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Exhibit 10.11
INTELLECTUAL PROPERTY SECURITY
AGREEMENT
Intellectual Property Security Agreement (this "
Agreement "), dated as of March 28, 2008, by and among
Itronics Inc., a Texas corporation (" Parent "), Whitney
& Whitney, Inc., a Nevada corporation; Itronics Metallurgical,
Inc., a Nevada corporation; Itronics California, Inc., a Nevada
corporation; American Hydromet, a Nevada joint venture; Nevada
Hydrometallurgical Project, a Nevada partnership; American Gold
& Silver Ltd., a Nevada limited partnership; Itronics
Gold’n Minerals, Inc., a Nevada corporation (collectively the
" Subsidiary ")(hereinafter the Parent and the Subsidiary
shall collectively be referred to as 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 Parent and the Secured
Party (the " Purchase Agreement "), Parent has agreed to
issue to the Secured Party and the Secured Party has agreed to
purchase from Parent certain of Parent’s 8% Callable Secured
Convertible Notes, due three years from the date of issue (the "
Notes "), which are convertible into shares of
Company’s Common Stock, par value $.001 per share (the "
Common Stock "). In connection therewith, Parent shall issue
the Secured Party certain Common Stock purchase warrants (the "
Warrants "); and
WHEREAS, the Parent and the Subsidiary have
been, and are now, engaged in recycling photographic wastes into
the GOLD’n GRO line of liquid fertilizers, performing
technical services to the mining industry, and operating
insidemetals.com, a subscription based website for investors and
others interested in precious metals markets . In the past, as now,
the Parent has provided financing for the Subsidiary, and the
Subsidiary has relied upon the Parent to provide such financing. In
addition, it is anticipated that, if the Subsidiary executes and
delivers this , the Parent will continue to provide such financing
to the Subsidiary, and that the proceeds of the Purchase Agreement
and Notes will be used, in part, for the general working capital
purposes of the Subsidiary; and
WHEREAS, the Subsidiary constitutes all of the
subsidiaries of the Parent and it is in the best interest of the
Subsidiary as subsidiaries of the Parent and the indirect
beneficiaries of the Purchase Agreement and Notes, that the Secured
Party enter into the Purchase Agreement and purchase the Notes to
the Company; and
WHEREAS, in order to induce the Secured Party to
purchase the Notes, Company has agreed to execute and deliver to
the Secured Party this Agreement for the benefit of the Secured
Party and to grant to it a first priority security interest in
certain Intellectual Property (defined below) of Company to secure
the prompt payment, performance and discharge in full of all of
Company’s obligations under the Notes and exercise and
discharge in full of Company’s obligations under the
Warrants; and
WHEREAS, in light of the foregoing, the Company
expects to derive substantial benefit from the Purchase Agreement
and sale of the Notes and the transactions contemplated thereby
and, in furtherance thereof, has agreed to execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of the
agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms . Unless otherwise
defined herein, terms which are defined in the Purchase Agreement
and used herein are so used as so defined; and the following terms
shall have the following meanings:
" Software Intellectual Property " shall
mean:
(a) all software programs (including all source
code, object code and all related applications and data files),
whether now owned, upgraded, enhanced, licensed or leased or
hereafter acquired by the Company, above;
(b) all computers and electronic data processing
hardware and firmware associated therewith;
(c) all documentation (including flow charts,
logic diagrams, manuals, guides and specifications) with respect to
such software, hardware and firmware described in the preceding
clauses (a) and (b); and
(d) all rights with respect to all of the
foregoing, including, without limitation, any and all upgrades,
modifications, copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and
indemnifications and substitutions, replacements, additions, or
model conversions of any of the foregoing.
" Copyrights " shall mean (a) all
copyrights, registrations and applications for registration,
issued or filed, including any reissues, extensions or
renewals thereof, by or with the United States Copyright Office or
any similar office or agency of the United States, any state
thereof, or any other country or political subdivision thereof, or
otherwise, including, all rights in and to the material
constituting the subject matter thereof, including, without
limitation, any referred to in Schedule B hereto, and (b)
any rights in any material which is copyrightable or which is
protected by common law, United States copyright laws or similar
laws or any law of any State, including, without limitation, any
thereof referred to in Schedule B hereto.
" Copyright License " shall mean any
agreement, written or oral, providing for a grant by the Company of
any right in any Copyright, including, without limitation, any
thereof referred to in Schedule B hereto.
" Intellectual Property " shall means,
collectively, the Software Intellectual Property, Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses and Trade Secrets.
" Obligations " means all of the
Company’s obligations under this Agreement and the Notes, in
each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and
later decreased, created or
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incurred, and all or any portion of such
obligations or liabilities that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly
from the Secured Party as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.
" Patents " shall mean (a) all letters
patent of the United States or any other country or any political
subdivision thereof, and all reissues and extensions thereof,
including, without limitation, any thereof referred to in
Schedule B hereto, and (b) all applications for letters
patent of the United States and all divisions, continuations and
continuations-in-part thereof or any other country or any political
subdivision, including, without limitation, any thereof referred to
in Schedule B hereto.
" Patent License " shall mean all
agreements, whether written or oral, providing for the grant by the
Company of any right to manufacture, use or sell any invention
covered by a Patent, including, without limitation, any thereof
referred to in Schedule B hereto.
" Security Agreement " shall mean the
Security Agreement, dated the date hereof between Company and the
Secured Party.
" Trademarks " shall mean (a) all
trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any
political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule B hereto,
and (b) all reissues, extensions or renewals thereof.
" Trademark License " shall mean any
agreement, written or oral, providing for the grant by the Company
of any right to use any Trademark, including, without limitation,
any thereof referred to in Schedule B hereto.
" Trade Secrets " shall mean common law
and statutory trade secrets and all other confidential or
proprietary or useful information and all know-how obtained by or
used in or contemplated at any time for use in the business of the
Company (all of the foregoing being collectively called a "
Trade Secret "), whether or not such Trade Secret has been
reduced to a writing or other tangible form, including all
documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses, including each
Trade Secret license referred to in Schedule B hereto, and
including the right to sue 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
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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
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interest in such Intellectual Property to the
extent that it can be perfected through such filings.
(f) Upon request of the Secured Party, the
Company shall execute and deliver any and all agreements,
instruments, documents, and papers as the Secured Party may request
to evidence the Secured Party’s security interest in the
Intellectual Property and the goodwill and general intangibles of
the Company relating thereto or represented thereby, and the
Company hereby appoints the Secured Party its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all
acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the
Obligations have been fully satisfied and are paid in full.
(g) The execution, delivery and performance of
this Agreement does not conflict with or cause a breach or default,
or an event that with or without the passage of time or notice,
shall constitute a breach or default, under any agreement to which
the Company is a party or by which the Company is bound. No consent
(including, without limitation, from stock holders or creditors of
the Company) is required for the Company to enter into and perform
its obligations hereunder.
(h) The Company shall at all times maintain the
liens and Security Interest provided for hereunder as valid and
perfected first priority liens and security interests in the
Intellectual Property to the extent they can be perfected by filing
in favor of the Secured Party until this Agreement and the Security
Interest hereunder shall terminate pursuant to Section 11. The
Company hereby agrees to defend the same against any and all
persons. The Company shall safeguard and protect all Intellectual
Property for the account of the Secured Party. Without limiting the
generality of the foregoing, the Company shall pay all fees, taxes
and other amounts necessary to maintain the Intellectual Property
and the Security Interest hereunder, and the Company shall obtain
and furnish to the Secured Party from time to time, upon demand,
such releases and/or subordinations of claims and liens which may
be required to maintain the priority of the Security Interest
hereunder.
(i) The Company will not transfer, pledge,
hypothecate, encumber, license (except for non-exclusive licenses
granted by the Company in the ordinary course of business), sell or
otherwise dispose of any of the Intellectual Property without the
prior written consent of the Secured Party.
(j) The Company shall, within ten (10) days of
obtaining knowledge thereof, advise the Secured Party promptly, in
sufficient detail, of any substantial change in the Intellectual
Property, and of the occurrence of any event which would have a
material adverse effect on the value of the Intellectual Property
or on the Secured Party’s security interest therein.
(k) The Company shall permit the Secured Party
and its representatives and agents to inspect the Intellectual
Property at any time, and to make copies of records pertaining to
the Intellectual Property as may be requested by the Secured Party
from time to time.
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(l) The Company will take all steps reasonably
necessary to diligently pursue and seek to preserve, enforce and
collect any rights, claims, causes of action and accounts
receivable in respect of the Intellectual Property.
(m) The Company shall promptly notify the
Secured Party in sufficient detail upon becoming aware of any
attachment, garnishment, execution or other legal process levied
against any Intellectual Property and of any other information
received by the Company that may materially affect the value of the
Intellectual Property, the Security Interest or the rights and
remedies of the Secured Party hereunder.
(n) All information heretofore, herein or
hereafter supplied to the Secured Party by or on behalf of the
Company with respect to the Intellectual Property is accurate and
complete in all material respects as of the date furnished.
(o) Schedule A attached hereto contains a
list of all of the subsidiaries of Company.
(p) Schedule B attached hereto includes
all Licenses, and all Patents and Patent Licenses, if any, owned by
the Company in its own name as of the date hereof. Schedule
B hereto includes all Trademarks and Trademark Licenses, if
any, owned by the Company in its own name as of the date hereof.
Schedule B hereto includes all Copyrights and Copyright
Licenses, if any, owned by the Company in its own name as of the
date hereof. Schedule B hereto includes all Trade Secrets
and Trade Secret Licenses, if any, owned by the Company as of the
date hereof. To the best of the Company’s knowledge, each
License, Patent, Trademark, Copyright and Trade Secret is valid,
subsisting, unexpired, enforceable and has not been abandoned.
Except as set forth in Schedule B , none of such Licenses,
Patents, Trademarks, Copyrights and Trade Secrets is the subject of
any licensing or franchise agreement. To the best of the
Company’s knowledge, no holding, decision or judgment has
been rendered by any Governmental Body which would limit, cancel or
question the validity of any License, Patent, Trademark, Copyright
and Trade Secrets . No action or proceeding is pending (i) seeking
to limit, cancel or question the validity of any License, Patent,
Trademark, Copyright or Trade Secret, or (ii) which, if adversely
determined, would have a material adverse effect on the value of
any License, Patent, Trademark, Copyright or Trade Secret. The
Company has used and will continue to use for the duration of this
Agreement, proper statutory notice in connection with its use of
the Patents, Trademarks and Copyrights and consistent standards of
quality in products leased or sold under the Patents, Trademarks
and Copyrights.
(q) With respect to any Intellectual Property:
(i) such Intellectual Property is
subsisting and has not been adjudged invalid or
unenforceable, in whole or in part;
(ii) such Intellectual Property is valid
and enforceable;
(iii) the Company has made all necessary
filings and recordations to protect its interest
in such Intellectual Property, including, without limitation,
recordations of all of its
interests in the Patents, Patent Licenses, Trademarks and Trademark
Licenses in
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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
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