applications therefor, recording, registering and filing of,
or
accomplishing any other formality with respect to the foregoing,
and
executing and delivering any and all agreements, documents, instruments
of
assignment or other papers necessary or advisable to effect such
purpose;
|
II.
|
Executing
any and all documents, statements, certificates or other papers
necessary
or advisable in order to obtain the purposes described above
as Laurus may
in its sole discretion determine.
|
This
power of attorney is made pursuant to the Agreement and may not be revoked
until
the payment in full of all Obligations (as defined in the Agreement) and
the
irrevocable termination of the Agreement.
Dated: ____________
___, 2006
MODTECH
HOLDINGS, INC.
|
||
|
|
|
By: | ||
Name:
Title:
|
STATE
OF ____________
|
)
|
) ss:
|
|
COUNTY
OF __________
|
)
|
On
the
____ day of ____________, 2006, before me personally came
_______________________ to me known, who being by me duly sworn, did depose
and
say s/he is the ______________ of Modtech Holdings, Inc., the corporation
described in and which executed the foregoing instrument; and that s/he
signed
her/his name thereto by order of the board of directors of said
corporation.
Notary
Public
My
Commission Expires:
|
SCHEDULE
I
TRADEMARK
REGISTRATIONS
GRANTOR
|
REG.
NO.
|
XXXX
|
COUNTRY
|
REG.
DATE
|
TRADEMARK
APPLICATIONS
GRANTOR
|
SER.
NO.
|
XXXX
|
COUNTRY
|
FILING
DATE
|
EXHIBIT
B
SPECIAL
POWER OF ATTORNEY
STATE
OF NEW YORK
|
)
|
) ss:
|
|
COUNTY
OF NEW YORK
|
)
|
KNOW
ALL
MEN BY THESE PRESENTS, that Modtech Holdings, Inc., a corporation formed
under
the laws of Delaware with its principal office at 0000 Xxxxxxx Xxxxxx,
Xxxxxx,
Xxxxxxxxxx 00000 (“Company”),
pursuant to an Intellectual Property Security Agreement dated as of ____________
___, 2006 (as amended, modified, restated and/or supplemented from time
to time,
the “Agreement”),
hereby appoints and constitutes Laurus Master Fund, Ltd., with offices
at c/o
M&C Corporate Services Limited, X.X. Xxx 000 XX, Xxxxxx House, Xxxxxx Town,
South Church Street, Grand Cayman, Cayman Islands (the “Laurus”), its true and
lawful attorney, with full power of substitution, and with full power and
authority to perform the following acts on behalf of Company:
I.
|
Assigning,
selling or otherwise disposing of all right, title and interest
of Company
in and to the Copyrights listed on Schedule
II
of
the Agreement, the copyrights which are added to the same subsequent
hereto, and all registrations and recordings thereof, and all
pending
applications therefor, recording, registering and filing of,
or
accomplishing any other formality with respect to the foregoing,
and
executing and delivering any and all agreements, documents, instruments
of
assignment or other papers necessary or advisable to effect such
purpose;
|
II.
|
Executing
any and all documents, statements, certificates or other papers
necessary
or advisable in order to obtain the purposes described above
as Laurus may
in its sole discretion determine.
|
This
power of attorney is made pursuant to the Agreement and may not be revoked
until
the payment in full of all Obligations (as defined in the Agreement) and
the
irrevocable termination of the Agreement.
Dated: ____________
___, 2006
MODTECH
HOLDINGS, INC.
|
||
|
|
|
By: | ||
Name:
Title:
|
STATE
OF ____________
|
)
|
) ss:
|
|
COUNTY
OF __________
|
)
|
On
the
____ day of ____________, 2006, before me personally came
_______________________ to me known, who being by me duly sworn, did depose
and
say s/he is the ______________ of Modtech Holdings, Inc., the corporation
described in and which executed the foregoing instrument; and that s/he
signed
her/his name thereto by order of the board of directors of said
corporation.
Notary
Public
My
Commission Expires:
|
SCHEDULE
II
COPYRIGHT
REGISTRATIONS
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Grantor
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Copyright
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Reg.
No.
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Date
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COPYRIGHT
APPLICATIONS
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Grantor
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Copyright
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Date
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