Exhibit 10.5

 

PATENT SECURITY AgREEMENT

THIS PATENT SECURITY AGREEMENT (the "Security Agreement") made as of this 31st
day of March, 2003, by Clinical Data Inc., a Delaware corporation ("Borrower")
in favor of LaSalle Business Credit, LLC with an office at 135 South LaSalle
Street, Suite 425, Chicago, Illinois 60603 ("Lender"):

W I T N E S S E T H

WHEREAS, Borrower, GPSI Acquisition, Inc., BioClinical Concepts, Inc. and Lender
are parties to a certain Loan and Security Agreement of even date herewith (as
amended, amended and restated or otherwise modified from time to time, the "Loan
Agreement") and other related loan documents of even date herewith
(collectively, with the Loan Agreement, and as each may be amended or otherwise
modified from time to time, the "Financing Agreements"), which Financing
Agreements provide (i) for Lender to, from time to time, extend credit to or for
the account of Borrower and (ii) for the grant by Borrower to Lender of a
security interest in certain of Borrower's assets, including, without
limitation, its patents and patent applications;

NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Borrower agrees as follows:

1. Incorporation of Financing Agreements

. The Financing Agreements and the terms and provisions thereof are hereby
incorporated herein in their entirety by this reference thereto. All terms
capitalized but not otherwise defined herein shall have the same meanings herein
as in the Loan Agreement.

2. Grant and Reaffirmation of Grant of Security Interests

. To secure the complete and timely payment and satisfaction of the Liabilities,
Borrower hereby grants to Lender, and hereby reaffirms its prior grant pursuant
to the Financing Agreements of, a continuing security interest in Borrower's
entire right, title and interest in and to all of its now owned or existing and
hereafter acquired or arising patents and patent applications, including,
without limitation, the inventions and improvements described and claimed
therein, all patentable inventions and those patents and patent applications
listed on Schedule A attached hereto and made a part hereof and all patents and
the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing, and all income, royalties,
damages and payments now or hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and payments for
past, present and future infringements of any of the foregoing and the right to
sue for past, present and future infringements of any of the foregoing (all of
the foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Patents").

 

 

3. Warranties and Representations

. Borrower warrants and represents to Lender that:

> > (i) no Patent has been adjudged invalid or unenforceable by a court of
> > competent jurisdiction nor has any such Patent been cancelled, in whole or
> > in part and each such Patent is presently subsisting;
> > 
> > (ii) Borrower is the sole and exclusive owner of the entire and unencumbered
> > right, title and interest in and to each Patent, free and clear of any
> > liens, charges and encumbrances, including without limitation, shop rights
> > and covenants by Borrower not to sue third persons;
> > 
> > (iii) Borrower has no notice of any suits or actions commenced or threatened
> > with reference to any Patent; and
> > 
> > (iv) Borrower has the unqualified right to execute and deliver this Security
> > Agreement and perform its terms.

4. Restrictions on Future Agreements

. Borrower agrees that until Borrower's Liabilities shall have been satisfied in
full and the Financing Agreements shall have been terminated, Borrower shall
not, without the prior written consent of Lender, sell or assign its interest in
any Patent or enter into any other agreement with respect to any Patent which
would affect the validity or enforcement of the rights transferred to Lender
under this Security Agreement.

5. New Patents

. Borrower represents and warrants that, based on a diligent investigation by
Borrower, the Patents listed on Schedule A constitute all of the federally
registered Patents and Patent applications now owned by Borrower. If, before
Borrower's Liabilities shall have been satisfied in full or before the Financing
Agreements have been terminated, Borrower shall (i) become aware of any existing
Patents of which Borrower has not previously informed Lender, (ii) obtain rights
to any new patentable inventions or Patents, or (iii) become entitled to the
benefit of any Patents, which benefit is not in existence on the date hereof,
the provisions of this Security Agreement above shall automatically apply
thereto and Borrower shall give to Lender prompt written notice thereof.
Borrower hereby authorizes Lender to modify this Security Agreement by amending
Schedule A to include any such Patents.

6. Royalties; Terms

. The term of this Security Agreement shall extend until the earlier of (i) the
expiration of each of the Patents, and (ii) the payment in full of Borrower's
Liabilities and the termination of the Financing Agreements. Borrower agrees
that upon the occurrence of an Event of Default, the use by Lender of all
Patents shall be without any liability for royalties or other related charges
from Lender to Borrower.

7. Release of Security Interest

. This Security Agreement is made for collateral purposes only. Upon payment in
full of Borrower's Liabilities and termination of the Financing Agreements,
Lender shall take such actions as may be necessary or proper to terminate the
security interests created hereby and pursuant to the Financing Agreements

8. Expenses

. All expenses incurred in connection with the performance of any of the
agreements set forth herein shall be borne by Borrower. All fees, costs and
expenses, of whatever kind or nature, including reasonable attorneys' fees and
legal expenses, incurred by Lender in connection with the filing or recording of
any documents (including all taxes in connection therewith) in public offices,
the payment or discharge of any taxes, reasonable counsel fees, maintenance
fees, encumbrances or otherwise in protecting, maintaining or preserving the
Patents or in defending or prosecuting any actions or proceedings arising out of
or related to the Patents shall be borne by and paid by Borrower and until paid
shall constitute Liabilities.

9. Duties of Borrower

. Borrower shall have the duty (i) to file and prosecute diligently any patent
applications pending as of the date hereof or hereafter until Borrower's
Liabilities shall have been paid in full and the Financing Agreements have been
terminated, (ii) to make application on unpatented but patentable inventions, as
commercially reasonable, (iii) to preserve and maintain all rights in the
Patents, as commercially reasonable and (iv) to ensure that the Patents are and
remain enforceable, as commercially reasonable. Any expenses incurred in
connection with Borrower's obligations under this Section 9 shall be borne by
Borrower.

10. Lender's Right to Sue

. After an Event of Default, Lender shall have the right, but shall in no way be
obligated, to bring suit in its own name to enforce the Patents and, if Lender
shall commence any such suit, Borrower shall, at the request of Lender, do any
and all lawful acts and execute any and all proper documents required by Lender
in aid of such enforcement and Borrower shall promptly, upon demand, reimburse
and indemnify Lender for all costs and expenses incurred by Lender in the
exercise of its rights under this Section 10.

11. Waivers

. No course of dealing between Borrower and Lender, nor any failure to exercise,
nor any delay in exercising, on the part of Lender, any right, power or
privilege hereunder or under the Financing Agreements shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.

12. Severability

. The provisions of this Security Agreement are severable, and if any clause or
provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Security Agreement in any jurisdiction.

13. Modification

. This Security Agreement cannot be altered, amended or modified in any way,
except as specifically provided in Section 5 hereof or by a writing signed by
the parties hereto.

14. Cumulative Remedies; Power of Attorney; Effect on Financing Agreements

. All of Lender's rights and remedies with respect to the Patents, whether
established hereby or by the Financing Agreements, or by any other agreements or
by law shall be cumulative and may be exercised singularly or concurrently.
Borrower hereby authorizes Lender upon the occurrence of an Event of Default, to
make, constitute and appoint any officer or agent of Lender as Lender may
select, in its sole discretion, as Borrower's true and lawful attorney-in-fact,
with power to (i) endorse Borrower's name on all applications, documents, papers
and instruments necessary or desirable for Lender in the use of the Patents or
(ii) take any other actions with respect to the Patents as Lender deems to be in
the best interest of Lender, or (iii) grant or issue any exclusive or
non-exclusive license under the Patents to anyone, or (iv) assign, pledge,
convey or otherwise transfer title in or dispose of the Patents to anyone.
Borrower hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney shall be irrevocable until
Borrower's Liabilities shall have been paid in full and the Financing Agreements
have been terminated. Borrower acknowledges and agrees that this Security
Agreement is not intended to limit or restrict in any way the rights and
remedies of Lender under the Financing Agreements but rather is intended to
facilitate the exercise of such rights and remedies. Lender shall have, in
addition to all other rights and remedies given it by the terms of this Security
Agreement and the Financing Agreements, all rights and remedies allowed by law
and the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in Illinois.

15. Binding Effect; Benefits

. This Security Agreement shall be binding upon Borrower and its respective
successors and assigns, and shall inure to the benefit of Lender, its
successors, nominees and assigns.

16. Governing Law

. This Security Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois and applicable federal law.

17. Headings

. Paragraph headings used herein are for convenience only and shall not modify
the provisions which they precede.

18. Further Assurances

. Borrower agrees to execute and deliver such further agreements, instruments
and documents, and to perform such further acts, as Lender shall reasonably
request from time to time in order to carry out the purpose of this Security
Agreement and agreements set forth herein.

19. Survival of Representations

. All representations and warranties of Borrower contained in this Security
Agreement shall survive the execution and delivery of this Security Agreement
and shall be remade on the date of each borrowing under the Financing
Agreements.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

IN WITNESS WHEREOF, Borrower has duly executed this Security Agreement as of the
date first written above.

CLINICAL DATA INC.

 

By
Its

Agreed and Accepted

As of the Date First Written Above

By LASALLE BUSINESS CREDIT, LLC
Its____________________________

 

SCHEDULE A

PATENTS

Patent Description U.S. Patent No. Issue Date Sample Filtration Separation and
Dispensing Device 5,000,922 March 19, 1991 Ion-Selective Electrodes 5,013,421
May 7, 1991 Sample Filtration, Separation

and Dispensing Device

5,112,490 May 12, 1991 Random access chemistry analyzer 4,942,017 July 17, 1990
Chemistry analyzer 5,271,899 December 21, 1993

PATENT APPLICATIONS

Patent Application Description U.S. Patent Application No. Date Applied

 

im(m:Dept\lbci\legal\Fenton Group\lbci-llc\Clinical Data\loandocs\patent
security agmt.doc) Last printed 04/29/03 4:24 PM