EXHIBIT 10.16
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is made as of August 25,
1999, by and between Videonics, Inc. ("Borrower"), and Venture Banking Group, a
division of Cupertino National Bank ("Bank").
RECITALS
A. Bank has agreed to lend to Borrower certain funds (the "Loan"), and
Borrower desires to borrow such funds from Bank pursuant to the terms of a Loan
Agreement of even date herewith (collectively, the "Loan Agreement").
B. In order to induce Bank to make the Loan, Borrower has agreed to
grant a first priority security interest in certain intangible property to
Lender for purposes of securing the obligations of Borrower to Bank.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance of all of Borrower's present or future
indebtedness, obligations and liabilities to Bank, Borrower hereby assigns,
transfers, conveys and grants a first priority security interest to Bank, as
security, in and to Borrower'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 applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof that is created by Borrower, 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unpublished and whether or not the same also constitutes a trade secret, now or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
Borrower 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
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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 servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks");
(f) Right to the proceeds (excluding attorneys' and other
professional and expert fees and expenses) arising from 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 xxx on behalf of 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
to the extent permitted by such license or rights or applicable law; and
(h) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(i) 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. Borrower authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks record
this security agreement.
3. Covenants and Warranties. Borrower represents, warrants, covenants
and agrees as follows:
(a) Borrower is now the sole owner of the Collateral, except
for non-exclusive licenses granted by Borrower to its customers in the ordinary
course of business;
(b) Performance of this Agreement does not conflict with or
result in a breach of any agreement to which Borrower is party or by which
Borrower is bound, except to the extent that certain intellectual property
agreements prohibit the assignment of the rights thereunder to a third party
without the licensor's or other party's consent and this Agreement constitutes
an assignment;
(c) During the term of this Agreement, Borrower will not
transfer or otherwise encumber any interest in the Collateral without Bank's
prior written consent,
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which shall not be unreasonably withheld, except for non-exclusive licenses
granted by Borrower in the ordinary course of business or as set forth in this
Agreement;
(d) To its knowledge, 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) Borrower shall promptly advise Bank of any material change
in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Borrower in or to any Trademark, Patent or
Copyright not specified in this Agreement;
(f) Borrower 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 Bank 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
Bank, which shall not be unreasonably withheld (provided that abandonment of
intent to use applications shall not require Lender's consent), unless Borrower
determines that reasonable business practices suggest that abandonment is
appropriate.
(g) Borrower shall file registration applications for the most
recent version of any of Borrower's Copyrights, if not so already registered,
from time to time as Bank may reasonably request 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 Collateral;
(h) This Agreement creates, and in the case of after acquired
Collateral, this Agreement will create at the time Borrower first has rights in
such after acquired Collateral, in favor of Bank 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 Revolving Promissory
Note dated August 25, 1999, executed by Borrower in favor of Bank upon making
the filings referred to in clause (i) below;
(i) To its knowledge, except for, and upon, the filing 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
necessary to perfect the security interests and assignment created hereunder,
and the filing of a financing statement (Form UCC-1) 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 Borrower of the security interest
granted hereby or for the execution, delivery or performance of this Agreement
by Borrower in the U.S. or (ii) for the perfection in the United States or the
exercise by Bank of its rights and remedies hereunder;
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(j) All information heretofore, herein or hereafter supplied
to Lender by or on behalf of Borrower with respect to the Collateral is accurate
and complete in all material respects.
(k) Borrower shall not enter into any agreement that would
materially impair or conflict with Borrower's obligations hereunder without Bank
's prior written consent, which consent shall not be unreasonably withheld.
Borrower 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 Borrower's rights and interests in any
property included within the definition of the Collateral acquired under such
contracts, except that certain contracts may contain anti-assignment provisions
that could in effect prohibit the creation of a security interest in such
contracts, and except that Borrower shall not be prohibited from granting
exclusive and non-exclusive licenses, or entering into marketing and
distribution agreements in the normal course of its business.
(l) Upon any executive officer of Borrower obtaining actual
knowledge thereof, Borrower will promptly notify Lender in writing of any event
that materially adversely affects the aggregate value of all Collateral, the
ability of Borrower to dispose of a material amount of Collateral or the rights
and remedies of Bank in relation thereto, including the levy of any legal
process against a material amount of the Collateral.
4. Bank's Rights. Bank shall have the right, but not the obligation, to
take, at Borrower's sole expense, any actions that Borrower is required under
this Agreement to take but which Borrower fails to take, after fifteen (15)
days' notice to Borrower. Borrower shall reimburse and indemnify Bank for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this section 4.
5. Inspection Rights. Borrower hereby grants to Bank and its employees,
representatives and agents the right to visit, during reasonable hours upon
prior reasonable written notice to Borrower, any of Borrower'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
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Borrower, provided that unless an
Event of Default has occurred and is continuing, such inspections shall occur no
more frequently than once every six calendar months.
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6. Further Assurances; Attorney in Fact.
(a) On a continuing basis, Borrower 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 the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Bank, to perfect Bank's security interest in all Copyrights,
Patents and Trademarks and otherwise to carry out the intent and purposes of
this Agreement, or for assuring and confirming to Bank the grant or perfection
of a security interest in all Collateral.
(b) Borrower hereby irrevocably appoints Bank as Borrower's
attorney-in-fact, with full authority in the place and stead of Borrower and in
the name of Borrower, from time to time in Bank's discretion, to take any action
and to execute any instrument which Bank may deem necessary or advisable to
accomplish the purposes of this Agreement, including:
(i) To modify, in its sole discretion, this Agreement
without first obtaining Borrower's approval of or signature to such modification
by amending Exhibit A, Exhibit B and Exhibit C, thereof, as appropriate, to
include reference to any right, title or interest in any Copyrights, Patents or
Trademarks acquired by Borrower after the execution hereof or to delete any
reference to any right, title or interest in any Copyrights, Patents or
Trademarks in which Borrower 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 Collateral without the signature of Borrower 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
(b) Borrower breaches any warranty or agreement made by
Borrower in this Agreement and, as to any breach that is capable of cure,
Borrower fails to cure such breach within five (5) days of the occurrence of
such breach.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Bank shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Borrower to assemble the Collateral and any tangible
property in which Bank has a security interest and to make it available to Bank
at a place reasonably designated by Lender. Bank shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Bank to exercise its rights and
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remedies upon the occurrence of an Event of Default. Borrower will pay any
expenses (including reasonable attorneys' fees) incurred by Bank in connection
with the exercise of any of Bank's rights hereunder, including without
limitation any expense incurred in disposing of the Collateral. All of Bank's
rights and remedies with respect to the Collateral shall be cumulative.
9. Indemnity. Borrower 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 Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Bank as a result of
or in any way arising out of, following or consequential to transactions between
Bank and Borrower, whether under this Agreement or otherwise (including without
limitation reasonable attorneys' fees and reasonable expenses), except for
losses arising from or out of Bank's gross negligence or willful misconduct.
10. Reassignment. At such time as Borrower shall completely satisfy all
of the obligations secured hereunder, Bank shall execute and deliver to Borrower
all deeds, assignments and other instruments as may be necessary or proper to
revest in Borrower 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. 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.
13. Amendments. This Agreement may be amended only by a written
instrument signed by both parties hereto.
14. Counterparts. 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.
15. California Law and Jurisdiction; Jury Waiver. This Agreement shall
be governed by the laws of the State of California, without regard for choice of
law provisions. Borrower and Bank consent to the exclusive jurisdiction of any
state or federal court located in Santa Xxxxx County, California. Borrower AND
Bank EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THE LOAN AGREEMENT, THIS AGREEMENT, OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
Address of Borrower: Borrower:
0000 Xxxx Xxxxxx Videonics, Inc.
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx
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Title:
Address of Lender: Bank:
Three Palo Alto Square, Suite 150 Venture Banking Group, a division of
Xxxx Xxxx, XX 00000 Cupertino National Bank
Attn: Xxx Xxxxxx By: /s/ Xxxxx Xxxxxxxx
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EXHIBIT A
Copyrights
Registration/ Registration/
Application Application
Description Number Date
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EXHIBIT B
Patents
Registration/ Registration/
Application Application
Description Number Date
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EXHIBIT C
Trademarks
Registration/ Registration/
Application Application
Description Number Date
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