INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

      INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement" dated as of

July 18, 2005, by and among ROO Group, Inc., a Delaware corporation (the

"Company"), and the secured parties signatory hereto and their respective

endorsees, transferees and assigns (collectively, the "Secured Party").

 

                              W I T N E S S E T H :

 

      WHEREAS, pursuant to a Securities Purchase Agreement, dated the date

hereof, between Company and the Secured Party (the "Purchase Agreement"),

Company has agreed to issue to the Secured Party and the Secured Party has

agreed to purchase from Company certain of Company's 8% Secured Convertible

Notes, due three years from the date of issue (the "Notes"), which are

convertible into shares of Company's Common Stock, par value $.0001 per share

(the "Common Stock"). In connection therewith, Company shall issue the Secured

Party certain Common Stock purchase warrants (the "Warrants"); and

 

      WHEREAS, in order to induce the Secured Party to purchase the Notes,

Company has agreed to execute and deliver to the Secured Party this Agreement

for the benefit of the Secured Party and to grant to it a security interest in

certain Intellectual Property (defined below) of Company to secure the prompt

payment, performance and discharge in full of all of Company's obligations under

the Notes and exercise and discharge in full of Company's obligations under the

Warrants; and

 

      NOW, THEREFORE, in consideration of the agreements herein contained and

for other good and valuable consideration, the receipt and sufficiency of which

is hereby acknowledged, the parties hereto hereby agree as follows:

 

            1. Defined Terms. Unless otherwise defined herein, terms which are

defined in the Purchase Agreement and used herein are so used as so defined; and

the following terms shall have the following meanings:

 

            "Software Intellectual Property" shall mean:

 

            (a) all software programs (including all source code, object code

and all related applications and data files), whether now owned, upgraded,

enhanced, licensed or leased or hereafter acquired by the Company, above;

 

            (b) all computers and electronic data processing hardware and

firmware associated therewith;

 

            (c) all documentation (including flow charts, logic diagrams,

manuals, guides and specifications) with respect to such software, hardware and

firmware described in the preceding clauses (a) and (b); and

 

            (d) all rights with respect to all of the foregoing, including,

without limitation, any and all upgrades, modifications, copyrights, licenses,

options, warranties, service contracts, program services, test rights,

maintenance rights, support rights, improvement rights, renewal rights and

 

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indemnifications and substitutions, replacements, additions, or model

conversions of any of the foregoing.

 

            "Copyrights" shall mean (a) all copyrights, registrations and

applications for registration, issued or filed, including any reissues,

extensions or renewals thereof, by or with the United States Copyright Office or

any similar office or agency of the United States, any state thereof, or any

other country or political subdivision thereof, or otherwise, including, all

rights in and to the material constituting the subject matter thereof,

including, without limitation, any referred to in Schedule B hereto, and (b) any

rights in any material which is copyrightable or which is protected by common

law, United States copyright laws or similar laws or any law of any State,

including, without limitation, any thereof referred to in Schedule B hereto.

 

            "Copyright License" shall mean any agreement, written or oral,

providing for a grant by the Company of any right in any Copyright, including,

without limitation, any thereof referred to in Schedule B hereto.

 

            "Intellectual Property" shall means, collectively, the Software

Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent Licenses,

Trademarks, Trademark Licenses and Trade Secrets.

 

            "Obligations" means all of the Company's obligations under this

Agreement and the Notes, in each case, whether now or hereafter existing,

voluntary or involuntary, direct or indirect, absolute or contingent, liquidated

or unliquidated, whether or not jointly owed with others, and whether or not

from time to time decreased or extinguished and later decreased, created or

incurred, and all or any portion of such obligations or liabilities that are

paid, to the extent all or any part of such payment is avoided or recovered

directly or indirectly from the Secured Party as a preference, fraudulent

transfer or otherwise as such obligations may be amended, supplemented,

converted, extended or modified from time to time.

 

            "Patents" shall mean (a) all letters patent of the United States or

any other country or any political subdivision thereof, and all reissues and

extensions thereof, including, without limitation, any thereof referred to in

Schedule B hereto, and (b) all applications for letters patent of the United

States and all divisions, continuations and continuations-in-part thereof or any

other country or any political subdivision, including, without limitation, any

thereof referred to in Schedule B hereto.

 

            "Patent License" shall mean all agreements, whether written or oral,

providing for the grant by the Company of any right to manufacture, use or sell

any invention covered by a Patent, including, without limitation, any thereof

referred to in Schedule B hereto.

 

            "Security Agreement" shall mean the a Security Agreement, dated the

date hereof between Company and the Secured Party.

 

            "Trademarks" shall mean (a) all trademarks, trade names, corporate

names, company names, business names, fictitious business names, trade styles,

service marks, logos and other source or business identifiers, and the goodwill

associated therewith, now existing or hereafter adopted or acquired, all

registrations and recordings thereof, and all applications in connection

therewith, whether in the United States Patent and Trademark Office or in any

similar office or agency of the United States, any state thereof or any other

 

 

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country or any political subdivision thereof, or otherwise, including, without

limitation, any thereof referred to in Schedule B hereto, and (b) all reissues,

extensions or renewals thereof.

 

            "Trademark License" shall mean any agreement, written or oral,

providing for the grant by the Company of any right to use any Trademark,

including, without limitation, any thereof referred to in Schedule B hereto.

 

            "Trade Secrets" shall mean common law and statutory trade secrets

and all other confidential or proprietary or useful information and all know-how

obtained by or used in or contemplated at any time for use in the business of

the Company (all of the foregoing being collectively called a "Trade Secret"),

whether or not such Trade Secret has been reduced to a writing or other tangible

form, including all documents and things embodying, incorporating or referring

in any way to such Trade Secret, all Trade Secret licenses, including each Trade

Secret license referred to in Schedule B hereto, and including the right to sue

for and to enjoin and to collect damages for the actual or threatened

misappropriation of any Trade Secret and for the breach or enforcement of any

such Trade Secret license.

 

      2. Grant of Security Interest. In accordance with Section 3(m) of the

Security Agreement, to secure the complete and timely payment, performance and

discharge in full, as the case may be, of all of the Obligations, the Company

hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the

Secured Party, a continuing security interest in, a continuing lien upon, an

unqualified right to possession and disposition of and a right of set-off

against, in each case to the fullest extent permitted by law, all of the

Company's right, title and interest of whatsoever kind and nature in and to the

Intellectual Property (the "Security Interest").

 

      3. Representations and Warranties. The Company hereby represents and

warrants, and covenants and agrees with, the Secured Party as follows:

 

            (a) The Company has the requisite corporate power and authority to

enter into this Agreement and otherwise to carry out its obligations thereunder.

The execution, delivery and performance by the Company of this Agreement and the

filings contemplated therein have been duly authorized by all necessary action

on the part of the Company and no further action is required by the Company.

This Agreement constitutes a legal, valid and binding obligation of the Company

enforceable in accordance with its terms, except as enforceability may be

limited by bankruptcy, insolvency, reorganization, moratorium or similar laws

affecting the enforcement of creditor's rights generally.

 

            (b) The Company represents and warrants that it has no place of

business or offices where its respective books of account and records are kept

(other than temporarily at the offices of its attorneys or accountants) or

places where the Intellectual Property is stored or located, except as set forth

on Schedule A attached hereto;

 

            (c) The Company is the sole owner of the Intellectual Property

(except for non-exclusive licenses granted by the Company in the ordinary course

of business), free and clear of any liens, security interests, encumbrances,

rights or claims, and is fully authorized to grant the Security Interest in and

 

 

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to pledge the Intellectual Property. There is not on file in any governmental or

regulatory authority, agency or recording office an effective financing

statement, security agreement, license or transfer or any notice of any of the

foregoing (other than those that have been filed in favor of the Secured Party

pursuant to this Agreement) covering or affecting any of the Intellectual

Property. So long as this Agreement shall be in effect, the Company shall not

execute and shall not knowingly permit to be on file in any such office or

agency any such financing statement or other document or instrument (except to

the extent filed or recorded in favor of the Secured Party pursuant to the terms

of this Agreement), except for a financing statement covering assets acquired by

the Company after the date hereof, provided that the value of the Intellectual

Property covered by this Agreement along with the Collateral (as defined in the

Security Agreement) is equal to at least 150% of the Obligations.

 

            (d) The Company shall at all times maintain its books of account and

records relating to the Intellectual Property at its principal place of business

and its Intellectual Property at the locations set forth on Schedule A attached

hereto and may not relocate such books of account and records unless it delivers

to the Secured Party at least 30 days prior to such relocation (i) written

notice of such relocation and the new location thereof (which must be within the

United States) and (ii) evidence that the necessary documents have been filed

and recorded and other steps have been taken to perfect the Security Interest to

create in favor of the Secured Party valid, perfected and continuing liens in

the Intellectual Property to the extent they can be perfected through such

filings.

 

            (e) This Agreement creates in favor of the Secured Party a valid

security interest in the Intellectual Property securing the payment and

performance of the Obligations and, upon making the filings required hereunder,

a perfected security interest in such Intellectual Property to the extent that

it can be perfected through such filings.

 

            (f) Upon request of the Secured Party, the Company shall execute and

deliver any and all agreements, instruments, documents, and papers as the

Secured Party may request to evidence the Secured Party's security interest in

the Intellectual Property and the goodwill and general intangibles of the

Company relating thereto or represented thereby, and the Company hereby appoints

the Secured Party its attorney-in-fact to execute and file all such writings for

the foregoing purposes, all acts of such attorney being hereby ratified and

confirmed; such power being coupled with an interest is irrevocable until the

Obligations have been fully satisfied and are paid in full.

 

            (g) The execution, delivery and performance of this Agreement does

not conflict with or cause a breach or default, or an event that with or without

the passage of time or notice, shall constitute a breach or default, under any

agreement to which the Company is a party or by which the Company is bound. No

consent (including, without limitation, from stock holders or creditors of the

Company) is required for the Company to enter into and perform its obligations

hereunder.

 

            (h) The Company shall at all times maintain the liens and Security

Interest provided for hereunder as valid and perfected liens and security

interests in the Intellectual Property to the extent they can be perfected by

filing in favor of the Secured Party until this Agreement and the Security

Interest hereunder shall terminate pursuant to Section 11. The Company hereby

agrees to defend the same against any and all persons. The Company shall

 

 

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safeguard and protect all Intellectual Property for the account of the Secured

Party. Without limiting the generality of the foregoing, the Company shall pay

all fees, taxes and other amounts necessary to maintain the Intellectual

Property and the Security Interest hereunder, and the Company shall obtain and

furnish to the Secured Party from time to time, upon demand, such releases

and/or subordinations of claims and liens which may be required to maintain the

priority of the Security Interest hereunder.

 

                  (i) The Company will not transfer, pledge, hypothecate,

encumber, license (except for non-exclusive licenses granted by the Company in

the ordinary course of business), sell or otherwise dispose of any of the

Intellectual Property without the prior written consent of the Secured Party.

 

                  (j) The Company shall, within ten (10) days of obtaining

knowledge thereof, advise the Secured Party promptly, in sufficient detail, of

any substantial change in the Intellectual Property, and of the occurrence of

any event which would have a material adverse effect on the value of the

Intellectual Property or on the Secured Party's security interest therein.

 

                  (k) The Company shall permit the Secured Party and its

representatives and agents to inspect the Intellectual Property at any time, and

to make copies of records pertaining to the Intellectual Property as may be

requested by the Secured Party from time to time.

 

                  (l) The Company will take all steps reasonably necessary to

diligently pursue and seek to preserve, enforce and collect any rights, claims,

causes of action and accounts receivable in respect of the Intellectual

Property.

 

                  (m) The Company shall promptly notify the Secured Party in

sufficient detail upon becoming aware of any attachment, garnishment, execution

or other legal process levied against any Intellectual Property and of any other

information received by the Company that may materially affect the value of the

Intellectual Property, the Security Interest or the rights and remedies of the

Secured Party hereunder.

 

                  (n) All information heretofore, herein or hereafter supplied

to the Secured Party by or on behalf of the Company with respect to the

Intellectual Property is accurate and complete in all material respects as of

the date furnished.

 

                  (o) Schedule A attached hereto contains a list of all of the

subsidiaries of Company.

 

                  (p) Schedule B attached hereto includes all Licenses, and all

Patents and Patent Licenses, if any, owned by the Company in its own name as of

the date hereof. Schedule B hereto includes all Trademarks and Trademark

Licenses, if any, owned by the Company in its own name as of the date hereof.

Schedule B hereto includes all Copyrights and Copyright Licenses, if any, owned

by the Company in its own name as of the date hereof. Schedule B hereto includes

all Trade Secrets and Trade Secret Licenses, if any, owned by the Company as of

the date hereof. To the best of the Company's knowledge, each License, Patent,

Trademark, Copyright and Trade Secret is valid, subsisting, unexpired,

 

 

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enforceable and has not been abandoned. Except as set forth in Schedule B, none

of such Licenses, Patents, Trademarks, Copyrights and Trade Secrets is the

subject of any licensing or franchise agreement. To the best of the Company's

knowledge, no holding, decision or judgment has been rendered by any

Governmental Body which would limit, cancel or question the validity of any

License, Patent, Trademark, Copyright and Trade Secrets . No action or

proceeding is pending (i) seeking to limit, cancel or question the validity of

any License, Patent, Trademark, Copyright or Trade Secret, or (ii) which, if

adversely determined, would have a material adverse effect on the value of any

License, Patent, Trademark, Copyright or Trade Secret. The Company has used and

will continue to use for the duration of this Agreement, proper statutory notice

in connection with its use of the Patents, Trademarks and Copyrights and

consistent standards of quality in products leased or sold under the Patents,

Trademarks and Copyrights.

 

                  (q) With respect to any Intellectual Property:

 

                        (i)   such Intellectual Property is subsisting and has

                              not been adjudged invalid or unenforceable, in

                              whole or in part;

 

                        (ii)  such Intellectual Property is valid and

                              enforceable;

 

                        (iii) the Company has made all necessary filings and

                              recordations to protect its interest in such

                              Intellectual Property, including, without

                              limitation, recordations of all of its interests

                              in the Patents, Patent Licenses, Trademarks and

                              Trademark Licenses in the United States Patent and

                              Trademark Office and in corresponding offices

                              throughout the world and its claims to the

                              Copyrights and Copyright Licenses in the United

                              States Copyright Office and in corresponding

                              offices throughout the world;

 

                        (iv)  other than as set forth in Schedule B, the Company

                              is the exclusive owner of the entire and

                              unencumbered right, title and interest in and to

                              such Intellectual Property and no claim has been

                              made that the use of such Intellectual Property

                              infringes on the asserted rights of any third

                              party; and

 

                        (v)   the Company has performed and will continue to

                              perform all acts and has paid all required fees

                              and taxes to maintain each and every item of

                              Intellectual Property in full force and effect

                              throughout the world, as applicable.

 

                  (r) Except with respect to any Trademark or Copyright that the

Company shall reasonably determine is of negligible economic value to the

Company, the Company shall:

 

                  (i) maintain each Trademark and Copyright in full force free

            from any claim of abandonment for non-use, maintain as in the past

            the quality of products and services offered under such Trademark or

            Copyright; employ such Trademark or Copyright with the appropriate

 

 

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            notice of registration; not adopt or use any mark which is

            confusingly similar or a colorable imitation of such Trademark or

            Copyright unless the Secured Party shall obtain a perfected security

            interest in such mark pursuant to this Agreement; and not (and not

            permit any licensee or sublicensee thereof to) do any act