INTELLECTUAL PROPERTY SECURITY AGREEMENT
Intellectual Property Security Agreement (this "Agreement") dated as of
February 6, 2003, by and among iDial Networks, Inc., a Nevada 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 as of February
6, 2003 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 12% Secured Convertible
Debentures, due one year from the date of issue (the "Debentures"), which are
convertible into shares of Company's Common Stock, par value $.005 per share
(the "Common Stock"). In connection therewith, Company shall issue the Secured
Party certain Common Stock purchase warrants dated as of the date hereof to
purchase the number of shares of Common Stock indicated below each Secured
Party's name on the Purchase Agreement (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the Debentures,
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 Debentures 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.
"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 Debentures, 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.
"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;
(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. 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. 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 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) 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.
(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.
(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.
(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 . 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
(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.
(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 Debentures)
under the Debentures;
(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 Debentures 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 Debentures,
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:
(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 Debentures. Until so paid, any fees payable hereunder shall be added to
the principal amount of the Debentures and shall bear interest at the
Default Rate.
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
Debentures 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 Debentures, 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 Debentures, 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.
11. Term of Agreement. This Agreement and the Security Interest shall terminate
on the date on which all payments under the Debentures 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 Debentures 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.
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: iDial Networks, Inc.
00000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With copies to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
1065 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: XXxxxxxxxx@xxxxxx.xxx
If to the Secured Party:______________________________AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
With copies to: Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, 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.
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 Debentures 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
Debentures 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.
(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 TRAIL 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]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
IDIAL NETWORKS, INC.
By:__________________________________
Xxxx X. Xxxx
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By:____________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By:__________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By:____________________________________
Xxxxx X. Xxxxxxxx
Manager
SCHEDULE A
----------
Principal Place of Business of the Company:
-------------------------------------------
00000 X. Xxxxxxx Xx. Xxxxx 000, Xxxxxx, XX 00000
Locations Where Intellectual Property is Located or Stored:
-----------------------------------------------------------
00000 X. Xxxxxxx Xx. Xxxxx 000, Xxxxxx, XX 00000
List of Subsidiaries of the Company:
------------------------------------
o IDNW Carrier Services, Inc. - Delaware Corp.
o IDNW, Inc. - Delaware Corp.
o Global Dollar, Inc. - Delaware Corp.
o Dibz, Inc. - Delaware, Corp.
o 2Sendit, Inc. - Colorado Corp.
o Adelant Telecom, Inc. - Nevada Corp.
SCHEDULE B
----------
A. Licenses, Patents and Patent Licenses
-------------------------------------
Registration or
Patent Application or Registration No. Country
------ ------------------------------- -------
Filing Date
-----------
None.
B. Trademarks and Trademark Licenses
---------------------------------
Registration or
Trademark Application or Registration No. Country
--------- ------------------------------- -------
Filing Date
-----------
Dibz, Inc 76-414755 USA 11/09/2002
C. Copyrights and Copyright Licenses
---------------------------------
Registration or
Name Application or Registration No. Country
---- ------------------------------- -------
Filing Date
-----------
None.
D. Trade Secrets and Trade Secret Licenses
---------------------------------------
Registration or
Name Application or Registration No. Country
---- ------------------------------- -------
Filing Date
-----------
None.
SCHEDULE C
----------
Jurisdictions:
-------------
Colorado
