Exhibit 10.3

 

Intellectual Property Security Agreement

 

This Intellectual Property Security Agreement (this “Agreement”) is made as of
this 21st day of October, 2020 by and between MAGNEGAS IP, LLC, a Delaware
limited liability company (“Pledgor”) and TECH CAPITAL, LLC, a California
limited liability company (“Secured Party”).

 

RECITALS

 

A. Secured Party has agreed to lend to Taronis Fuels, Inc., a Delaware
corporation (“Parent”), MagneGas Welding Supply – Southeast, LLC, a Florida
limited liability company (“MagneGas Southeast”), MagneGas Welding Supply –
South, LLC, a Texas limited liability company (“MagneGas South”), MagneGas
Welding Supply – West, LLC, a California limited liability company (“MagneGas
West”), Tech-Gas Solutions, LLC, a Texas limited liability company (“TGS”),
Taronis - TAS, LLC, a Florida limited liability company (“Taronis-TAS”), and
Taronis – TAH, LLC, a Florida limited liability company (“Taronis-TAH”, together
with Parent, MagneGas Southeast, MagneGas South, MagneGas West, TGS, and
Taronis-TAS, individually and collectively, “Borrower”) certain funds (the
“Loan”), and Borrower desires to borrow such funds from Secured Party, which
Loan will be secured in part pursuant to the terms of a Loan and Security
Agreement, and/or Secured Promissory Note executed or to be executed in
connection herewith (individually and collectively, as amended, the “Loan
Agreement”).

 

B. In order to induce Secured Party to make the Loan, Pledgor has agreed to
guaranty Borrower’s indebtedness under the Loan Agreement and to grant a
security interest in certain intangible property to Secured Party for purposes
of securing the obligations of Pledgor to Secured Party under its guaranty.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1. Patent Mortgage and Grant of Security Interest. As collateral security for
the prompt and complete payment and performance of all of Pledgor’s present or
future indebtedness, obligation and liabilities to Secured Party, Pledgor hereby
grants a security interest and mortgage to Secured Party in Pledgor’s entire
right, title and interest in, to and under the following (all of which shall
collectively be called the “Collateral”):

 

a. Any and all copyright rights, copyright application, copyright registrations
and like protections in each work or authorship and derivative work thereof,
whether published or unpublished and whether or not the same also constitutes a
trade secret, now or hereafter existing, created, acquired or held, including
without limitation those set forth on Exhibit A attached hereto (collectively,
the “Copyrights”);

 

b. Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, or acquired or held;

 

c. Any and all design rights which may be available to Pledgor now or hereafter
existing, created, acquired or held;

 

d. All patents, patent applications and like protections including, without
limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including without limitation
the patents and patent applications set forth on Exhibit B attached hereto
(collectively, the “Patents”);

 

e. Any trademark and service mark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Pledgor connected with and symbolized by
such trademarks, including without limitation those set forth on Exhibit C
attached hereto (collectively, the “Trademarks”).

 

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f. Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;

 

g. All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use; and

 

h. All proceeds and products of the foregoing, including without limitation all
payments under insurance or any indemnity or warranty payable in respect of any
of the foregoing.

 

2. Authorization. Pledgor irrevocably authorizes the Secured Party to perfect
its security interest in the Collateral including recording this document with
the Register of Copyrights and the Commissioner of Patents and Trademarks record
this Agreement.

 

3. Covenants and Warranties. Pledgor represents, warrants, covenants and agrees
as follows:

 

a. Pledgor is now the sole owner of the Collateral, except for licenses granted
by Pledgor to its customers in the ordinary course of business and except for
liens, encumbrances or security interests described in Exhibit D attached
hereto;

 

b. Performance of this Agreement does not conflict with or result in a breach of
any agreement to which Pledgor is party or by which Pledgor is bound;

 

c. During the term of this Agreement, Pledgor will not transfer or otherwise
encumber any interest in the Collateral, except for licenses granted by Pledgor
to its customers in the ordinary course of business, copies of which Pledgor
will provide from time to time to Secured Party at the request of Secured Party;

 

d. Each of the Patents is valid and enforceable, and no part of the Collateral
has been judged invalid or unenforceable, in whole or in part, and no claim has
been made that any part of the Collateral violates the rights of any third
party;

 

e. Pledgor shall promptly advise Secured Party of any material change in the
composition of the Collateral, including but not limited to any subsequent
ownership right of the Pledgor in or to any Trademark, Patent or Copyright not
specified in this Agreement;

 

f. Pledgor shall (i.) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights, (ii.) use its best
efforts to detect infringements of the Trademarks, Patents and Copyrights and
promptly advise Secured Party in writing of material infringements detected and
(iii.) not allow any Trademarks, Patents or Copyrights to be abandoned,
forfeited or dedicated to the public without the written consent of Secured
Party, which shall not be unreasonably withheld;

 

g. Pledgor shall not register any maskworks, software, computer programs or
other works of authorship subject to United States copyright protection with the
United States Copyright Office without first complying with the following: (i)
providing Secured Party with at least fifteen (15) days’ prior written notice
thereof; and (ii) providing Secured Party with a copy of the application for any
such registration. Pledgor irrevocably authorizes the Secured Party to perfect
its security interest in any maskworks, software, computer programs, or other
works of authorship registered by Pledgor;

 

h. This Agreement creates, and in the case of after acquired Collateral, this
Agreement will create at the time Pledgor first has rights in such after
acquired Collateral, in favor of Secured Party a valid and perfected first
priority security interest in the Collateral in the United States securing the
payment and performance of the obligations evidenced by the Loan Agreement upon
making the filings referred to in clause 3.i below;

 

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i. Except for, and upon, the filing with the United States Patent and Trademark
Office with respect to the Patents and Trademarks and the filing with the United
States Copyright Office with respect to Copyrights, necessary to perfect the
security interests created hereunder, and, except as has been already made or
obtained, no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required either
(i.) for the grant by Pledgor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement or by Pledgor; or (ii.) for
the perfection in the United States or the exercise by Secured Party of its
rights and remedies hereunder;

 

j. All information heretofore, herein or hereafter supplied to Secured Party by
or on behalf of Pledgor with respect to the Collateral is accurate and complete
in all material respects;

 

k. Pledgor shall not enter into any agreement that would materially impair or
conflict with Pledgor’s obligations hereunder without Secured Party’s prior
written consent. Pledgor shall not permit the inclusion in any contract to which
it becomes a party of any provisions that could or might in any way impair or
prevent the creation of a security interest in Pledgor’s rights and interests in
any property included within the definition of the Collateral acquired under
such contracts; and

 

l. Pledgor will promptly notify Secured Party in writing of any event that
materially adversely affects the value of any of the Collateral, the ability of
Pledgor or Secured Party to dispose of any of the Collateral or the rights and
remedies of Secured Party in relation thereto, including the levy of any legal
process against any of the Collateral.

 

4. Secured Party’s Rights. Secured Party shall have the right, but not the
obligation, to take, at Pledgor’s sole expense, any actions that Pledgor is
required under this Agreement to take but which Pledgor fails to take, after
five (5) business days’ telephonic or written notice to Pledgor. Pledgor shall
reimburse and indemnify Secured Party for all costs and expenses incurred in the
reasonable exercise of its rights under this section 4.

 

5. Inspection Rights. Pledgor hereby grants to Secured Party and its employees,
representatives and agents the right to visit, during reasonable hours upon
prior reasonable notice to Pledgor, and any of Pledgor’s and its subcontractors’
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold under any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable notice to Pledgor and as often as may be reasonably
requested; provided, however, nothing herein shall entitle Secured Party to
access to Pledgor’s trade secrets and other proprietary information.

 

6. Further Assurances; Attorney in Fact.

 

a. On a continuing basis, Pledgor will, subject to any prior licenses,
encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including, appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademark Office and United States Copyright
Office, and take all such action as may reasonably be deemed necessary or
advisable, or as requested by Secured Party to carry out the intent and purposes
of this Agreement, or for assuring and confirming to Secured Party the grant or
perfection of a security interest in all Patents.

 

b. Pledgor hereby irrevocably appoints Secured Party as Pledgor’s
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party’s discretion:

 

i. To modify in its sole discretion this Agreement without first obtaining
Pledgor’s approval of or signature to such modification by amending Exhibit A,
Exhibit B and Exhibit C thereof, to include reference to any right title or
interest in any copyrights, patents, or trademarks acquired by Pledgor after the
execution hereof or to delete any reference to any right, title, interest in any
copyrights, patents, or trademarks in which Pledgor no longer has or claims any
right, title or interest; and,

 

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ii. To file, in its sole discretion, one or more UCC financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of Pledgor where permitted by law.

 

7. Events of Default. The occurrence of any of the following shall constitute an
Event of Default under this Agreement:

 

a. An Event of Default occurs under the Loan Agreement or any other agreement
between Pledgor and Secured Party including under Pledgor’s guaranty; or

 

b. Pledgor breaches any warranty or agreement made by Pledgor in this Agreement.

 

8. Remedies. Upon the occurrence of an Event of Default that is not cured prior
to the expiration of any cure period applicable to same, if any, Secured Party
shall have the right to exercise all the remedies of a secured party under the
California Uniform Commercial Code or other applicable law, including without
limitation the right to require Pledgor to assemble the Collateral and to make
it available to Secured Party at a place designated by Secured Party. Pledgor
will pay any expenses (including attorneys’ fees) incurred by Secured Party in
connection with the exercise of any of Secured Party’s rights hereunder,
including without limitation any expense incurred in disposing of the
Collateral. All of Secured Party’s rights and remedies with respect to the
Collateral shall be cumulative.

 

9. Indemnity. Pledgor agrees to defend, indemnify and hold harmless Secured
Party and its officers, employees, and agents against: (a.) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b.) all
losses or expenses in any way suffered, incurred, or paid by Secured Party as a
result of or in any way arising out of, following or consequential to
transactions between Secured Party and Pledgor, whether under this Agreement or
otherwise (including, without limitation, attorneys’ fees and expenses), except
for losses arising from or out of Secured Party’s gross negligence or willful
misconduct.

 

10. Release. At such time as Pledgor shall completely satisfy all of the
obligations secured hereunder, Secured Party shall execute and deliver to
Pledgor all deeds, releases and other instruments as may be necessary or proper
to revest in Pledgor full title to the property granted hereunder, subject to
any disposition thereof which may have been made by Secured Party pursuant
hereto.

 

11. Course of Dealing. No course of dealing, nor any failure to exercise, nor
any delay in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.

 

12. Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that Pledgor may not assign this Agreement or any rights or duties
hereunder without Secured Party’s prior written consent, and Secured Party may
not assign this Agreement without the prior written consent of the Pledgor
except in the cases of: (a) the exercise of Secured Party’s remedies under
Paragraph 8, (b) an assignment to the parent or a wholly owned subsidiary of the
Secured Party upon prior notice to Pledgor, (c) an assignment of: (i) an
interest in the Loan and Security Agreement and related loan documents in
connection with Secured Party’s sale and assignment of a loan participation, or
(ii) an assignment of the Loan and Security Agreement and related loan
documents, to a commercial bank, finance company, or other financial institution
(organized under the laws of the United States, or any state thereof) engaged in
making, purchasing or otherwise investing in commercial loans, but with Secured
Party agreeing to provide Pledgor with written notice at least ten (10) days’
prior to any assignment permitted by this subsection (c). Any prohibited
assignment shall be absolutely void.

 

13. Attorneys’ Fees. If any action relating to this Agreement is brought by
either party hereto against the other party, the prevailing party shall be
entitled to recover reasonable attorneys’ fees, costs, and disbursements.

 

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14. Integration; Amendments. This is an integrated Agreement and supersedes all
prior agreements or negotiations regarding the subject matter hereof. This
Agreement may be amended only by a written instrument signed by both parties
hereto.

 

15. Counterparts; Electronic Signatures. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument. This Agreement or a signed
signature page thereto (intended to be attached to a copy of this Agreement)
transmitted by facsimile machine, telecopier, or other electronic means
(including via transmittal of a “pdf” file) shall be deemed and treated as an
original document and an original signature.

 

16. California Law and Jurisdiction. This Agreement shall be governed by the
laws of the State of California, without regard for choice of law provisions.
Pledgor and Secured Party consent to the non-exclusive jurisdiction of any state
or federal court located in Santa Clara County, California.

 

17. Jury Trial Waiver; Reference Proceeding. TO THE FULLEST EXTENT PERMITTED BY
LAW, EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY OR ON BEHALF OF A PARTY UNDER THIS AGREEMENT. WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury
is not enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided by
a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
§638 as such section may be amended and/or re-numbered from time to time (or
pursuant to comparable provisions of federal law if the dispute falls within the
exclusive jurisdiction of the federal courts), sitting without a jury, in Santa
Clara County, California; and the parties hereby submit to the jurisdiction of
such court. The reference proceeding shall be conducted pursuant to and in
accordance with the provisions of California Code of Civil Procedure §§638
through 645.1 inclusive, as such sections may be amended and/or re-numbered from
time to time. No provision of this Section shall limit the right of any party
(a) to exercise self-help remedies (including setoff), (b) to foreclose against
or sell any collateral, by power of sale or otherwise, or (c) to obtain or
oppose provisional or ancillary remedies from a court of competent jurisdiction
before, after or during the pendency of a reference. The exercise of, or
opposition to, any such remedy does not waive the right of any party to
reference pursuant to this Section. In the event of any challenge to the
legality or enforceability of this Section, the prevailing party shall be
entitled to recover the costs and expenses, including reasonable attorneys’
fees, incurred by it in connection therewith.

 

[Remainder of Page Intentionally Left Blank; Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Intellectual Property
Security Agreement on the day and year first above written.

 

Address of Pledgor:   PLEDGOR:       24980 N.83rd Ave, Suite 100   MAGNEGAS IP,
LLC, Peoria, AZ 85383   a Delaware limited liability company           /s/ Scott
Mahoney     By: Scott Mahoney     Its: Manager         Address of Secured Party:
  SECURED PARTY:       2010 N. First Street, Suite 300   TECH CAPITAL, LLC, San
Jose, California 95131   a California limited liability company           /s/
Hank Noon     By: Hank Noon     Its: Sr. V.P. & Head of Asset Based Lending

 

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Exhibit “A”

 

COPYRIGHTS

 

All present and future registered and unregistered copyrights, including but not
limited to the following:

 

Description of Copyright   Country of Registration   Registration or Application
No. None        

 

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Exhibit “B”

 

PATENTS

 

All present and future registered and unregistered patents, including but not
limited to the following:

 

Patent   Registration Number
or Serial Number   Date

DURABLE AND EFFICIENT EQUIPMENT FOR THE PRODUCTION OF A COMBUSTIBLE AND NON-
POLLUTANT GAS FROM UNDERWATER ARCS AND METHOD THEREFOR

  6,183,604   8/11/1999           CLEAN BURNING LIQUID FUEL PRODUCED VIA A SELF-
SUSTAINING PROCESSING OF LIQUID FEEDSTOCK   6,663,752   10/03/2001          
APPARATUS FOR MAKING A NOVEL, HIGHLY EFFICIENT, NONPOLLUTANT, OXYGEN RICH AND
COST COMPETITIVE COMBUSTIBLE GAS AND ASSOCIATED METHOD   6,673,322   6/29/2001  
        RECLAMATION OF METALS FROM A FLUID   10,537,902   8/14/2017          
APPARATUS AND METHOD FOR PRODUCING A CLEAN BURNING COMBUSTIBLE GAS WITH LONG
LIFE ELECTRODES AND MULTIPLE PLASMA-ARC-FLOWS   6,926,872   12/07/2001          
APPARATUS AND METHOD FOR PROCESSING HYDROGEN, OXYGEN AND OTHER GASES   6,972,118
  12/14/2001           PLASMA-ARC-THROUGH APPARATUS AND PROCESS FOR SUBMERGED
ELECTRIC ARCS   8,236,150   7/01/2010           APPARATUS FOR FLOW- THROUGH OF
ELECTRIC ARCS   Serial # 61/898,839   11/01/2013           METHOD AND APPARATUS
FOR THE INDUSTRIAL PRODUCTION OF NEW HYDROGEN-RICH FUELS   9,700,870   4/03/2014

 

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RECLAMATION OF METALS FROM A FLUID   Serial # 61/988,973   5/06/2014          
PLASMA-ARC-THROUGH APPARATUS AND PROCESS FOR SUBMERGED ELECTRIC ARCS WITH
VENTING   9,433,916   05/28/2014           APPARATUS FOR FLOW- THROUGH OF
ELECTRIC ARCS  

Serial #

14/529,723

  10/31/2014           RECLAMATION OF METALS FROM A FLUID   9,764,335  
5/04/2015           INCINERATION OF BIO-HAZARD MATERIAL  

Serial #

62/269,232

  12/18/2015           STERILIZATION OF FLUIDS USING ELECTRIC ARC  

Serial #

62/269,242

  12/18/2015           PLASMA-ARC-THROUGH APPARATUS AND PROCESS FOR SUBMERGED
ELECTRIC ARCS WITH VENTING   10,100,416   8/08/2016           APPARATUS FOR
FLOW- THROUGH OF ELECTRIC ARCS  

Serial #

62/403,781

  10/4/2016           INCINERATION OF BIO-HAZARD MATERIAL  

Serial #

15/380,689

  12/15/2016           METHOD AND APPARATUS FOR THE INDUSTRIAL PRODUCTION OF NEW
HYDROGEN-RICH FUELS   10,100,262   6/02/2017           SYSTEM, METHOD, AND
APPARATUS FOR GASIFICATION OF A SOLID OR LIQUID  

Serial #

62/542,689

  8/08/2017           RECLAMATION OF METALS FROM A FLUID  

Serial #

15/676,304

  8/14/2017           APPARATUS FOR FLOW- THROUGH OF ELECTRIC ARCS  

Serial #

15/720,816

  9/29/2017           SYSTEM, METHOD, AND APPARATUS FOR GASIFICATION OF A SOLID
OR LIQUID  

Serial #

16/052,759

  8/02/2018          

PLASMA-ARC-FLOW APPARATUS FOR SUBMERGED LONG-LASTING ELECTRIC ARCS OPERATING
UNDER HIGH POWER, PRESSURE AND TEMPERATURE CONDITIONS TO PRODUCE A COMBUSTIBLE
GAS

  7,780,924   6/26/2006           APPARATUS FOR FLOW-THROUGH OF ELECTRIC ARCS  
10,189,002   10/31/2014

 

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Exhibit “C”

 

TRADEMARKS

 

All present and future registered and unregistered trademarks, including but not
limited to the following:

 

Trademark   Registration Number
or Serial Number   Date

MAGNEGAS

 

2812824

  2/10/2004

VENTURI

 

4952283

  5/03/2016 MAGNEGAS 2   5156799   3/7/2017 MAGNETOTE   5157232   3/7/2017
VENTURI PLASMA ARC FLOW        

 

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Exhibit “D”

 

LIENS

 

None

 

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