PATENT SECURITY AGREEMENT
Exhibit
10.2
This
is a Patent Security Agreement
("Agreement"), dated March 7, 2007, made by NaturalNano,
Inc., a Nevada corporation, and its wholly-owned subsidiary NaturalNano
Research, Inc, a Delaware corporation (collectively referred to herein as the
"Company") with a place of business at 00
Xxxxxx
Xxxxx, Xxxxxxxxx, XX 00000 in favor of the investors named Schedule I to this
Agreement (the
"Secured Parties") and
Platinum Advisors, LLC, a Delaware limited liability company with
an
address of 000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx,
Xxx Xxxx, XX 00000, as agent (the “Agent”).
Background.
A. This
Agreement is being executed in connection with that certain Loan
and
Security Agreement dated as of March 7, 2007, by
and
among the Company, NaturalNano, Inc., the Secured Parties and the Agent (as
amended, supplemented, restated, replaced, or otherwise modified from time
to
time, the "Loan Agreement"). Capitalized terms used but not defined herein
shall
have the meanings given to such terms in, or by reference in, the Loan
Agreement.
B. As
security for payment and performance of the Obligations, the Company is granting
Secured Party a first and prior lien on and security interest in certain assets
of the Company associated with or relating to services or products related
to
the Company's Patent Collateral (as defined herein), and under which the Secured
Party is entitled to foreclose or otherwise deal with such assets under the
terms and conditions set forth herein.
C. The
Company owns, is developing the technology of, and/or is using (i) the Letters
Patent and the inventions disclosed and claimed therein set forth on Exhibit
A
to this Agreement (hereinafter referred to collectively as the "Patents");
(ii)
the applications for Letters Patent and the inventions disclosed and claimed
therein set forth on Exhibit A to this Agreement and any Letters Patent which
may be issued upon any of said applications (hereinafter referred to
collectively as the "Applications"); (iii) US provisional patent applications
and the inventions disclosed therein set forth on Exhibit A to this Agreement
(hereinafter referred to collectively as the "Provisional Applications”); (iv)
foreign patents, foreign patent applications, and/or Patent Cooperation treaty
(PCT) applications and the inventions disclosed and claimed therein set forth
on
Exhibit A to this Agreement (hereinafter referred to collectively as the
"Foreign Patents"). In conjunction with the patents and applications, Company
may use and/or adopt any reissues, extensions, divisions, continuations or
continuations-in-part of the patents or applications (such reissues, extensions,
divisions, continuations and continuations-in-part being herein referred to
collectively as the "Reissued Patents"); and may be entitled to future royalties
or other fees paid or payments made to Company in respect of the Patents
(hereinafter referred to collectively as the "Royalties"), (the Patents,
Applications, Provisional Applications, Foreign Patents, Reissued Patents and
Royalties are referred to collectively as the "Patent Rights").
D. Pursuant
to the Loan Agreement, the Secured Party has been granted a first and prior
lien
on and security interest in, among other things, the Patent Collateral (as
defined herein) and the registration thereof, as security for all of the
Obligations, and the Secured Party desires to have its security interest in
such
Patent Collateral confirmed by a document identifying same and in such form
that
it may be recorded in the United States Patent and Trademark
Office.
Now
therefore,
with
the foregoing Background deemed incorporated by reference and made a part
hereof, and in consideration of the premises and mutual promises herein
contained, the parties hereto, intending to be legally bound hereby, covenant
and agree as follows:
1. In
consideration of and pursuant to the terms of the Loan Agreement, and for other
good, valuable and sufficient consideration, the receipt of which is hereby
acknowledged, and to secure the payment and performance of the Obligations,
the
Company grants a first and prior lien and security interest to the Secured
Party
in all of the Patent Rights and all proceeds thereof and all the Company's
right, title, interest, claims and demands that the Company has or may have
in
profits and damages for past and future infringements of the Patent Rights
(such
rights, interest, claims and demand being herein called the "Claims") (the
Patent Rights and Claims are collectively herein referred to as the "Patent
Collateral").
2. The
Company hereby covenants and agrees to maintain the Patent Collateral in full
force and effect (except to the extent any Patent Collateral expires by its
terms) until all of the Obligations are satisfied in full.
3.
The
Company represents, warrants and covenants to the Secured Party that:
(a) The
Company is, except as otherwise noted herein or in Exhibit A, the sole and
exclusive respective owner of the entire and unencumbered right, title and
interest in and to the Patent Collateral;
(b) To
the
best of the Company's knowledge, based either upon an on-line search (see
Exhibit A, footnote 1) and review of application documents available, but with
no other investigation having been made or required to be made, the Patent
Collateral has not been adjudged invalid or unenforceable;
(c) To
the
best of the Company's knowledge, with no investigation having been made or
required to be made, all issued patents of the Patent Rights, if any, are valid
and enforceable;
(d) To
the
best of the Company's knowledge, based either upon an on-line USPTO assignment
search (see Exhibit A, footnote 1) and review of application documents
available, but with no investigation having been made or required to be made,
except as noted by Footnote 1 of Exhibit A, all of the Patent Collateral is
free
and clear of any liens, charges and encumbrances including, without limitation,
pledges, assignments, licenses and covenants by Company not to xxx third
persons, except that certain patent applications may be subject to a
non-exclusive license as set forth in NCRADA-NRL-05-367;
2
(e) The
Company has no notice of any suits or actions commenced or threatened against
it, or notice of claims asserted or threatened against it, with reference to
the
Patent Collateral;
(f) The
Company has the right, power and authority to enter into this Agreement and
perform its terms;
(g) The
Company has used and will continue to use for the duration of this Agreement,
consistent standards of quality in services or products leased or sold under
the
Patent Collateral and hereby grants to the Secured Party and its employees,
representatives and agents the right (with no obligation of any kind upon the
Secured Party to do so) upon prior notice to visit the Company's affiliates,
franchises or management locations and to inspect the use of the Patent
Collateral and quality control records relating thereto at reasonable times
during regular business hours to ensure the Company's compliance with this
paragraph 3(h).
4. The
Company further covenants that:
(a) Until
the
Obligations have been satisfied in full, the Company will not enter into any
agreement, including, without limitation, license agreements or options, which
are inconsistent with the Company’s obligations under this Agreement or any
obligation under the Loan Agreement or which restrict or impair the Secured
Party 's rights hereunder.
(b) If
the
Company shall acquire or hold any new Patent Collateral that is not listed
on
Exhibit A hereto ("Additional Patent Collateral") or even though presently
listed in Exhibit A, Company later records such acquisition or holding, then
(i)
the provisions of this Agreement shall be deemed to automatically apply thereto
and such Additional Patent Collateral shall be deemed part of the Patent
Collateral, (ii) the Company shall give the Secured Party prompt written notice
thereof, and (iii) the Company shall promptly deliver to the Secured Party
with
respect to such Additional Patent Collateral, a Supplement to Patent Security
Agreement in a form satisfactory to the Secured Party, duly completed and
executed by the Company. Each schedule of Additional Patent Collateral shall
be
incorporated and become a part of Exhibit A, and all references to Exhibit
A
contained in this Agreement shall be deemed, for all purposes, to also include
each such schedule. The Company hereby authorizes and empowers the Secured
Party, its successors and assigns, and any officer or agent of the Secured
Party
as the Secured Party may select, in its exclusive discretion, as the Company's
true and lawful attorney-in-fact, with the power to endorse the Company's name
on such Supplement to Patent Security Agreement and to execute any documents
or
make any filings in connection therewith.
5. So
long
as this Agreement is in effect and so long as the Company has not received
notice from the Secured Party that an Event of Default has occurred and is
continuing under the Loan Agreement or the Note and that the Secured Party
has
elected to exercise its rights hereunder (i) the Company shall continue to
have
the exclusive right to use the Patent Collateral; and (ii) the Secured Party
shall have no right to use the Patent Collateral or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Patent Collateral to any third party. Foreclosure with
respect to the Patent Collateral shall not abrogate or diminish the rights
of
any licensee or any other permitted transferee of any part of the Patent
Collateral in the normal course of the Company’s business.
3
6. The
Company agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Patent Collateral to any entity or
person without the prior written consent of the Secured Party, except that
the
Company may, without any consent, grant exclusive, field of use and
non-exclusive licenses in the normal course of its business.
7. Anything
herein contained to the contrary notwithstand-ing, if and while an Event of
Default exists under the Loan Agreement or the Note, the Company covenants
and
agrees that the Secured Party, as the holder of a security interest under the
Uniform Commercial Code, as now or hereafter in effect in the State of New
York,
may take such action as permitted hereunder, in its exclusive discretion, to
foreclose upon the Patent Collateral.
8. This
Agreement shall be subject to the terms, provisions, and conditions set forth
in
the Loan Agreement and may not be modified without the written consent of the
party against whom enforcement is being sought.
9. All
rights and remedies herein granted to the Secured Party shall be in addition
to
any rights and remedies granted to the Secured Party under the Loan Agreement
and the Note. In the event of an inconsistency between this Agreement and Loan
Agreement, the language of this Agreement shall control.
10. Upon
performance and full satisfaction of all Obligations, the Secured Party shall
execute and deliver to the Company all documents reasonably necessary to
terminate the Secured Party's security interest in the Patent Collateral and
to
record such satisfaction and termination wherever Company chooses, including
but
not limited to the United States Patent and Trademark Office, at the sole
expense of the Company.
11. Any
and
all reasonable fees, costs and expenses, of whatever kind or nature, including
the reasonable attorneys' fees and legal expenses incurred by the Secured Party
in connection with the preparation of this Agreement and all other documents
relating hereto and the consummation of this transaction, the filing or
recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, reasonable counsel fees,
maintenance fees, encumbrances or costs otherwise incurred in protecting,
maintaining, preserving the Patent Collateral, or in defending or prosecuting
any actions or proceed-ings arising out of or related to the Patent Collateral,
in each case in accordance with the terms of this Agreement, shall be borne
and
paid by the Company on demand by the Secured Party and until so paid shall
be
added to the principal amount of the Note.
12. Subject
to the terms of the Loan Agreement and except to the extent that the Company
reasonably determines such Patent Collateral is not material to its business,
the Company shall have the duty to prosecute diligently any application and/or
registration with respect to the Patent Collateral pending as of the date of
this Agreement or thereafter, until all of the Obligations shall have been
satisfied in full, to preserve and maintain all rights in the Patent Collateral,
and upon reasonable request by the Secured Party, the Company shall make
application for a patent on patentable technology belonging to the Company
or
licensed to the Company. Any reasonable expenses incurred in connection with
such applications shall be borne exclusively by the Company. The Company shall
not abandon any Patent Collateral (other than Patent Collateral that the Company
reasonably determines is not material to its business) without the prior written
consent of the Secured Party, which consent shall not be unreasonably
withheld.
4
13. The
Company shall have the right to bring suit in its own name to enforce the Patent
Collateral, in which event the Secured Party may, if the Company reasonably
deems it necessary, be joined as a nominal party to such suit, so long as the
Secured Party shall have been satisfied, in its sole discretion, that it is
not
thereby incurring any risk of liability because of such joinder. The Company
shall promptly, upon demand, reimburse and indemnify the Secured Party for
all
damages, costs and expenses, including reasonable attorneys' fees and costs,
incurred by the Secured Party in the fulfillment of the provisions of this
paragraph.
14. Upon
the
occurrence and during the continuance of an Event of Default under the Loan
Agreement or the Note, the Secured Party may, without any obligation to do
so,
complete any obligation of the Company hereunder, in the Company's name or
in
the Secured Party's name, but at the expense of the Company, and the Company
hereby agrees to reimburse the Secured Party in full for all reasonable
expenses, including, without limitation, all reasonable attorneys' fees incurred
by the Secured Party in protecting, defending and maintaining the Patent
Collateral.
15. 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, shall operate as a waiver thereof, and
all
of the Secured Party's rights and remedies with respect to the Patent
Collateral, whether established hereby or by the Loan Agreement or the Note,
or
by any other future agreements between the Company and the Secured Party or
by
law, shall be cumulative and may be exercised singularly or
concurrently.
16. The
provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and
effect.
17. This
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.
18. This
Agreement shall be governed by and construed in conformity with the laws of
the
State of New York, without regard to its otherwise applicable principles of
conflicts of laws.
5
19. THE
COMPANY AND THE SECURED PARTY EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE
TO
A JURY TRIAL ARISING IN CONNECTION WITH ANY PROCEED-ING OR CONTROVERSY RELATING
TO THIS AGREEMENT.
In
witness whereof,
the
parties hereto have executed this Patent Security Agreement, the day and year
first above written.
| NATURALNANO, INC. | |||
| By: | /s/ Xxxxx X. Xxxxxxxxx | ||
| Name: | Xxxxx X. Xxxxxxxxx | ||
| Title: | President | ||
| Attest: | /s/ Xxxxxxx XxXxxxxx | ||
| Name: | Xxxxxxx XxXxxxxx | ||
| Title: | Administrative Assistant | ||
| NATURALNANO RESEARCH, INC. | |||
| By: | /s/ Xxxxxxxx X. Xxxxxx | ||
| Name: | Xxxxxxxx X. Xxxxxx | ||
| Title: | Chief Financial Officer | ||
| Attest: | /s/ Xxxxxxx XxXxxxxx | ||
| Name: | Xxxxxxx XxXxxxxx | ||
| Title: | Administrative Assistant | ||
0
XXXXXXXXX
XXXXXXXXXXXXXX
| XXXXXX XXXXXX XX XXXXXXX | : | |
| STATE OF NEW YORK | : | SS |
| COUNTY OF MONROE | : |
On
this
5th day of March, 2007, before me personally appeared Xxxxx Xxxxxxxxx, who
being
duly sworn, deposes and says that she is the President of NaturalNano, Inc.,
the
corporation described in the foregoing document, that she in such capacity
as
officer of said corporation is authorized to execute on behalf of each
corporation the foregoing document for the purposes contained therein, and
that
she is the person whose name and signature is subscribed to the foregoing
document.
| /s/ Xxxx X. XxXxxxx, Xx. | ||
|
Notary Public |
||
|
Xxxx
X. XxXxxxx, Xx.
Notary
Public, State of New York
Monroe
County No. 01LE5019379
Commission
Expires 00/00/0000
|
||
XXXXXXXXX
XXXXXXXXXXXXXX
| XXXXXX XXXXXX XX XXXXXXX | : | |
| STATE OF NEW YORK | : | SS |
| COUNTY OF MONROE | : |
On
this
5th day of March, 2007, before me personally appeared Xxxxxxxx Xxxxxx, who
being
duly sworn, deposes and says that she is the Chief Financial Officer of
NaturalNano Research, Inc., the corporation described in the foregoing document,
that she in such capacity as officer of said corporation is authorized to
execute on behalf of each corporation the foregoing document for the purposes
contained therein, and that she is the person whose name and signature is
subscribed to the foregoing document.
| /s/ Xxxx X. XxXxxxx, Xx. | ||
|
Notary Public |
||
|
Xxxx
X. XxXxxxx, Xx.
Notary
Public, State of New York
Monroe
County No. 01LE5019379
Commission
Expires
10/18/2009
|
||
Exhibit
A
Application
S/N, Date
11/244,376
Filed
10/06/05
11/042,219
Filed
01/25/05
11/134,657
Filed
05/20/02
11/183,417
Filed
07/18/05
11/099,055
Filed
4/5/2005 (1)
PCT/US2006/019682
Filed
05/19/06
PCT/US2006/026936
Filed
5/19/06
11/481,025
Filed
7/6/2006
11/469,128
Filed
08/31/06
PCT/US2006/034281
Filed
9/1/2006
11/531,459
Filed
09/13/06
PCT/US2006/035659
Filed
9/14/2006
11/541,115
Filed
10/19/06
PCT/US2006/041208
Filed
10/20/06
11/554,575
Filed
10/30/06
PCT/US2006/042554
Filed
10/31/06
60/867,369
Filed
11/27/2006
60/888,685
Filed
2/7/07
1
Application
may be subject to a claim of joint ownership.
Schedule
I
Platinum
Partners Long Term Growth IV
Platinum
Advisors LLC
Longview
Special Financing Inc.
