Exhibit 10.11
INTELLECTUAL
PROPERTY SECURITY AGREEMENT
Intellectual Property Security Agreement (this "
Agreement "), dated as of July 31, 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 corporation; Nevada
Hydrometallurgical Project, a Nevada corporation; Itronics
Gold’n Minerals, Inc. (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 12% 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
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 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, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Intellectual Property, and
of the occurrence of any event which would have a material adverse
effect on the value of the Intellectual Property or on the Secured
Party’s security interest therein.
(k) The Company shall permit the Secured Party and its
representatives and agents to inspect the Intellectual Property at
any time, and to make copies of records pertaining to the
Intellectual Property as may be requested by the Secured Party from
time to time.
(l) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in respect
of the Intellectual Property.
(m) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment,
garnishment, execution or other legal process levied against any
Intellectual Property and of any other information received by the
Company that may materially affect the value of the Intellectual
Property, the Security Interest or the rights and remedies of the
Secured Party hereunder.
(n) All information heretofore, herein or hereafter supplied to
the Secured Party by or on behalf of the Company with respect to
the Intellectual Property is accurate and complete in all material
respects as of the date furnished.
(o) Schedule A attached hereto contains a list of all of
the subsidiaries of Company.
(p) Schedule B attached hereto includes all Licenses, and
all Patents and Patent Licenses, if any, owned by the Company in
its own name as of the date hereof. Schedule B hereto
includes all Trademarks and Trademark Licenses, if any, owned by
the Company in its own name as of the date hereof. Schedule
B hereto includes all Copyrights and Copyright Licenses, if
any, owned by the Company in its own name as of the date hereof.
Schedule B hereto includes all Trade Secrets and Trade
Secret Licenses, if any, owned by the Company as of the date
hereof. To the best of the Company’s knowledge, each License,
Patent, Trademark, Copyright and Trade Secret is valid, subsisting,
unexpired, enforceable and has not been abandoned. Except as set
forth in Schedule B , none of such Licenses, Patents,
Trademarks, Copyrights and Trade Secrets is the subject of any
licensing or franchise agreement. To the best of the
Company’s knowledge, no holding, decision or judgment has
been rendered by any Governmental Body which would limit, cancel or
question the validity of any License, Patent, Trademark, Copyright
and Trade Secrets . No action or proceeding is pending (i) seeking
to limit, cancel or question the validity of any License, Patent,
Trademark, Copyright or Trade Secret, or (ii) which, if adversely
determined, would have a material adverse effect on the value of
any License, Patent, Trademark, Copyright or Trade Secret. The
Company has used and will continue to use for the duration of this
Agreement, proper statutory notice in connection with its use of
the Patents, Trademarks and Copyrights and consistent standards of
quality in products leased or sold under the Patents, Trademarks
and Copyrights.
(q) With respect to any Intellectual Property:
(i) such Intellectual Property is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) the Company has made all necessary filings and
recordations to protect its interest in such Intellectual Property,
including, without limitation, recordations of all of its interests
in the Patents, Patent Licenses, Trademarks and Trademark Licenses
in the
United States Patent and Trademark Office and in corresponding
offices throughout the world and its claims to the Copyrights and
Copyright Licenses in the United States Copyright Office and in
corresponding offices throughout the world;
(iv) other than as set forth in Schedule B , the Company
is the exclusive owner of the entire and unencumbered right, title
and interest in and to such Intellectual Property and no claim has
been made that the use of such Intellectual Property infringes on
the asserted rights of any t
