SECURITY AGREEMENT
This Security Agreement ("Security Agreement") is made as
of this 1 day of December, 2000, by and between Idaho Technical,
Inc., a Nevada Corporation ("Grantor") and Biophan, LLC, a New
York Limited Liability Company ("Secured Party").
WHEREAS, Grantor and Secured Party are parties to that
certain transfer agreement, dated of even date herewith (the
"Transfer Agreement") and an assignment also dated of even date
herewith (the Assignment), which collectively provides for the
grant by Grantor to Secured Party of a security interest in
certain inventions comprising certain new and useful
improvements in MRI-Resistant Cardiac Pacemakers that are partly
described:
in a Provisional Patent Application, the disclosure
of which was filed in the United States Patent and
Trademark Office on April 20, 2000, and accorded
Application No. 60/198,631 with Attorney Docket No.
T31-003/T31-005,
that are partly described in a disclosure submitted
to Elman & Associates and assigned Attorney Docket
No. T31-010; and
related technologies for suppressing MRI energies and
radio frequency energy from negative effects on
pacemakers and certain other implantable and external
medical devices and diagnostic systems ( collectively
the "Patents").
WHEREAS, Secured Party has required, as a condition to
executing the Assignment and under the Transfer Agreement, that
Grantor execute and deliver to Secured Party this Security
Agreement; and
WHEREAS, Grantor and Secured Party desire to secure the
performance by Grantor of all of its obligations to Secured
Party under the Transfer Agreement (collectively, the
"Obligations") by a pledge of the property described in Section
1 below all in accordance with the terms and conditions of this
Security Agreement and the Transfer Agreement.
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Grantor agrees as follows:
1. Security Interest. To secure the complete and timely
satisfaction of the Obligations, Grantor hereby grants,
conveys, and assigns to Secured Party all of Grantor's right,
title, and interest in and to the following (collectively, the
"Collateral"):
1.1 Patents. The Patents and patent applications listed
above together with:
1.1.1. The inventions, improvements, claims, and
shop rights associated therewith.
1.1.2. The reissues, divisions, continuations,
renewals, extensions, continuations-in-part,
and improvements thereof.
1.1.3. All income, royalties, damages, and
payments now and hereafter due and/or payable
under and with respect thereto, including,
without limitation, damages and payments for
past or future infringements thereof.
1.1.4. All rights corresponding thereto,
including, without limitation, the right to sue
and recover for past, present and future
infringements thereof.
1.1.5. All other proceeds and products of the
foregoing, including, without limitation, any
rights pursuant to its agreements with any other
party relating thereto.
2. Scope. The assignment of the Collateral herein creates a
first-priority mortgage and security interest having priority
over all other security interests. Secured Party's rights to the
Collateral will be worldwide and will not require the payment of
any royalties or other related charges by Secured Party to
Grantor or any other person. The Collateral includes Patents now
owned by Grantor, those Patents currently applied for and all
Patents hereafter applied for or filed by Grantor or hereafter
granted or otherwise arising in Grantor's interest.
3. Covenants. During the Term, except as may otherwise be
provided in the Transfer Agreement and except with the prior
written consent of Secured Party, Grantor:
3.1. Will not enter into any agreement inconsistent with
Grantor's obligations under this Security Agreement.
3.2. Will, to the extent possible, continue to use proper
statutory notice in connection with its use of the
Patents.
3.3. Will use commercially reasonable efforts to discover,
preserve and protect its intellectual property; will
file applications for Patents with respect to such
intellectual property when commercially reasonable to
do so, giving due consideration to the economic and
strategic value and opinion of counsel as to
desirability and feasibility of such application and
will prosecute diligently all present and future
applications for Patents.
3.4. Will not abandon any pending Patent application.
3.5. Will promptly pay when due all taxes and assessments
(including patent maintenance fees) upon the
Collateral or for its use.
3.6. Will preserve, maintain, and enforce against
infringement, dilution and improper use all Patents;
and will not, directly or indirectly, take any
action, or fail to take any action which would impair
the validity or enforceability of any of the Patents.
3.7. Will not create, incur or suffer or permit to be
created or incurred or to exist any lien or security
interest upon or against any of the Collateral that
is prior in right to that of Secured Party.
3.8. Will not merge or consolidate with or into any
entity.
3.9. Will not change its name or conduct its business
under any other trade name.
4. License.
4.1. Patents. Secured Party hereby grants to Grantor the
royalty-free, exclusive, nontransferable right and
license to make, have made, use, and sell the
inventions disclosed and claimed in the Patents
solely for Grantor's own benefit.
4.2. Limitations. The licenses granted under this Section
4 will terminate at the end of the Term or sooner
upon an Event of Default (as defined below). Except
with the prior written consent of Secured Party,
Grantor will not sell, assign its interest in, or
grant any sublicense under, any of the licenses
granted under this Section 4.
5. Term. The period of effectiveness of this Security
Agreement (the "Term") will begin on the date first written
above and will remain in full force and effect until the
complete satisfaction of the Obligations.
6. Right to Inspect. Secured Party has the right, at any
reasonable time and from time to time, to inspect Grantor's
premises and to examine Grantor's books, records, and operations
which are relevant to Grantor's intellectual property generally,
to the Patents and to the enforcement of the provisions of this
Security Agreement.
7. Termination. This Security Agreement is made for collateral
purposes only. At the end of the Term, all of Secured Party's
right, title, and interest in and to the Collateral will
automatically revert to Grantor. In such event, Secured Party
will execute and deliver to Grantor all termination statements
and other instruments which are required to terminate Secured
Party's security interest and to vest in Grantor all right,
title, and interest in and to the Collateral, subject to any
prior enforcement by Secured Party of its security interest as
provided under this Security Agreement.
8. Expenses. Each party will bear its own expenses of
complying with the terms of this Security Agreement. Such
expenses of compliance for Grantor will include, without
limitation, the expenses of maintaining the Collateral as
provided in Section 3. Such expenses of Compliance for Secured
Party will include, without limitation, the expenses of
perfecting the security interest created by this Security
Agreement.
9. Events of Default. An "Event of Default" will occur under
this Security Agreement upon the happening of any of the
following events:
9.1. The occurrence of an event of default under the
Transfer Agreement.
9.2. A default in the performance of the Obligations or
any provision of this Security Agreement.
9.3. The Grantor, or its Parent (Parent shall mean any
individual or entity which owns or controls, itself
or in conjunction with an affiliate or other entity
under its control, by contract or otherwise, at least
fifty percent of the outstanding shares of the
Grantor.) commences any voluntary proceeding under
any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, receivership,
dissolution, or liquidation law or statute, of any
jurisdiction, whether now or subsequently in effect;
or Grantor or its Parent is adjudicated insolvent or
bankrupt by a court of competent jurisdiction; or
Grantor or its Parent petitions or applies for,
acquiesces in, or consents to, the appointment of any
receiver or trustee of Grantor or its Parent for all
or substantially all of its property or assets; or
the Grantor or its Parent makes an assignment for the
benefit of its creditors; or Grantor or its Parent
admits in writing its inability to pay its debts as
they mature.
9.4. There is commenced against Grantor or its Parent any
proceeding relating to Grantor or its Parent any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, receivership, dissolution, or
liquidation law or statute, of any jurisdiction,
whether now or subsequently in effect, and the
proceeding remains undismissed for a period of thirty
(30) days or Grantor or its Parent by an act
indicates its consent to, approval of, or
acquiescence in, the proceeding; or a receiver or
trustee is appointed for Grantor or its Parent for
all or substantially all of its property or assets,
and the receivership or trusteeship remains
undischarged for a period of thirty (30) days; or a
warrant of attachment, execution or similar process
is issued against any substantial part of the
property or assets of Grantor or its Parent, and the
warrant or similar process is not dismissed or bonded
within thirty (30) days after the levy.
9.5. The Grantor's failure to account, to the Secured
Party's satisfaction, at such time as the Secured
Party may reasonably require, for any of the
Collateral, or proceeds thereof.
9.6. The institution of any suit affecting the Grantor
deemed by the Secured Party to affect adversely its
interest hereunder in the Collateral.
10. Remedies. Upon the occurrence of an Event of Default, so
long as such Event of Default has not been waived, and after
written notice from Secured Party to Grantor of Secured Party's
intention to enforce its rights and claims in the Collateral,
all of the Grantor's rights in and to the Collateral will
automatically revert to Secured Party. Thereafter, Secured
Party shall be authorized and empowered (1) to take any or all
of the Collateral as Secured Party's property (a "Taking"); (2)
to cause any or all of the Collateral to be sold (a "Sale"); or
(3) to bring suit and take any other action in its own name to
enforce or otherwise protect, preserve, or realize upon the
Collateral (a "Suit"). Grantor will, at the request of Secured
Party, and in connection with any Taking, Sale, Suit or any
other action taken to enforce Secured Party's rights in the
Collateral (1) do any and all lawful acts and execute any and
all instruments reasonably required by Secured Party; and (2)
reimburse and indemnify Secured Party for all reasonable
expenses incurred by Secured Party.
11. Power of Attorney.
11.1 Authorization. Grantor hereby authorizes Secured
Party to:
11.1.1. Make, constitute, and appoint any
representative of Secured Party as Secured Party may
select, in its sole discretion, as Grantor's true and
lawful attorney-in-fact, with power to endorse
Grantor's name on all applications, documents,
papers, and instruments necessary or desirable for
Secured Party to give effect to the provisions of
this Security Agreement and the intent of the parties
hereto.
11.1.2. Take any other actions with respect to the
Collateral, consistent with this Security Agreement,
as Secured Party deems in the best interest of
Secured Party.
11.1.3. Following the occurrence of an Event of
Default, grant or issue any exclusive or non-
exclusive license under the Patents to any person.
11.1.4. Following the occurrence of an Event of
Default, subject to the terms of any existing license
agreement, assign, pledge, convey, or otherwise
transfer title in or dispose of the Collateral to any
person.
11.2 Ratification. Grantor hereby ratifies all that
Secured Party, acting as Grantor's attorney-in-fact
will lawfully do or cause to be done by virtue
hereof. This power of attorney will be irrevocable
during the Term.
12. Cumulative Remedies. All of Secured Party's rights and
remedies with respect to the Collateral, whether established
hereby or by the Transfer Agreement, or by any other agreements
or by law, will be cumulative and may be exercised individually
or concurrently. Secured Party will have, in addition to all
other rights and remedies given it by the terms of this Security
Agreement, all rights and remedies allowed by law and the rights
and remedies of a secured party under the Uniform Commercial
Code as enacted in any jurisdiction in which the Collateral may
be used or rights thereto enforced. Grantor acknowledges and
agrees that this Security Agreement is not intended to limit or
restrict in any way the rights and remedies of Secured Party
under the Transfer Agreement but rather is intended to
facilitate the exercise of such rights and remedies.
13. Waivers. No course of dealing between Grantor and Secured
Party and no failure or delay of Secured Party to exercise any
right, power or privilege hereunder will operate as a waiver
thereof. No single or partial exercise of any right, power or
privilege hereunder will preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
14. Severability. The provisions of this Security Agreement are
severable, and if any clause or provision is held invalid or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability will affect only such clause or
provision, or part thereof, in such jurisdiction, and will not
in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Security
Agreement.
15. General. This Security Agreement will inure to the benefit
of and be binding upon Grantor, Secured Party and their
respective successors and assigns. Grantor may not assign its
rights or obligations under this Security Agreement without the
prior written consent of Biophan. No party is liable for its
breach if such breach is due to an event beyond its reasonable
control. All required notices must be in writing. No failure or
delay to enforce a provision will be deemed a waiver thereof.
This Security Agreement is governed by the internal laws of New
York and the parties hereby consent to the jurisdiction of the
state and federal courts located in Monroe County, New York.
This Security Agreement along with the Assignment and Transfer
Agreement are the entire and exclusive set of terms and
conditions for the assignment and disposition of the Collateral
and may only be modified by a writing signed by all parties.
IN WITNESS WHEREOF, the parties have executed this Security
Agreement by their signature or the signature of their duly
authorized representatives below.
IDAHO TECHNICAL, INC.
By ______________________________________________
______________________, President
BIOPHAN, LLC
By ______________________________________________
Michael L. Weiner, CEO
