EXHIBIT 10.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made as of the 17th day of May, 2002, by and
between BioSphere Medical, Inc., a Delaware corporation ("Debtor"); and Xxxxx
Brothers Xxxxxxxx & Co., a New York general partnership ("Secured Party").
WITNESSETH:
WHEREAS, Debtor has executed and delivered to Secured Party a Credit
Agreement of even date herewith (as the same may be amended, extended or
restated from time to time, the "Loan Agreement"); and
WHEREAS, pursuant to the Loan Agreement, Debtor has executed and delivered
to Secured Party a Promissory Note of even date herewith in the original
principal amount of up to $5,000,000 (as the same may be amended, extended,
renewed or restated from time to time, the "Note"); and
WHEREAS, Debtor has agreed to enter into this Security Agreement in order
to induce Secured Party, inter alia, to make the loans to be evidenced by the
Note;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. The Security Interests.
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(a) In order (i) to secure the due and punctual payment of the Note; (ii)
to secure the due and punctual payment and performance of all obligations of
Debtor contained herein; (iii) to secure the due and punctual payment and
performance of all indebtedness, obligations and liabilities of Debtor contained
in the Loan Agreement and in all other agreements executed or delivered by
Debtor in connection with or as contemplated by the Loan Agreement; and (iv) to
secure the due and punctual payment and performance of all other indebtedness,
liabilities and obligations of Debtor to Secured Party of every kind and
description, whether direct, indirect or contingent, whether now existing or
hereafter arising or incurred, whether due or to become due, whether otherwise
secured or unsecured and howsoever evidenced, incurred or arising, including,
without limitation, all indebtedness, liabilities and obligations evidenced or
arising pursuant to any promissory note, loan agreement, equipment lease,
conditional sales agreement, consignment agreement, guaranty, overdraft,
bankers' acceptance, forward contract, foreign exchange contract, letter of
credit reimbursement agreement or any other agreement or instrument which may at
any time be executed or issued for Debtor's account or to which Debtor is now or
hereafter may become a party (all of the foregoing are hereinafter collectively
called the "Obligations"), Debtor hereby grants to Secured Party a continuing
security interest in the following described fixtures and personal property,
whether now existing or hereafter arising (hereinafter collectively called the
"Collateral"):
All fixtures and all tangible and intangible personal property of Debtor of
every kind and description and wherever located, in each case whether now owned
or hereafter acquired by Debtor, or in which Debtor may now have or hereafter
acquire an interest, including, without limitation:
(1) all equipment (as such term is defined in the Uniform Commercial
Code [the "UCC"]), machinery and fixtures, including, without limitation,
all processing and manufacturing equipment, machine tools, data processing
and computer equipment, furniture, tools, dies, molds, motor vehicles,
rolling stock, trailers, airplanes, vessels and other equipment of every
kind and description, in each case whether now owned or hereafter acquired
by Debtor, or in which Debtor may now have or hereafter acquire an
interest;
(2) all inventory (as such term is defined in the UCC), including
without limitation, all merchandise, raw materials, work in process, parts,
components, dies, molds, finished goods, supplies and all goods returned to
or repossessed by Debtor, in each case whether now owned or hereafter
acquired by Debtor, or in which Debtor may now have or hereafter acquire an
interest;
(3) all accounts (as such term is defined in the UCC), accounts
receivable, other receivables, evidences of indebtedness, notes, drafts,
acceptances, contract rights, leases, chattel paper and electronic chattel
paper (as such terms are defined in the UCC), commercial tort claims (as
such term is defined in the UCC), and general intangibles (as such term is
defined in the UCC), including, without limitation, all collateral and
security therefor and all supporting obligations (as such term is defined
in the UCC) of every kind and description (including, without limitation,
all guarantees, letters of credit, letter-of-credit rights (as such term is
defined in the UCC), liens and security interests in favor of Debtor), and
all goodwill, going concern value, patents, applications for patents,
trademarks, trade names, service marks, registrations of trademarks and
servicemarks, customer lists, advertising materials, operating manuals,
copyrights, blueprints, designs, engineering drawings and contracts,
proprietary information, product lines, distribution agreements, dealer
contracts, supplier contracts, tax refund claims, licenses, research and
development, and all rights to the payment of money, in each case whether
now owned or hereafter acquired by Debtor, or in which Debtor may now have
or hereafter acquire an interest;
(4) all instruments (as such term is defined in the UCC), documents of
title, policies and certificates of insurance, securities (as such term is
defined in the UCC), securities entitlements (as such term is defined in
the UCC), investment property (as such term is defined in the UCC),
partnership interests, membership interests in limited liability companies,
bank deposits, deposit accounts (as such term is defined in the UCC),
checking accounts, certificates of deposit and cash, in each case whether
now owned or hereafter acquired by Debtor, or in which Debtor may now have
or hereafter acquire an interest, including, without limitation, all right,
title and interest of Debtor in and to its account with Secured Party
entitled BioSphere Medical, Inc., Account Number 0000000, and all money,
investment property and financial assets now or hereafter held in such
account;
(5) all accessions, additions and improvements to, all substitutions
for and all proceeds and products of, all of the foregoing, including
proceeds of insurance, whether now owned or hereafter acquired by Debtor,
or in which Debtor may now have or hereafter acquire an interest; and
(6) all books, records, documents, computer tapes and discs relating
to all of the foregoing, whether now owned or hereafter acquired by Debtor,
or in which Debtor may now have or hereafter acquire an interest.
Notwithstanding any provision of this Agreement to the contrary, Collateral
shall not include: (i) Debtor's ownership interest in its subsidiaries, now
or hereafter existing, including the subsidiaries listed on Schedule III of
the Loan Agreement; (ii) the property that is described in the financing
statement listed in Exhibit B hereto; (iii) certain equipment hereafter
acquired by Debtor if such equipment is covered by a lien that secures
purchase money indebtedness incurred by Debtor solely for the purpose of
acquiring such equipment and so long as the amount of such indebtedness
does not exceed the fair value of such equipment at the time of
acquisition; and (iv) the leased equipment described in Schedule I attached
hereto and made a part hereof.
(b) All of Debtor's accounts, accounts receivable, contract rights,
chattel paper, general intangibles and rights to the payment of money, and
all collateral and security therefor and related supporting obligations,
and all proceeds thereof, are sometimes hereinafter collectively called the
"Customer Receivables". All of Debtor's equipment, fixtures and inventory
are sometimes hereinafter collectively called the "Tangible Collateral".
(c) The security interests granted pursuant to this Section 1 (the
"Security Interests") are granted as security only and shall not subject
Secured Party to, or transfer to Secured Party, or in any way affect or
modify, any obligation or liability of Debtor under any of the Collateral
or any transaction which gave rise thereto.
(d) If Debtor shall at any time acquire a commercial tort claim, as
defined in Article 9 of the UCC, Debtor shall promptly notify Secured Party
in writing of the brief details thereof and shall grant to Secured Party in
writing a security interest therein and in the proceeds thereof, all on the
terms of this Security Agreement, and in writing in form and substance
reasonably satisfactory to Secured Party.
(e) For avoidance of doubt it is expressly understood and agreed that
(i) the Collateral is intended to consist of all assets of Debtor other
than Debtor's ownership interest in its subsidiaries, now or hereafter
existing, including the subsidiaries listed on Schedule III to the Loan
Agreement, the property that is described in the financing statement listed
in Exhibit B hereto, certain equipment hereafter acquired by Debtor if such
equipment is covered by a lien that secures purchase money indebtedness
incurred by Debtor solely for the purpose of acquiring such equipment and
so long as the amount of such indebtedness does not exceed the fair value
of such equipment at the time of acquisition, and the leased equipment
described in Schedule I attached hereto and made a part hereof; and (ii) to
the extent the UCC is revised subsequent to the date hereof such that the
definition of any of the foregoing terms included in the description of
Collateral is changed, the parties agree that any property which is
included in such changed definitions which would not otherwise be included
in the foregoing grant on the date hereof be included in such grant
immediately upon the effective date of such revision, it being the
intention of the parties hereto that the description of Collateral set
forth herein be construed to include the broadest possible range of
property and assets and all tangible and intangible personal property and
fixtures of Debtor of every kind and description other than as specifically
excluded herein.
Section 2. Delivery of Pledged Securities and Chattel Paper.
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(a) All securities of Debtor, whether now owned or hereafter acquired by
Debtor, shall be promptly delivered to Secured Party by Debtor pursuant hereto
(which securities, together with all other securities, securities entitlements,
and shares of stock which may hereafter be delivered to Secured Party pursuant
to the terms hereof, are hereinafter called the "Pledged Securities"), shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignments in blank, with signatures
appropriately guaranteed, and accompanied in each case by any required transfer
tax stamps, all in form and substance satisfactory to Secured Party. Exhibit A
attached hereto and made a part hereof sets forth a complete description of all
Pledged Securities owned by Debtor on the date hereof. Debtor shall from time to
time promptly and in accordance with the foregoing provisions deliver to Secured
Party any and all Pledged Securities which may hereafter be acquired by Debtor.
(b) Secured Party may at any time or from time to time, in its sole
discretion, require Debtor to cause any chattel paper included in the Customer
Receivables to be delivered to Secured Party or any agent or representative
designated by it, or to cause a legend referring to the Security Interests to be
placed on such chattel paper and upon any ledgers or other records concerning
the Customer Receivables.
Section 3. Filing; Further Assurances.
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Debtor will, at its expense, execute, deliver, file and record (in such
manner and form as Secured Party may reasonably require), or permit Secured
Party to file and record, any financing statements, any carbon, photographic or
other reproduction of a financing statement or this Security Agreement (which
the parties hereto agree shall be sufficient as a financing statement
hereunder), any specific assignments or other paper that may be reasonably
necessary or desirable, or that Secured Party may reasonably request, in order
to create, confirm, preserve, perfect or validate any Security Interest or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
or under applicable law with respect to any of the Collateral. Debtor hereby
authorizes Secured Party, at any time and from time to time, without the
Debtor's further signature or authorization, to file financing statements,
continuation statements and amendments thereto that describe or indicate the
Collateral including, without limitation, an indication that the Collateral
consists of "all assets" of the Debtor or words of similar effect and which
contain any other information required by Part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement, continuation
statement or amendment, including whether Debtor is an organization, the type of
organization and any organization identification number issued to Debtor. Debtor
agrees to furnish any such information to Secured Party promptly upon request.
Section 4. Debtor's Representations and Warranties.
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Debtor hereby represents and warrants to Secured Party as follows:
(a) Except as described in Exhibit B attached hereto and made a part hereof
and liens permitted by the Loan Agreement, Debtor is, or to the extent that
certain of the Collateral is to be acquired after the date hereof, will be, the
owner of the Collateral free from any adverse lien, security interest or
encumbrance.
(b) Except for such financing statements as may be described in Exhibit B
attached hereto and made a part hereof, no financing statement covering the
Collateral is on file in any public office, other than the financing statements
filed pursuant to this Security Agreement.
(c) All additional information, representations and warranties contained in
Exhibit C attached hereto and made a part hereof, and any Schedules attached to
said Exhibit C, are true, accurate and complete on the date hereof.
(d) There are no restrictions upon the voting rights or the transfer of all
or any of the Pledged Securities (other than may appear on the face of the
certificate thereof) and Debtor has the right to vote, pledge, grant a security
interest in, and otherwise transfer the Pledged Securities free of any
encumbrances (other than applicable restrictions imposed by Federal or state
securities laws or regulations). Debtor is not affiliated with the issuers of
any securities constituting Collateral through officers, directors or otherwise
and Debtor does not hold, directly or indirectly, more than 10% of the
securities of any issuer of securities constituting Collateral.
(e) Exhibit D attached hereto constitutes an accurate and complete list of
all patents, trademarks, tradenames, patent applications, servicemarks and
registrations of the foregoing owned by or held by Debtor.
Section 5. Debtor's Covenants.
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Debtor hereby covenants and agrees with Secured Party that Debtor will:
(a) Defend the Collateral against all claims and demands of all persons at
any time claiming any interest therein (other than the parties holding liens
permitted by the Loan Agreement to secure indebtedness permitted by the Loan
Agreement).
(b) Provide Secured Party, at least fifteen (15) business days prior to
occurrence, with written notice of (i) any change in Debtor's chief executive
office or the office where Debtor maintains its books and records pertaining to
the Customer Receivables, (ii) the movement or location of Collateral to or at
any address other than as set forth in said Exhibit C, and (iii) any event or
occurrence which would render any material warranty or information contained in
Exhibit C or D hereto inaccurate or incomplete.
(c) Promptly notify Secured Party of any event causing a substantial loss
or diminution in the value of all or any material part of the Collateral and the
amount or an estimate of the amount of such loss or diminution.
(d) Except as otherwise permitted by the Loan Agreement and Section 27
hereof, not sell or offer to sell or otherwise assign, transfer or dispose of
the Collateral or any interest therein, without Secured Party's prior written
consent; provided, however, that Debtor may sell inventory, if any, in the
ordinary course of its business, may enter into licenses of its intellectual
property in the ordinary course of its business, and may sell equipment having
an aggregate value not to exceed $200,000 in any calendar year.
(e) Except as otherwise permitted by the Loan Agreement, keep the
Collateral free from any adverse lien, security interest or encumbrance and in
good order and repair, reasonable wear and tear excepted, and not waste or
destroy the Collateral or any part thereof.
(f) Not use the Collateral in violation of applicable law or of any policy
of insurance applicable thereto.
(g) Not change its corporate name, identity, structure or state of
organization or formation without at least thirty (30) days prior written notice
to Secured Party.
(h) At Secured Party's request, execute, acknowledge and deliver such
further documents and instruments as Secured Party may from time to time
reasonably request or require to confirm Secured Party's Security Interests in
and to any patent, trademark or service xxxx, and any registrations or
applications for same.
(i) Promptly pay any and all taxes, assessments and governmental charges
upon the Collateral prior to the date penalties are attached thereto, except to
the extent that such taxes, assessments and charges shall be contested in good
faith by Debtor, adequate reserves have been set aside therefor, and payment of
such contested taxes made prior to the institution of any enforcement proceeding
which could adversely affect the Security Interests or the Collateral.
(j) Have and maintain insurance at all times with respect to the Tangible
Collateral against risks of fire (including so-called extended coverage) and
theft, and such other risks as Secured Party may reasonably require in writing,
containing such terms, in such form, in such amounts, for such periods, and
written by such companies as may be reasonably satisfactory to Secured Party,
such insurance to name Secured Party as "additional insured" and "mortgagee"
thereunder and to be payable to Secured Party and Debtor as their respective
interests may appear pursuant to Loss Payable Endorsements in form acceptable to
Secured Party. All policies of insurance shall provide for thirty (30) days'
prior written notice to Secured Party of cancellation or material amendment of
the policies, and Debtor shall furnish Secured Party with certificates or other
evidence satisfactory to Secured Party of compliance with the foregoing
insurance provisions. Debtor shall notify Secured Party of any material change
in the insurance maintained with respect to the Tangible Collateral and shall
furnish Secured Party satisfactory evidence of any such change. Without limiting
any other remedies available to Secured Party, in the event Debtor shall default
in the performance of its obligations under this paragraph (j), Secured Party,
at its option, may effect such insurance coverage with an insurer acceptable to
Secured Party and add the premium(s) paid therefor to the Obligations secured
hereby, and the amount of such premium(s) shall be payable by Debtor on demand
with interest thereon at the highest rate payable under the agreements
evidencing the Obligations.
(k) Take such steps as the Secured Party may reasonably request for Secured
Party (i) to obtain an acknowledgement, in form and substance satisfactory to
Secured Party, of any bailee having possession of any of the Collateral that the
bailee holds such Collateral for Secured Party, (ii) to obtain "control" of any
investment property, deposit accounts, letter-of-credit rights or electronic
chattel paper (as such terms are defined in Article 9 of the UCC) with any
agreements establishing control to be in form and substance reasonably
satisfactory to Secured Party, and (iii) otherwise to insure the continued
perfection and priority of Secured Party's security interest in the Collateral
and of the preservation of its rights therein.
Section 6. Records Relating to Collateral.
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Debtor will keep its records concerning the Collateral, including the
Customer Receivables and all chattel paper included in the Customer Receivables,
at its offices at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx, or at such other
place or places of business as Secured Party may approve in writing. Debtor will
hold and preserve such records and chattel paper and will permit Secured Party's
representatives at any time during normal business hours to examine and inspect
the Collateral and to make abstracts from such records and chattel paper, and
will furnish to Secured Party such information and reports regarding the
Collateral as Secured Party may from time to time reasonably request.
Section 7. Collections with Respect to Customer Receivables.
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Debtor will, at its expense:
(i) endeavor to collect or cause to be collected from
customers indebted on Customer Receivables, as and when due, any and
all amounts, including interest, owing under or on account of each
Customer Receivable; and
(ii) take or cause to be taken such appropriate action to
repossess goods, the sale or rental of which gave rise to any Customer
Receivable, and to enforce any rights or liens under Customer
Receivables, in the name of Debtor or Secured Party, as Secured Party
may deem proper;
provided, however, that (a) Debtor will at all times use its best judgment to
protect the interests of Secured Party, and (b) Debtor shall not be required
under this Section 7 to take any action which would be contrary to any
applicable law, court order or standard practice in Debtor's industry. Debtor
shall, at Secured Party's request following the occurrence of an Event of
Default that continues beyond the expiration of any applicable grace or cure
period, if any, notify Debtor's account debtors of the Security Interests in the
Customer Receivables and Secured Party may itself at any such time following the
occurrence of an Event of Default that continues beyond the expiration of any
applicable grace or cure period, if any, so notify account debtors. Secured
Party shall have full power at any time after such notice to collect,
compromise, endorse, sell or otherwise deal with any or all outstanding Customer
Receivables or the proceeds thereof in the name of either Secured Party or
Debtor, as Secured Party shall reasonably determine. In the event that, after
notice to any account debtors to pay Secured Party, Debtor receives any payment
on a Customer Receivable, all such payments shall be held by Debtor in trust for
Secured Party and promptly turned over to Secured Party.
Section 8. Record Ownership of Pledged Securities.
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Upon the occurrence of an Event of Default that continues beyond the
expiration of any applicable grace or cure period, if any, Secured Party may
cause any or all of the Pledged Securities to be transferred of record into
Secured Party's name. Debtor will promptly give to Secured Party copies of any
notices or other communications received by Debtor with respect to Pledged
Securities registered in the name of Debtor and Secured Party will promptly give
to Debtor copies of any notices and communications received by Secured Party
with respect to Pledged Securities registered in the name of Secured Party.
Section 9. Right to Receive Distributions on Pledged Securities.
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Unless an Event of Default shall have occurred that continues beyond the
expiration of any applicable grace or cure period, if any, Debtor shall be
entitled, from time to time, to collect and receive for its own use all
dividends, interest and other payments and distributions made upon or with
respect to the Pledged Securities, except
(i) stock dividends,
(ii) dividends payable in securities or other property, and non-cash
dividends,
(iii)dividends or distributions on dissolution, or on partial or
total liquidation, or in connection with a reduction of capital,
capital surplus or paid-in surplus, and
(iv) other securities issued with respect to or in lieu of the Pledged
Securities (whether upon conversion of the convertible securities
included therein or through stock split, spin-off, split-off,
reclassification, merger, consolidation, sale of assets,
combination of shares or otherwise).
Secured Party shall have the right to receive and retain all dividends, interest
and other payments and distributions made upon or with respect to the Pledged
Securities, except those which Debtor is specifically authorized to receive as
provided above, and Debtor shall take all such action as may be necessary or
appropriate to give effect to such right. From time to time upon receiving a
written request from Debtor accompanied by a certificate signed by its principal
financial officer or designee stating that no Event of Default has occurred and
is continuing, Secured Party shall deliver to Debtor suitable assignments and
orders for the payment to Debtor or upon its order of all dividends, interest
and other payments and distributions to which Debtor is entitled as set forth
herein, upon or with respect to any Pledged Securities which are registered in
Secured Party's name.
Section 10. Right to Vote Pledged Securities.
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Unless an Event of Default shall have occurred that continues beyond the
expiration of any applicable grace or cure period, if any, Debtor shall have the
right, from time to time, to vote and to give consents, ratifications and
waivers with respect to the Pledged Securities and to exercise conversion rights
with respect to the convertible securities included therein, and Secured Party
shall, upon receiving a written request from Debtor accompanied by a certificate
signed by its principal financial officer stating that no Event of Default has
occurred and is continuing, deliver to Debtor or as specified in such request
such proxies, powers of attorney, consents, ratifications and waivers as Secured
Party shall approve in respect of any Pledged Securities which are registered in
Secured Party's name, and make such arrangements with respect to the conversion
of convertible securities as shall be specified in Debtor's request and be in
form and substance reasonably satisfactory to Secured Party.
If an Event of Default shall have occurred that continues beyond the
expiration of any applicable grace or cure period, if any, and provided Secured
Party elects to exercise the rights hereinafter set forth by notice to Debtor of
such election, Secured Party shall have the right to the extent permitted by
law, and Debtor shall take all such action as may be necessary or appropriate to
give effect to such right, to vote and to give consents, ratifications and
waivers and take any other action with respect to all the Pledged Securities
with the same force and effect as if Secured Party were the absolute and sole
owner thereof. The curing of any such Event of Default where no grace or cure
period has been granted herein or the curing of any such Event of Default after
the expiration of any applicable grace or cure period, if any, shall not divest
Secured Party of its rights under Sections 8, 9, 10 and 11 hereof unless and
until Secured Party in writing reinstates the rights of Debtor which existed
prior to the occurrence of the Event of Default.
Section 11. General Authority.
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Debtor hereby irrevocably appoints Secured Party Debtor's true and lawful
attorney, with full power of substitution, in the name of Debtor, Secured Party
or otherwise, for the sole use and benefit of Secured Party, but at Debtor's
expense, to the extent permitted by law to exercise, at any time and from time
to time after any Event of Default has occurred that continues beyond the
expiration of any applicable grace or cure period, if any, all or any of the
following powers with respect to all or any of the Collateral (which power shall
be in addition and supplemental to any powers, rights and remedies of Secured
Party described herein or otherwise available to Secured Party under applicable
law):
(i) to demand, xxx for, collect, receive and give acquittance for any
and all moneys due or to become due upon or by virtue thereof,
(ii) to receive, take, endorse, assign and deliver any and all checks,
notes, drafts, documents and other negotiable and non-negotiable
instruments and chattel paper taken or received by Secured Party
in connection therewith,
(iii)to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(iv) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof or any related goods securing
the Customer Receivables, as fully and effectually as if Secured
Party were the absolute owner thereof,
(v) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto, and
(vi) to discharge any taxes, liens, security interests or other
encumbrances at any time placed thereon.
The power conferred on Secured Party under this Section 11 is solely to
protect, realize upon and enforce Secured Party's Security Interests and rights
and remedies in respect to the Collateral and shall not impose any duty upon
Secured Party to exercise such power.
Section 12. Events of Default.
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Debtor shall be in default under this Security Agreement upon the
occurrence of any "Event of Default" as defined in the Loan Agreement, or in any
agreement now or hereafter securing the Note, or in any agreement now or
hereafter evidencing or securing any of the Obligations, and the continuance of
such Event of Default beyond the expiration of any applicable grace or cure
period, if any (each such event is herein referred to as an "Event of Default").
Section 13. Remedies Upon Event of Default.
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(a) If any Event of Default shall have occurred and shall have continued
beyond the expiration of any applicable grace or cure period, if any, Secured
Party may exercise all the rights and remedies of a secured party under the UCC
(whether or not the UCC is in effect in the jurisdiction where such rights and
remedies are exercised) and, in addition, Secured Party may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, (i) apply the cash, if any, then held by it as
Collateral in the manner specified in Section 15 hereof, and (ii) if there shall
be no such cash or if such cash shall be insufficient to pay all the Obligations
in full, sell the Collateral, or any part thereof, at public or private sale or
at any broker's board or on any securities exchange, for cash, upon credit or
for future delivery, and at such price as Secured Party may deem satisfactory.
(b) Secured Party may require Debtor to assemble all or any part of the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient. Any holder of an Obligation may be
the purchaser of any or all of the Collateral so sold at any public sale (and,
if the Collateral is of a type customarily sold in a recognized market or is of
a type which is the subject of widely distributed standard price quotations, at
any private sale) and thereafter hold the same absolutely, free from any right
or claim of whatsoever kind. Upon any such sale Secured Party shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of Debtor.
(c) Unless the Collateral to be sold is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party shall give Debtor at least twenty (20) days' prior written notice
of its intention to make any such public or private sale or sale at a broker's
board or on a securities exchange. Such notice, in case of a public sale, shall
state the time and place fixed for such sale, and in case of sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or the portion
thereof so being sold, will first be offered for sale at such board or exchange.
Such notice, in case of a private sale or disposition, shall state the time
after which any private sale or other intended disposition is to be made.
(d) Any such public sale shall be held at such time or times within
ordinary business hours and at public or private place or places as Secured
Party may fix in the notice of such sale. At any public or private sale, the
Collateral may be sold in one lot as an entirety or in separate parcels, as
Secured Party may determine. Secured Party shall not be obligated to make such
sale pursuant to any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale,. and such sale may be made at any time or place to which the same may be
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by Secured Party
until the selling price is paid by the purchaser thereof, but Secured Party
shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice.
(e) Debtor acknowledges that Secured Party may be unable to effect a public
sale of Pledged Securities by reason of prohibitions contained in applicable
state and federal securities laws, and agrees that Secured Party is authorized,
at any such sale, if it deems it advisable so to do, to restrict the prospective
bidders or purchasers of any of the Pledged Securities to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Pledged Securities. Debtor agrees that any private sale of Pledged Securities
may be at prices and on terms less favorable than if sold at public sales, and
Debtor agrees that such private sales shall not by reason thereof be deemed to
have been made in a commercially unreasonable manner. Secured Party shall have
no obligation to delay any sale of Pledged Securities for the period of time
necessary to permit the issuer of such Pledged Securities to register such
securities for public sale under applicable securities laws, even if such issuer
would agree to do so.
(f) Secured Party, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.
(g) All rights and remedies contained herein shall be separate and
cumulative and in addition to all other rights and remedies available to a
secured party under applicable law, and the exercise of one shall not in any way
limit or prejudice the exercise of any other such rights or remedies.
Section 14. Right of Secured Party to Use and Operate Tangible Collateral,
Etc.
---------- --------------------------------------------------------------
Upon the occurrence of an Event of Default that shall continue beyond the
expiration of any applicable grace or cure period, if any, to the extent
permitted by law, Secured Party shall have the right and power to take
possession of all or any part of the Tangible Collateral, and to exclude Debtor
and all persons claiming under Debtor wholly or partly therefrom, and thereafter
to hold, store, and/or use, operate, manage and control the same. Upon any such
taking of possession, Secured Party may, from time to time, at Debtor's expense,
make all such repairs, replacements, alterations, additions and improvements to
and of the Tangible Collateral as Secured Party may reasonably deem proper. In
such case, Secured Party shall have the right to manage and control the Tangible
Collateral and to carry on the business and to exercise all rights and powers of
Debtor in respect thereto as Secured Party shall deem best, including the right
to enter into any and all such agreements with respect to the leasing and/or
operation of the Tangible Collateral or any part thereof as Secured Party may
deem fit; and Secured Party shall be entitled to collect and receive all rents,
issues, profits, fees, revenues and other income of the same and every part
thereof. Such rents, issues, profits, fees, revenues and other income shall be
applied to pay the expenses of holding and operating the Tangible Collateral and
of conducting the business thereof, and of all maintenance, repairs,
replacements, alterations, additions and improvements, and to make all payments
which Secured Party may be required or may elect to make, if any, for taxes,
assessments, insurance and other charges upon the Tangible Collateral or any
part thereof, and all other payments which Secured Party may be required or
authorized to make under any provision of this Security Agreement (including
legal costs and attorney's fees). The remainder of such rents, issues, profits,
fees, revenues and other income shall be applied to the payment of the
Obligations in such order or priority as Secured Party shall determine (subject
to the provisions of Section 15 hereof) and, unless otherwise provided by law or
by a court of competent jurisdiction, any surplus shall be paid over to Debtor.
Section 15. Application of Collateral and Proceeds.
---------- --------------------------------------
The proceeds of any sale of, or other realization upon, all or any part of
the Collateral shall be applied in the following order of priorities:
(a) first, to pay the actual and reasonable expenses of such sale or other
realization, including reasonable commission to Secured Party's agent, and all
expenses, liabilities and advances incurred or made by Secured Party in
connection therewith, and any other unreimbursed expenses for which Secured
Party is to be reimbursed pursuant to Section 16 hereof;
(b) second, to the payment of the Obligations in such order and manner as
Secured Party, in its sole discretion, shall determine; and
(c) finally, unless applicable law otherwise provides, to pay to Debtor, or
its successors or assigns, or as a court of competent jurisdiction may direct,
any surplus then remaining from such proceeds.
Section 16. Expenses; Secured Party's Lien.
---------- ------------------------------
Debtor will forthwith upon demand pay to Secured Party:
(a) the amount of any taxes which Secured Party may at any time be required
to pay by reason of the Security Interests (including any applicable transfer
taxes and taxes payable in connection with the filing of financing statements to
perfect the Security Interests) or to free any of the Collateral from any lien
thereon, and
(b) the amount of any and all actual and reasonable out-of-pocket expenses,
including reasonable attorneys' fees and the reasonable fees and disbursements
of any agents not regularly in its employ, which Secured Party may incur in
connection with (i) the preparation and administration of this Security
Agreement, (ii) the collection, sale or other disposition of any of the
Collateral, (iii) the exercise by Secured Party of any of the powers, rights or
remedies conferred upon it hereunder, or (iv) any Event of Default hereunder.
Section 17. Termination of Security Interests; Release of Collateral.
---------- --------------------------------------------------------
Upon the repayment and performance in full of all the Obligations, the
expiration of all obligations of Secured Party to extend credit or provide
financial accommodations to Debtor under the Loan Agreement, and the termination
of the Loan Agreement, the Security Interests shall terminate and all rights to
the Collateral shall revert to Debtor. Upon any such termination of the Security
Interests or release of Collateral, Secured Party will, at Debtor's expense to
the extent permitted by law, execute and deliver to Debtor such documents as
Debtor shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
Section 18. Notices.
---------- -------
All notices, communications and demands hereunder shall be in writing and
sent by certified or registered mail, return receipt requested, or by overnight
delivery service, with all charges prepaid, to the applicable party or parties
at the addresses set forth below, or by facsimile transmission (including,
without limitation, computer generated facsimile), promptly confirmed in writing
sent by first class mail, to the FAX numbers and addresses set forth below:
(i) If to Debtor, to it at:
Xx. Xxxxxx X. Xxxxxxxxx
BioSphere Medical, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Fax No. (000) 000-0000
with a copy to:
Attorney Xxxxx X. Xxxxxxx
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax No. (000) 000-0000
(ii) If to Secured Party, to it at:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx
Fax No. (000) 000-0000
with a copy to:
Attorney Xxxxx X. Xxxxxxx
XxxXxxxx & Xxxxx Incorporated
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Fax No. (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties complying as to delivery with the terms
of this Section. All such notices and correspondence shall be deemed given upon
the earliest to occur of (i) actual receipt, (ii) if sent by certified or
registered mail, three (3) business days after being postmarked, (iii) if sent
by overnight delivery service, when received or when delivery is refused, or
(iv) if sent by facsimile, when receipt of such transmission is acknowledged.
Section 19. Waivers; Non-Exclusive Remedies.
---------- -------------------------------
(a) Except as otherwise specifically provided herein, Debtor hereby waives
demand, notice, protest, notice of acceptance of this Security Agreement, notice
of loans made, credit extended, collateral received or delivered or other action
taken in reliance hereon (and all other demands and notice of any description).
With respect to both the Obligations and the Collateral, Debtor hereby assents
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of Collateral, to the addition or
release of any party or person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as
Secured Party may deem advisable.
(b) Except as otherwise provided by applicable law, Secured Party shall not
have any duty as to the collection or protection of the Collateral or any income
thereon, nor as to the preservation of rights against prior parties, nor as to
the preservation of any rights pertaining thereto beyond the safe custody of any
Collateral in its possession. Except as otherwise provided by applicable law,
Secured Party may exercise its rights with respect to the Collateral without
resorting or regard to other collateral or sources of reimbursement for
liability. Except as otherwise provided by applicable law, Secured Party shall
not be required to marshal any present or future security for (including, but
not limited to, this Security Agreement and the Collateral subject to the
Security Interest created hereby), or guaranties of, the Obligations or any of
them, or to resort to such security or guarantees in any particular order; and
all of its rights hereunder and in respect of such security and guarantees shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may do so, Debtor hereby agrees that it will not
invoke any law relating to the marshalling of collateral which might cause delay
in or impede the enforcement of Secured Party's rights under this Security
Agreement or under any other instrument evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or guaranteed, and to the extent that it lawfully may do
so, Debtor hereby irrevocably waives the benefits of all such laws.
(c) No failure on the part of Secured Party to exercise, and no delay in
exercising, and no course of dealing with respect to, any right, power or remedy
under this Security Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise by Secured Party of any right, power or remedy under
this Security Agreement preclude any other right, power or remedy. The remedies
in this Security Agreement are cumulative and are not exclusive of any other
remedies provided by law, including any rights of setoff in favor of Secured
Party.
(d) Debtor, to the extent it may lawfully do so, hereby consents to the
jurisdiction of the courts of the Commonwealth of Massachusetts and the Federal
District Courts sitting in the Commonwealth of Massachusetts for the purpose of
any suit or proceeding brought in connection with or with respect to this
Security Agreement.
Section 20. Waiver of Jury Trial.
---------- --------------------
EACH OF DEBTOR AND SECURED PARTY HEREBY EXPRESSLY WAIVES TRIAL BY JURY IN
ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS SECURITY AGREEMENT.
Section 21. Changes in Writing.
---------- ------------------
Neither this Security Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally but only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
Section 22. Massachusetts Law; Meaning of Terms.
---------- -----------------------------------
This Security Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Massachusetts applicable to contracts made
and performed in said commonwealth, except to the extent that remedies provided
by the laws of any state other than Massachusetts are governed by the laws of
such state. Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the UCC as in effect in the
Commonwealth of Massachusetts have the meanings therein stated.
Section 23. Separability.
---------- ------------
If any provision hereof is invalid or unenforceable in any jurisdiction,
the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of Secured Party.
Section 24. Successors and Assigns.
---------- ----------------------
This Security Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, including,
without limitation, any subsequent holders of the Note or any of the
Obligations, each of whom shall, without further act, become a party hereto by
becoming a holder of the Note or such Obligations.
Section 25. Headings.
---------- --------
The headings in this Security Agreement are for the purposes of reference
only and shall not limit or otherwise affect the meaning hereof.
Section 26. Counterparts.
---------- ------------
This Security Agreement may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same agreement.
Section 27. Permitted Transfer of Cash or Cash Equivalents.
---------- ----------------------------------------------
Notwithstanding any provision of this Agreement to the contrary, Debtor may
at its election direct the disposition of funds from the Pledged Account (as
defined in the Loan Agreement) and may originate instructions or entitlement
orders with respect to the Pledged Account so long as: (a) Debtor is at all
times in compliance with Sections 5.8 and 5.10 of the Loan Agreement (both prior
to and after giving effect to any such directions, instructions or entitlement
orders); and (b) no Event of Default has occurred hereunder and continued beyond
the expiration of any applicable grace or cure period, if any, or would result
from the taking of any such action permitted hereunderno condition which, with
the giving of notice or the passage of time, or both, would constitute an Event
of Default hereunder exists or would result from the taking of any such action
permitted hereunder.
IN WITNESS WHEREOF, this Security Agreement has been executed by the
parties hereto all as of the day and year first above written.
BIOSPHERE MEDICAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Title: Vice President / CFO
--------------------------------
XXXXX BROTHERS XXXXXXXX & Co.
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Title: Senior Vice President
--------------------------------
EXHIBIT A
Pledged Securities Existing on Date Hereof
Debtor owns no securities, security entitlements or shares of stock as of the
date hereof.
EXHIBIT B
Financing Statements on File on Date Hereof
Filing Secured File Collateral
Office Party No. Date Description
--------------------------------------------------------------------------------
Delaware Waters 20268742 1/3/02 Specified
Secretary Financial Equipment
of State Services
EXHIBIT C
Additional Representations and Warranties
1. Debtor's exact name is: BioSphere Medical, Inc.
2. Debtor's Federal Tax Identification Number is: #00-0000000.
3. Debtor's organization number assigned to Debtor by the Secretary of State
of its state of formation is #NONE.
4. Debtor uses in its business and owns the following trade names: None.
5. Debtor's chief executive office is: 0000 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxxxx 00000
6. Debtor's principal place of business is: 0000 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxxxx 00000
7. Debtor has other places of business located at: 0000 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxxxx 00000
8. Debtor owns or has an interest in personal property located elsewhere at:
None.
9. Debtor owns property consisting of fixtures at the following locations:
Address Record Owner of Real Estate
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
True and complete legal descriptions of such real estate are attached hereto
as Schedules
---------------.
EXHIBIT D
Patents, Trademarks, Tradenames, Etc.
SCHEDULE I
Leased Equipment
o (10) IBM Thinkpads and (1) 340 Microdrive Thinkpad leased by Debtor through
Xxxxxx Financial Group pursuant to a five year lease that began in April
2001.
o (1) Dell Firewall Server leased by Debtor through Dell Equipment Leasing
pursuant to a three year lease that began in May 1, 2002.
o (1) High Performance Liquid Chromatography Machine leased by Debtor through
Waters Financial pursuant to a three year lease that began in January 2002.
