Exhibit 10.65
EXECUTION COPY
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement (this "IP Agreement") is made
as of the 18TH DAY OF JUNE, 2004, by and between IBASIS, INC., a Delaware
corporation with its principal place of business at 00 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Grantor"), and THE BANK OF NEW YORK, a New
York banking corporation, as Collateral Agent for the Holders (as such term is
defined in the Indenture referred to below, with its principal place of business
at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000 ("Secured Party").
RECITALS
A. Pursuant to that certain Indenture (as the same may be amended or
supplemented from time to time, the "Indenture"), dated June 18, 2004, by and
among the Grantor, the subsidiary guarantor named therein and The Bank of New
York, as Trustee (the "Trustee"), Grantor has issued its 8% Senior Subordinated
Convertible Notes due 2007 ("Notes") in an aggregate principal amount not to
exceed $29,000,000. The Notes are secured in part pursuant to the terms of the
Security Documents (as defined in the Indenture), and this IP Agreement is one
of the Security Documents.
B. In accordance with the terms of the Indenture, Grantor desires to
grant Secured Party a Lien (as defined in the Indenture) upon the Intellectual
Property Collateral (hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged and intending to be legally bound, as collateral security
for the prompt and complete payment when due of the Indebtedness (as defined
below), Grantor hereby represents, warrants, covenants and agrees as follows:
1. GRANT OF SECURITY INTEREST. As collateral security for the prompt and
complete payment and performance of all of Grantor's present or future
indebtedness, obligations and liabilities to the Holders, the Trustee and
the Secured Party under the Notes and the Indenture (hereinafter, the
"Indebtedness"), Grantor hereby grants to the Secured Party, for the
benefit of the Holders, the Trustee and the Secured Party, a security
interest in all of Grantor's right, title and interest in, to and under its
registered and unregistered intellectual property collateral (all of which
shall collectively be called the "Intellectual Property Collateral"),
including, without limitation, the following:
a. Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished, registered
or unregistered, 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 secret rights, including any rights to unpatented
inventions, know-how, operating manuals, license rights and
agreements, and confidential information, and any and all intellectual
property rights in computer software and computer software products
now or hereafter existing, created, acquired or held;
c. Any and all design rights which may be available to Grantor 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 xxxx rights, slogans, trade dress, and
tradenames, trade styles, whether registered or not, applications to
register and registrations of the same and like protections, and the
entire goodwill of the business of Grantor connected with and
symbolized by such trademarks, including without limitation those set
forth on EXHIBIT C attached hereto (collectively, the "Trademarks");
f. All mask works or similar rights available for the protection of
semiconductor chips, now owned or hereafter acquired, including,
without limitation those set forth on EXHIBIT D attached hereto
(collectively, the "Mask Works");
g. Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the right, but
not the obligation, to xxx for and collect such damages for said use
or infringement of the intellectual property rights identified above;
h. All licenses or other rights to use any of the Copyrights, Patents,
Trademarks, or Mask Works and all license fees and royalties arising
from such use to the extent permitted by such license or rights,
including, without limitation those set forth on EXHIBIT E attached
hereto; and
i. All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks, Patents, or Mask Works; and
j. 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 AND REQUEST. Grantor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks
record this IP Agreement, or a copy thereof.
3. COVENANTS AND WARRANTIES. Grantor represents, warrants, covenants and
agrees as follows:
a. Grantor is now the sole owner of the Intellectual Property Collateral,
except for non-exclusive licenses granted by Grantor to its customers
in the ordinary course of business.
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b. Performance of this IP Agreement does not conflict with or result in a
breach of any material agreement to which Grantor is bound.
c. During the term of this IP Agreement, except as otherwise permitted by
the Indenture, Grantor will not transfer or otherwise encumber any
interest in the Intellectual Property Collateral, except for
non-exclusive licenses granted by Grantor in the ordinary course of
business or as set forth in this IP Agreement;
d. To its knowledge, each of the Patents is valid and enforceable, and no
part of the Intellectual Property Collateral has been judged invalid
or unenforceable, in whole or in part, and no claim has been made that
any part of the Intellectual Property Collateral violates the rights
of any third party;
e. Grantor shall promptly advise Secured Party of any material adverse
change in the composition of the Collateral, including but not limited
to any subsequent ownership right of the Grantor in or to any
Trademark, Patent, Copyright, or Mask Work specified in this IP
Agreement;
f. Grantor shall (a) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents, Copyrights, and Mask Works,
(b) use its best efforts to detect infringements of the Trademarks,
Patents, Copyrights, and Mask Works and promptly advise Secured Party
in writing of material infringements detected and (c) not allow any
Trademarks, Patents, Copyrights, or Mask Works to be abandoned,
forfeited or dedicated to the public without the written consent of
Secured Party, which shall not be unreasonably withheld, unless
Grantor determines that reasonable business practices suggest that
abandonment is appropriate.
g. Grantor shall take such further actions as Secured Party may
reasonably request from time to time to perfect or continue the
perfection of Secured Party's interest in the Intellectual Property
Collateral;
h. This IP Agreement creates, and in the case of after acquired
Intellectual Property Collateral, this IP Agreement will create at the
time Grantor first has rights in such after acquired Intellectual
Property Collateral, in favor of Secured Party for the benefit of the
Holders, the Trustees and the Secured Party a valid and perfected
second priority security interest and collateral assignment in the
Intellectual Property Collateral in the United States securing the
payment and performance of the obligations evidenced by the Indenture;
i. To its knowledge, except for, and upon, the filing of UCC financing
statements, or other notice filings or notations in appropriate filing
offices, if necessary to perfect the security interests created
hereunder, no authorization, approval or other action by, and no
notice to or filing with, any U.S. governmental authority or U.S.
regulatory body is required either (a) for the grant by Grantor of the
security interest granted hereby, or for the execution, delivery or
performance of
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this IP Agreement by Grantor in the U.S. or (b) for the perfection in
the United States or the exercise by Secured Party of its rights and
remedies thereunder;
j. All information heretofore, herein or hereafter supplied to Secured
Party by or on behalf of Grantor with respect to the Intellectual
Property Collateral is accurate and complete in all material respects.
k. Except as otherwise permitted by the Indenture, Grantor shall not
enter into any agreement that would materially impair or conflict with
Grantor's obligations hereunder without Secured Party's prior written
consent, which consent shall not be unreasonably withheld. Grantor
shall not permit the inclusion in any material contract to which it
becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Grantor's rights and
interest in any property included within the definition of the
Intellectual Property Collateral acquired under such contracts.
l. Upon any executive officer of Grantor obtaining actual knowledge
thereof, Grantor will promptly notify Secured Party in writing of any
event that materially adversely affects the value of any material
Intellectual Property Collateral, the ability of Grantor to dispose of
any material Intellectual Property Collateral of the rights and
remedies of Secured Party in relation thereto, including the levy of
any legal process against any of the Intellectual Property Collateral.
4. SECURED PARTY'S RIGHTS. Secured Party shall have the right, but not the
obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this IP Agreement to take but which Grantor fails to take,
after forty-five (45) days' notice to Grantor. Grantor shall reimburse and
indemnify Secured Party for all reasonable costs and reasonable expenses
incurred in the reasonable exercise of its rights under this section 4.
5. INSPECTION RIGHTS. Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, any of Grantor's
plants and facilities that manufacture, install or store products (or that
have done so during the prior six-month period) that are sold utilizing any
of the Intellectual Property Collateral, and to inspect the products and
quality control records relating thereto upon reasonable written notice to
Grantor and as often as may be reasonably requested, but not more than once
in every six (6) months; provided, however, nothing herein shall entitle
Secured Party access to Grantor's trade secrets and other proprietary
information.
6. FURTHER ASSURANCES; ATTORNEY IN FACT.
a. On a continuing basis, Grantor will, upon request by Secured Party,
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 Trademarks Office and the Register of
Copyrights,
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and take all such action as may reasonably be deemed necessary or
advisable, or as requested by Secured Party, to perfect Secured
Party's security interest in all Copyrights, Patents, Trademarks, and
Mask Works and otherwise to carry out the intent and purposes of this
IP Agreement, or for assuring and confirming to Secured Party the
grant or perfection of a security interest in all Intellectual
Property Collateral.
b. In addition to section 6(a) above, Grantor shall not register any of
its Copyrights or Mask Works with the Register of Copyrights without
first executing and simultaneously registering an IP Agreement, in the
identical form of this IP Agreement, with the Register of Copyrights,
listing such Copyrights(s) on Exhibit A thereto and/or such Mask Works
on Exhibit D in order to protect and perfect Secured Party's security
interest in such Copyrights or Mask Works. Promptly after such
registration, Grantor shall forward to the Secured Party, at the
address listed above, a copy of, and the original IP Agreement as
filed with the Register of Copyrights.
c. Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority in the place and stead of
Grantor and in the name of Grantor, Secured Party or otherwise, from
time to time in Secured Party's discretion, upon Grantor's failure or
inability to do so, to take any action and to execute any instrument
which Secured Party may deem necessary or advisable to accomplish the
purposes of this IP Agreement, including:
i. To modify, in its sole discretion, this IP Agreement without
first obtaining Grantor's approval of or signature to such
modification by amending Exhibit A, Exhibit B, Exhibit C, and
Exhibit D hereof, as appropriate, to include reference to any
right, title or interest in any Copyrights, Patents,
Trademarks or Mask Works acquired by Grantor after the
execution hereof or to delete any reference to any right,
title or interest in any Copyrights, Patents, Trademarks, or
Mask Works in which Grantor no longer has or claims any right,
title or interest; and
ii. To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to
any of the Intellectual Property Collateral without the
signature of Grantor where permitted by law.
iii. Grantor hereby authorizes Secured Party to file financing
statements without notice to Grantor with all appropriate
jurisdictions, as Secured Party deems appropriate, in order to
further perfect or protect Secured Party's interest in the
Intellectual Property Collateral.
7. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an Event of Default under this IP Agreement:
a. An Event of Default occurs under the Indenture; or
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b. Grantor breaches any material warranty or agreement made by Grantor in
this IP Agreement.
8. REMEDIES. Subject to the Intercreditor Agreement and the subordination
provisions contained in Section 4 of the Indenture, upon the occurrence and
continuance of an Event of Default, Secured Party shall have the right to
exercise all the remedies of a secured party under the New York Uniform
Commercial Code, including without limitation the right to require Grantor
to assemble the Intellectual Property Collateral and any tangible property
in which Secured Party has a security interest and to make it available to
Secured Party at a place designated by Secured Party. Secured Party shall
have a nonexclusive, royalty free license to use the Copyrights, Patents,
Trademarks, and Mask Works to the extent reasonably necessary to permit
Secured Party to exercise its rights and remedies upon the occurrence of an
Event of Default. Grantor will pay any expenses (including reasonable
attorney's 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 Intellectual Property Collateral.
All of Secured Party's rights and remedies with respect to the Intellectual
Property Collateral shall be cumulative.
9. INDEMNITY. Grantor 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 IP 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 Grantor, whether
under this IP Agreement or otherwise (including without limitation,
reasonable attorneys fees and reasonable expenses), except for losses
arising from or out of Secured Party's gross negligence or willful
misconduct.
10. TERMINATION. At such time as all amounts owed under the Indenture, all
principal and interest under the Notes and all amounts under the Security
Documents have been indefeasibly paid in full, at Grantor's request and
sole expense, Secured Party shall execute and deliver to Grantor all
releases, terminations, and other instruments as may be necessary or proper
to release the security interest hereunder.
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. AMENDMENTS. This IP Agreement may be amended only by a written instrument
signed by both parties hereto.
13. COUNTERPARTS. This IP 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.
14. LAW AND JURISDICTION. This IP Agreement shall be governed by and construed
in accordance with the laws of the State of New York. GRANTOR ACCEPTS FOR
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ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK IN ANY ACTION, SUIT, OR PROCEEDING OF
ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT;
PROVIDED, HOWEVER, THAT IF FOR ANY REASON SECURED PARTY CANNOT AVAIL ITSELF
OF THE COURTS OF THE STATE OF NEW YORK, GRANTOR ACCEPTS JURISDICTION OF THE
COURTS AND VENUE IN NEW YORK COUNTY, NEW YORK. NOTWITHSTANDING THE
FOREGOING, THE SECURED PARTY SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION WHICH THE SECURED PARTY DEEMS NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE SECURED
PARTY'S RIGHTS AGAINST THE GRANTOR OR ITS PROPERTY. GRANTOR AND SECURED
PARTY EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS IP AGREEMENT AND
ANY OF THE SECURITY DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES
THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER
INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
15. CONFIDENTIALITY. In handling any confidential information, Secured Party
shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Secured Party's subsidiaries or affiliates in connection with their present
or prospective business relations with Grantor; (b) to prospective
transferees or purchasers of any interest in the Indebtedness; (c) as
required by law, regulation, subpoena, or other order, (d) as required in
connection with Secured Party's examination or audit; and (e) as Secured
Party considers appropriate in exercising remedies under this IP Agreement.
Confidential information does not include information that either: (i) is
in the public domain or in Secured Party's possession when disclosed to
Secured Party, or becomes part of the public domain after disclosure to
Secured Party; or (ii) is disclosed to Secured Party by a third party, if
Secured Party reasonably does not know that the third party is prohibited
from disclosing the information.
16. INDENTURE CONTROLLING. In the event and to the extent of any inconsistency
or conflict between the provisions of this IP Agreement and those contained
in the Indenture, the provisions of the Indenture shall control.
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EXECUTED as a sealed instrument under the laws of the State of New York on
the day and year first written above.
GRANTOR:
iBASIS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Executive Vice President
------------------------------------
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("Secured Party")
THE BANK OF NEW YORK
By: /s/ Xxxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxxx Xxxxxx
-------------------------------------
Title: Vice President
------------------------------------
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EXHIBIT A
COPYRIGHTS, PATENTS, TRADEMARKS, MASK WORKS, AND LICENSES
COPYRIGHTS
ISSUED COPYRIGHTS
COPYRIGHT REGISTRATION DATE OF
DESCRIPTION NUMBER ISSUANCE
----------- ------------ --------
NONE
PENDING COPYRIGHT APPLICATIONS
FIRST DATE OF
COPYRIGHT APPLICATION DATE OF DATE OF PUBLIC
DESCRIPTION NUMBER FILING CREATION DISTRIBUTION
----------- ----------- ------- -------- -------------
NONE
UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)
DATE AND
RECORDATION
NUMBER OF IP
AGREEMENT WITH
OWNER OR ORIGINAL
GRANTOR IF ORIGINAL AUTHOR
AUTHOR OR OWNER OR OWNER OF
OF COPYRIGHT COPYRIGHT IS
COPYRIGHT DATE OF FIRST DATE OF IS DIFFERENT DIFFERENT FROM
DESCRIPTION CREATION DISTRIBUTION FROM GRANTOR GRANTOR
----------- -------- ------------- ----------------- ---------------
The Grantor has created a variety of custom designed software to enable its
Internet-based communications services.
EXHIBIT "B"
PATENTS
PATENT
DESCRIPTION DOCKET NO. COUNTRY SERIAL NO. FILING DATE STATUS
----------- ---------- ------- ---------- ----------- ------
METHOD FOR DETERMINING BEST PATH USA 10/094,671 Mar. 7, 2001 Pending
SYSTEM AND METHOD FOR USA 60/331,479 Nov. 16, 2001 Pending
NEXT-GENERATION VOICE OVER
INTERNET PROTOCOL (VoIP) AND
FACSIMILE OVER INTERNET PROTOCOL
(FoIP) NETWORK
SYSTEM AND METHOD FOR PROVIDING USA 60/337,971 May 7, 2002 Pending
CONFERENCE CALLING OVER AN IP
NETWORK
SYSTEM AND METHOD FOR USA 10/298,208 Nov. 18, 2002 Pending
NEXT-GENERATION VOICE OVER
INTERNET PROTOCOL (VoIP) AND
FACSIMILE OVER INTERNET PROTOCOL
(FoIP) CALLING OVER THE INTERNET
SYSTEM AND METHOD FOR PROVIDING USA 10/430,678 May 7, 2003 Pending
CONFERENCE CALLING OVER AN IP
NETWORK
SYSTEM AND METHOD FOR USA 10/464,678 Aug. 25, 2003 Pending
NEXT-GENERATION VOICE OVER
INTERNET PROTOCOL (VoIP) AND
FACSIMILE OVER INTERNET PROTOCOL
(FoIP) CALLING OVER THE INTERNET
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO. STATUS
----------- ------- ---------- -------- ------
Assured Quality Routing USA 75/659431 2,336,896 Registered
ConnectPoint USA 76/316841 2,633,272 Registered
iBasis USA 75/731829 2,494,853 Registered
iBasis (design) USA 75/731611 2,446,999 Registered
iBasis European 001924638 001924538 Registered
Community
VIP Calling USA 75/214395 2,244,931 Registered
Mero Mejicano USA 78/325857 Pending/Intent
to Use - filed
11/11/03
Schmooze USA 78/370728 Pending/Intent
to Use - filed
2/20/04
ILDS USA 78/383413 Pending/Intent
to Use - filed
3/12/04
DirectVoIP USA 78/394677 Pending/Intent
to Use - filed
4/1/04
Xxxxxxx USA 78/399214 Pending/Intent
to Use - filed
4/9/04
VozPort USA 78/419434 Pending/Intent
to Use - filed
5/10/04
Margin NOC USA 78/419427 Pending/Intent
to Use - filed
5/10/04
Pingo USA 78/427695 Pending/Intent
to Use - filed
6/1/04
Pingo (design) USA 78/434241 Pending/Intent
to Use - filed
6/12/04
Pin-Go USA 78/427705 Pending/Intent
to Use - filed
6/1/04
INTERNET CENTRAL OFFICE*
INTERNET BRANCH OFFICE*
CONNECTPOINT GLOBAL ACCESS*
IP CALLCARD*
*NOT FILED
EXHIBIT "D"
MASK WORKS
MASK WORK
DESCRIPTION COUNTRY SERIAL NO. REG. NO. STATUS
----------- ------- ---------- -------- ------
NONE
EXHIBIT "E"
LICENSES
The Grantor has granted licenses in the ordinary course of business for
occasional use of the Grantor's name, logo, trademarks and/or servicemarks to
certain marketing partners pursuant to joint marketing and/or other agreements,
provided, such use is previously approved by the Grantor.
