INTELLECTUAL PROPERTY SECURITY AGREEMENT
This
Intellectual Property Security Agreement (this “IP Agreement”) is made as of the
13th day of March, 2007 by and between PARADIGM
HOLDINGS, INC.,
a
Wyoming corporation, with offices at 0000 Xxx Xxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000
(“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 Xxxxxx Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (“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 (working capital line of credit) dated as of March 13, 2007 among
Grantor, Paradigm Solutions Corporation and Lender, and a certain Loan and
Security Agreement dated as of March 13, 2007 among Grantor, Paradigm Solutions
Corporation and Lender, as each may be amended from time to time (as amended,
collectively, 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, 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”);
-1-
(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 (collectively, the “Licenses”); 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, and any amendments thereto,
or
copies 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.
(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 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 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.
-2-
(g) Grantor
shall 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;
(i) To
its
knowledge, except for, and upon, the filing of UCC financing statements and
the
filing of this Agreement with the Register of Copyrights, 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 this
IP Agreement by Grantor in the U.S. or (b) 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 or 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’ written 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.
6. Further
Assurances; Attorney in Fact.
(a) On
a
continuing basis, Grantor will, upon request by Lender, 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.
-3-
(b) In
addition to section 6(a) above, Grantor shall not register any Copyrights or
Mask Works in the United States Copyright Office unless it: (i) has given at
least fifteen (15) days’ prior written notice to Lender of its intent to
register such Copyrights or Mask Works and has provided Lender with a copy
of
the application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (ii) executes a security agreement or such other
documents as Lender may reasonably request in order to maintain the perfection
and priority of Lender’s security interest in the Copyrights proposed to be
registered with the United States Copyright Office; and (iii) records such
security documents with the United States Copyright Office contemporaneously
with filing the Copyright application(s) with the United States Copyright
Office. Grantor shall promptly provide to Lender a copy of the Copyright
application(s) filed with the United States Copyright Office, together with
evidence of the recording of the security documents necessary for Lender to
maintain the perfection and priority of its security interest in such Copyrights
or Mask Works. Grantor shall provide written notice to Lender of any application
filed by Grantor in the United States Patent Trademark Office for a patent
or to
register a trademark or service xxxx within 30 days of any such
filing.
(c) 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;
and
(ii) To
file,
in its sole discretion, one or more financing or continuation statements and
amendments thereto, or other notice filings or notations in appropriate filing
offices, relative to any of the Intellectual Property Collateral, 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.
-4-
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. Termination.
At such
time as Grantor shall completely satisfy all of the obligations secured
hereunder, Lender 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
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; or (b) is disclosed to Lender
by a
third party, if Lender reasonably does not know that the third party is
prohibited from disclosing the information.
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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:
|
|
9715
Key West Avenue, Third Floor
|
|
|
Xxxxxxxxx,
Xxxxxxxx 00000
|
|
|
By:
/s/ Xxxxx X.
XxXxxxxxxx
|
|
|
Name:
Xxxxx X. XxXxxxxxxx
|
|
|
Title:
President and CEO
|
|
|
|
SILICON
VALLEY BANK
|
|
_____________________________________________
|
By:
/s/ Xxxxx
Xxxxx
|
|
Name:
Xxxxx
Xxxxx
|
|
|
Title:
|
-6-
Exhibit
“A” attached to that certain Intellectual Property Security Agreement dated
March 13, 2007.
EXHIBIT
“A”
COPYRIGHTS
SCHEDULE
A - ISSUED COPYRIGHTS
|
COPYRIGHT
|
REGISTRATION
|
DATE
OF
|
|
DESCRIPTION
|
NUMBER
|
ISSUANCE
|
None
SCHEDULE
B - PENDING COPYRIGHT APPLICATIONS
|
FIRST
DATE
|
||||
|
COPYRIGHT
|
APPLICATION
|
DATE
OF
|
DATE
OF
|
OF
PUBLIC
|
|
DESCRIPTION
|
NUMBER
|
FILING
|
CREATION
|
DISTRIBUTION
|
None
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
IS
|
||
|
COPYRIGHT
|
DATE
OF
|
OF
|
IS
DIFFERENT
|
DIFFERENT
FROM
|
|
DESCRIPTION
|
CREATION
|
DISTRIBUTION
|
FROM
GRANTOR
|
GRANTOR
|
None
-7-
Exhibit
“B” attached to that certain Intellectual Property Security Agreement dated
March 13, 2007.
EXHIBIT
“B”
PATENTS
|
PATENT
|
|||||
|
DESCRIPTION
|
DOCKET
NO.
|
COUNTRY
|
SERIAL
NO.
|
FILING
DATE
|
STATUS
|
None
-8-
Exhibit
“C” attached to that certain Intellectual Property Security Agreement dated
March 13, 2007.
EXHIBIT
“C”
TRADEMARKS
|
TRADEMARK
|
||||
|
DESCRIPTION
|
COUNTRY
|
SERIAL
NO.
|
REG.
NO.
|
STATUS
|
None
-9-
Exhibit
“D” attached to that certain Intellectual Property Security Agreement dated
March 13, 2007.
EXHIBIT
“D”
MASK
WORKS
|
MASK
WORK
|
||||
|
DESCRIPTION
|
COUNTRY
|
SERIAL
NO.
|
REG.
NO.
|
STATUS
|
None
-10-
Exhibit
“E” attached to that certain Intellectual Property Security Agreement dated
March 13, 2007.
EXHIBIT
“E”
LICENSES
None
-11-
