INTELLECTUAL PROPERTY SECURITY AGREEMENT
Intellectual Property Security Agreement (this "Agreement"
dated as of February 28th, 2005, by and among Insynq, 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 the date
hereof, between the Company and the Secured Party (the "Purchase Agreement"),
the Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from the Company certain of the Company's 8% Secured
Convertible Notes, due three years from the date of issue (the "Notes"), which
are convertible into shares of the Company's Common Stock, par value $.001 per
share (the "Common Stock") and shares of the Company's Series B Convertible
Preferred Stock (the "Preferred Stock" and collectively with the Notes, the
"Convertible Securities"). In connection therewith, the 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
Convertible Securities, the 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 security interest in certain Intellectual Property (defined below) of
the Company to secure the prompt payment, performance and discharge in full of
all of the Company's obligations under the Convertible Securities and exercise
and discharge in full of the 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 Convertible Securities, 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.
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"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, subject to the Pre-Existing Liens (as defined below) 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
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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
for the security interests of the Secured Party that have been granted
prior to the date hereof (the "Pre-Existing Liens") 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 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 reasonably 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
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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 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 during
reasonable business hours, and to make copies of records pertaining to
the Intellectual Property as may be requested by the Secured Party from
time to time, so long as the Secured Party provides the Company with
reasonable prior notice.
(l) The Company will take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Intellectual
Property.
(m) The Company shall promptly notify the Secured Party in sufficient
detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Intellectual Property and of any
other information received by the Company that may materially affect
the value of the Intellectual Property, the Security Interest or the
rights and remedies of the Secured Party hereunder.
(n) All information heretofore, herein or hereafter supplied to the Secured
Party by or on behalf of the Company with respect to the Intellectual
Property is accurate and complete in all material respects as of the
date furnished.
(o) Schedule A attached hereto contains a list of all of the subsidiaries
of Company.
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(p) Schedule B attached hereto includes all Licenses, and all Patents and
Patent Licenses, if any, owned by the Company in its own name as of the
date hereof. Schedule B hereto includes all Trademarks and Trademark
Licenses, if any, owned by the Company in its own name as of the date
hereof. Schedule B hereto includes all Copyrights and Copyright
Licenses, if any, owned by the Company in its own name as of the date
hereof. Schedule B hereto includes all Trade Secrets and Trade Secret
Licenses, if any, owned by the Company as of the date hereof. To the
best of the Company's knowledge, each License, Patent, Trademark,
Copyright and Trade Secret is valid, subsisting, unexpired, enforceable
and has not been abandoned. Except as set forth in Schedule B, none of
such Licenses, Patents, Trademarks, Copyrights and Trade Secrets is the
subject of any licensing or franchise agreement. To the best of the
Company's knowledge, no holding, decision or judgment has been rendered
by any Governmental Body which would limit, cancel or question the
validity of any License, Patent, Trademark, Copyright and Trade
Secrets. 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
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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
to the extent registered; not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark or
Copyright unless the Secured Party shall obtain a perfected security
interest in such xxxx pursuant to this Agreement; and not (and not
permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby any Trademark or Copyright may become
invalidated;
(ii) not, except with respect to any Patent that it shall reasonably
determine is of negligible economic value to it, do any act, or omit to
do any act, whereby any Patent may become abandoned or dedicated; and
(iii) notify the Secured Party immediately if it knows, or has reason to
know, that any application or registration relating to any Patent,
Trademark or Copyright may become abandoned or dedicated, or of any
adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United
States Copyright Office or any court or tribunal in any country)
regarding its ownership of any Patent, Trademark or Copyright or its
right to register the same or to keep and maintain the same.
(s) Whenever the Company, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of
any Patent, Trademark or Copyright with the United States Patent and
Trademark Office, United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof or
acquire rights to any new Patent, Trademark or Copyright whether or not
registered, report such filing to the Secured Party within five
business days after the last day of the fiscal quarter in which such
filing occurs.
(t) The Company shall take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the
Patents, Trademarks and Copyrights, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
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(u) In the event that any Patent, Trademark or Copyright included in the
Intellectual Property is infringed, misappropriated or diluted by a
third party, promptly notify the Secured Party after it learns thereof
and shall, unless it shall reasonably determine that such Patent,
Trademark or Copyright is of negligible economic value to it, which
determination it shall promptly report to the Secured Party, promptly
demand cessation from or 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
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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
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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: Insynq, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to: xx Xxxxxx & Xxxxx, LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (619)_702-9401
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.
10
(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.
11
(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]
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
INSYNQ, INC.
By:
-------------------------------------------------
Xxxx Xxxxx
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
NEW MILLENNIUM CAPITAL
PARTNERS II, LLC
By: First Street Manager II, LLC
By:
-------------------------------------------------
Xxxxx X. Xxxxxxxx
Manager
13
SCHEDULE A
Principal Place of Business of the Company:
0000 Xxxxxxxx Xxxxx, #000
Xxxxxx, XX 00000
Locations Where Intellectual Property is Located or Stored:
0000 Xxxxxxxx Xxxxx, #000
Xxxxxx, XX 00000
List of Subsidiaries of the Company:
None.
A-1
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
Patent Application or Registration No. Country Filing Date
None
C. Copyrights and Copyright Licenses
Registration or
Patent Application or Registration No. Country Filing Date
None
D. Trade Secrets and Trade Secret Licenses
Registration or
Patent Application or Registration No. Country Filing Date
None
B-1
SCHEDULE C
Jurisdictions:
Xxxxxx County, State of Washington
C-1
