EXHIBIT 1.2(b)
IP SECURITY AGREEMENT
THIS IP SECURITY AGREEMENT (the "Security Agreement") is made as of November 3,
2000 (the "Closing Date") by and between SELECT THERAPEUTICS INC., a Delaware
corporation ("Select" or "Secured Party"), SIERRA DIAGNOSTICS, INC., a
California corporation ("Sierra" or "Grantor"), and SIERRA DIAGNOSTICS, LLC, a
California limited liability company ("Sierra LLC").
RECITALS
A. Sierra LLC and Select have entered into a Stock Purchase Agreement of
even date herewith whereby Sierra LLC is acquiring all of the outstanding shares
of capital stock of Sierra from Select (the "Stock Purchase Agreement").
B. Pursuant to the terms of the Stock Purchase Agreement, Sierra LLC has
delivered to Select an Acquisition Promissory Note dated as of October 1, 2000
(the "Acquisition Promissory Note").
C. To secure payment of Sierra LLC's obligations to Select under the
Acquisition Promissory Note, Sierra LLC is causing Sierra to grant to Select a
security interest in certain patents held by Sierra and rights related thereto
pursuant to the terms of this Security Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Grant of Security Interest. Sierra hereby grants to Select a security
interest in and lien (the "Lien") upon the Collateral (defined below) to secure
the timely payment of all amounts owing by Sierra LLC to Select and performance
of its obligations under the terms of the Acquisition Promissory Note
(hereinafter collectively called the "Obligations"). The Lien is and, except as
otherwise provided in Section 11, shall be prior to all liens on the Collateral
other than any future liens imposed by law relating to judgments, taxes or
assessments.
2. Collateral Defined. As used in this Security Agreement, the term "Collateral"
shall mean the following patents and patent applications:
Methods and reagents for Preservation of DNA in bodily Fluids
Inventor: Tony Baker
Patent Application Serial Number 09/185,402 United States Patent
Application Number 98962024.0-2116 European Patent Office (the "Scheduled
Patent");
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together with (i) all letters patent of the United States or any other country,
all registrations and recordings thereof, and all applications for letters
patent of the United States or any other country, for the Scheduled Patent,
including without limitation, registrations, recordings and applications
therefor in the United States Patent and Trademark Office or comparable office
of any other country, (ii) all reissues, continuations, divisions,
continuations-in-part or extensions thereof, (iii) the rights of Sierra thereof
in respect of the foregoing and the inventions disclosed therein and all
improvements thereto, including the right to prevent others from making, using
or selling the inventions disclosed therein, and (iv) all trade secrets,
know-how, confidential information, proprietary information and unpatented
inventions (whether or not patentable) related to the inventions claimed in the
Scheduled Patent and improvements thereto; all license agreements related to any
of the foregoing and income or rights to receive income therefrom; the right to
sue for all past, pres-ent and future infringement of the foregoing; and
pro-ceeds of the foregoing, including without limitation all goods, accounts,
contract rights, documents, chat-tel paper, deposit accounts, instruments, cash
and general intangibles arising from the sale, lease or other disposition of the
aforesaid, and all payments under insurance (whether or not any Grantor is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or infringement of or otherwise with respect to the
aforesaid or such proceeds thereof (hereinafter collectively called the
"Intellectual Property"); and all proceeds and products of all of the above
(hereinafter collectively called the "Proceeds").
3. Perfection of Security Interest. Upon the request of the Secured Party and to
the extent the Secured Party deems it necessary or desirable in order to perfect
the Lien with respect to Collateral, the Grantor shall (i) join the Se-cured
Party in executing one or more assignments and/or financing statements and all
necessary continuation state-ments thereto pursuant to the applicable Uniform
Commercial Code as in then effect and such other states in which a part of the
Collateral may reside or such other notices appropriate under applicable law in
form satisfacto-ry to the Secured Party and its counsel and (ii) pay all
reasonable filing or recording costs with respect thereto. The Secured Party
shall be authorized to file this Security Agreement, or other documents
necessary to perfect the secu-rity interest granted hereby in the Grantor's
patents and patent applications in the United States Patent Office.
4. Maintenance and Protection of Collateral. The Grantor will not do, or suffer
to be done, any acts or things whereby the security interest and Lien created
hereby might or could be impaired; provided that (a) so long as no Default Event
(defined below) has occurred and is continuing, Grantor may retain possession
of, use, and deal in the ordinary course of its business with the Collateral,
(b) Grantor shall in no event be liable for breach of this Section 4 if the
breach arises as a result of or in connection with Select's breach of Select's
obligation under Section 11 of this Security Agreement, and (c) Grantor shall in
no event be liable for breach of this Section 4 as a result of any failure by
Grantor to perform or undertake actions which are or which reasonably could
constitute Patent Work (as that term is defined in Section 5.2(a) of the Stock
Purchase Agreement).
5. Grantor's Warranties and Representations. Grantor warrants, covenants and
agrees as follows:
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(a) To pay and perform all of the obliga-tions secured by this
Agreement according to their terms, and
(b) To defend the title to Collateral held by it against all persons
and against all claims and demands whatsoever; provided that Grantor shall
in no event be liable for breach of this Section 5(b) as a result of any
failure by Grantor to perform or undertake actions which are or which
reasonably could constitute Patent Work and for which Patent Work Advances
(as defined in Section 5.2(b) of the Stock Purchase Agreement) have not
been made by Select.
(c) Assuming the accuracy of warranties and representations made by
Select in Article 2 of the Stock Purchase Agreement, the Collateral, except
for the security interest granted hereby, is lawfully owned by Grantor and
is now free and clear of any and all liens and security interests, claims,
charges, encumbrances, taxes and assessments, except as may be referred to
herein.
6. Further Assurances. Sierra agrees promptly to execute, acknowledge and
deliver all such further instruments and documents and take all such actions as
Select may from time to time reasonably request in order to perfect and protect
the security interest granted hereby or to enable Select to exercise and enforce
its rights and remedies hereunder with respect to any Collateral, including,
without limitation, the filing of any financing statements, continuation
statement or other similar documents in connection herewith (including filings
with the United States Patent and Trademark Office).
7. Remedies. Upon the occurrence of any Default Event (as that term is defined
in the Acquisition Promissory Note), Select shall have all the default rights
and remedies of a secured party under the United States Patent Act and under the
New York Uniform Commercial Code and other applicable law, including, without
limitation, the right take title to the Collateral and to sell or otherwise
dispose of the Collateral or any part thereof, for cash, on credit or otherwise,
with or without representations or warranties, and upon such terms as shall be
acceptable to Select. Grantor agrees to execute and deliver all such instruments
of assignment and conveyance and other documentation as may be reasonably
requested by the Secured Party to vest title in and to the Collateral in the
Secured Party or, if such Collater-al is sold as contemplated by the immediately
preceding sentence, in the purchaser or purchasers thereof.
Upon the occurrence a Default Event, the Secured Party's reasonable
attorneys' fees and disbursements for pursuing, searching for, receiving,
taking, keeping, storing, advertising, and selling the Collateral shall be
chargeable to the Grantor.
The net cash proceeds resulting from the liquidation, sale or other
disposition of the Collateral shall be applied first to the expenses (including
all attorneys' fees) of retaking, holding, processing and preparing for sale,
selling, collecting, liquidating and the like, and then to the satisfaction of
the Obligations secured hereby. Grantor and Sierra LLC jointly and severally
shall be liable to Select and shall pay to Select on demand any deficiency which
may remain after such sale, disposition, collection or liquidation of
Collateral.
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8. Cumulative Rights. The rights, powers and remedies of Select under this
Security Agreement shall be in addition to all rights, powers and remedies given
to Select under any statute or rule of law or any other agreement, all of which
rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently.
9. Waiver. Any forbearance, failure or delay by Select in exercising any right,
power or remedy shall not preclude the further exercise thereof, and every
right, power or remedy of Select shall continue in full force and effect until
such right, power or remedy is specifically waived in a writing executed by
Select.
10. Termination. This Security Agreement and the security interest created
hereby shall terminate on payment in full of all Obligations, at which time
Select shall execute and deliver to Sierra all Uniform Commercial Code
termination statements, United States Patent and Trademark Office filings and
similar documents which Sierra or Sierra LLC shall reasonably request to
evidence such termination.
11. Subordination. Secured Party agrees that, upon request of Sierra or Sierra
LLC, it shall execute a subordination agreement on commercially reasonable terms
whereby the Lien granted by this Security Agreement in and to all Ancillary
Collateral (defined below) is subordinated to any lien or other security
interest that Sierra or Sierra LLC may grant to an institutional lender in
conjunction with working capital financing that may be provided by such
institutional lender to Sierra or Sierra LLC. The term "Ancillary Collateral"
shall mean all Collateral other than the Scheduled Patent itself and the
Collateral related thereto that is listed in clauses (i) and (ii) of Section 2
of this Security Agreement.
12. Miscellaneous.
12.1. Notices. All notices, requests, demands and other communications
under this Security Agreement shall be in writing and shall be deemed given
when delivered personally or by reputable overnight courier or mailed by
registered or certified mail, return receipt requested, to the parties at
the following addresses (or to such other address as a party may have
specified by notice to the other parties pursuant to this provision):
(a) if to Sierra or Sierra LLC, at:
Sierra Diagnostics, LLC
21109 Longeway, #C
Sonora, California 95370
Attn: Mr. Tony K. Baker
with a copy to:
Jeffrey B. Detwiler, Esq.
Dudnick Detwiler, Rivin & Stikker, LLP
351 California Street, 15th Floor
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San Francisco, California 94104
(b) if to Select, at:
Select Therapeutics Inc.
50 O'Connor Street - Suite 300
Ottawa, Ontario KlP 6L2
CANADA
Attn: Mr. Robert Bender, Chairman
with a copy to:
Richard G. Klein, Esq.
Hofheimer Gartlir & Gross, LLP
530 Fifth Avenue
New York, New York 10036
12.2. Assignment. This Security Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
party. Notwithstanding the foregoing, and as contemplated by Section 5.4 of
the Stock Purchase Agreement, (i) Sierra LLC anticipates liquidation of
Sierra following the Closing Date (as that term is defined in the Stock
Purchase Agreement), (ii) Select has consented to, and agreed to cooperate
to the extent reasonably required to effect, the assignment of Sierra's
assets to Sierra LLC (including the Scheduled Patent), and the assumption
by Sierra LLC of Sierra's contractual obligations, including any
obligations of Sierra to Select created under or contemplated by this
Security Agreement.
12.3. Entire Agreement. This Security Agreement contains, and is
intended as, a complete statement of all the terms of the agreements among
the parties with respect to the matters provided for, supersedes any
previous agreements and understanding among the parties with respect to
those matters, and cannot be changed or terminated except by a writing
signed by the parties.
12.4. Governing Law; Consent to Jurisdiction and Service of Process.
This Security Agreement shall be governed by and construed in accordance
with the substantive laws of the State of New York applicable to contracts
entered into and to be performed entirely within New York. Any legal
action, suit or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby may be instituted in the federal
courts of the State of New York and each party waives any objection which
such party may now or hereafter have to the laying of venue of any such
action, suit or proceeding and irrevocably submits to the jurisdiction of
any such court in any such action, suit or proceeding. Any and all service
of process and any other notice in any such action, suit or proceeding
shall be effective against any party if given by registered or certified
mail, return re-ceipt requested, or by any other means of mail that
requires a signed receipt, postage prepaid, mailed to such party as herein
provided. If for any reason such service of process by mail is ineffective,
then each party shall be deemed to have appointed its
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attorney as designated in Section 12.1 as such party's authorized agent to
accept and acknowl-edge on such party's behalf service of any and all
process which may be served in any such action, suit or proceeding. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction other than
New York.
12.5. Interpretation. The headings contained in this Security
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Security Agreement. Whenever the
words "include," "includes" or "including" are used in this Security
Agreement, they shall be deemed to be followed by the words "without
limitation."
12.6. Facsimile/Counterparts. This Security Agreement may be executed
by facsimile, and may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
12.7. Parties in Interest. This Security Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns, and nothing in this Security
Agreement, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
12.8. Severability. Any term or provision of this Security Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms or provisions of this Security Agreement in any other jurisdiction.
If any provision of this Security Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
12.9. Attorneys' Fees. In the event of a dispute arising under this
Security Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and court costs, with any such fees and costs
incurred in enforcing any judgement or award and upon appeals recoverable
as a separate item of costs.
12.10. Further Assurances. Each party agrees to cooperate fully with
the other parties and to execute such further instructions, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the
transactions described herein and contemplated hereby and to carry into
effect the intents and purposes of this Security Agreement.
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IN WITNESS WHEREOF, the parties have executed this Security Agreement as of
the date first above written.
SELECT THERAPEUTICS INC. SIERRA DIAGNOSTICS, INC.
By: By:
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Robert Bender, President Tony K. Baker, President
SIERRA DIAGNOSTICS, LLC
By:
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Tony K. Baker, Manager
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