Exhibit 10.38 Intellectual Property Security Agreement dated as of
November 27, 2002 between the Registrant and the secured
parties named therein
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement" dated as of
November 27, 2002, 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 as of November
27, 2002 between Company and the Secured Party (the "Purchase Agreement"),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company's 12% Secured
Convertible Debentures, due one year from the date of issue (the
"Debentures"), which are convertible into shares of Company's Common Stock,
no par value per share (the "Common Stock"). In connection therewith,
Company shall issue the Secured Party certain Common Stock purchase
warrants dated as of the date hereof to purchase the number of shares of
Common Stock indicated below each Secured Party's name on the Purchase
Agreement (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the Debentures,
Company has agreed to execute and deliver to the Secured Party this
Agreement for the benefit of the Secured Party and to grant to it a first
priority security interest in certain Intellectual Property (defined below)
of Company to secure the prompt payment, performance and discharge in full
of all of Company's obligations under the Debentures and exercise and
discharge in full of Company's obligations under the Warrants; and
NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Purchase Agreement and used herein are so used as so
defined; and the following terms shall have the following meanings:
"Software Intellectual Property" shall mean:
(a) all software programs (including the H-Net(TM) System and 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) through (c) and
(d) all rights with respect to all of the foregoing, including, without
limitation, any and all upgrades, modifications, copyrights, licenses,
options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and
indemnifications and substitutions, replacements, additions, or model
conversions of any of the foregoing.
"Copyrights" shall mean (a) all copyrights, registrations and applications
for registration, issued or filed, including any reissues, extensions or
renewals thereof, by or with the United States Copyright Office or any
similar office or agency of the United States, any state thereof, or any
other country or political subdivision thereof, or otherwise, including,
all rights in and to the material constituting the subject matter thereof,
including, without limitation, any referred to in Schedule B hereto, and
(b) any rights in any material which is copyrightable or which is protected
by common law, United States copyright laws or similar laws or any law of
any State, including, without limitation, any thereof referred to in
Schedule B hereto.
"Copyright License" shall mean any agreement, written or oral, providing
for a grant by the Company of any right in any Copyright, including,
without limitation, any thereof referred to in Schedule B hereto.
"Intellectual Property" shall means, collectively, the Software
Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks, Trademark Licenses and Trade Secrets.
"Obligations" means all of the Company's obligations under this Agreement
and the Debentures, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and later
decreased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be
amended, supplemented, converted, extended or modified from time to time.
"Patents" shall mean (a) all letters patent of the United States or any
other country or any political subdivision thereof, and all reissues and
extensions thereof, including, without limitation, any thereof referred to
in Schedule B hereto, and (b) all applications for letters patent of the
United States and all divisions, continuations and continuations-in-part
thereof or any other country or any political subdivision, including,
without limitation, any thereof referred to in Schedule B hereto.
"Patent License" shall mean all agreements, whether written or oral,
providing for the grant by the Company of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule B hereto.
"Security Agreement" shall mean the a Security Agreement, dated the date
hereof between Company and the Secured Party.
"Trademarks" shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any state
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
Schedule B hereto, and (b) all reissues, extensions or renewals thereof.
"Trademark License" shall mean any agreement, written or oral, providing
for the grant by the Company of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule B hereto.
"Trade Secrets" shall mean common law and statutory trade secrets and all
other confidential or proprietary or useful information and all know-how
obtained by or used in or contemplated at any time for use in the business
of the Company (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade
Secret licenses, including each Trade Secret license referred to in
Schedule B hereto, and including the right to xxx for and to enjoin and to
collect damages for the actual or threatened misappropriation of any Trade
Secret and for the breach or enforcement of any such Trade Secret license.
2. Grant of Security Interest. In accordance with Section 3(m) of the
Security Agreement, to secure the complete and timely payment, performance
and discharge in full, as the case may be, of all of the Obligations, the
Company hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Secured Party, a continuing security interest in, a
continuing first lien upon, an unqualified right to possession and
disposition of and a right of set-off against, in each case to the fullest
extent permitted by law, all of the Company's right, title and interest of
whatsoever kind and nature in and to the Intellectual Property (the
"Security Interest").
3. Representations and Warranties. The Company hereby represents and
warrants, and covenants and agrees with, the Secured Party as follows:
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its obligations
thereunder. The execution, delivery and performance by the Company of this
Agreement and the filings contemplated therein have been duly authorized by
all necessary action on the part of the Company and no further action is
required by the Company. This Agreement constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally.
(b) The Company represents and warrants that it has no place of
business or offices where its respective books of account and records are
kept (other than temporarily at the offices of its attorneys or
accountants) or places where the Intellectual Property is stored or
located, except as set forth on Schedule A attached hereto;
(c) The Company is the sole owner of the Intellectual Property (except
for non-exclusive licenses granted by the Company in the ordinary course of
business), free and clear of any liens, security interests, encumbrances,
rights or claims, and is fully authorized to grant the Security Interest in
and to pledge the Intellectual Property. There is not on file in any
governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement, license or transfer or
any notice of any of the foregoing (other than those that have been filed
in favor of the Secured Party pursuant to this Agreement) covering or
affecting any of the Intellectual Property. So long as this Agreement
shall be in effect, the Company shall not execute and shall not knowingly
permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of this
Agreement), except for a financing statement covering assets acquired by
the Company after the date hereof, provided that the value of the
Intellectual Property covered by this Agreement along with the Collateral
(as defined in the Security Agreement) is equal to at least 150% of the
Obligations.
(d) The Company shall at all times maintain its books of account and
records relating to the Intellectual Property at its principal place of
business and its Intellectual Property at the locations set forth on
Schedule A attached hereto and may not relocate such books of account and
records unless it delivers to the Secured Party at least 30 days prior to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) evidence that the
necessary documents have been filed and recorded and other steps have been
taken to perfect the Security Interest to create in favor of the Secured
Party valid, perfected and continuing first priority liens in the
Intellectual Property to the extent they can be perfected through such
filings.
(e) This Agreement creates in favor of the Secured Party a valid
security interest in the Intellectual Property securing the payment and
performance of the Obligations and, upon making the filings required
hereunder, a perfected first priority security interest in such
Intellectual Property to the extent that it can be perfected through such
filings.
(f) Upon request of the Secured Party, the Company shall execute and
deliver any and all agreements, instruments, documents, and papers as the
Secured Party may request to evidence the Secured Party's security interest
in the Intellectual Property and the goodwill and general intangibles of
the Company relating thereto or represented thereby, and the Company hereby
appoints the Secured Party its attorney-in-fact to execute and file all
such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; such power being coupled with an interest is
irrevocable until the Obligations have been fully satisfied and are paid in
full.
(g) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or
without the passage of time or notice, shall constitute a breach or
default, under any agreement to which the Company is a party or by which
the Company is bound. No consent (including, without limitation, from
stock holders or creditors of the Company) is required for the Company to
enter into and perform its obligations hereunder.
(h) The Company shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected first priority liens
and security interests in the Intellectual Property to the extent they can
be perfected by filing in favor of the Secured Party until this Agreement
and the Security Interest hereunder shall terminate pursuant to Section 11.
The Company hereby agrees to defend the same against any and all persons.
The Company shall safeguard and protect all Intellectual Property for the
account of the Secured Party. Without limiting the generality of the
foregoing, the Company shall pay all fees, taxes and other amounts
necessary to maintain the Intellectual Property and the Security Interest
hereunder, and the Company shall obtain and furnish to the Secured Party
from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority of the
Security Interest hereunder.
(i) The Company will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by the Company in the
ordinary course of business), sell or otherwise dispose of any of the
Intellectual Property without the prior written consent of the Secured
Party.
(j) The Company shall locate and store any and all of the source and
object code for the H-Net(TM) System in the safe deposit box referenced on
Schedule A attached hereto, and only Xxxxxx X. Xxxxxx, the Chief Executive
Officer of the Company, and Xxxxxxxx Xxxxxxxx, the Chief Technology Officer
of the Company, shall have access to such code without the prior written
consent of the Secured Party.
(k) 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.
(l) 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.
(m) 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.
(n) 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.
(o) 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.
(p) Schedule A attached hereto contains a list of all of the
subsidiaries of Company.
(q) 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 also 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. To the
best of the Company's knowledge, each License, Patent, Trademark and
Copyright is valid, subsisting, unexpired, enforceable and has not been
abandoned. Except as set forth in Schedule B, none of such Licenses,
Patents, Trademarks and Copyrights 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 or
Copyright. No action or proceeding is pending (i) seeking to limit, cancel
or question the validity of any License, Patent, Trademark or Copyright, or
(ii) which, if adversely determined, would have a material adverse effect
on the value of any License, Patent, Trademark or Copyright. 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.
(r) 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.
(s) 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.
(t) 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.
(u) 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.
(v) In the event that any Patent, Trademark or Copyright included in
the Intellectual Property is infringed, misappropriated or diluted by a
third party, promptly notify the Secured Party after it learns thereof and
shall, unless it shall reasonably determine that such Patent, Trademark or
Copyright is of negligible economic value to it, which determination it
shall promptly report to the Secured Party, promptly xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate
and to recover any and all damages for such infringement, misappropriation
or dilution, or take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent, Trademark or
Copyright. If the Company lacks the financial resources to comply with
this Section 3(t), the Company shall so notify the Secured Party and shall
cooperate fully with any enforcement action undertaken by the Secured Party
on behalf of the Company.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Company in this Agreement or
in the Security Agreement shall prove to have been incorrect in any
material respect when made;
(c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Security Agreement for ten (10) days after
receipt by the Company of notice of such failure from the Secured Party;
and
(d) Any breach of, or default under, the Warrants.
5. Duty To Hold In Trust. Upon the occurrence of any Event of Default
and at any time thereafter, the Company shall, upon receipt by it of any
revenue, income or other sums subject to the Security Interest, whether
payable pursuant to the Debentures or otherwise, or of any check, draft,
note, trade acceptance or other instrument evidencing an obligation to pay
any such sum, hold the same in trust for the Secured Party and shall
forthwith endorse and transfer any such sums or instruments, or both, to
the Secured Party for application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right
to exercise all of the remedies conferred hereunder and under the
Debentures, and the Secured Party shall have all the rights and remedies of
a secured party under the UCC and/or any other applicable law (including
the Uniform Commercial Code of any jurisdiction in which any Intellectual
Property is then located). Without limitation, the Secured Party shall
have the following rights and powers:
(a) The Secured Party shall have the right to take possession of the
Intellectual Property and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Intellectual Property, or
any part thereof, is or may be placed and remove the same, and the Company
shall assemble the Intellectual Property and make it available to the
Secured Party at places which the Secured Party shall reasonably select,
whether at the Company's premises or elsewhere, and make available to the
Secured Party, without rent, all of the Company's respective premises and
facilities for the purpose of the Secured Party taking possession of,
removing or putting the Intellectual Property in saleable or disposable
form.
(b) The Secured Party shall have the right to operate the business of
the Company using the Intellectual Property and shall have the right to
assign, sell, lease or otherwise dispose of and deliver all or any part of
the Intellectual Property, at public or private sale or otherwise, either
with or without special conditions or stipulations, for cash or on credit
or for future delivery, in such parcel or parcels and at such time or times
and at such place or places, and upon such terms and conditions as the
Secured Party may deem commercially reasonable, all without (except as
shall be required by applicable statute and cannot be waived) advertisement
or demand upon or notice to the Company or right of redemption of the
Company, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Intellectual Property, the Secured Party
may, unless prohibited by applicable law which cannot be waived, purchase
all or any part of the Intellectual Property being sold, free from and
discharged of all trusts, claims, right of redemption and equities of the
Company, which are hereby waived and released.
7. Applications of Proceeds. The proceeds of any such sale, lease or
other disposition of the Intellectual Property hereunder shall be applied
first, to the expenses of retaking, holding, storing, processing and
preparing for sale, selling, and the like (including, without limitation,
any taxes, fees and other costs incurred in connection therewith) of the
Intellectual Property, to the reasonable attorneys' fees and expenses
incurred by the Secured Party in enforcing its rights hereunder and in
connection with collecting, storing and disposing of the Intellectual
Property, and then to satisfaction of the Obligations, and to the payment
of any other amounts required by applicable law, after which the Secured
Party shall pay to the Company any surplus proceeds. If, upon the sale,
license or other disposition of the Intellectual Property, the proceeds
thereof are insufficient to pay all amounts to which the Secured Party is
legally entitled, the Company will be liable for the deficiency, together
with interest thereon, at the rate of 15% per annum (the "Default Rate"),
and the reasonable fees of any attorneys employed by the Secured Party to
collect such deficiency. To the extent permitted by applicable law, the
Company waives all claims, damages and demands against the Secured Party
arising out of the repossession, removal, retention or sale of the
Intellectual Property, unless due to the gross negligence or willful
misconduct of the Secured Party.
8. Costs and Expenses. The Company agrees to pay all out-of-pocket
fees, costs and expenses incurred in connection with any filing required
hereunder, including without limitation, any financing statements,
continuation statements, partial releases and/or termination statements
related thereto or any expenses of any searches reasonably required by the
Secured Party. The Company shall also pay all other claims and charges
which in the reasonable opinion of the Secured Party might prejudice,
imperil or otherwise affect the Intellectual Property or the Security
Interest therein. The Company will also, upon demand, pay to the Secured
Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents,
which the Secured Party may incur in connection with (i) the enforcement of
this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Intellectual
Property, or (iii) the exercise or enforcement of any of the rights of the
Secured Party under the Debentures. Until so paid, any fees payable
hereunder shall be added to the principal amount of the Debentures and
shall bear interest at the Default Rate.
9. Responsibility for Intellectual Property. The Company assumes all
liabilities and responsibility in connection with all Intellectual
Property, and the obligations of the Company hereunder or under the
Debentures and the Warrants shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Intellectual
Property or its unavailability for any reason.
10. Security Interest Absolute. All rights of the Secured Party and
all Obligations of the Company hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability
of this Agreement, the Debentures, the Warrants or any agreement entered
into in connection with the foregoing, or any portion hereof or thereof;
(b) any change in the time, manner or place of payment or performance of,
or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Debentures,
the Warrants or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the
Intellectual Property, or any release or amendment or waiver of or consent
to departure from any other Intellectual Property for, or any guaranty, or
any other security, for all or any of the Obligations; (d) any action by
the Secured Party to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection
with the Intellectual Property; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to the
Company, or a discharge of all or any part of the Security Interest granted
hereby. Until the Obligations shall have been paid and performed in full,
the rights of the Secured Party shall continue even if the Obligations are
barred for any reason, including, without limitation, the running of the
statute of limitations or bankruptcy. The Company expressly waives
presentment, protest, notice of protest, demand, notice of nonpayment and
demand for performance. In the event that at any time any transfer of any
Intellectual Property or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance
under the bankruptcy or insolvency laws of the United States, or shall be
deemed to be otherwise due to any party other than the Secured Party, then,
in any such event, the Company's obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by
any prior payment thereof and/or cancellation of this Agreement, but shall
remain a valid and binding obligation enforceable in accordance with the
terms and provisions hereof. The Company waives all right to require the
Secured Party to proceed against any other person or to apply any
Intellectual Property which the Secured Party may hold at any time, or to
marshal assets, or to pursue any other remedy. The Company waives any
defense arising by reason of the application of the statute of limitations
to any obligation secured hereby.
11. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Debentures have been
made in full and all other Obligations have been paid or discharged. Upon
such termination, the Secured Party, at the request and at the expense of
the Company, will join in executing any termination statement with respect
to any financing statement executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors
or assigns with full power of substitution, as the Company's true and
lawful attorney-in-fact, with power, in its own name or in the name of the
Company, to, after the occurrence and during the continuance of an Event of
Default, (i) endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of
any policy of insurance) in respect of the Intellectual Property that may
come into possession of the Secured Party; (ii) to sign and endorse any UCC
financing statement or any invoice, freight or express xxxx, xxxx of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to the Intellectual Property; (iii) to pay or discharge taxes,
liens, security interests or other encumbrances at any time levied or
placed on or threatened against the Intellectual Property; (iv) to demand,
collect, receipt for, compromise, settle and xxx for monies due in respect
of the Intellectual Property; and (v) generally, to do, at the option of
the Secured Party, and at the Company's expense, at any time, or from time
to time, all acts and things which the Secured Party deems necessary to
protect, preserve and realize upon the Intellectual Property and the
Security Interest granted therein in order to effect the intent of this
Agreement, the Debentures and the Warrants, all as fully and effectually as
the Company might or could do; and the Company hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable for
the term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
(b) On a continuing basis, the Company will make, execute, acknowledge,
deliver, file and record, as the case may be, in the proper filing and
recording places in any jurisdiction, including, without limitation, the
jurisdictions indicated on Schedule C, attached hereto, all such
instruments, and take all such action as may reasonably be deemed necessary
or advisable, or as reasonably requested by the Secured Party, to perfect
the Security Interest granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to
the Secured Party the grant or perfection of a security interest in all the
Intellectual Property.
(c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and stead of
the Company and in the name of the Company, from time to time in the
Secured Party's discretion, to take any action and to execute any
instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its
sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Intellectual Property without
the signature of the Company where permitted by law.
13. Notices. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto,
and shall be deemed to have been duly given when (i) if delivered by hand,
upon receipt, (ii) if sent by facsimile, upon receipt of proof of sending
thereof, (iii) if sent by nationally recognized overnight delivery service
(receipt requested), the next business day or (iv) if mailed by first-class
registered or certified mail, return receipt requested, postage prepaid,
four days after posting in the U.S. mails, in each case if delivered to the
following addresses:
If to the Company:
Conectisys Corporation
00000 Xxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
Email: xxxxxxx@xxxxxxxxxx.xxx
With 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
Email: xxxxxxxx@xxxxx.xxx
If to the Secured Party:
AJW Partners, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
With copies to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
Facsimile: 000-000-0000
14. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Intellectual Property or by
the guarantee, endorsement or property of any other person, firm,
corporation or other entity, then the Secured Party shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take
any other action with respect thereto, without in any way modifying or
affecting any of the Secured Party's rights and remedies hereunder.
15. Miscellaneous.
(a) No course of dealing between the Company and the Secured Party, nor
any failure to exercise, nor any delay in exercising, on the part of the
Secured Party, any right, power or privilege hereunder or under the
Debentures shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(b) All of the rights and remedies of the Secured Party with respect to
the Intellectual Property, whether established hereby or by the Debentures
or by any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or concurrently.
(c) This Agreement and the Security Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and is
intended to supersede all prior negotiations, understandings and agreements
with respect thereto. Except as specifically set forth in this Agreement,
no provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed by
the parties hereto.
(d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid, prohibited
or unenforceable provision had been more narrowly drawn so as not to be
invalid, prohibited or unenforceable. If, notwithstanding the foregoing,
any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction, such provision, as to such jurisdiction,
shall be ineffective to the extent of such invalidity, prohibition or
unenforceability without invalidating the remaining portion of such
provision or the other provisions of this Agreement and without affecting
the validity or enforceability of such provision or the other provisions of
this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of
any subsequent breach or default or right, whether of the same or similar
nature or otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Intellectual Property which are governed by a jurisdiction other than the
State of New York in which case such law shall govern. Each of the parties
hereto irrevocably submit to the exclusive jurisdiction of any New York
State or United States Federal court sitting in Manhattan county over any
action or proceeding arising out of or relating to this Agreement, and the
parties hereto hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
Federal court. The parties hereto agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. The parties hereto further waive any objection to venue in the State
of New York and any objection to an action or proceeding in the State of
New York on the basis of forum non conveniens.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE
TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON
LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING
INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS
WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY
TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING
THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the
event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same
force and effect as if such facsimile signature were the original thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
CONECTISYS CORPORATION
By:/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By:/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By:/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By:/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Manager
SCHEDULE A
Principal Place of Business of the Company:
00000 Xxxxxx Xxxxxxxx, Xxxxx 000, 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
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)
