Exhibit 10.2
Viking Systems, Inc.
Form 8-K
File No. 000-49636
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement (this "IP Agreement") is made
as of September 14, 2004 by and between Viking Systems, Inc. ("Grantor"), and
Silicon Valley Bank, a California banking corporation ("Bank").
RECITALS
A. Bank will make advances to Grantor ("Advances") as described in the
Silicon Valley Bank Loan and Security Agreement of approximate even date (the
"Loan Agreement"), but only if Grantor grants Bank a security interest in its
Copyrights, Trademarks, Patents, and Mask Works. 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 Bank
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.
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 under the
Loan Agreement, 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 Bank, Grantor hereby grants a
security interest in all of Grantor's right, title and interest in, to and under
its 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derivative work thereof, whether published or unpublished and whether or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;
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(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 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 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 sue 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;
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.
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 IP Agreement to which Grantor 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 IP Agreement constitutes a security
interest.
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(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 Bank 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 Bank 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 Bank, which shall not be unreasonably
withheld, unless Grantor determines that reasonable business practices
suggest that abandonment is appropriate.
(g) Grantor 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 15 days prior
written notice thereof, (ii) providing Secured Party with a copy of the
application for any such registration and (iii) executing and filing such
other instruments, and taking 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 Collateral, including without limitation
the filing with the United States Copyright Office, simultaneously with the
filing by Grantor of the application for any such registration, of a copy
of this Agreement or a Supplement hereto in form acceptable to Secured
Party identifying the maskworks, software, computer programs or other works
of authorship being registered and confirming the grant of a security
interest therein in favor of Secured Party.
(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 Bank a valid and perfected first priority security
interest in the Intellectual Property Collateral in the United States
securing the payment and performance of the obligations evidenced by the
Note and the Loan Agreement 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
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 of U.S. regulatory body is required
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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 Bank of its rights and remedies thereunder;
(j) All information heretofore, herein or hereafter supplied to Bank
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 Bank'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, except that certain contracts may
contain anti-assignment provisions that could in effect prohibit the
creation of a security interest in such contracts.
(l) Upon any executive officer of Grantor obtaining actual knowledge
thereof, Grantor will promptly notify Bank 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 Bank in
relation thereto, including the levy of any legal process against any of
the Intellectual Property Collateral.
4. Bank's Rights. Bank 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 Bank 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 Bank and its employees,
representatives and agents the right to visit, during reasonable hours upon
prior reasonable written notice to Grantor, and 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 one (1) in every six
(6) months; provided, however, nothing herein shall entitle Bank access to
Grantor's trade secrets and other proprietary information.
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
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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, Trademarks, and Mask Works
and otherwise to carry out the intent and purposes of this IP Agreement, or
for assuring and confirming to Bank the grant or perfection of a security
interest in all Intellectual Property Collateral.
(b) Grantor hereby irrevocably appoints Bank as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and
in the name of Grantor, Bank or otherwise, from time to time in Bank's
discretion, upon Grantor's failure or inability to do so, to take any
action and to execute any instrument which Bank 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.
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
(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,
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 Grantor to assemble the Intellectual Property Collateral and any
tangible property in which Bank has a security interest and to make it available
to Bank at a place designated by Bank. Bank shall have a nonexclusive, royalty
free license to use the Copyrights, Patents, Trademarks, and Mask Works to the
extent reasonably necessary to permit Bank 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 Bank in connection with the
exercise of any of Bank's rights hereunder, including without limitation any
expense incurred in disposing of the Intellectual Property Collateral. All of
Bank's rights and remedies with respect to the Intellectual Property Collateral
shall be cumulative.
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9. Indemnity. Grantor agrees to defend, indemnify and hold harmless Bank
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 Bank as a result of or in any
way arising out of, following or consequential to transactions between Bank 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 Bank's gross negligence or willful misconduct.
10. Reassignment. At such time as Grantor shall completely satisfy all of
the obligations secured hereunder, Bank shall execute and deliver to Grantor all
deed, 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 Bank 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 IP 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 IP Agreement may be amended only by a written
instrument signed by both parties hereto.
14. 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.
15. Law and Jurisdiction. This IP Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
for choice of law provisions. Grantor and Bank consent to the nonexclusive
jurisdiction of any state or federal court located in Santa Clara County,
California.
16. Confidentiality. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this IP
Agreement except that the disclosure of this information may be made (i) to the
affiliates of the Bank, (ii) to prospective transferee or purchasers of an
interest in the obligations secured hereby, provided that they have entered into
comparable confidentiality agreement in favor of Grantor and have deliver a copy
to Grantor, (iii) as required by law, regulation, rule or order, subpoena
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of Bank.
[Remainder of Page Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this IP Agreement on
the day and year first above written.
Address of Grantor: GRANTOR:
7514 Girard Ave., Suite 1509 Viking Systems, Inc.
La Jolla, CA 92037
By: /s/ Thomas B. Marsh
Name: Thomas B. Marsh
Title: CEO
Address of Grantee: GRANTEE:
3003 Tasman Drive Silicon Valley Bank
Santa Clara, CA 95054
By /s/ Robert Anderson
Name: Robert Anderson
Title: Vice President
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Exhibit "A" attached to that certain Intellectual Property Security Agreement
dated September 14, 2004.
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 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 TO
OWNER OF
ORIGINAL GRANTOR (IF
AUTHOR OR ORIGINAL AUTHOR
OWNER OF OR OWNER OF
FIRST DATE COPYRIGHT COPYRIGHT IS
COPYRIGHT DATE OF OF (IF DIFFERENT DIFFERENT FROM
DESCRIPTION CREATION DISTRIBUTION FROM GRANTOR) GRANTOR)
- ----------- -------- ------------ ------------- ---------------
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Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated September 14, 2004.
EXHIBIT "B"
PATENTS
PATENT
DESCRIPTION COUNTRY PATENT NO. ISSUE DATE STATUS
- ----------- ------- ---------- ---------- ------
NONE
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Exhibit "C" attached to that certain Intellectual Property Security Agreement
dated September 14, 2004.
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO. STATUS
- ----------- ------- ---------- -------- ------
NONE
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Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated September 14, 2004.
EXHIBIT "D"
MASK WORKS
MASK WORK
DESCRIPTION COUNTRY SERIAL NO. REG. NO. STATUS
- ----------- ------- ---------- -------- ------
NONE
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