EXHIBIT 10.4
 
SECURITY AGREEMENT

This Security Agreement is made and entered into as of October 10, 2013, by and
among Wound Management Technologies, Inc., a Texas corporation (“WTI”), Wound
Care Innovations, LLC, a Nevada limited liability company (“WCI”), Resorbable
Orthopedic Products, LLC, a Texas limited liability company (“ROP”), and
BioPharma Management Technologies, Inc., a Texas corporation (“BMT”), and
Brookhaven Medical, Inc., a Delaware corporation (“Lender”), to record the grant
of a secu­rity inter­est in all of the tangible and intangible assets of
Borrowers (as defined below) as further described herein.  WTI, WCI, ROP and BMI
are sometimes each referred to herein as a “Borrowers”, and collectively, as the
“Borrowers”.  Borrowers and Lender are sometimes each referred to herein as a
“Party”, and collectively, as the “Parties”.

RECITALS
 
A.           Contemporaneously herewith: (i) the Parties have executed and
delivered a Term Loan Agreement, of even date herewith (the “Loan Agreement”);
(ii) Borrowers executed and delivered to Lender a Senior Secured Convertible
Promissory Note, of even date herewith, in the original principal amount of One
Million and No/00 U.S. Dollars ($1,000,000) (the “Note”); and (iii) Lender
advanced $1,000,000 to Borrowers under the Note.
 
B.           To induce Lender to make the loan evidenced by the Note, Borrowers
have agreed to grant a security interest in the Assets of the Borrowers to
secure Borrowers’ obligations to Lender under the Note.
 
Agreement
 
For value received, and to induce Lender to make the loan evidenced by the Note,
the Parties hereby agree as follows:

1.         Definitions.  As used in this Security Agreement, the defined terms
set forth in the Loan Agreement shall have the same meanings as attributed
therein.  As used herein, “Inventory” shall mean all products and all supplies
sold by Borrowers to their customers in the ordinary course of business.  In
addition, as used in this Security Agreement, (a) the words “include” and
“in­clud­ing” always are without limitation, (b) words in the singular number
include words in the plural number and vice versa, (c) the word “days” refers to
calendar days, including Saturdays, Sundays, and holidays, (d) the word “law”
includes a local, state, or national code, rule, treaty, statute, ordinance, or
regulation and the common law arising from final, nonappealable decisions of
governmental authorities and state or federal courts in the United States of
America, in each case as amended or modified through the date of application to
this Security Agreement, (e) the word “property” includes both tangible and
intangible property, unless the context otherwise requires, (f) the word
“person” in­cludes a trust, corporation, partner­ship, joint venture,
association, limited liability company, unincorporated organization, public body
or authority, and a governmental authority, as well as a natural person, (g) the
term “governmental authority” includes a government, a central bank, a public
body or authority, and any governmental body, agency, authority, department, or
subdivision, whether domestic or foreign or local, state, regional, or national,
(h) the word “costs” includes all fines, penalties, interest, internal expenses,
amounts paid in settlement, fees, costs, and expenses of appraisers,
broker-dealers, collection agents, and supersedeas bonds, costs and expenses of
holding and preserving the Collateral and preparing it for sale, and attorneys’
fees, costs, and expenses, whether incurred before or after demand for payment
or the commencement of legal proceedings, and whether incurred pursuant to
trial, appellate, mediation, bank­ruptcy, arbitration, administrative, or
judgment-execution proceedings, and (i) “business day” means any day that is not
a Saturday, Sunday, or holiday observed by national banking associations in Fort
Worth, Texas.  All references to any agreement or instrument, including
references to any of the Loan Documents, include every modification, amendment,
extension, and renewal of the agreement or instrument.  Unless the context
otherwise indicates, all other uncapitalized terms that are contained in this
Security Agreement and are defined in the UCC will have the meanings provided
for in the UCC (if the term is defined in Article 9 of the UCC differently than
another article of the UCC, the term will have the meaning provided in Article 9
of the UCC).
 
 
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2.         Grant and Perfection of Security Interest.  To secure the full and
punctual pay­ment and performance of the Obligations, Borrowers hereby grant to
Lender a continuing and unconditional security interest in the Collateral.  From
time to time at the request of Lender, Borrowers shall execute, deliver, file,
and record all assignments, notices of lien, financ­ing state­ments,
continuation statements, statements of change, certificates of title, patents,
copyrights and trademark filings and other documents, pay the cost of preparing,
processing, and filing or recording them in every place specified by Lender, and
do all other acts and things as Lender may request from time to time to cre­ate,
per­fect, and preserve a valid security interest in the Collat­eral, free from
all other Liens, except as expressly allowed in writing by Lender or as
permitted under the Loan Documents, to secure the full and punctual payment and
performance of the Obligations or to enable Lender to exercise and enforce
Lender’s rights and powers under this Security Agreement with respect to the
Collateral.  Lender shall furnish to Borrowers a copy of any UCC financing or
continuation statement filed by Lender with respect to the security interests
granted by this Security Agreement.

At the request and option of Lender, Borrowers shall use all commercially
reasonable efforts to take any and all reasonable action requested by Lender
that is necessary or useful for the attachment, perfection, and priority of, and
the ability of Lender to enforce, Lender’s security interest in any and all of
the Collateral, including (a) obtaining (in form and substance reasonably
acceptable to Lender) all waivers, consents, and approvals from each person that
Lender deems reasonably necessary, (b) executing, delivering, and where
appropriate, filing financing statements and related amendments under the UCC,
to the extent if any, that any Borrower’s signature is required, (c) complying
with any law, if compliance with the law is a condition to the attachment,
perfection, or priority of, or ability of Lender to enforce, its security
interest in that Collateral, and (d) causing Lender’s name to be noted as
secured party on any certificate of title for a titled good if the notation is a
condition to the attachment, perfection, or priority of, or ability of Lender to
enforce, its security interest in that Collateral.
 
 
 
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3.         Representations and Warranties.  Borrowers represent and warrant that
as of the date of this Security Agreement:

(a)         Borrowers have the authority to grant to Lender a security interest
in the Collateral pursuant to this Security Agreement;

(b)         Borrowers have not filed any financing statements in any public
office covering any of the Collat­eral (except for the Liens to be satisfied
with the proceeds of the Note);

(c)         Borrowers are the sole legal and equi­table owner of all the
Collateral, except for the security interests granted to Lender in this Security
Agreement;

(d)        This Security Agreement has been duly authorized, executed, and
delivered on behalf of Borrowers and constitutes a valid and binding agreement
that is enforceable against Borrowers by Lender in accordance with its terms,
except to the extent limited by bankruptcy, insolvency, debtor relief, and other
laws of general application affecting the enforcement of creditors’ rights and
debtors’ obligations;

(e)        The Collateral is free and clear of all Liens, charges, and
assess­ments of every kind and nature, except for:  (i) liens for taxes and
assessments of gov­ernmental authorities that are not yet due and for which
adequate reserves are recorded in Borrowers’ books of account; and (ii) security
interests grant­ed in favor of Lender or allowed in writ­ing by Lender;

(f)         Borrowers’ chief executive offices and the places where Borrowers
keep the Collateral that is not in Lender’s possession (if any) and all the
records pertaining to the Collateral are at the addresses of Borrowers listed in
Section 13 of this Security Agreement, except as set forth on Schedule 3(f)
hereto;

(g)        The exact legal name and state of organization of each Borrower is as
set forth in the first paragraph of this Security Agreement, and Borrowers do
not transact any business under any name other than the exact legal name set
forth in the first paragraph of this Security Agreement; and

(h)        The execution, delivery, and performance of this Security Agreement
by Borrowers: (i) have been duly authorized by all requisite corporate action of
Borrowers; (ii) will not result in the creation of any Lien on any property of
Borrowers (other than the security interests created pursuant to this Security
Agreement); (iii) will not contravene the articles of incorporation or bylaws or
articles of formation or company agreement, as applicable, of Borrowers; (iv) do
not require any consent, filing, approval, or other action by or with any
person; (v) will not accelerate the maturity or time for performance of any
Indebtedness of Borrowers; and (vi) will not constitute a breach, a default, or
an event that (with notice, lapse of time, or both) would be a breach or
default, under any order, decree, lease, judgment, agreement, or instrument to
which any Borrowers is a party or otherwise subject.

 
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4. Affirmative Covenants.  Until the Obligations have been paid in full, or
Lender has converted the Note as provided in the Note, Borrowers shall (a)
furnish to Lender any information received by Borrowers pertaining to claims
made by third parties to the Collateral, (b) promptly notify Lender after
Borrowers learn of any event that would constitute an Event of  Default, (c)
promptly pay all Indebtedness in accordance with the terms of the Loan
Documents, (d) conduct and maintain their affairs and business according to
their usual and ordinary course, maintain themselves at all times as a legal
entity organized and existing in good standing under the laws of their
respective States of organization, and comply with all laws applicable to the
Collateral, (e) keep books, records, and accounts that fairly reflect all
dealings and transactions related to the Collateral and to Borrowers’ business
and activities, permit Lender or its agents or representatives, at any time
during normal business hours, to copy, examine, and make extracts from all of
Borrowers’ records pertaining to the Collateral, and compile, prepare, and
furnish to Lender all data, reports, schedules, information, and certificates
concerning the Collateral as Lender may reasonably request from time to time,
(f) promptly pay all filing, recording, and certi­fication fees and charges and
other direct costs incurred by Lender to perfect the security interests created
by this Security Agreement, whether incurred before or after the date of this
Security Agreement, (g) maintain insurance on the Collateral against all risks
to which the Collateral may be exposed, with all such insurance policies to name
Lender as an additional insured and loss payee as its interests may appear, (h)
defend their title or interest in the Collateral against any and all Liens,
charges, offsets, defenses, and assessments of every kind and nature, except for
Permitted Encumbrances and for Liens which are permitted under the Loan
Documents, (i); perform their obligations, under each material contract and
other agreement constituting part of the Collateral to ensure that no breach,
default, or event of default will occur under such contract or agreement, and
(j) maintain insurance coverage for the Inventory, including appropriate product
liability in such amounts to fully insure the balance owing under the Note.

Borrowers  acknowledge that Lender has no obligation to preserve the Collateral
or to pay taxes, assessments, insurance premiums, and indebtedness secured by a
Lien on the Collateral.  Any payments made by Lender or actions taken by Lender
to preserve the Collateral will not constitute a cure or waiver of any
Default.  Additionally, Borrowers confirm to Lender that Borrowers bear all risk
of loss associated with the Collateral and that Lender has no duty to collect
any income accruing on the Collateral or to preserve any rights relating to the
Collateral.

5.         Negative Covenants.  Without the prior written consent of Lender,
which it may withhold in its sole discretion, and except as expressly permitted
by the Loan Agreement, Borrowers shall not:
 
 
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(a)           Take any action or fail to take any action that will impair the
rights of Lender in the Collateral;

(b)           Use the Collateral, or permit it to be used, in violation of any
law, agreement, or policy of insurance;

(c)           Sell, lease, license, transfer, or otherwise dispose (or offer to
do so) of any of the Collateral or any interest in it except in the ordinary
course of its business or, as contemplated in the transactions described in
Schedule 5(c) attached hereto, without payment in full of the Obligations;

(d)           Grant or transfer any lien, pledge, mortgage, restriction,
security interest, or other encumbrance on any of the Assets of the Borrowers,
except as permitted under the Loan Documents;

(e)           Enter into any contract, arrangement, or commitment (oral or
written) that is reasonably likely to have a material adverse effect on
Borrower’s duties or the rights of Lender under the Loan Documents, or that
limits, abrogates, or is inconsistent with any of the Loan Documents;

(f)           Except for Permitted Encumbrances and as otherwise permitted under
the Loan Documents: (i) borrow on the security of the Collateral from anyone
except Lender; (ii) pledge or grant a Lien on the Collateral to anyone except
Lender; (iii) permit any levy on the Collateral pursuant to legal process; or
(iv) permit any lien, security interest, or encumbrance to attach to any of the
Collateral, except for security interests in favor of Lender or expressly
allowed in writing by Lender, or as provided herein or in Schedule 5(c) attached
hereto;

(g)           Breach or default under the terms of any other Loan Document,
except for breaches or defaults which are cured under any applicable cure
period; or

(h)           Sell, assign, convey, pledge, transfer, hypothecate, or in any
other way encumber or dispose of any Col­lateral, except in the ordinary course
of its business or as permitted under the Loan Documents, without the advance
written approval of Lender (which it may withhold in its sole discretion),
except for the security interests granted to Lender in this Security Agreement.

6.         Secured  Party Rights.   Lender may elect (but is not obligated) to
do any of the following at any time and from time to time:  (a) receive or
release other security for payment of any of the Obligations; (b) release any
party pri­marily or sec­ondarily liable for payment of any of the Obligations;
(c) apply any other secu­rity held by it to the satis­faction of the
Obligations; and (d) except for Liens otherwise permitted under the Loan
Documents, discharge any Lien on the Collateral that not been expressly allowed
in writing by it and pay the costs of insur­ing, maintaining, and preserving the
Collateral; in each case without preju­dice to any of its rights under this
Security Agreement.
 
 
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7.         Rights with Respect to Collateral.  As long as an Event of Default
has not occurred and is not continuing, Borrowers may use and sell the
Collateral in the ordinary course of its business.  If an Event of Default has
occurred, and until the Obligations have been fully paid, Borrowers shall hold
all cash or other property that they receive as a payment or other distribution
in respect of the Collateral under an ex­press trust for the sole ben­efit of
Lender and deliver that cash or other property to Lender with­in 48 hours after
Borrowers receive it, in the form received (ex­cept for any endorsement or
assignment required to transfer it to Lender), for applica­tion to payment of
the Obligations.
 
8.         Events of Default.  The occurrence of any event that constitutes an
Event of Default as set forth in the Loan Agreement shall constitute a Default
under this Security Agreement.  In addition, the following events or conditions
shall constitute a Default:  (a), a levy, execution, or attachment on any of the
Collateral by a third party other than Lender; (b) the transfer or disposition
of any Collateral, except as expressly permitted by this Security Agreement or
the other Loan Documents; or (c) except as otherwise permitted under the Loan
Documents Lender at any time receives a report from a Texas state registry
indicating that Lender’s security interest in some or all of the Collateral is
not prior to all other security interests or other interests reflected in the
report, and such situation is not cured within ten (10) days following written
notice by Lender to Borrowers of such situation.
 
 
9.         Default Remedies.  At any time after a Default, Lender may elect (but
is not obligated) to do any of the following:

(a)         Upon written notice to Borrowers, accelerate the maturity date of
the Obligations and declare them to be immediately due and pay­able; and

(b)         Exercise from time to time all rights and remedies of a secured
creditor under applicable law, including the UCC.

Lender shall notify Borrowers (either concurrently or promptly thereafter) of
any of the preceding actions taken by it, but its failure to do so will not
affect the validity of any action taken by it or any of its rights or interests
under this Security Agreement.

Lender may exercise any of its rights or remedies seri­ally, wholly, partially,
or collectively, and the exercise of any one right does not preclude the
exercise of any other right.  Lender has no obligation to attempt to satisfy the
Obligations by collecting from any other Person, and Lender may release, modify,
or waive any collateral provided by another person to secure any of the
Obligations without affecting in any manner Lender’s rights against Borrowers or
the Collateral.  Borrowers waive any right they might have to require Lender to
pursue any person for any of the Obligations.  Borrowers waive any and all
rights that they might have to a judicial hearing in advance of the enforcement
of any of Lender’s rights and remedies under this Security Agreement, including
Lender’s right after an Event of Default to take immediate possession of the
Collateral to exercise Lender’s rights and remedies with respect to the
Collateral.
 
 
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After a Default, Borrowers, at its sole expense and at Lender’s request, shall
assemble any Collateral that is not in Lender’s possession and make it
avail­able to Lender at a convenient place acceptable to Lender.  Any notice of
sale, disposition, or other intended action by Lender that is given to Borrowers
at the address for Borrowers listed in this Security Agreement at least ten days
before the action is taken will con­stitute reasonable notice of disposition to
Borrowers.  Lender may sell the Collateral without giving any warranties as to
the Collateral and may specifically disclaim warranties of title and other
warranties without adversely affecting the commercial reasonableness of any sale
or other disposition of the Collateral.

Lender is not obligated to resort to any Collateral or other assurances of
payment in any particular order.  Lender may apply any Proceeds from a
disposition of any of the Collateral toward payment of any of the Obligations,
in such order of application as Lender elects in its sole discretion, and
Borrowers are liable to Lender for any deficiency between the Proceeds realized
on any disposition of the Collateral and the amount of Obligations remaining
unpaid.  Borrowers promptly shall pay to Lender, on demand, all costs incurred
by Lender in connection with the enforcement, interpretation, and administration
of its rights under this Security Agreement.

Borrowers shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which
Lender is entitled, including all costs and expenses that Lender is permitted to
deduct from such proceeds pursuant to this Security Agreement and all reasonable
fees and disbursements of any attorneys employed by Lender to collect such
deficiency.
 
 10.          Power of Attorney.  Borrowers irrevocably appoint Lender as its
agent and attorney-in-fact with full power and authority and with full power of
substitution, whether or not any Default exists, to sign on behalf of Borrowers
any registration, notice of lien, financing statement, or other document
covering the Collateral as Lender reasonably considers necessary in its sole
discretion to create, perfect, and preserve a valid security interest in the
Collateral in favor of Lender, and, after a Default, to do any of the following
as fully as Borrowers lawfully might do:

(a)           At Lender’s sole expense and to make claims with respect to the
Collateral under any insurance policy of Borrowers and to otherwise act to
collect any insurance proceeds with respect to the Collateral

(b)           Exchange, surrender, or substitute any Collateral;

(c)           Renew or extend any liability owing to Borrowers under any
Collateral;

(d)           Defend, settle, prosecute, or compromise any claim, action, or
proceeding with respect to the Collateral;

 
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(e)           Transfer the record title or ownership of any Collateral into the
name of Lender or Lender’s nominee;

(f)           Sell, assign, pledge, indorse, transfer, grant a security interest
in, and make any agreement with respect to, any of the Collateral;

(g)           Demand, collect, receive, and apply to any of the Obligations, in
any order of applica­tion that Lender elects in its sole discretion, all
Proceeds and payments or monies due or to become due to Borrowers in respect of
the Collateral; and

(h)           Endorse and collect all items, checks, drafts, orders, and
instruments for the payment of money that are payable to Borrowers on account of
the Collateral and come into the posses­sion of Lender, to give full discharge
for same, and to apply all amounts col­lected to the Obligations in any order of
application that Lender elects in its sole discre­tion.

This power of attorney is a power coupled with an interest.  Lender is under no
duty to exercise or withhold the exercise of any of the rights, powers,
privileges, and options expressly or implicitly granted to Lender in this
Security Agreement and is not liable for any failure to do so or any delay in
doing so.  Lender is not liable for any act, mistake, omission, or error of
judgment in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct.
 
 11.         Termination.  This Security Agreement and the security interests of
Lender under it will terminate when the all the Obligations have been paid in
full in cash or the Note has been converted into shares of WTI’s Class C
Convertible Preferred Stock in accordance with the terms of the Note, but only
if Borrowers do not file (and none of the creditors of Borrowers file against
them), within 91 calendar days after the first date when all the Obligations are
paid and performed in full, a petition seeking relief under any bankruptcy,
insolvency, reorganization, or debtor relief law and a claim for recovery or
re­payment of any amount paid on the Obligations or for avoidance of any
security interest in the Collateral.  An affidavit or written statement of
Lender, or any duly appointed agent or attorney-in-fact for Lender, that shows
or asserts that any of the Obligations remain unpaid will constitute presumptive
evidence of the continuing effectiveness of this Security Agreement and the
security interests of Lender under it, and any interested person is autho­rized
to rely on it.   When all of the Obligations have been fully paid (or the Note
has been converted in accordance with its terms), Lender promptly shall: (i)
deliver to Borrowers the original Note, marked “cancelled”; and (ii) assign,
indorse, deliver and transfer to Borrowers, against receipt, without recourse to
or warranty by Lender, any and all Col­lateral (if any) that is then held by
Lender under this Security Agreement and has not been sold or otherwise applied
pursuant to the terms of this Security Agreement.  On termination of this
Security Agreement and at the request and at the expense of Borrowers, Lender
shall terminate all effective financing state­ments in favor of Lender that are
then on file or recorded with respect to the Collateral.
 
 
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 12.          Legal Proceedings.  The validity, construction, interpretation,
and enforceability of this Security Agreement are governed by the laws of the
State of Texas and the federal laws of the United States of America, excluding
the laws of those jurisdictions relating to resolution of conflicts with laws of
other jurisdictions and except to the extent the UCC provides for the
application of the law of another state.  Borrowers and Lender consent to the
personal jurisdiction of the state and federal courts in the State of Texas,
stipulate that the proper and convenient venue for any legal proceeding between
them that pertains to either this Security Agreement or any of the Collateral is
the State Court for Tarrant County, Texas, and waive any defenses, whether
asserted by motion or pleading, that this venue is improper or inconvenient.

Except as expressly prohibited by law, Borrowers waive any right they might have
to claim or recover any special, exemplary, punitive, or consequential damages
or any damages other than, or in addition to, actual damages.  Borrowers certify
that neither Lender nor any agent, attorney, or representative of Lender has
represented, expressly or otherwise, that Lender would not seek to enforce the
foregoing waivers or other waivers contained in this Security Agreement, and
acknowledges that Lender has relied on, among other things, the foregoing
waivers and certification.

In any legal proceeding between Borrowers and Lender that arises out of this
Security Agreement and pertains to the validity or enforcement of this Security
Agreement or Lender’s security interests in the Collat­eral granted under it,
the non-prevailing party will reimburse the prevailing party for all reasonable
costs incurred by the prevailing party as a result of the legal proceeding.  If
Lender becomes a party to any legal proceeding arising out of this Security
Agreement that is initiated by any person other than Borrowers and that
per­tains to the valid­ity or enforcement of this Security Agreement or Lender’s
secu­rity interests in the Collateral granted under it, Borrowers shall
reimburse Lender for all reasonable costs incurred by it in con­nection with the
legal proceeding, regardless of who prevails.

BORROWERS KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THEIR RIGHT TO A JURY
TRIAL IN ANY LAWSUIT BY LENDER TO ENFORCE THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS.
 
 13.          Notices.  Every notice, consent, or approval required or permitted
under this Security Agreement will be valid only if it is in writing (whether or
not this Security Agreement expressly states that it must be in writing),
delivered personally or by telecopy, commercial courier, or first class, postage
prepaid United States mail (whether or not certified or registered and
regardless of whether a return receipt is received or requested by the sender)
and addressed by the sender to the party who is the intended recipient at its
address list­ed in this Security Agreement, or to any other address as the party
may have previously designated by written notice given to the other party in
accordance with this section.  A validly given no­tice will be effective on the
earlier of its receipt, if de­livered personally or by telecopy or com­mer­cial
courier, or the third day after it is postmarked by the United States Postal
Service, if delivered by first class, postage prepaid United States mail.  Each
party promptly shall notify the other of any change in its mailing address
listed in this Security Agreement.  Each notice, consent, or approval sent by
telecopy must be confirmed by United States mail in the manner provided in this
section to be valid.  The cur­rent mailing address­es and telecopy numbers for
Borrowers and Lender are as follows:
 
 
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(a)
If to Lender:

Brookhaven Medical, Inc.
11 Paces West Drive
Atlanta, Georgia 30327
Attention:  John Feltman

With a copy to:

Robert Altenbach, Esq.
3050 Peachtree Road, Suite 360
Atlanta, Georgia  30305

(b)           If to Borrowers:

c/o Wound Management Technologies, Inc.
777 Main Street
Suite 3100
Ft. Worth, Texas  76102
Attention:  Robert Lutz

With a copy to:

Richard F. Dahlson, Esq.
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas  75202

14.           Waiver and Amendment; Assignment.

(a)           A waiver, amend­ment, modification, or termination of this
Security Agreement will be valid and effective only if it is in writing and
signed by Borrowers and Lender.  In addition, a written waiver by Lender of a
Default under this Security Agreement will not operate as a waiver of any other
Default or of a succeeding Default under the same provision or as a waiver of
the provision itself.  A delay, omission, or course of dealing on the part of
Lender in exercising any right, power, or remedy will not operate as a waiver of
it, except when this Security Agreement expressly requires the right, power, or
remedy to be exercised within a specified time, and a single or partial exercise
by Lender of any right, power, or remedy does not preclude any further exercise
of it or the exercise of any other right, power, or remedy.  Lender’s exercise
or failure to exercise any right, power, or remedy does not consti­tute a waiver
of any Default by Borrowers under this Security Agreement.  This Security
Agreement is not assignable (by operation of law or otherwise) by Borrowers
without the advance written approval of Lender, which it may withhold in its
sole discretion.
 
 
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(b)           The assignment of this Security Agreement by Borrowers without the
advance written approval of Lender will constitute a Default by Borrowers and
will be invalid and unenforceable as to Lender.

(c)           Lender may assign its rights and interests under this Security
Agreement, and if Lender assigns those rights and interests, Borrowers shall
render performance under this Security Agreement to the assignee.

15.           Miscellaneous.  Time is of the essence with respect to the
performance of Borrowers’ obligations under this Security Agreement.  This
Security Agreement will become effective on the date stated at the end of it,
when it has been signed by Borrowers and Lender.  When any provision of this
Security Agreement requires or prohibits action to be taken by a person, the
provision applies regard­less of whether the action is taken directly or
indirectly by the person.  The headings preceding the sections of this Security
Agreement are solely for convenient reference and neither constitute a part of
this Security Agreement nor affect its meaning, interpretation, or effect. This
Security Agreement inures to the benefit of Lender and its assignees and
suc­cessors in interest and is binding on Borrowers and its assignees and
succes­sors in interest and shall bind all persons that become bound as a debtor
to this Security Agreement.  No reference in this Security Agreement to
“Proceeds” authorizes any sale, transfer, or other disposition of any Collateral
by Borrowers except in the ordinary course of its business.  Each provision of
this Security Agreement should be construed and interpreted so it is valid and
enforceable under applicable law.  If a provision of this Security Agreement (or
the application of it) is held by a court to be invalid or unenforceable under
applicable law, that provision will be deemed separable from the remaining
provisions of this Security Agreement and will not affect the validity or
interpretation of the other provisions of this Security Agreement or the
application of that provision to a person or circumstance to which it is valid
and enforceable.
 
 
11

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IN WITNESS WHEREOF, the Parties have caused this Security Agreement to be
executed by their respective duly authorized officers, as of the date first
above-written.
 
WITNESS:
 
By: /s/ Simone R. Siex
Name: Simone R. Siex
 
 
BROOKHAVEN MEDICAL, INC.
 
By: /s/ John D. Feltman
    John D. Feltman, Chairman, CEO
 
WITNESS:
 
By: /s/ Laura R. Fox
Name: Laura R. Fox
 
 
WOUND MANAGEMENT TECHNOLOGIES, INC.
 
By: /s/ Robert H. Lutz, Jr.
    Robert H. Lutz, Jr.,
    Chief Executive Officer and President
 
WITNESS:
 
By: /s/ Laura R. Fox
Name: Laura R. Fox
 
 
WOUND CARE INNOVATIONS, LLC
 
By: /s/ Robert H. Lutz, Jr.
    Robert H. Lutz, Jr.,
    Chief Executive Officer
 
WITNESS:
 
By: /s/ Laura R. Fox
Name: Laura R. Fox
 
 
 
RESORBABLE ORTHOPEDIC PRODUCTS, LLC
 
By: /s/ Robert H. Lutz, Jr.
    Robert H. Lutz, Jr.,
    President
WITNESS:
 
By: /s/ Laura R. Fox
Name: Laura R. Fox
 
BIOPHARMA MANAGEMENT TECHNOLOGIES, INC.
 
By: /s/ Robert H. Lutz, Jr.
    Robert H. Lutz, Jr.,
    President

S-1

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