EXHIBIT 10.6 INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement" dated as of March 8,
2006, by and among Conectisys Corporation, a Colorado 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 6% Callable Secured Convertible
Notes, due two years from the date of issue (the "Notes"), which are
convertible into shares of Company's Common Stock, no par value 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.
"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 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, except as set forth on Schedule B. 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 or a security agreement prior
to the date hereof) covering or affecting any of the Intellectual Property,
except as set forth on Schedule B. 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 or a security agreement
prior to the date hereof), except for a financing statement covering assets
acquired by the Company after the date hereof or as set forth on Schedule B,
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 B, 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 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:
(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.
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.
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.
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:
Conectisys Corporation
00000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxx 00
Xxxxxxxx, XX 00000
Attention: President
Facsimile: 000-000-0000
With a copy to:
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, 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.
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.
(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]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
CONECTISYS CORPORATION
By: /s/ XXXXXX X. XXXXXX
--------------------------
Xxxxxx Xxxxxx
President
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
SCHEDULE A
Principal Place of Business of the Company:
00000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxx 00, Xxxxxxxx, Xxxxxxxxxx 00000
Locations Where Intellectual Property is Located or Stored:
00000 Xxxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000
Bank of America
00000 Xxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Safe Deposit Box No. 5639L
List of Subsidiaries of the Company:
TechniLink Technology Manufacturing, Inc. (conditionally dissolved)
xXxxxxxXxxxxxx.xxx
United Telemetry Company
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
--------- ------------------------------- -------- ------------------
H-Net 75/653178 USA 3-3-99
H-Net 75/653026 USA 3-3-99
H-Net 75/653027 USA 3-3-99
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
------ ------------------------------- -------- ------------------
H-Net(TM) System N/A N/A N/A
The Company has granted a security interest in its assets to AJW Partners, LLC,
New Millennium Capital Partners II, LLC, AJW Offshore, Ltd. (formerly AJW/New
Millennium Offshore, Ltd.) and AJW Qualified Partners, LLC (formerly Pegasus
Capital Partners, LLC) pursuant to a Security Agreement dated as of March 29,
2002, a Security Agreement dated as of November 27, 2002, a Security Agreement
dated as of November 25, 2003, a Security Agreement dated as of April 19, 2004
and a Security Agreement dated as of March 17, 2005. In addition, the Company
has granted security interest in its intellectual property to such parties
pursuant to an Intellectual Property Security Agreement dated as of November
27, 2002, an Intellectual Property Security Agreement dated as of November 25,
2003, an Intellectual Property Security Agreement dated as of April 19, 2004
and an Intellectual Property Security Agreement dated as of March 17, 2005
SCHEDULE C
Jurisdictions:
Conectisys Corp. (California)
Conectisys Corp. (Colorado)
TechniLink Technology Manufacturing, Inc. (conditionally dissolved) (California)
eEnergy Xxxxxxx.xxx (Nevada)
eEnergy Xxxxxxx.xxx (California)
United Telemetry Company (Nevada)
