Exhibit 10.5
 
PATENT SECURITY AGREEMENT
 
This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
10th day of December, 2008, among the Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), and DMRJ GROUP, LLC (together with its successors, the “Secured
Party”).
 
W I T N E S S E T H:
 
 
WHEREAS, the Secured Party is the holder of that certain Senior Secured
Convertible Promissory Note bearing even date herewith in the principal amount
of $5,600,000 (together with any and all promissory notes issued by the Company
after the date hereof pursuant to the Purchase Agreement, collectively and each
individually, the “Note”) issued or to be issued by the Implant Sciences
Corporation (“Company”) pursuant to the terms of the Note and Warrant Purchase
Agreement bearing even date herewith (as may be amended, restated, supplemented,
replaced or otherwise modified from time to time, the “Purchase Agreement”) by
and between the Company and the Secured Party, and
 
 
WHEREAS, pursuant to the terms and conditions of the Purchase Agreement, the
Secured Party has agreed to extend a loan to the Company, repayment of which is
evidenced by the Note, and
 
 
WHEREAS, in order to induce the Secured Party to enter into the Note, the
Purchase Agreement and the other Transaction Documents and to induce the Secured
Party to make financial accommodations to the Company as provided for in the
Purchase Agreement, Grantors have executed and delivered to Secured Party that
certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”);
 
 
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Party this Patent Security Agreement;
 
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
 
1. DEFINED TERMS.  All capitalized terms used but not otherwise defined herein
have the meanings given to them in the Security Agreement or the Note or the
Purchase Agreement.
 
2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL.  Each Grantor hereby
unconditionally grants, assigns and pledges to Secured Party a Security Interest
in all of such Grantor’s right, title and interest in and to the following,
whether now owned or hereafter acquired or arising and wherever located
(collectively, the “Patent Collateral”):
 
(a) all of its Patents including those referred to on Schedule I hereto; and
 
(b) all Proceeds of the foregoing.
 

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3. SECURITY FOR OBLIGATIONS.  This Patent Security Agreement and the Security
Interest created hereby secures the payment and performance of the Secured
Obligations, whether now existing or arising hereafter.  Without limiting the
generality of the foregoing, this Patent Security Agreement secures the payment
of all amounts which constitute part of the Secured Obligations and would be
owed by Grantors, or any of them, to Secured Party whether or not they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.
 
4. SECURITY AGREEMENT.  The Security Interest granted pursuant to this Patent
Security Agreement is granted in conjunction with the Security Interest granted
to Secured Party pursuant to the Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Secured Party with
respect to the Security Interest in the Patent Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Patent Security
Agreement and the Security Agreement, the Security Agreement shall control.
 
5. AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. Grantors shall give prompt (and in any event within fifteen (15)
Business Days) notice in writing to Secured Party with respect to any such new
patent rights.  Without limiting Grantors’ obligations under this Section 5,
Grantors hereby authorize Secured Party unilaterally to modify this Agreement by
amending Schedule I to include any such new patent rights of
Grantors.  Notwithstanding the foregoing, no failure to so modify this Patent
Security Agreement or amend Schedule I shall in any way affect, invalidate or
detract from Secured Party’s continuing Security Interest in all Collateral,
whether or not listed on Schedule I.
 
6. TERMINATION AND RELEASE.  Upon indefeasible payment in full in cash of the
Obligations in accordance with the provisions of the Note and the Purchase
Agreement, the Security Interest granted hereby shall terminate and all rights
to the Patent Collateral shall revert to Grantors or any other Person entitled
thereto.  At such time, Secured Party shall execute and deliver, and authorize
the filing of, appropriate termination and release statements or other documents
to terminate and release such Security Interests.
 
7. COUNTERPARTS.  This Patent Security Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.  In proving this Patent Security Agreement or any other Transaction
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought.  Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
 
8. CONSTRUCTION.  Unless the context of this Patent Security Agreement or any
other Transaction Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
“includes” and  “including” are
 
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not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.”  The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Patent Security
Agreement or any other Transaction Document refer to this Patent Security
Agreement or such other Transaction Document, as the case may be, as a whole and
not to any particular provision of this Patent Security Agreement or such other
Transaction Document, as the case may be.  Section, subsection, clause,
schedule, and exhibit references herein are to this Patent Security Agreement
unless otherwise specified.  Any reference in this Patent Security Agreement or
in any other Transaction Document to any agreement, instrument, or document
shall include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein or in the other
Transaction Documents).  Any reference herein or in any other Transaction
Document to the satisfaction or repayment in full of the Obligations shall mean
the repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations.  Any reference herein to any Person shall be
construed to include such Person’s successors and assigns.  Any requirement of a
writing contained herein or in any other Transaction Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
 
9. GOVERNING LAW.  THE VALIDITY OF THIS PATENT SECURITY AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER
TRANSACTION DOCUMENT IN RESPECT OF SUCH OTHER TRANSACTION DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
 

[signature page follows]
 

 
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IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
 

 
IMPLANT SCIENCES CORPORATION
         
By:  /s/ Phillip C. Thomas
 
Name:  Phillip C. Thomas
 
Title:  President                                                                
         
C ACQUISITION CORP.
         
By:  /s/ Phillip C. Thomas
 
Name:  Phillip C. Thomas
 
Title:  President                                                                
         
ACCUREL SYSTEMS INTERNATIONAL CORPORATION
         
By:  /s/ Phillip C. Thomas
 
Name:  Phillip C. Thomas
 
Title:  President                                                                
         
IMX ACQUISITION CORP.
         
By:  /s/ Phillip C. Thomas
 
Name:  Phillip C. Thomas
 
Title:  President                                                                
         
ACCEPTED AND ACKNOWLEDGED BY:
     
DMRJ GROUP, LLC, as Secured Party
         
By:  /s/ D. I.
Small                                                                
 
Name:  Daniel Small
 
Title:  MD                                                                

 
 
 

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SCHEDULE I
 
to
 
PATENT SECURITY AGREEMENT
 
U.S. Patent Registrations and Applications
 

 

 Security Products Patents Issued
 Number
 PCT
 Explosives Detection System
 6,828,795
 
 Cyclone Sampling Nozzle for an Ion Mobility Spectrometer
 6,861,646
   Modified Vortex for an ION Mobility Spectrometer
 6,870,155
   Virtual Wall Gas Sampling for an ION Mobility Spectrometer
 6,888,128
   Flash Vapor Sampling for a Trace Chemical Detector
 7,098,672
   Pulsed Vapor Desorber
 7,244,288
         Security Products Patent Applications      Photoelectric Ion Source
Photocathode Regeneration System
 11/248,603
   Narcotics and Explosives Particle Removal System
 11/258,477
   Long Lifetime Chemical Desorber
 11/492,672
   Trace Chemical Particle Release Nozzle
 11/654,900
   Trace Chemical Sensing
 11/654,394
US07/24385 
 Chemical Calibration Method and System
 12/006,246
   Flash Heating for Tubing
 12/077190
   Pulsed UV Ion Source
 12/151273
   Trace Particle Collection System
 12/152441
US08/06102 
 Real-time Trace Detection by High Field and Low Field Ion Mobility and Mass
Spectrometry
 11/941,939
       

 

 
 
 
 

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