INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement" dated as of
September 12, 2006, by and among Advanced Biophotonics Inc., a Delaware
corporation (the "Company"), and the secured parties signatory hereto and their
respective endorsees, transferees and assigns (collectively, the "Secured
Party").
W I T N E S S E T H :
WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof, between Company and the Secured Party (the "Purchase Agreement"),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company's 8% Callable Secured
Convertible Notes, due three years from the date of issue (the "Notes"), which
are convertible into shares of Company's Common Stock, par value $.001 per share
(the "Common Stock"). In connection therewith, Company shall issue the Secured
Party certain Common Stock purchase warrants (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the Notes,
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party and to grant to it a first priority
security interest in certain Intellectual Property (defined below) of Company to
secure the prompt payment, performance and discharge in full of all of Company's
obligations under the Notes and exercise and discharge in full of Company's
obligations under the Warrants; and
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are defined
in the Purchase Agreement and used herein are so used as so defined; and the
following terms shall have the following meanings:
"Software Intellectual Property" shall mean:
(a) all software programs (including all source code, object code
and all related applications and data files), whether now owned, upgraded,
enhanced, licensed or leased or hereafter acquired by the Company, above;
(b) all computers and electronic data processing hardware and
firmware associated therewith;
(c) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such software,
hardware and firmware described in the preceding clauses (a) and (b); and
(d) all rights with respect to all of the foregoing, including,
without limitation, any and all upgrades, modifications, copyrights,
licenses, options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications and substitutions, replacements, additions, or
model conversions of any of the foregoing.
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"Copyrights" shall mean (a) all copyrights, registrations and
applications for registration, issued or filed, including any reissues,
extensions or renewals thereof, by or with the United States Copyright Office or
any similar office or agency of the United States, any state thereof, or any
other country or political subdivision thereof, or otherwise, including, all
rights in and to the material constituting the subject matter thereof,
including, without limitation, any referred to in Schedule B hereto, and (b) any
rights in any material which is copyrightable or which is protected by common
law, United States copyright laws or similar laws or any law of any State,
including, without limitation, any thereof referred to in Schedule B hereto.
"Copyright License" shall mean any agreement, written or oral,
providing for a grant by the Company of any right in any Copyright, including,
without limitation, any thereof referred to in Schedule B hereto.
"Intellectual Property" shall means, collectively, the
Software Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks, Trademark Licenses and Trade Secrets.
"Obligations" means all of the Company's obligations under
this Agreement and the Notes, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later decreased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference, fraudulent
transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.
"Patents" shall mean (a) all letters patent of the United
States or any other country or any political subdivision thereof, and all
reissues and extensions thereof, including, without limitation, any thereof
referred to in Schedule B hereto, and (b) all applications for letters patent of
the United States and all divisions, continuations and continuations-in-part
thereof or any other country or any political subdivision, including, without
limitation, any thereof referred to in Schedule B hereto.
"Patent License" shall mean all agreements, whether written or
oral, providing for the grant by the Company of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule B hereto.
"Security Agreement" shall mean the a Security Agreement,
dated the date hereof between Company and the Secured Party.
"Trademarks" shall mean (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers, and the
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 any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule B hereto, and (b) all reissues,
extensions or renewals thereof.
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"Trademark License" shall mean any agreement, written or oral,
providing for the grant by the Company of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule B hereto.
"Trade Secrets" shall mean common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of the Company (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including each Trade Secret license referred to in Schedule B hereto, and
including the right to xxx for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
2. Grant of Security Interest. In accordance with Section 3(m) of
the Security Agreement, to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party, a continuing security
interest in, a continuing first lien upon, an unqualified right to
possession and disposition of and a right of set-off against, in each case
to the fullest extent permitted by law, all of the Company's right, title
and interest of whatsoever kind and nature in and to the Intellectual
Property (the "Security Interest").
3. Representations and Warranties. The Company hereby represents and
warrants, and covenants and agrees with, the Secured Party as follows:
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out
its obligations thereunder. The execution, delivery and performance
by the Company of this Agreement and the filings contemplated
therein have been duly authorized by all necessary action on the
part of the Company and no further action is required by the
Company. This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditor's rights generally.
(b) The Company represents and warrants that it has no place
of business or offices where its respective books of account and
records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where the Intellectual Property
is stored or located, except as set forth on Schedule A attached
hereto;
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(c) The Company is the sole owner of the Intellectual Property
(except for non-exclusive licenses granted by the Company in the
ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and is fully authorized
to grant the Security Interest in and to pledge the Intellectual
Property, except as set forth on Schedule D or for a financing
statement covering assets acquired by the Company after the date
hereof. There is not on file in any governmental or regulatory
authority, agency or recording office an effective financing
statement, security agreement, license or transfer or any notice of
any of the foregoing (other than those that have been filed in favor
of the Secured Party pursuant to this Agreement) covering or
affecting any of the Intellectual Property, except as set forth on
Schedule D. So long as this Agreement shall be in effect, the
Company shall not execute and shall not knowingly permit to be on
file in any such office or agency any such financing statement or
other document or instrument (except to the extent filed or recorded
in favor of the Secured Party pursuant to the terms of this
Agreement), except as set forth on Schedule D or for a financing
statement covering assets acquired by the Company after the date
hereof, provided that the value of the Intellectual Property covered
by this Agreement along with the Collateral (as defined in the
Security Agreement) is equal to at least 150% of the Obligations.
(d) The Company shall at all times maintain its books of
account and records relating to the Intellectual Property at its
principal place of business and its Intellectual Property at the
locations set forth on Schedule A attached hereto and may not
relocate such books of account and records unless it delivers to the
Secured Party at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must
be within the United States) and (ii) evidence that the necessary
documents have been filed and recorded and other steps have been
taken to perfect the Security Interest to create in favor of the
Secured Party valid, perfected and continuing first priority liens
in the Intellectual Property to the extent they can be perfected
through such filings.
(e) This Agreement creates in favor of the Secured Party a
valid security interest in the Intellectual Property securing the
payment and performance of the Obligations and, upon making the
filings required hereunder, a perfected first priority security
interest in such Intellectual Property to the extent that it can be
perfected through such filings.
(f) Upon request of the Secured Party, the Company shall
execute and deliver any and all agreements, instruments, documents,
and papers as the Secured Party may request to evidence the Secured
Party's security interest in the Intellectual Property and the
goodwill and general intangibles of the Company relating thereto or
represented thereby, and the Company hereby appoints the Secured
Party its attorney-in-fact to execute and file all such writings for
the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power being coupled with an interest is
irrevocable until the Obligations have been fully satisfied and are
paid in full.
(g) Except as set forth on Schedule D, the execution, delivery
and performance of this Agreement does not conflict with or cause a
breach or default, or an event that with or without the passage of
time or notice, shall constitute a breach or default, under any
agreement to which the Company is a party or by which the Company is
bound. No consent (including, without limitation, from stock holders
or creditors of the Company) is required for the Company to enter
into and perform its obligations hereunder.
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(h) The Company shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected
first priority liens and security interests in the Intellectual
Property to the extent they can be perfected by filing in favor of
the Secured Party until this Agreement and the Security Interest
hereunder shall terminate pursuant to Section 11. The Company hereby
agrees to defend the same against any and all persons. The Company
shall safeguard and protect all Intellectual Property for the
account of the Secured Party. Without limiting the generality of the
foregoing, the Company shall pay all fees, taxes and other amounts
necessary to maintain the Intellectual Property and the Security
Interest hereunder, and the Company shall obtain and furnish to the
Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain
the priority of the Security Interest hereunder.
(i) The Company will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by the
Company in the ordinary course of business), sell or otherwise
dispose of any of the Intellectual Property without the prior
written consent of the Secured Party, which consent will not be
unreasonably withheld.
(j) The Company shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Intellectual Property, and
of the occurrence of any event which would have a material adverse
effect on the value of the Intellectual Property or on the Secured
Party's security interest therein.
(k) The Company shall permit the Secured Party and its
representatives and agents to inspect the Intellectual Property at
any time, and to make copies of records pertaining to the
Intellectual Property as may be requested by the Secured Party from
time to time.
(l) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in respect
of the Intellectual Property.
(m) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment,
garnishment, execution or other legal process levied against any
Intellectual Property and of any other information received by the
Company that may materially affect the value of the Intellectual
Property, the Security Interest or the rights and remedies of the
Secured Party hereunder.
(n) All information heretofore, herein or hereafter supplied
to the Secured Party by or on behalf of the Company with respect to
the Intellectual Property is accurate and complete in all material
respects as of the date furnished.
(o) Schedule A attached hereto contains a list of all of the
subsidiaries of Company.
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(p) Schedule B attached hereto includes all Licenses, and all
Patents and Patent Licenses, if any, owned by the Company in its own
name as of the date hereof. Schedule B hereto includes all
Trademarks and Trademark Licenses, if any, owned by the Company in
its own name as of the date hereof. Schedule B hereto includes all
Copyrights and Copyright Licenses, if any, owned by the Company in
its own name as of the date hereof. Schedule B hereto includes all
Trade Secrets and Trade Secret Licenses, if any, owned by the
Company as of the date hereof. To the best of the Company's
knowledge, each License, Patent, Trademark, Copyright and Trade
Secret is valid, subsisting, unexpired, enforceable and has not been
abandoned. Except as set forth in Schedule B, none of such Licenses,
Patents, Trademarks, Copyrights and Trade Secrets is the subject of
any licensing or franchise agreement. To the best of the Company's
knowledge, no holding, decision or judgment has been rendered by any
Governmental Body which would limit, cancel or question the validity
of any License, Patent, Trademark, Copyright and Trade Secrets .
Except as set forth in Schedule B, no action or proceeding is
pending (i) seeking to limit, cancel or question the validity of any
License, Patent, Trademark, Copyright or Trade Secret, or (ii)
which, if adversely determined, would have a material adverse effect
on the value of any License, Patent, Trademark, Copyright or Trade
Secret. The Company has used and will continue to use for the
duration of this Agreement, proper statutory notice in connection
with its use of the Patents, Trademarks and Copyrights and
consistent standards of quality in products leased or sold under the
Patents, Trademarks and Copyrights.
(q) With respect to any Intellectual Property:
(i) such Intellectual Property is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and
enforceable;
(iii) the Company has made all necessary filings and
recordations to protect its interest in such Intellectual
Property, including, without limitation, recordations of all
of its interests in the Patents, Patent Licenses, Trademarks
and Trademark Licenses in the United States Patent and
Trademark Office and in corresponding offices throughout the
world and its claims to the Copyrights and Copyright Licenses
in the United States Copyright Office and in corresponding
offices throughout the world;
(iv) other than as set forth in Schedule B, the Company
is the exclusive owner of the entire and unencumbered right,
title and interest in and to such Intellectual Property and no
claim has been made that the use of such Intellectual Property
infringes on the asserted rights of any third party; and
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(v) the Company has performed and will continue to
perform all acts and has paid all required fees and taxes to
maintain each and every item of Intellectual Property in full
force and effect throughout the world, as applicable.
(r) Except with respect to any Trademark or Copyright that the
Company shall reasonably determine is of negligible economic value
to the Company, the Company shall:
(i) maintain each Trademark and Copyright in full force
free from any claim of abandonment for non-use, maintain as in
the past the quality of products and services offered under
such Trademark or Copyright; employ such Trademark or
Copyright with the appropriate notice of registration; not
adopt or use any xxxx which is confusingly similar or a
colorable imitation of such Trademark or Copyright unless the
Secured Party shall obtain a perfected security interest in
such xxxx pursuant to this Agreement; and not (and not permit
any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark or
Copyright may become invalidated;
(ii) not, except with respect to any Patent that it
shall reasonably determine is of negligible economic value to
it, do any act, or omit to do any act, whereby any Patent may
become abandoned or dedicated; and
(iii) notify the Secured Party immediately if it knows,
or has reason to know, that any application or registration
relating to any Patent, Trademark or Copyright may become
abandoned or dedicated, or of any adverse determination or
development (including, without limitation, the institution
of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office,
United States Copyright Office or any court or tribunal in any
country) regarding its ownership of any Patent, Trademark or
Copyright or its right to register the same or to keep and
maintain the same.
(s) Whenever the Company, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent, Trademark or Copyright with the United States
Patent and Trademark Office, United States Copyright Office or any similar
office or agency in any other country or any political subdivision thereof
or acquire rights to any new Patent, Trademark or Copyright whether or not
registered, report such filing to the Secured Party within five business
days after the last day of the fiscal quarter in which such filing occurs.
(t) The Company shall take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the Patents,
Trademarks and Copyrights, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
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(u) In the event that any Patent, Trademark or Copyright included in
the Intellectual Property is infringed, misappropriated or diluted by a
third party, promptly notify the Secured Party after it learns thereof and
shall, unless it shall reasonably determine that such Patent, Trademark or
Copyright is of negligible economic value to it, which determination it
shall promptly report to the Secured Party, promptly xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate
and to recover any and all damages for such infringement, misappropriation
or dilution, or take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent, Trademark or
Copyright. If the Company lacks the financial resources to comply with
this Section 3(t), the Company shall so notify the Secured Party and shall
cooperate fully with any enforcement action undertaken by the Secured
Party on behalf of the Company.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the Notes)
under the Notes;
(b) Any representation or warranty of the Company in this Agreement
or in the Security Agreement shall prove to have been incorrect in any
material respect when made;
(c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Security Agreement for ten (10) days after
receipt by the Company of notice of such failure from the Secured Party;
and
(d) Any breach of, or default under, the Warrants.
5. Duty To Hold In Trust. Upon the occurrence of any Event of Default and
at any time thereafter, the Company shall, upon receipt by it of any revenue,
income or other sums subject to the Security Interest, whether payable pursuant
to the Notes or otherwise, or of any check, draft, note, trade acceptance or
other instrument evidencing an obligation to pay any such sum, hold the same in
trust for the Secured Party and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Secured Party for application to the
satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Notes, and the
Secured Party shall have all the rights and remedies of a secured party under
the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Intellectual Property is then located). Without
limitation, the Secured Party shall have the following rights and powers:
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(a) The Secured Party shall have the right to take possession of the
Intellectual Property and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Intellectual Property, or
any part thereof, is or may be placed and remove the same, and the Company
shall assemble the Intellectual Property and make it available to the
Secured Party at places which the Secured Party shall reasonably select,
whether at the Company's premises or elsewhere, and make available to the
Secured Party, without rent, all of the Company's respective premises and
facilities for the purpose of the Secured Party taking possession of,
removing or putting the Intellectual Property in saleable or disposable
form.
(b) The Secured Party shall have the right to operate the business
of the Company using the Intellectual Property and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or any part of
the Intellectual Property, at public or private sale or otherwise, either
with or without special conditions or stipulations, for cash or on credit
or for future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and conditions as
the Secured Party may deem commercially reasonable, all without (except as
shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Company or right of
redemption of the Company, which are hereby expressly waived. Upon each
such sale, lease, assignment or other transfer of Intellectual Property,
the Secured Party may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Intellectual Property being sold,
free from and discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the Intellectual Property hereunder shall be applied first, to
the expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Intellectual Property, to the
reasonable attorneys' fees and expenses incurred by the Secured Party in
enforcing its rights hereunder and in connection with collecting, storing and
disposing of the Intellectual Property, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by applicable law,
after which the Secured Party shall pay to the Company any surplus proceeds. If,
upon the sale, license or other disposition of the Intellectual Property, the
proceeds thereof are insufficient to pay all amounts to which the Secured Party
is legally entitled, the Company will be liable for the deficiency, together
with interest thereon, at the rate of 15% per annum (the "Default Rate"), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency. To the extent permitted by applicable law, the Company waives
all claims, damages and demands against the Secured Party arising out of the
repossession, removal, retention or sale of the Intellectual Property, unless
due to the gross negligence or willful misconduct of the Secured Party.
8. Costs and Expenses. The Company agrees to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or termination statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Intellectual Property or
the Security Interest therein. The Company will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Intellectual Property, or (iii) the
exercise or enforcement of any of the rights of the Secured Party under the
Notes. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Notes and shall bear interest at the Default Rate.
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9. Responsibility for Intellectual Property. The Company assumes all
liabilities and responsibility in connection with all Intellectual Property, and
the obligations of the Company hereunder or under the Notes and the Warrants
shall in no way be affected or diminished by reason of the loss, destruction,
damage or theft of any of the Intellectual Property or its unavailability for
any reason.
10. Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Notes, the Warrants or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of
the Obligations, or any other amendment or waiver of or any consent to any
departure from the Notes, the Warrants or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Intellectual Property, or any release or amendment or waiver of or
consent to departure from any other Intellectual Property for, or any guaranty,
or any other security, for all or any of the Obligations; (d) any action by the
Secured Party to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Intellectual
Property; or (e) any other circumstance which might otherwise constitute any
legal or equitable defense available to the Company, or a discharge of all or
any part of the Security Interest granted hereby. Until the Obligations shall
have been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. The Company
expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any
transfer of any Intellectual Property or any payment received by the Secured
Party hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Party, then, in any such
event, the Company's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. The
Company waives all right to require the Secured Party to proceed against any
other person or to apply any Intellectual Property which the Secured Party may
hold at any time, or to marshal assets, or to pursue any other remedy. The
Company waives any defense arising by reason of the application of the statute
of limitations to any obligation secured hereby.
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11. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Notes have been made in
full and all other Obligations have been paid or discharged. Upon such
termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors
or assigns with full power of substitution, as the Company's true and
lawful attorney-in-fact, with power, in its own name or in the name of the
Company, to, after the occurrence and during the continuance of an Event
of Default, (i) endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of
any policy of insurance) in respect of the Intellectual Property that may
come into possession of the Secured Party; (ii) to sign and endorse any
UCC financing statement or any invoice, freight or express xxxx, xxxx of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and
other documents relating to the Intellectual Property; (iii) to pay or
discharge taxes, liens, security interests or other encumbrances at any
time levied or placed on or threatened against the Intellectual Property;
(iv) to demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Intellectual Property; and (v) generally, to
do, at the option of the Secured Party, and at the Company's expense, at
any time, or from time to time, all acts and things which the Secured
Party deems necessary to protect, preserve and realize upon the
Intellectual Property and the Security Interest granted therein in order
to effect the intent of this Agreement, the Notes and the Warrants, all as
fully and effectually as the Company might or could do; and the Company
hereby ratifies all that said attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and thereafter as
long as any of the Obligations shall be outstanding.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper
filing and recording places in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule C, attached hereto,
all such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Secured Party,
to perfect the Security Interest granted hereunder and otherwise to carry
out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a security
interest in all the Intellectual Property.
(c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and stead of
the Company and in the name of the Company, from time to time in the
Secured Party's discretion, to take any action and to execute any
instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its
sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Intellectual Property without
the signature of the Company where permitted by law.
12
13. Notices. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
If to the Company: Advanced Biophotonics Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Secured Party: AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
New Millennium Capital Partners, II, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
With copies to: Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
Facsimile: 000-000-0000
14. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Intellectual Property or by the
guarantee, endorsement or property of any other person, firm, corporation or
other entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any of the
Secured Party's rights and remedies hereunder.
13
15. Miscellaneous.
(a) No course of dealing between the Company and the Secured Party,
nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Party, any right, power or privilege hereunder or under the
Notes 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.
(b) All of the rights and remedies of the Secured Party with respect
to the Intellectual Property, whether established hereby or by the Notes
or by any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement and the Security Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and is
intended to supersede all prior negotiations, understandings and
agreements with respect thereto. Except as specifically set forth in this
Agreement, no provision of this Agreement may be modified or amended
except by a written agreement specifically referring to this Agreement and
signed by the parties hereto.
(d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly drawn so as
not to be invalid, prohibited or unenforceable. If, notwithstanding the
foregoing, any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction, such provision, as to
such jurisdiction, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability without invalidating the remaining portion
of such provision or the other provisions of this Agreement and without
affecting the validity or enforceability of such provision or the other
provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of
any subsequent breach or default or right, whether of the same or similar
nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
14
(h) This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Intellectual Property which are governed by a jurisdiction other than the
State of New York in which case such law shall govern. Each of the parties
hereto irrevocably submit to the exclusive jurisdiction of any New York
State or United States Federal court sitting in Manhattan county over any
action or proceeding arising out of or relating to this Agreement, and the
parties hereto hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
Federal court. The parties hereto agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. The parties hereto further waive any objection to venue in the State
of New York and any objection to an action or proceeding in the State of
New York on the basis of forum non conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS
RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS
IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of 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. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same
force and effect as if such facsimile signature were the original thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
SCHEDULE A
1. Principal Place of Business of the Company
000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxx Xxxx 00000
2. Locations of Intellectual Property other than Headquarters
List of Bailed Equipment (BioScanIR(R) Systems) as of September 11, 2006
Unit#: OMNI-0059 (Cleveland)
Customer: Cleveland Clinic
Address: Taussig Cancer Center
0000 Xxxxxx Xxxxxx
X0-000x
Xxxxxxxxx, Xxxx 00000
Shipped: October 29, 2004
Product: BioScanIR(R) Beta Version 1.1 (Therapy Monitoring)
Unit#: ABP-0066
Customer: Xxxx Israel Medical Center
Address: 000 Xxxxxxx Xxxxxx
Xxxxx 0X
Xxxxxx, Xxxxxxxxxxxxx 00000
Shipped: August 8, 2006
Product: BioScanIR(R) Beta Version 2.0 (Plastic Surgery
Application)
Unit#: ABP-0065
Customer: Hospital at the University of Pennsylvania
Address: University of Pennsylvania Medical Center
10 Penn Tower
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Shipped: June 5, 2006
Product: BioScanIR(R) Beta Version 2.0 (Plastic Surgery
Application)
16
Unit#: ABP-0064
Customer: Dartmouth - Xxxxxxxxx Medical School
Address: Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Shipped: June 15, 2006
Product: BioScanIR(R) Beta Version 2.0 (Plastic Surgery
Application)
Unit#: ABP-0063
Customer: Yale University Medical Center
Address: Xxxx Xxx Xxxxx Xxxxxxxx
Xxxxxxxx Xxxxxxxx - Xxxx 000X
000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Shipped: January 9, 2006
Product: BioScanIR(R) Beta Version 2.0 (Plastic Surgery
Application)
3. List of Subsidiaries of the Company
None.
17
SCHEDULE B
1. List of Patents and Patent Licenses
See attached list.
2. List of Trademarks and Trademark Licenses
See attached list.
3. List of Copyrights and Copyright Licenses
None.
4. Patents which are subject to Licensing or Franchise Agreements
None.
5. Trademarks which are subject to Licensing or Franchise Agreements
None.
6. Copyrights which are subject to Licensing or Franchise Agreements
None.
7. Actions bought to Invalidate the Company's Intellectual Property
None.
8. Infringement Actions bought against the Company's Intellectual Property
None.
9. Liens or encumbrances on the Company's Intellectual Property
None.
18
SCHEDULE C
Jurisdictions:
19
SCHEDULE D
1. Liens or Encumberances on the Intellectual Property of the Company - ss.3(c)
None.
2. Potential Breach of Existing Agreements- ss.3(g)
None.
3. Consents Required to Enter into this Agreement- ss.3(g)
None.
4. List of Subsidiaries of the Company - ss.3(o)
None.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
ADVANCED BIOPHOTONICS INC.
By: /s/ Xxxxx X. X'Xxxxxx
-----------------------
Xxxxx X. X'Xxxxxx
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx
Manager
21
