EXHIBIT 10.27
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INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement (this "IP Agreement") is
made as of the 30th day of October, 2001 by and between DATAWATCH CORPORATION, a
Delaware corporation with its principal place of business at 000 Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxxxxx 00000-0000 ("Grantor"), and SILICON VALLEY
BANK, a California-chartered bank, with its principal place of business at 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office
located at One Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, doing business under the name "Silicon Valley East"
("Lender").
RECITALS
A. Lender has agreed to make advances of money and to extend certain
financial accommodations to Grantor (the "Loan"), pursuant to a certain Loan and
Security Agreement of even date herewith between Grantor and Lender, as amended
from time to time (as amended, the "Loan Agreement"). The Loan is secured
pursuant to the terms of the Loan Agreement. Lender is willing to enter into
certain financial accommodations with Grantor, but only upon the condition,
among others, that Grantor shall grant to Lender a security interest in certain
Copyrights, Trademarks, Patents, and Mask Works, and other assets, to secure the
obligations of Grantor under the Loan Agreement. Defined terms used but not
defined herein shall have the same meanings as in the Loan Agreement.
B. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Lender a security interest in all of Grantor's right title and interest, whether
presently existing or hereafter acquired in, to and under all of the Collateral
(as defined therein).
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 Grantor's 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 Lender (hereinafter, the
"Indebtedness"), including, without limitation, under the Loan Agreement,
Grantor hereby grants 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 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, 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, 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;
(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.
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 or exclusive licenses
granted to distributors in the ordinary course of business to market
certain Intellectual Property Collateral.
(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, 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, exclusive licenses granted
to distributors in the ordinary course of business to market certain
Intellectual Property Collateral, 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 Lender 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 (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents, Copyrights, and Mask
Works, (ii) use its best efforts to detect infringements of the
Trademarks, Patents, Copyrights, and Mask Works and promptly advise
Lender in writing of material infringements detected and (iii) not
allow any Trademarks, Patents, Copyrights, or Mask Works to be
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abandoned, forfeited or dedicated to the public without the written
consent of Lender, which shall not be unreasonably withheld, unless
Grantor determines that reasonable business practices suggest that
abandonment is appropriate.
(g) Grantor shall, in its reasonable business discretion,
register the most recent version of any of Grantor's Copyrights, if not
so already registered, and shall, from time to time, execute and file
such other instruments, and take such further actions as Lender may
reasonably request from time to time to perfect or continue the
perfection of Lender'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 Lender a valid and perfected first
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 Loan
Agreement upon making the filings referred to in clause (i) below;
(i) To its knowledge, except for, and upon, the filing of UCC
financing statements in the appropriate filing office and with the
United States Patent and Trademark office with respect to the Patents
and Trademarks and the Register of Copyrights with respect to the
Copyrights and Mask Works 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 U.S. governmental authority or U.S. regulatory body is
required either (i) for the grant by Grantor of the security interest
granted hereby, or for the execution, delivery or performance of this
IP Agreement by Grantor in the U.S. or (ii) for the perfection in the
United States or the exercise by Lender of its rights and remedies
thereunder;
(j) All information heretofore, herein or hereafter supplied to
Lender by or on behalf of Grantor with respect to the Intellectual
Property Collateral is accurate and complete in all material respects.
(k) Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder
without Lender'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 Lender 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 Lender in relation thereto, including the levy of any legal
process against any of the Intellectual Property Collateral.
4. Lender's Rights. Lender 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
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify
Lender 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 Lender 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 Lender access to
Grantor's trade secrets and other proprietary information.
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6. Further Assurances; Attorney in Fact.
(a) On a continuing basis, Grantor 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
Trademarks Office and the Register of Copyrights, and take all such
action as may reasonably be deemed necessary or advisable, or as
requested by Lender, to perfect Lender'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 Lender the grant or perfection of a security interest in
all Intellectual Property Collateral.
(b) Grantor hereby irrevocably appoints Lender as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor
and in the name of Grantor, Lender or otherwise, from time to time in
Lender's discretion, upon Grantor's failure or inability to do so, to
take any action and to execute any instrument which Lender 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; provided, that
written notice of any such modifications is promptly provided to
Grantor; 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 Lender to file financing
statements without notice to Grantor with all appropriate
jurisdictions, as Lender deems appropriate, in order to further
perfect or protect Lender'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 Loan Agreement; or any
document from Grantor to Lender; or
(b) Grantor breaches any warranty or agreement made by Grantor
in this IP Agreement.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Lender shall have the right to exercise all the remedies of a secured
party under the Massachusetts Uniform Commercial Code, including without
limitation the right to require Grantor to assemble the Intellectual Property
Collateral and any tangible property in which Lender has a security interest and
to make it available to Lender at a place designated by Lender. Lender shall
have a nonexclusive, royalty free license to use the Copyrights, Patents,
Trademarks, and Mask Works to the extent reasonably necessary to permit Lender
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
Lender in connection with the exercise of any of Lender's rights hereunder,
including without limitation any expense incurred in disposing of the
Intellectual Property Collateral. All of Lender's rights and remedies with
respect to the Intellectual Property Collateral shall be cumulative.
9. Indemnity. Grantor agrees to defend, indemnify and hold harmless
Lender 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 Lender as a result
of or in any way arising out of, following or consequential to transactions
between Lender 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 Lender's gross negligence or
willful misconduct.
10. Reassignment. At such time as Grantor shall completely satisfy all
of the obligations secured hereunder, Lender shall execute and deliver to
Grantor all deeds, assignments, and other instruments as may be necessary or
proper to reinvest in Grantor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Lender 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. 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 Commonwealth of Massachusetts.
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS 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 LENDER CANNOT AVAIL ITSELF
OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, GRANTOR ACCEPTS JURISDICTION
OF THE COURTS AND VENUE IN SANTA XXXXX COUNTY, CALIFORNIA. NOTWITHSTANDING THE
FOREGOING, THE LENDER 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 LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR TO OTHERWISE ENFORCE THE LENDER'S RIGHTS AGAINST THE GRANTOR OR
ITS PROPERTY.
GRANTOR AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN 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, Lender
shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Lender's
subsidiaries or affiliates in connection with their present or prospective
business relations with Grantor; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Lender's examination or audit;
and (v) as Lender considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(a) is in the public domain or in Lender's possession when disclosed to Lender,
or becomes part of the public domain after disclosure to Lender (through no act
or omission of Lender); or (b) is disclosed to Lender by a third party, which
third party is not under any non-disclosure obligation.
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EXECUTED as a sealed instrument under the laws of the Commonwealth of
Massachusetts on the day and year first written above.
ADDRESS OF GRANTOR: GRANTOR:
000 Xxxxx Xxxxxx, Xxxxx 000 DATAWATCH CORPORATION
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: President & Chief Executive Officer
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SILICON VALLEY BANK
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
------------------------------------
Title: Vice President
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Exhibit "A" attached to that certain Intellectual Property Security
Agreement dated October 30, 2001.
EXHIBIT "A"
COPYRIGHTS
SCHEDULE A - ISSUED COPYRIGHTS
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COPYRIGHT REGISTRATION DATE OF
DESCRIPTION NUMBER ISSUANCE
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SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
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FIRST DATE
COPYRIGHT APPLICATION DATE OF DATE OF OF PUBLIC
DESCRIPTION NUMBER FILING CREATION DISTRIBUTION
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SCHEDULE C - 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
FIRST DATE OF COPYRIGHT COPYRIGHT
COPYRIGHT DATE OF OF IS DIFFERENT IS DIFFERENT
DESCRIPTION CREATION DISTRIBUTION FROM GRANTOR FROM GRANTOR
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Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated October 30, 2001.
EXHIBIT "B"
PATENTS
PATENT
DESCRIPTION DOCKET NO. COUNTRY SERIAL NO. FILING DATE STATUS
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Exhibit "C" attached to that certain Intellectual Property Security Agreement
dated October 30, 2001.
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
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DESCRIPTION COUNTRY APPLICATION NO. REG. NO STATUS
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Datawatch Canada 1,013,488 Pending
Datawatch European Community 210,476 210,476 Registered
Datawatch USA 74/553,269 1,963,783 Registered
Q-Browser Australia 752,268 752,268 Registered
Q-Browser European Community 547,323 547,323 Registered
Q-Browser USA 75/315,418 2,255,961 Registered
Q-Flow Australia 744,567 744,567 Registered
Q-Flow Canada 873,647 528,267 Registered
Q-Flow European Community 633,834 633,834 Registered
Q-Flow USA 75/364,269 2,256,046 Registered
Q-Support European Community 210,682 210,682 Registered
Quetzal Australia 634,675 A634,675 Registered
Quetzal European Community 210,831 210,831 Registered
Quetzal/SC Australia 821,537 Published
Quetzal/SC Canada 1,045,423 Pending
Quetzal/SC USA 75/580,763 2,471,994 Registered
VorteXML and Design Australia 873,785 Pending
VorteXML and Design Canada 1,100,922 Pending
VorteXML and Design European Community 2,192,961 Pending
VorteXML and Design USA 76/209,512 Pending
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Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated October 30, 2001.
EXHIBIT "D"
MASK WORKS
MASK WORK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
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