Exhibit 10.2


 


APOGEE TECHNOLOGY,
INC. AND CERTAIN OF ITS SUBSIDIARIES

MASTER SECURITY AGREEMENT


 


To:                              Laurus
Master Fund, Ltd.

c/o M&C Corporate Services Limited

P.O. Box 309 GT

Ugland House

South Church Street

George Town

Grand Cayman, Cayman Islands


 


Date: August 9, 2005


 


To Whom It May Concern:


 


1.             To
secure the payment of all Obligations (as hereafter defined), Apogee Technology, Inc.,
a Delaware corporation (the “Company”), each of the other undersigned parties
(other than Laurus Master Fund, Ltd., (“Laurus”)) and each other entity that is
required to enter into this Master Security Agreement (each an “Assignor” and,
collectively, the “Assignors”) hereby assigns and grants to Laurus a continuing
security interest in all of the following property now owned or at any time
hereafter acquired by such Assignor, or in which such Assignor now has or at
any time in the future may acquire any right, title or interest (the “Collateral”):
all cash, cash equivalents, accounts, accounts receivable, deposit accounts, inventory,
equipment, goods, fixtures, documents, instruments (including, without
limitation, promissory notes), contract rights, general intangibles (including,
without limitation, payment intangibles and an absolute right to license on
terms no less favorable than those current in effect among such Assignor’s
affiliates), chattel paper, supporting obligations, investment property
(including, without limitation, all partnership interests, limited liability
company membership interests and all other equity interests owned by any
Assignor), letter-of-credit rights, trademarks, trademark applications,
tradestyles, patents, patent applications, copyrights, copyright applications
and other intellectual property in which such Assignor now has or hereafter may
acquire any right, title or interest, all proceeds and products thereof
(including, without limitation, proceeds of insurance) and all additions,
accessions and substitutions thereto or therefor.  In the event any Assignor wishes to finance
the acquisition in the ordinary course of business of any hereafter acquired
equipment and has obtained a written commitment from an unrelated third party
financing source to finance such equipment, Laurus shall release its security
interest on such hereafter acquired equipment so financed by such third party
financing source.  Except as otherwise
defined herein, all capitalized terms used herein shall have the meanings
provided such terms in the Securities Purchase Agreement referred to below.


 


2.             The
term “Obligations” as used herein shall mean and include all debts, liabilities
and obligations owing by each Assignor to Laurus arising under, out of, or in
connection with: (i) that certain Securities Purchase Agreement dated as
of the date hereof by and between the Company and Laurus (the “Securities
Purchase Agreement”) and (ii) the Related Agreements


 





















 


referred to in the Securities
Purchase Agreement (the Securities Purchase Agreement and each Related
Agreement, as each may be amended, modified, restated or supplemented from time
to time, collectively, the “Documents”), and in connection with any documents,
instruments or agreements relating to or executed in connection with the
Documents or any documents, instruments or agreements referred to therein or
otherwise, and in connection with any other indebtedness, obligations or
liabilities of each such Assignor to Laurus, whether now existing or hereafter
arising, direct or indirect, liquidated or unliquidated, absolute or
contingent, due or not due and whether under, pursuant to or evidenced by a
note, agreement, guaranty, instrument or otherwise, including, without
limitation, obligations and liabilities of each Assignor for post-petition
interest, fees, costs and charges that accrue after the commencement of any
case by or against such Assignor under any bankruptcy, insolvency,
reorganization or like proceeding (collectively, the “Debtor Relief Laws”) in
each case, irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against any Assignor
under any Debtor Relief Law.


 


3.             Each
Assignor hereby jointly and severally represents, warrants and covenants to
Laurus that:


 


(a)           it
is a corporation, partnership or limited liability company, as the case may be,
validly existing, in good standing and formed under the respective laws of its
jurisdiction of formation set forth on Schedule A, and each Assignor will
provide Laurus thirty (30) days’ prior written notice of any change in any of
its respective jurisdiction of formation;


 


(b)           its
legal name is as set forth in its Certificate of Incorporation or other
organizational document (as applicable) as amended through the date hereof and
as set forth on Schedule A, and it will provide Laurus thirty (30) days’
prior written notice of any change in its legal name;


 


(c)           its
organizational identification number (if applicable) is as set forth on Schedule A
hereto, and it will provide Laurus thirty (30) days’ prior written notice of
any change in its organizational identification number;


 


(d)           it
is the lawful owner of its Collateral and it has the sole right to grant a
security interest therein and will defend the Collateral against all claims and
demands of all persons and entities;


 


(e)           it
will keep its Collateral free and clear of all attachments, levies, taxes,
liens, security interests and encumbrances of every kind and nature (“Encumbrances”),
except (i) Encumbrances securing the Obligations and (ii) Encumbrances
securing indebtedness of each such Assignor not to exceed $100,000 in the
aggregate for all such Assignors so long as all such Encumbrances are removed
or otherwise released to Laurus’ satisfaction within ten (10) days of the
creation thereof;


 


2





















 


(f)            it
will, at its and the other Assignors’ joint and several cost and expense keep
the Collateral in good state of repair (ordinary wear and tear excepted) and
will not waste or destroy the same or any part thereof other than ordinary
course discarding of items no longer used or useful in its or such other
Assignors’ business;


 


(g)           it
will not, without Laurus’ prior written consent, sell, exchange, lease or
otherwise dispose of any Collateral, whether by sale, lease or otherwise,
except for the sale of inventory in the ordinary course of business and for the
disposition or transfer in the ordinary course of business during any fiscal
year of obsolete and worn-out equipment or equipment no longer necessary for
its ongoing needs, having an aggregate fair market value of not more than
$100,000 and only to the extent that:


 


(i)            the
proceeds of each such disposition are used to acquire replacement Collateral
which is subject to Laurus’ first priority perfected security interest, or are
used to repay the Obligations or to pay general corporate expenses; or


 


(ii)           following
the occurrence of an Event of Default which continues to exist the proceeds of
which are remitted to Laurus to be held as cash collateral for the Obligations.


 


(h)           it
will insure or cause the Collateral to be insured in Laurus’ name (as an additional
insured and loss payee) against loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other hazards as Laurus shall specify in
amounts and under policies by insurers acceptable to Laurus and all premiums
thereon shall be paid by such Assignor and the policies delivered to
Laurus.  If any such Assignor fails to do
so, Laurus may procure such insurance and the cost thereof shall be promptly
reimbursed by the Assignors, jointly and severally, and shall constitute
Obligations;


 


(i)            it
will at all reasonable times allow Laurus or Laurus’ representatives free
access to and the right of inspection of the Collateral; and


 


(j)            such
Assignor (jointly and severally with each other Assignor) hereby indemnifies
and saves Laurus harmless from all loss, costs, damage, liability and/or
expense, including reasonable attorneys’ fees, that Laurus may sustain or incur
to enforce payment, performance or fulfillment of any of the Obligations and/or
in the enforcement of this Master Security Agreement or in the prosecution or
defense of any action or proceeding either against Laurus or any Assignor
concerning any matter growing out of or in connection with this Master Security
Agreement, and/or any of the Obligations and/or any of the Collateral except to
the extent caused by Laurus’ own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and nonappealable
decision).


 


4.             The
occurrence of any of the following events or conditions shall constitute an “Event
of Default” under this Master Security Agreement:


 


3





















 


(a)           any
covenant or any other term or condition of this Master Security Agreement is
breached in any material respect and such breach, to the extent subject to
cure, shall continue without remedy for a period of fifteen (15) days after the
occurrence thereof;


 


(b)           any
representation or warranty, or statement made or furnished to Laurus under this
Master Security Agreement by any Assignor or on any Assignor’s behalf should
prove to any time be false or misleading in any material respect on the date as
of which made or deemed made;


 


(c)           the
loss, theft, substantial damage, destruction, sale or encumbrance to or of any
of the Collateral or the making of any levy, seizure or attachment thereof or
thereon except to the extent:


 


(i)            such
loss is covered by insurance proceeds which are used to replace the item or
repay Laurus; or


 


(ii)           said
levy, seizure or attachment does not secure indebtedness in excess of $200,000
in the aggregate for all Assignors and such levy, seizure or attachment has
been removed or otherwise released within ten (10) days of the creation or
the assertion thereof;


 


(d)           an
Event of Default shall have occurred under and as defined in any Document.


 


5.             Upon
the occurrence of any Event of Default and at any time thereafter, Laurus may
declare all Obligations immediately due and payable and Laurus shall have the
remedies of a secured party provided in the Uniform Commercial Code as in
effect in the State of New York, this Agreement and other applicable law.  Upon the occurrence of any Event of Default
and at any time thereafter, Laurus will have the right to take possession of
the Collateral and to maintain such possession on any Assignor’s premises or to
remove the Collateral or any part thereof to such other premises as Laurus may
desire.  Upon Laurus’ request, each
Assignor shall assemble the Collateral and make it available to Laurus at a
place of Laurus’ choosing; provided that any related shipping costs will be
initially paid by Laurus and subsequently subtracted from the proceeds of any
sale. If any notification of intended disposition of any Collateral is required
by law, such notification, if mailed, shall be deemed properly and reasonably
given if mailed at least ten (10) days before such disposition, postage
prepaid, addressed to the applicable Assignor either at such Assignor’s address
shown herein or at any address appearing on Laurus’ records for such
Assignor.  Any proceeds of any disposition
of any of the Collateral shall be applied by Laurus to the payment of all
expenses in connection with the sale of the Collateral, including reasonable
attorneys’ fees and other legal expenses and disbursements and the reasonable
expenses of retaking, holding, preparing for sale, selling, and the like, and
any balance of such proceeds may be applied by Laurus toward the payment of the
Obligations in such order of application as Laurus may elect, and each Assignor
shall be liable for any deficiency.  For
the avoidance of doubt, following the occurrence and during the continuance of
an Event of Default, Laurus shall have the immediate right to withdraw any and
all monies contained in any deposit


 


4





















 


account in the name of any
Assignor and controlled by Laurus and apply same to the repayment of the
Obligations (in such order of application as Laurus may elect).


 


6.             If
any Assignor defaults in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on such Assignor’s
part to be performed or fulfilled under or pursuant to this Master Security
Agreement, Laurus may, at its option without waiving its right to enforce this
Master Security Agreement according to its terms, immediately or at any time
thereafter and without notice to any Assignor, perform or fulfill the same or
cause the performance or fulfillment of the same for each Assignor’s joint and
several account and at each Assignor’s joint and several cost and expense, and
the cost and expense thereof (including reasonable attorneys’ fees) shall be
added to the Obligations and shall be payable on demand with interest thereon
at the highest rate permitted by law, or, at Laurus’ option, debited by Laurus
from any other deposit accounts in the name of any Assignor and controlled by
Laurus.


 


7.             Each
Assignor appoints Laurus, any of Laurus’ officers, employees or any other
person or entity whom Laurus may designate as such Assignor’s attorney, with
power to execute such documents in each such Assignor’s behalf and to supply
any omitted information and correct patent errors in any documents executed by
any Assignor or on any Assignor’s behalf; to file financing statements against
such Assignor covering the Collateral (and, in connection with the filing of
any such financing statements, describe the Collateral as “all assets and all
personal property, whether now owned and/or hereafter acquired” (or any
substantially similar variation thereof)); to sign such Assignor’s name on
public records; and to do all other things Laurus deem necessary to carry out
this Master Security Agreement.  Each
Assignor hereby ratifies and approves all acts of the attorney and neither
Laurus nor the attorney will be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law other than gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).  This power being coupled with an interest, is
irrevocable so long as any Obligations remains unpaid.


 


8.             No
delay or failure on Laurus’ part in exercising any right, privilege or option
hereunder shall operate as a waiver of such or of any other right, privilege,
remedy or option, and no waiver whatever shall be valid unless in writing,
signed by Laurus and then only to the extent therein set forth, and no waiver
by Laurus of any default shall operate as a waiver of any other default or of
the same default on a future occasion. 
Laurus’ books and records containing entries with respect to the
Obligations shall be admissible in evidence in any action or proceeding, shall
be binding upon each Assignor for the purpose of establishing the items therein
set forth and shall constitute prima facie proof thereof.  Laurus shall have the right to enforce any
one or more of the remedies available to Laurus, successively, alternately or
concurrently.  Each Assignor agrees to
join with Laurus in executing such documents or other instruments to the extent
required by the Uniform Commercial Code in form satisfactory to Laurus and in
executing such other documents or instruments as may be required or deemed
necessary by Laurus for purposes of affecting or continuing Laurus’ security
interest in the Collateral.


 


9.             THIS
MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH


 


5





















 


STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.  All of
the rights, remedies, options, privileges and elections given to Laurus
hereunder shall inure to the benefit of Laurus’ successors and assigns.  The term “Laurus” as herein used shall
include Laurus, any parent of Laurus’, any of Laurus’ subsidiaries and any
co-subsidiaries of Laurus’ parent, whether now existing or hereafter created or
acquired, and all of the terms, conditions, promises, covenants, provisions and
warranties of this Agreement shall inure to the benefit of each of the
foregoing, and shall bind the representatives, successors and assigns of each
Assignor.


 


10.           Each
Assignor hereby consents and agrees that the state of federal courts located in
the County of New York, State of New York shall have exclusive jurisdiction to
hear and determine any claims or disputes between Assignor, on the one hand,
and Laurus, on the other hand, pertaining to this Master Security Agreement or
to any matter arising out of or related to this Master Security Agreement,
provided, that Laurus and each Assignor acknowledges that any appeals from
those courts may have to be heard by a court located outside of the County of
New York, State of New York, and further provided, that nothing in this Master
Security Agreement shall be deemed or operate to preclude Laurus from bringing
suit or taking other legal action in any other jurisdiction to collect, the
Obligations, to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of
Laurus.  Each Assignor expressly submits
and consents in advance to such jurisdiction in any action or suit commenced in
any such court, and each Assignor hereby waives any objection which it may have
based upon lack of personal jurisdiction, improper venue or forum  non
conveniens.  Each Assignor hereby
waives personal service of the summons, complaint and other process issues in
any such action or suit and agrees that service of such summons, complaint and
other process may be made by registered or certified mail addressed to such
assignor at the address set forth on the signature lines hereto and that
service so made shall be deemed completed upon the earlier of such Assignor’s
actual receipt thereof or five (5) days after deposit in the U.S. mails,
proper postage prepaid.


 


The parties desire that their disputes be resolved by
a judge applying such applicable laws. 
Therefore, to achieve the best combination of the benefits of the
judicial system and of arbitration, the parties hereto waive all rights to
trial by jury in any action, suite, or proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between Laurus, and/or
any Assignor arising out of, connected with, related or incidental to the relationship
established between them in connection with this Master Security Agreement or
the transactions related hereto.


 


11.           It
is understood and agreed that any person or entity that desires to become an
Assignor hereunder, or is required to execute a counterpart of this Master
Security Agreement after the date hereof pursuant to the requirements of any
Document, shall become an Assignor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering supplements
to such exhibits and annexes to such Documents as Laurus shall reasonably
request and (z) taking all actions as specified in this Master Security
Agreement as would have been taken by such Assignor had it been an original
party to this Master Security Agreement, in each case with all documents
required above to be delivered to Laurus and with all documents and actions
required above to be taken to the reasonable satisfaction of Laurus.


 


6





















 


12.           All
notices from Laurus to any Assignor shall be sufficiently given if mailed or
delivered to such Assignor’s address set forth below.


 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
  APOGEE
  TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACKNOWLEDGED:

  
	
   

  	
   

  
	
   

  	
  LAURUS
  MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title

  



 


7





















 


SCHEDULE A


 


	
  Entity

  	
   

  	
  Jurisdiction of

  Formation

  	
   

  	
  Employer Identification

  Number

  	
   

  
	
  Apogee Technology, Inc.

  	
   

  	
  Delaware

  	
   

  	
   

  	
   

  
	
  Dubla, Inc.

  	
   

  	
  Delaware

  	
   

  	
  N/A