Exhibit 10.63
INTELLECTUAL PROPERTY SECURITY AGREEMENT
     INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”) dated as of
June 26, 2006 by and between REDENVELOPE, INC., a Delaware corporation (the
“Grantor”) with its principal executive offices at 149 Montgomery Street, San
Francisco California 94105, and WELLS FARGO RETAIL FINANCE, LLC, a Delaware
limited liability company (the “Lender”) with offices at One Boston Place — 19th
Floor, Boston, Massachusetts, in consideration of the mutual covenants contained
herein and benefits to be derived herefrom.
WITNESSETH:
     Reference is made to the Loan and Security Agreement dated of even date
herewith (as amended, modified, supplemented or restated hereafter, the “Loan
Agreement”) by and between the Grantor and the Lender. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Loan Agreement.
     The Lender has agreed, among other things, to make Revolving Credit Loans
to the Grantor pursuant to, and upon the terms and subject to the conditions
specified in, the Loan Agreement. The obligations of the Lender to make
Revolving Credit Loans are each conditioned upon, among other things, the
execution and delivery by the Grantor of an agreement in the form hereof to
secure the Liabilities.
     Accordingly, the Grantor and the Lender (and each of their respective
successors or assigns), hereby agree as follows:
     1. Definitions: As used herein, the following terms shall have the
following meanings:
     “Copyrights” shall mean all copyrights and like protections in each work of
authorship or derivative work thereof of the Grantor, whether registered or
unregistered and whether published or unpublished, including, without
limitation, the copyrights listed on EXHIBIT A annexed hereto and made a part
hereof, together with all registrations and recordings thereof, all applications
in connection therewith, and any goodwill of the business connected with, and
symbolized by, any of the foregoing.
     “Copyright Licenses” shall mean all written agreements providing for the
grant by or to Grantor of any right to use any Copyright, including, without
limitation, the agreements listed on EXHIBIT A annexed hereto and made a part
hereof.
     “Copyright Office” shall mean the United States Copyright Office or any
other federal governmental agency which may hereafter perform its functions.
     “Intellectual Property” shall have the meaning assigned to such term in
Section 3 hereof.
     “IP Collateral” shall have the meaning assigned to such term in Section 2
hereof.
     “Licenses” shall mean, collectively, the Copyright Licenses, Patent
Licenses and Trademark Licenses.

 

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     “Patents” shall mean all letters patent and applications for letters patent
of the Grantor, and the inventions and improvements therein disclosed, and any
and all divisions, reissues and continuations of said letters patent including,
without limitation the patents listed on EXHIBIT B annexed hereto and made a
part hereof.
     “Patent Licenses” shall mean all written agreements providing for the grant
by or to Grantor of any right to manufacture, use or sell any invention covered
by a Patent, including, without limitation, the agreements listed on EXHIBIT B
annexed hereto and made a part hereof.
     “PTO” shall mean the United States Patent and Trademark Office or any other
federal governmental agency which may hereafter perform its functions.
     “Trademarks” shall mean all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress, trade
styles, service marks, designs, logos and other source or business identifiers
of the Grantor, whether registered or unregistered, including, without
limitation, the trademarks listed on EXHIBIT C annexed hereto and made a part
hereof, together with all registrations and recordings thereof, all applications
in connection therewith, and any goodwill of the business connected with, and
symbolized by, any of the foregoing.
     “Trademark Licenses” shall mean all written agreements providing for the
grant by or to Grantor of any right to use any Trademark, including, without
limitation, the agreements listed on EXHIBIT C annexed hereto and made a part
hereof.
     2. Grant of Security Interest: In furtherance and as confirmation of the
security interest granted by the Grantor to the Lender under the Loan Agreement,
and as further security for the payment or performance, as the case may be, in
full of the Liabilities, Grantor hereby ratifies such security interest and
grants to the Lender a continuing security interest, with a power of sale (which
power of sale shall be exercisable only following the occurrence of an Event of
Default), in all of the present and future right, title and interest of the
Grantor in and to the following property, and each item thereof, whether now
owned or existing or hereafter acquired or arising, together with all products,
proceeds, substitutions, and accessions of or to any of the following property
(collectively, the “IP Collateral”):

  (a)   All Copyrights and Copyright Licenses.     (b)   All Patents and Patent
Licenses.     (c)   All Trademarks and Trademark Licenses.     (d)   All
renewals of any of the foregoing.     (e)   All General Intangibles connected
with the use of, or related to, any and all Intellectual Property (including,
without limitation, all goodwill of the Grantor and its business, products and
services appurtenant to, associated with, or symbolized by, any and all
Intellectual Property and the use thereof).     (f)   All income, royalties,
damages and payments now and hereafter due and/or payable under and with respect
to any of the foregoing, including, without

 

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      limitation, payments under all Licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions
thereof.     (g)   The right to sue for past, present and future infringements
and dilutions of any of the foregoing.     (h)   All of the Grantor’s rights
corresponding to any of the foregoing throughout the world.

     3. Protection of Intellectual Property By Grantors: Except as set forth
below in this Section 3, the Grantor shall undertake the following with respect
to each of the items respectively described in Sections 2(a), (b), (c), (d) and
(e) (collectively, the “Intellectual Property”):

  (a)   Pay all renewal fees and other reasonable fees and costs associated with
maintaining the Intellectual Property and with the processing of the
Intellectual Property and take all other reasonable and necessary steps to
maintain each registration of the Intellectual Property.     (b)   Take all
actions reasonably necessary to prevent any of the Intellectual Property from
becoming forfeited, abandoned, dedicated to the public, invalidated or impaired
in any way.     (c)   At the Grantor’s sole cost, expense, and risk, pursue the
reasonably prompt, diligent processing of each application for registration
which is the subject of the security interest created herein and not abandon or
delay any such efforts.     (d)   At the Grantor’s sole cost, expense, and risk,
take any and all action which the Grantor reasonably deems appropriate under the
circumstances to protect the Intellectual Property from infringement,
misappropriation or dilution, including, without limitation, the prosecution and
defense of infringement actions.

Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, and no Material Adverse Change would result therefrom, Grantor
shall not have an obligation to use or to maintain any Intellectual Property
(i) that relates solely to any product that has been discontinued, abandoned or
terminated, (ii) that is not necessary, in the reasonable business judgment of
the Grantor, for the conduct of the business of the Grantor from time to time or
(iii) that has been replaced with Intellectual Property substantially similar to
the Intellectual Property that may be abandoned or otherwise become invalid, so
long as the failure to use or maintain such Intellectual Property does not
materially adversely affect the validity of such replacement Intellectual
Property and so long as such replacement Intellectual Property is subject to the
lien created by this Agreement.
     4. Grantor’s Representations and Warranties: The Grantor represents and
warrants that, except as disclosed in or pursuant to the Loan Agreement:

  (a)   EXHIBIT A is a true, correct and complete list of all Copyrights and
Copyright Licenses owned by the Grantor as of the date hereof.

 

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  (b)   EXHIBIT B is a true, correct and complete list of all Patents and Patent
Licenses owned by the Grantor as of the date hereof.     (c)   EXHIBIT C is a
true, correct and complete list of all Trademarks and Trademark Licenses owned
by the Grantor as of the date hereof.     (d)   Except as set forth in EXHIBITS
A, B and C, none of the Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which Grantor is the licensor or franchisor.    
(e)   All IP Collateral is, and shall remain, free and clear of all liens,
Encumbrances, or security interests in favor of any Person, other than Permitted
Encumbrances and liens in favor of the Lender.     (f)   No material claim has
been asserted and is pending by any Person challenging or questioning the use by
Grantor of any of its Intellectual Property or the validity or effectiveness of
any of its Intellectual Property, nor does Grantor know of any valid basis for
any such claim, except as otherwise set forth in the Loan Agreement. No holding,
decision or judgment has been rendered by any governmental authority which would
limit, cancel or question the validity of Grantor’s rights in, any Intellectual
Property in any respect that could reasonably be expected to result in a
Material Adverse Change on the business or the property of Grantor.     (g)  
The Grantor shall give the Lender written notice (with reasonable detail) within
ten (10) days following the occurrence of any of the following:

  (i)   The Grantor’s obtaining rights to, and filing applications for
registration of, any new Intellectual Property, or otherwise acquiring ownership
of any newly registered Intellectual Property (other than the Grantor’s right to
sell products containing the trademarks of others in the ordinary course of the
Grantor’s business).     (ii)   The Grantor’s becoming entitled to the benefit
of any registered Intellectual Property whether as licensee or licensor (other
than the Grantor’s right to sell products containing the trademarks of others in
the ordinary course of the Grantor’s business).     (iii)   The Grantor’s
entering into any new outbound Licenses or any material inbound Licenses other
than Licenses for the use of tradenames or trademarks in connection with selling
goods or otherwise in the ordinary course of Grantor’s business.     (iv)   The
Grantor’s knowing that any application or registration relating to any
Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the PTO, the Copyright Office or any court or tribunal) regarding
the Grantor’s ownership of, or the validity of,

 

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      any Intellectual Property or the Grantor’s right to register the same or
to own and maintain the same.

  5.   Agreement Applies to Future Intellectual Property:     (a)   The
provisions of this Agreement shall automatically apply to any such additional
property or rights described in subsections (i), (ii) and (iii) of Section 4(g),
above, all of which shall be deemed to be and treated as “Intellectual Property”
within the meaning of this Agreement.     (b)   Upon the reasonable request of
the Lender, the Grantor shall execute and deliver, and have recorded, any and
all agreements, instruments, documents and papers as the Lender may request to
evidence the Lender’s security interest in any Copyright, Patent or Trademark
and the goodwill and General Intangibles of the Grantor relating thereto or
represented thereby (including, without limitation, filings with the PTO, the
Copyright Office or any similar office), and the Grantor hereby constitutes the
Lender as 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; provided, however, the Lender’s taking of such action shall not be a
condition to the creation or perfection of the security interest created hereby.

     6. Grantor’s Rights To Enforce Intellectual Property: Prior to the Lender’s
giving of notice to the Grantor following the occurrence of an Event of Default,
the Grantor shall have the exclusive right to sue for past, present and future
infringement of the Intellectual Property including the right to seek
injunctions and/or money damages, in an effort by the Borrowers to protect the
Intellectual Property against encroachment by third parties, provided, however:

  (a)   The Grantor provide the Lender with written notice of any such suit for
enforcement of any Intellectual Property.     (b)   Following the occurrence and
during the continuance of any Event of Default, the Lender, by notice to the
Grantor may terminate or limit the Grantor’s rights under this Section 6.     7.
  Lender’s Actions To Protect Intellectual Property: In the event of:     (a)  
the Grantor’s failure, within five (5) days of written notice from the Lender,
to cure any failure by the Grantor to observe or perform any of the Grantor’s
material covenants, agreements or other obligations hereunder; and/or     (b)  
the occurrence and continuance of any Event of Default,

the Lender, acting in its own name or in that of the Grantor, may (but shall not
be required to) act in the Grantor’s place and stead and/or in the Lender’s own
right in connection therewith.
     8. Rights Upon Default: Upon the occurrence of any Event of Default, the
Lender may exercise all rights and remedies of a secured party upon default
under the Uniform Commercial Code as adopted in the Commonwealth of
Massachusetts, with respect to the

 

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Intellectual Property, in addition to which, in connection with the exercise of
any such rights and remedies, the Lender may sell, license, assign, transfer, or
otherwise dispose of the Intellectual Property. The Lender shall give the
Grantor at least ten (10) days’ prior written notice, by authenticated record,
of any such intended disposition of the Intellectual Property. Any person may
conclusively rely upon an affidavit of an officer of the Lender that an Event of
Default has occurred and that the Lender is authorized to exercise such rights
and remedies.

  9.   Lender As Attorney In Fact:     (a)   The Grantor hereby irrevocably
constitutes and designates the Lender as and for the Grantor’s attorney in fact,
effective following the occurrence and during the continuance of any Event of
Default:

  (i)   To supplement and amend from time to time EXHIBITS A, B and C of this
Agreement to include any new or additional Intellectual Property of the Grantor.
    (ii)   To exercise any of the rights and powers referenced herein.     (iii)
  To execute all such instruments, documents, and papers as the Lender
determines to be appropriate in connection with the exercise of such rights and
remedies and to cause the sale, license, assignment, transfer, or other
disposition of the Intellectual Property.

  (b)   The within grant of a power of attorney, being coupled with an interest,
shall be irrevocable until this Agreement is terminated in accordance with the
Loan Agreement by a duly authorized officer of the Lender.     (c)   The Lender
shall not be obligated to do any of the acts or to exercise any of the powers
authorized by Section 9(a), but if the Lender elects to do any such act or to
exercise any of such powers, it shall not be accountable for more than it
actually receives as a result of such exercise of power, and shall not be
responsible to Grantor for any act or omission to act except for any act or
omission to act as to which there is a final determination made in a judicial
proceeding (in which proceeding the Lender has had an opportunity to be heard)
which determination includes a specific finding that the subject act or omission
to act had been grossly negligent or in actual bad faith.

  10.   Lender’s Rights:     (a)   Any use by the Lender of the Intellectual
Property, as authorized hereunder in connection with the exercise of the
Lender’s rights and remedies under this Agreement and under the Loan Agreement
shall be coextensive with the Grantor’s rights thereunder and with respect
thereto and without any liability for royalties or other related charges.    
(b)   None of this Agreement, the Loan Agreement, or any act, omission, or
circumstance taken or arising hereunder may be construed as directly or

 

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      indirectly conveying to the Lender any rights in and to the Intellectual
Property, which rights are effective only following the occurrence of any Event
of Default.

     11. Intent: This Agreement is being executed and delivered by the Grantor
for the purpose of registering and confirming the grant of the security interest
of the Lender in the IP Collateral with the PTO and the Copyright Office. It is
intended that the security interest granted pursuant to this Agreement is
granted as a supplement to, and not in limitation of, the security interest
granted to the Lender under the Loan Agreement. All provisions of the Loan
Agreement shall apply to the IP Collateral. The Lender shall have the same
rights, remedies, powers, privileges and discretions with respect to the
security interests created in the IP Collateral as in all other Collateral. In
the event of a conflict between this Agreement and the Loan Agreement, the terms
of this Agreement shall control with respect to the IP Collateral and the Loan
Agreement with respect to all other Collateral.
     12. Choice of Laws: It is intended that this Agreement take effect as a
sealed instrument and that all rights and obligations hereunder, including
matters of construction, validity, and performance, shall be governed by the
laws of the Commonwealth of Massachusetts.
[SIGNATURE PAGES FOLLOW]

 

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     IN WITNESS WHEREOF, the Grantor and the Lender respectively have caused
this Agreement to be executed by their respective duly authorized officers as of
the date first above written.

              GRANTOR:   REDENVELOPE, INC.    
 
           
 
  By:     /s/ Polly Boe    
 
           
 
  Name:        Polly Boe    
 
  Title:        Chief Financial Officer    
 
            LENDER:   WELLS FARGO RETAIL FINANCE, LLC    
 
           
 
  By:     /s/ David Molinario    
 
           
 
  Name:        David Molinario    
 
  Title:        Vice President    

Signature Page to the Intellectual Property Security Agreement

 

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EXHIBIT A
List of Copyrights and Copyright Licenses
Copyright Registrations and Applications

              Title   Serial No.   Registration No.   Registration Date  
None
           

Copyright Licenses
None

 

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EXHIBIT B
List of Patents and Patent Licenses
Patents and Patent Applications

                  Title   Serial No.   Patent No.   Date of Filing   Date of
Issuance  
None
               

Patent Licenses
None

 

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EXHIBIT C
List of Trademarks and Trademark Licenses
Trademark Registrations and Applications

                      Trademark   Serial No.   Registration No.   Registration
Date
Flap Design (Red) Trade Dress
(US)
    76/583,815       3,037,192     1/3/06
Flap Design (Red) Trade Dress
(Canada)
    1232828       n/a     App Date: 9/29/04
Flap Design (Red) Trade Dress
(Europe)
    004052528       n/a     App Date: 9/29/04
 
                   
RedEnvelope (US)
    75/752,568       2,474,275     7/31/01
RedEnvelope (Australia)
    832179       832179     7/3/01
RedEnvelope(Austria)
    13622003       211335     7/23/03
RedEnvelope (Benelux)
    1036262       732080     2/26/03
RedEnvelope (Canada)
    1056886       555832     12/21/01
RedEnvelope (China P.R.)
    1056886       1699726     1/14/02
RedEnvelope (Europe)
    1601392       n/a     App Date: 4/10/00
RedEnvelope (France)
    033212560       033212560     2/28/03
RedEnvelope (Germany)
    30313511535       30313511     7/4/03
RedEnvelope (UK)
    2285192A       n/a     App Date: 11/9/01
RedEnvelope (Ireland)
    200300340       226623     2/25/03
RedEnvelope (Japan)
    200090100       4551718     3/15/02
RedEnvelope (Sweden)
    200301306       n/a     App Date: 2/27/03
RedEnvelope (Mexico)
    650486       842577     7/19/04
RedEnvelope (Norway)
    200403501       n/a     App Date: 4/1/04
RedEnvelope (Switzerland)
    521732004       524084     7/27/04
RedEnvelope (Taiwan)
    93014108       1144690     3/16/05
 
                   
RedEnvelope – Stylized (US)
    76/026,297       2,461,506     6/19/01
RedEnvelope – Stylized (Australia)
    832180       832180     7/3/01
RedEnvelope – Stylized (Canada)
    1056885       555831     12/21/01
RedEnvelope – Stylized (China PR)
    2000112433       1744152     4/7/02
RedEnvelope – Stylized (Europe)
    1601327       n/a     App Date: 4/10/00
RedEnvelope – Stylized (UK)
    2285192B       n/a     App Date: 11/9/01
RedEnvelope – Stylized (Japan)
    2000111862       4534363     1/11/02
RedEnvelope – Stylized (Hong Kong)
    134162000     B10833AB2001     9/19/01
 
                   
Red Box and Ivory Bow Trade Dress (US)
    76/183,690       2,988,425     8/30/05
Red Box and Ivory Bow Trade Dress (Canada)
    1154470       n/a     App Date: 10/1/02

 

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                      Trademark   Serial No.   Registration No.   Registration
Date
Red Box and Ivory Bow Trade Dress (Europe)
    2850303       2850303     9/16/02  
Get Lucky Dice (US)
    76,211,248       2,544,627     3/5/02
Gift Alert (US)
    75/475,821       2,484,134     9/4/01
Red Box and Ivory Bow Design (US)
    76/594,431       3,003,414     10/4/05

Trademark Licenses
None