EXHIBIT 10.16


                    INTELLECTUAL PROPERTY SECURITY AGREEMENT



         This Intellectual  Property Security Agreement is made as of August 25,
1999, by and between Videonics, Inc. ("Borrower"),  and Venture Banking Group, a
division of Cupertino National Bank ("Bank").

                                    RECITALS

         A. Bank has agreed to lend to Borrower certain funds (the "Loan"),  and
Borrower  desires to borrow such funds from Bank pursuant to the terms of a Loan
Agreement of even date herewith (collectively, the "Loan Agreement").

         B. In order to induce  Bank to make the Loan,  Borrower  has  agreed to
grant a first  priority  security  interest  in certain  intangible  property to
Lender for purposes of securing the obligations of Borrower to Bank.

         NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:

         1. Grant of Security  Interest.  As collateral  security for the prompt
and complete  payment and  performance  of all of  Borrower's  present or future
indebtedness,  obligations  and  liabilities to Bank,  Borrower  hereby assigns,
transfers,  conveys and grants a first  priority  security  interest to Bank, as
security, in and to Borrower's entire right, title and interest in, to and under
the following (all of which shall collectively be called the "Collateral"):

                  (a) Any  and all  copyright  rights,  copyright  applications,
copyright  registrations  and like  protections  in each work or authorship  and
derivative  work  thereof  that is created by  Borrower,  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unpublished and whether or not the same also constitutes a trade secret,  now or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
Borrower 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

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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 Borrower connected with
and symbolized by such trademarks,  including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks");

                  (f)  Right to the  proceeds  (excluding  attorneys'  and other
professional  and expert fees and expenses)  arising from any and all claims for
damages by way of past,  present  and future  infringement  of any of the rights
included above, with the right, but not the obligation,  to sue on behalf of and
collect such damages for said use or infringement of the  intellectual  property
rights identified above;

                  (g) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks,  and all license fees and royalties arising from such use
to the extent permitted by such license or rights or applicable law; and

                  (h) All  amendments,  renewals  and  extensions  of any of the
Copyrights, Trademarks or Patents; and

                  (i) 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. Borrower authorizes and requests that the
Register of Copyrights and the  Commissioner  of Patents and  Trademarks  record
this security agreement.

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

                  (a) Borrower is now the sole owner of the  Collateral,  except
for non-exclusive  licenses granted by Borrower to its customers in the ordinary
course of business;

                  (b)  Performance  of this  Agreement does not conflict with or
result  in a breach  of any  agreement  to which  Borrower  is party or by which
Borrower  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 Agreement  constitutes
an assignment;

                  (c)  During  the  term of this  Agreement,  Borrower  will not
transfer or otherwise  encumber any interest in the  Collateral  without  Bank's
prior written  consent,

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which shall not be  unreasonably  withheld,  except for  non-exclusive  licenses
granted by Borrower in the  ordinary  course of business or as set forth in this
Agreement;

                  (d)  To its  knowledge,  each  of the  Patents  is  valid  and
enforceable,  and  no  part  of  the  Collateral  has  been  judged  invalid  or
unenforceable,  in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;

                  (e) Borrower shall promptly advise Bank of any material change
in  the  composition  of  the  Collateral,  including  but  not  limited  to any
subsequent  ownership  right of the Borrower in or to any  Trademark,  Patent or
Copyright not specified in this Agreement;

                  (f)  Borrower  shall (i)  protect,  defend  and  maintain  the
validity and enforceability of the Trademarks,  Patents and Copyrights, (ii) use
its  best  efforts  to  detect  infringements  of the  Trademarks,  Patents  and
Copyrights  and  promptly  advise  Bank in  writing  of  material  infringements
detected  and (iii)  not  allow any  Trademarks,  Patents  or  Copyrights  to be
abandoned,  forfeited or dedicated to the public without the written  consent of
Bank,  which shall not be unreasonably  withheld  (provided that  abandonment of
intent to use applications shall not require Lender's consent),  unless Borrower
determines  that  reasonable  business  practices  suggest that  abandonment  is
appropriate.

                  (g) Borrower shall file registration applications for the most
recent version of any of Borrower's  Copyrights,  if not so already  registered,
from time to time as Bank may reasonably  request 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 Collateral;

                  (h) This Agreement creates,  and in the case of after acquired
Collateral,  this Agreement will create at the time Borrower first has rights in
such after  acquired  Collateral,  in favor of Bank a valid and perfected  first
priority  security  interest in the Collateral in the United States securing the
payment and performance of the obligations evidenced by the Revolving Promissory
Note dated  August 25,  1999,  executed by Borrower in favor of Bank 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
necessary to perfect the security  interests and assignment  created  hereunder,
and the  filing of a  financing  statement  (Form  UCC-1) 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 Borrower of the security  interest
granted hereby or for the  execution,  delivery or performance of this Agreement
by Borrower in the U.S. or (ii) for the  perfection  in the United States or the
exercise by Bank of its rights and remedies hereunder;

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                  (j) All information  heretofore,  herein or hereafter supplied
to Lender by or on behalf of Borrower with respect to the Collateral is accurate
and complete in all material respects.

                  (k)  Borrower  shall not enter into any  agreement  that would
materially impair or conflict with Borrower's obligations hereunder without Bank
's prior written  consent,  which consent  shall not be  unreasonably  withheld.
Borrower  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  Borrower's  rights and  interests  in any
property  included  within the definition of the 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,  and except  that  Borrower  shall not be  prohibited  from  granting
exclusive  and   non-exclusive   licenses,   or  entering  into   marketing  and
distribution agreements in the normal course of its business.

                  (l) Upon any executive  officer of Borrower  obtaining  actual
knowledge thereof,  Borrower will promptly notify Lender in writing of any event
that materially  adversely  affects the aggregate  value of all Collateral,  the
ability of Borrower to dispose of a material  amount of Collateral or the rights
and  remedies  of Bank in  relation  thereto,  including  the levy of any  legal
process against a material amount of the Collateral.

         4. Bank's Rights. Bank shall have the right, but not the obligation, to
take, at Borrower's  sole expense,  any actions that Borrower is required  under
this  Agreement to take but which  Borrower  fails to take,  after  fifteen (15)
days' notice to Borrower.  Borrower  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. Borrower hereby grants to Bank and its employees,
representatives  and agents  the right to visit,  during  reasonable  hours upon
prior  reasonable  written  notice to  Borrower,  any of  Borrower'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
Collateral,  and to inspect the products and quality  control  records  relating
thereto upon  reasonable  written  notice to Borrower,  provided  that unless an
Event of Default has occurred and is continuing, such inspections shall occur no
more frequently than once every six calendar months.

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         6.       Further Assurances; Attorney in Fact.

                  (a) On a continuing basis, Borrower 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  Trademark  Office and the 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 and  Trademarks  and  otherwise  to carry out the intent and purposes of
this  Agreement,  or for assuring and confirming to Bank the grant or perfection
of a security interest in all Collateral.

                  (b) Borrower  hereby  irrevocably  appoints Bank as Borrower's
attorney-in-fact,  with full authority in the place and stead of Borrower and in
the name of Borrower, from time to time in Bank's discretion, to take any action
and to execute any  instrument  which Bank may deem  necessary  or  advisable to
accomplish the purposes of this Agreement, including:

                           (i) To modify, in its sole discretion, this Agreement
without first obtaining Borrower's approval of or signature to such modification
by amending  Exhibit A, Exhibit B and Exhibit C,  thereof,  as  appropriate,  to
include reference to any right, title or interest in any Copyrights,  Patents or
Trademarks  acquired by  Borrower  after the  execution  hereof or to delete any
reference  to any  right,  title  or  interest  in any  Copyrights,  Patents  or
Trademarks  in which  Borrower  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 Collateral without the signature of Borrower where permitted by law.

         7. Events of Default.  The  occurrence  of any of the  following  shall
constitute an Event of Default under this Agreement:

                  (a) An Event of Default occurs under the Loan Agreement; or

                  (b)  Borrower  breaches  any  warranty  or  agreement  made by
Borrower  in this  Agreement  and,  as to any  breach  that is  capable of cure,
Borrower  fails to cure such breach  within five (5) days of the  occurrence  of
such breach.

         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  Borrower  to  assemble  the  Collateral  and any  tangible
property in which Bank has a security  interest and to make it available to Bank
at a place  reasonably  designated  by Lender.  Bank shall have a  nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Bank to exercise its rights and

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remedies  upon the  occurrence  of an Event of  Default.  Borrower  will pay any
expenses (including  reasonable  attorneys' 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  Collateral.  All of Bank's
rights and remedies with respect to the Collateral shall be cumulative.

         9. Indemnity.  Borrower  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 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 Borrower,  whether under this 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 Borrower shall completely satisfy all
of the obligations secured hereunder, Bank shall execute and deliver to Borrower
all deeds,  assignments  and other  instruments as may be necessary or proper to
revest in Borrower 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  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  Agreement  may be  amended  only  by a  written
instrument signed by both parties hereto.

         14.  Counterparts.  This  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. California Law and Jurisdiction;  Jury Waiver. This Agreement shall
be governed by the laws of the State of California, without regard for choice of
law provisions.  Borrower and Bank consent to the exclusive  jurisdiction of any
state or federal court located in Santa Clara County,  California.  Borrower AND
Bank EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THE LOAN AGREEMENT,  THIS AGREEMENT,  OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

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         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on
the day and year first above written.


Address of Borrower:                    Borrower:

1370 Dell Avenue                        Videonics, Inc.
Campbell, CA 95008

Attn: Gary Williams                     By: /s/ Gary Williams
                                            -----------------

Title:


Address of Lender:                      Bank:

Three Palo Alto Square, Suite 150       Venture Banking Group, a division of
Palo Alto, CA  94306                    Cupertino National Bank

Attn:  Nan Walton                       By: /s/ Jason Hartmann
                                            ------------------

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                                    EXHIBIT A

                                   Copyrights


                                        Registration/             Registration/
                                        Application               Application
Description                                Number                     Date
-----------                                ------                     ----

<PAGE>

                                    EXHIBIT B

                                     Patents


                                        Registration/             Registration/
                                        Application               Application
Description                                Number                     Date
-----------                                ------                     ----

<PAGE>

                                    EXHIBIT C

                                   Trademarks


                                        Registration/             Registration/
                                        Application               Application
Description                                Number                     Date
-----------                                ------                     ----