**Exhibit 10.5**

 

**INTELLECTUAL PROPERTY SECURITY AGREEMENT**

ThisIntellectual Property Security Agreement is entered into as of October 9, 2006by and between SILICON VALLEY BANK (“Secured Party”) and ITERIS, INC. (“Grantor”).

RECITALS

A.            Secured Party and Grantor areentering into that certain Loan and Security Agreement of even date herewith(as the same may be amended, modified or supplemented from time to time, the “LoanAgreement”; capitalized terms used herein which are not defined, have themeanings set forth in the Loan Agreement).

B.            Pursuant to the terms of the LoanAgreement, Grantor has granted to Secured Party a security interest in all ofGrantor’s right, title and interest, whether presently existing or hereafteracquired, in, to all Intellectual Property and all other Collateral.

NOW,THEREFORE, as collateral security for the payment and performance when due ofall of the Obligations, Grantor hereby grants, represents, warrants, covenantsand agrees as follows:

AGREEMENT

1.             Grantof Security Interest.  To secure allof the Obligations, Grantor grants and pledges to Secured Party a securityinterest in all of Grantor’s right, title and interest in, to and under itsIntellectual Property (as defined in the Loan Agreement), including withoutlimitation the following:

(a)           All of present and future UnitedStates registered copyrights and copyright registrations, including, withoutlimitation, the registered copyrights, maskworks, software, computer programsand other works of authorship subject to United States copyright protectionlisted in Exhibit A-1 to this Agreement (and including all of theexclusive rights afforded a copyright registrant in the United States under 17U.S.C.****§106 and any exclusive rights whichmay in the future arise by act of Congress or otherwise) and all present andfuture applications for copyright registrations (including applications forcopyright registrations of derivative works and compilations) (collectively,the “Registered Copyrights”), and any and all royalties, payments, and otheramounts payable to Grantor in connection with the Registered Copyrights,together with all renewals and extensions of the Registered Copyrights, theright to recover for all past, present, and future infringements of theRegistered Copyrights, and all computer programs, computer databases, computerprogram flow diagrams, source codes, object codes and all tangible propertyembodying or incorporating the Registered Copyrights, and all other rights ofevery kind whatsoever accruing thereunder or pertaining thereto.

(b)           All present and future copyrights,maskworks, software, computer programs and other works of authorship subject to(or capable of becoming subject to) United States copyright protection whichare not registered in the United States Copyright Office (the “UnregisteredCopyrights”), whether now owned or hereafter acquired, including withoutlimitation the Unregistered Copyrights listed in Exhibit A-2 to thisAgreement, and any and all royalties, payments, and other amounts payable toGrantor in connection with the Unregistered Copyrights, together with allrenewals and extensions of the Unregistered Copyrights, the right to recoverfor all past, present, and future infringements of the Unregistered Copyrights,and all

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computer programs, computerdatabases, computer program flow diagrams, source codes, object codes and alltangible property embodying or incorporating the Unregistered Copyrights, andall other rights of every kind whatsoever accruing thereunder or pertainingthereto.  The Registered Copyrights andthe Unregistered Copyrights collectively are referred to herein as the “Copyrights.”

(c)           All right, title and interest in andto any and all present and future license agreements with respect to theCopyrights.

(d)           All present and future accounts,accounts receivable, royalties, and other rights to payment arising from, inconnection with or relating to the Copyrights.

(e)           All patents, patent applications andlike protections including, without limitation, improvements, divisions, continuations,renewals, reissues, extensions and continuations-in-part of the same, includingwithout limitation the patents and patent applications set forth on ExhibitB attached hereto (collectively, the “Patents”);

(f)            All trademark and servicemark rights,whether registered or not, applications to register and registrations of thesame and like protections, and the entire goodwill of the business of Grantorconnected with and symbolized by such trademarks, including without limitationthose set forth on Exhibit C attached hereto (collectively, the “Trademarks”);

(g)           Any and all claims for damages by wayof 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 forsaid use or infringement of the rights identified above;

(h)           All licenses or other rights to useany of the Copyrights, Patents or Trademarks, and all license fees androyalties arising from such use to the extent permitted by such license orrights;

(i)            All amendments, extensions, renewalsand extensions of any of the Copyrights, Trademarks or Patents; and

(j)            All proceeds and products of theforegoing, including without limitation all payments under insurance or anyindemnity or warranty payable in respect of any of the foregoing, and alllicense royalties and proceeds of infringement suits, and all rightscorresponding to the foregoing throughout the world and all re-issues,divisions continuations, renewals, extensions and continuations-in-part of theforegoing.

2.             LoanAgreement.  This security interest isgranted in conjunction with the security interest granted to Secured Partyunder the Loan Agreement.  The rights andremedies of Secured Party with respect to the security interest granted herebyare in addition to those set forth in the Loan Agreement and the other LoanDocuments, and those which are now or hereafter available to Secured Party as amatter of law or equity.  Each right,power and remedy of Secured Party provided for herein or in the Loan Agreementor any of the other Loan Documents, or now or hereafter existing at law or inequity shall be cumulative and concurrent and shall be in addition to everyright, power or remedy provided for herein and the exercise by Secured Party ofany one

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or more of the rights,powers or remedies provided for in this Agreement, the Loan Agreement or any ofthe other Loan Documents, or now or hereafter existing at law or in equity,shall not preclude the simultaneous or later exercise by any person, includingSecured Party, of any or all other rights, powers or remedies.

3.             Covenants and Warranties.Grantor represents, warrants, covenants and agrees as follows:

(a)           Grantor has no present maskworks,software, computer programs and other works of authorship registered with theUnited States Copyright Office except as disclosed on Exhibit A-1 hereto.

(b)           Grantor shall undertake allreasonable measures to cause its employees, agents and independent contractorsto assign to Grantor all rights of authorship to any copyrighted material inwhich Grantor has or may subsequently acquire any right or interest.

(c)           Grantor shall promptly advise SecuredParty of any Trademark, Patent or Copyright not specified in this Agreement,which is hereafter acquired by Grantor.

(d)           Grantor shall not register anymaskworks, software, computer programs or other works of authorship subject toUnited States copyright protection with the United States Copyright Officewithout first complying with the following: (i) providing Secured Party with at least 15 days prior written noticethereof, (ii) providing Secured Party with a copy of the application for anysuch registration and (iii) executing and filing such other instruments, andtaking such further actions as Secured Party may reasonably request from timeto time to perfect or continue the perfection of Secured Party’s interest inthe Collateral, including without limitation the filing with the United StatesCopyright Office, simultaneously with the filing by Grantor of the applicationfor any such registration, of a copy of this Agreement or a Supplement heretoin form acceptable to Secured Party identifying the maskworks, software,computer programs or other works of authorship being registered and confirmingthe grant of a security interest therein in favor of Secured Party.

4.             General. If any actionrelating to this Agreement is brought by either party hereto against the otherparty, the prevailing party shall be entitled to recover reasonable attorneysfees, costs and disbursements. This Agreement may be amended only by a writteninstrument signed by both parties hereto. To the extent that any provision of this Agreement conflicts with anyprovision of the Loan Agreement, the provision giving Secured Party greaterrights or remedies shall govern, it being understood that the purpose of thisAgreement is to add to, and not detract from, the rights granted to SecuredParty under the Loan Agreement.  ThisAgreement, the Loan Agreement, and the other Loan Documents comprise the entireagreement of the parties with respect to the matters addressed in thisAgreement. This Agreement shall be governed by the laws of the State ofCalifornia, without regard for choice of law provisions. Grantor and SecuredParty consent to the nonexclusive jurisdiction of any state or federal courtlocated in Santa Clara County, California.

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**5.             WAIVEROF RIGHT TO JURY TRIAL.** **SECURED PARTY AND GRANTOREACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASEDUPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR(II)  ANY OTHER PRESENT OR FUTUREINSTRUMENT OR AGREEMENT BETWEEN SECURED PARTY AND GRANTOR; OR (III) ANYCONDUCT, ACTS OR OMISSIONS OF SECURED PARTY OR GRANTOR OR ANY OF THEIRDIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SECURED PARTY OR GRANTOR;IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OROTHERWISE.**

INWITNESS WHEREOF, the parties have cause this Intellectual Property SecurityAgreement to be duly executed by its officers thereunto duly authorized as ofthe first date written above.
| Address of Grantor:            |   | Grantor:            |
|--------------------------------|--------|---------------------|
|                           |   |                |
| 1515 South  Manchester Avenue  |   | ITERIS, INC.        |
| Anaheim,  California 92892     |   |                |
|                           |   |                |
|                           |   | By:                 |  /S/ JAMES S. MIELE |   |
|                           |   | Title:              | CFO |   |
|                           |   | Name:               | James S. Miele |   |
|                           |   |                |   |   |
| Address of  Secured Party:     |   | Secured Party:      |
|                           |   |                |
| 3003 Tasman  Drive             |   | SILICON VALLEY BANK |
| Santa Clara,  California 95054 |   |                |
|                           |   |                |
|                           |   | By:                 |  /S/ DEREK BRUNELLE |   |
|                           |   | Title:              | Derek Brunelle,  Vice President |   |
|                                |        |                     |  |  |  |  |  |  |  |

 

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