EXHIBIT 10.23
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement (this "IP Agreement") is
made as of the 27th day of December, 1999 by and between Datawatch Corporation,
a Delaware corporation ("Grantor"), and Silicon Valley Bank, a California
banking corporation ("Lender").
RECITALS
A. Lender has agreed to make advances of money and to extend certain
financial accommodations to Grantor (the "Loans"), pursuant to an Export-Import
Loan and Security Agreement of even date herewith (the "Loan Agreement") and
Grantor desires to borrow such funds from Lender. The Loan is or will be secured
in part pursuant to the terms of the Loan Agreement. Lender is willing to make
such Loans to 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 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 and Security 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 herein).
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 Lender, 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derivative work thereof, whether published or unpublished and whether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;
(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 other intellectual property security 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.
(c) During the term of this IP Agreement, Grantor will not transfer or
otherwise encumber any interest in the Intellectual Property
Collateral, except for security interests granted to Lender and
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
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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.
(g) Grantor shall promptly 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 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, subject only to a prior security
interest in the Intellectual Property Collateral in favor of Lender
evidenced by, among other documents, instruments, and agreements, a
Collateral Assignment, Patent Mortgage and Security Agreement dated
November 1, 1994;
(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 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, 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 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; and
(i) 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, a certain
Amended and Restated Loan and Security Agreement dated March 16, 1999
between Grantor and Lender, as affected and amended pursuant to a Loan
Modification Agreement of even date (as so amended, the "Domestic 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
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(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. 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 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 CLARA COUNTY, CALIFORNIA.
16. 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.
17. Confidentiality. In handling any confidential information, Lender 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 Lender, (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 Lender.
18. Subordination. Notwithstanding anything to the contrary contained in this IP
Agreement ,it is expressly acknowledged and agreed that this IP Agreement and
the security interest created herein in favor of Lender (and all rights and
remedies available to Lender hereunder) is subject and subordinate to a prior
security interest granted by the Grantor to the Lender in the Intellectual
Property Collateral to secure the Domestic Loan Agreement. In the event of any
exercise of any rights and remedies available hereunder, unless otherwise agreed
to in writing by Lender, all "Obligations" under the Domestic Loan Agreement
shall
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be paid in full from any proceeds obtained hereunder prior to any payment in
satisfaction of the Indebtedness and "Obligations" (as defined in the Loan
Agreement) of Grantor.
EXECUTED as a sealed instrument this 27th day of December, 1999
under the laws of the Commonwealth of Massachusetts.
ADDRESS OF GRANTOR: GRANTOR:
DATAWATCH CORPORATION
900 Chelmsford Street
- ------------------------- By: /s/ Bruce R. Gardner
--------------------------
Lowell, MA 01851-8100
- ------------------------- Name: Bruce R. Gardner
------------------------
Title: President and Chief
Executive Officer
-----------------------
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Exhibit "A" attached to that certain Intellectual Property Security
Agreement dated December 27, 1999.
EXHIBIT "A"
COPYRIGHTS
SCHEDULE A - ISSUED COPYRIGHTS
------------------------------
COPYRIGHT REGISTRATION DATE OF
DESCRIPTION NUMBER ISSUANCE
- ----------- ------ --------
SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
-------------------------------------------
FIRST DATE
COPYRIGHT APPLICATION DATE OF DATE OF OF PUBLIC
DESCRIPTION NUMBER FILING CREATION DISTRIBUTION
- ----------- ------ ------ -------- ------------
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 ROM
DESCRIPTION CREATION DISTRIBUTION FROM GRANTOR GRANTOR
- ----------- -------- ------------ ------------ -------
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Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated December 27, 1999.
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 December 27, 1999.
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
- ----------- ------- ---------- ------- ------
DATAWATCH US 14/553,269 1,963,783 Registered
(07/25/1994) (03/26/1996)
DATAWATCH EU 210,476 210,476 Registered
(04/01/1996) (04/01/1996)
Q-SUPPORT EU 210,682 210,682 Registered
(04/01/1996) (04/01/1996)
QUETZAL EU 210,831 210,831 Registered
(04/01/1996) (04/01/1996)
QUETZAL AUSTRALIA 634,675 A634,675 Registered
(07/11/1994) (09/13/1995)
QUETZAL/SC US 75/580,763 Pending
(10/29/1998)
Q-BROWSER US 75,315,418 2,255,961 Registered
(06/26/1997) (06/22/1999)
Q-BROWSER EU 547,323 Published
(05/21/1997)
Q-BROWSER AUSTRALIA 752,268 752,268 Registered
(01/07/1998) (01/07/1998)
Q-FLOW US 75/364,269 2,256,046 Registered
(09/29/1997) (06/22/1999)
Q-FLOW EU 633,834 Published
(09/22/1997)
Q-FLOW CANADA 873,647 Published
(03/27/1998)
Q-FLOW AUSTRALIA 744,567 744,567 Registered
(09/22/1997) (11/06/1998)
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Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated December 27, 1999.
EXHIBIT "D"
MASK WORKS
MASK WORK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
- ----------- ------- ---------- ------- ------
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