Unassociated Document


 

    EXHIBIT
10.45

     


    SECURITY
AGREEMENT

    


    The undersigned, BioDrain Medical,
Inc., a Minnesota corporation with a place of business and executive office
located at 699 Minnetonka Highlands Lane, Orono, Minnesota 55356-9728,
(hereinafter referred to as “Debtor”) hereby grants to the Purchasers listed on
Schedule A to that certain Secured Convertible Note Purchase Agreement dated as
of the date of this Agreement (hereinafter called the “Secured Party”), a
security interest in and agrees and acknowledges that Secured Party has and will
continue to have a security interest in the following:

    


    (A)           All
of Debtor’s inventory of whatever name, nature, kind or description, all
Debtor’s goods held for sale or lease or to be furnished under contracts of
service, finished goods, work in process, raw materials, materials used or
consumed by the Debtor, parts, supplies, all wrapping, packaging, advertising,
labeling, and shipping materials, devices, names and marks, all contract rights
and documents relating to any of the foregoing, whether any of the foregoing be
now existing or hereafter arising, wherever located, now owned or hereafter
acquired by the Debtor (all of which is sometimes hereinafter referred to as
“Inventory”);

    


    (B)           All
of the Debtor’s presently owned and hereafter acquired equipment, machinery,
furniture, fixtures and all other tangible personal property of whatsoever kind
or nature, together with all proceeds thereof, additions and accessions thereto
or replacements thereof or substitutions therefor (all of which is sometimes
hereinafter referred to as “Equipment”);

    


    (C)           All
of the Debtor’s accounts, accounts receivable, notes, bills, drafts,
acceptances, instruments, documents, chattel paper and all other debts,
obligations and liabilities in whatever form owing to the Debtor for goods sold
by it or for services rendered by it, or however otherwise established or
created, all guaranties and security therefor, all right, title and interest of
the Debtor in the goods or services which gave rise thereto, including rights of
an unpaid seller of goods or services; whether any of the foregoing be now
existing or hereafter arising, now or hereafter received by or owing or
belonging to the Debtor (all of which are sometimes hereinafter referred to as
“Accounts”);

    


    (D)           All
of the Debtor’s general intangibles, including without limitation, names,
goodwill, trade secrets, copyrights, trademarks, trademark applications,
tradenames, patents, patent applications, licenses, other intellectual property,
permits, governmental approvals, deposit accounts, tax refunds, claims under
insurance policies (whether or not proceeds from Collateral), other rights to
payment, rights of setoff, choses in action, rights under judgments, computer
programs and software, contract rights, and all contracts and agreements to, or
of which it is a party or beneficiary, and all intangible personal property of
whatsoever kind or nature now owned by the Debtor as well as any and all thereof
that may be hereafter acquired and in and to all proceeds thereof;

    


    (E)           All
of the Debtor’s books and records, as they exist from time to time, relating to
(A) through (D) above, inclusive;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (F)           All
other assets of every nature and description, whether it be now existing or
hereafter arising and whether now or hereafter belonging to the
Debtor;

    


    (all
hereinafter sometimes collectively referred to as “Collateral”); to secure the
payment of all sums due or which may become due under certain Secured
Convertible Notes, due April __, 2008, of the Debtor in the original aggregate
principal amount of One Hundred Fifty Thousand Dollars ($150,000), such notes
being issued pursuant to a certain Secured Convertible Note Purchase Agreement
(the “Purchase Agreement”) by and between the Debtor and Secured Party of even
date herewith (hereinafter sometimes collectively referred to as “Obligation” or
“Obligations”).

    


    I.           
  WARRANTIES
AND COVENANTS.

    


    The Debtor hereby warrants and
covenants that:

    


    (A)           The
Equipment and Inventory are used primarily for business purposes.

    


    (B)           The
Equipment and Inventory of the Debtor will be kept at the Debtor’s places of
business, set forth above.

    


    (C)           Except
for the security interest granted hereby the Debtor is the owner of its
presently owned Collateral and will be the owner of its Collateral hereafter
acquired free from any adverse lien, security interest or encumbrance, and the
Debtor will defend the Collateral against the claims and demands of all persons
at any time claiming the same or any interest therein.

    


    (D)           No
financing statements covering any Collateral or any proceeds thereof are on file
in any public office, and at the request of Secured Party, the Debtor will join
with Secured Party in executing one or more (i) financing statements pursuant to
the Uniform Commercial Code, (ii) title certificate lien application forms; and
(iii) other documents necessary or advisable to perfect the security interests
evidenced hereby, all in form satisfactory to Secured Party and the Debtor will
pay the cost of filing the same or filing or recording this Agreement in all
public offices wherever filing or recording is deemed by Secured Party to be
necessary or desirable.

    


    (E)           The
Debtor will have and maintain insurance at all times with respect to all its
Collateral against risks of fire (including so-called extended coverage), theft,
embezzlement and such other risks as Secured Party may reasonably require
containing such terms, in such form, for such periods and written by such
companies as may be reasonably satisfactory to Secured Party.

    


    (F)           The
Debtor will upon request made by the Secured Party render to the Secured Party a
list of all Accounts and a statement indicating the total dollar amount of the
Accounts then outstanding.

    


    (G)           The
Debtor will keep its Collateral free from any adverse lien, security interest or
encumbrances.  The Debtor will at all times keep accurate and complete
records of its Accounts.  The Debtor shall immediately notify the
Secured Party of any event causing material loss or depreciation in value of any
of its Accounts and the amount of such loss or depreciation.

     

    
      
         

      

      
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    II.            ADDITIONAL RIGHTS AND
ASSURANCES.

    


    (A)           At
the Secured Party’s request, the Debtor at its expense will promptly and duly
execute and deliver such documents and assurances and take such actions as may
be necessary or desirable or as the Secured Party may request in order to
correct any defect, error or omission which may at any time be discovered or to
more effectively carry out the intent and purpose of this Agreement and to
establish, perfect and protect the Secured Party’s security interest, rights and
remedies created or intended to be created hereunder.

    


    (B)           Subject
to the law of the State of Minnesota., the Secured Party will at any time
following an occurrence of an Event of Default hereunder have the right to take
physical possession of the Collateral and to maintain such possession on the
Debtor’s premises or to remove the Collateral or any part thereof to such other
places as the Secured Party may desire.  If the Secured Party
exercises such right, the Debtor shall at its sole expense upon the Secured
Party’s request assemble the same and make it available to the Secured Party at
a place reasonably convenient to the Secured Party.

    
 

    III.           EVENTS OF
DEFAULT.

    


    The Debtor shall be in default under
this Agreement upon the happening of any of the following events or conditions
(individually and collectively an “Event of Default”):

    


    (A)           Failure
by the Debtor to observe or perform any covenant or agreement referred to herein
and, if no other grace or cure period is applicable thereto, the continuance of
such failure for fifteen (15) business days;

    


    (B)           Sale,
transfer or assignment of any of the Collateral (including via an assignment of
transfer of any interest of the Debtor) (except the sale of inventory in the
ordinary course of business); or

    


    (C)           An
Event of Default (as defined in the Purchase Agreement or the Notes, or under
any of the documents referred to therein) shall have occurred and is continuing
and such Event of Default has not been annulled.

    


    IV.           REMEDIES.

    


    (A)           If
an Event of Default occurs:

    


    (1)           The
Secured Party may declare all obligations secured hereby to be immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived.

     

    
      
         

      

      
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    (2)           The
Secured Party may exercise and shall have any and all rights and remedies
accorded it by the Minnesota. Uniform Commercial Code or the Uniform Commercial
Code as adopted in such state whose laws govern the disposition of certain
Collateral.

    


    (B)           No
delay in accelerating the maturity of any obligation as aforesaid or in taking
any other action with respect to any Event of Default or in exercising any
rights with respect to the Collateral such affect the rights of the Secured
Party later to take such action with respect thereto, and no waiver as to one
Event of Default shall affect rights as to any other default.

    


    V.       
    MISCELLANEOUS.

    


    (A)           The
Debtor irrevocably

    


    (1)           agrees
that any suit, action, or other legal proceeding arising out of this Agreement
may be brought in the courts of record of the State of Minnesota. or the courts
of the United States located in such state;

    


    (2)           consents
to the jurisdiction of each such court in any such suit; action or proceeding;
and

    


    (3)           to
the extent permitted under applicable law, waives any objection which it may
have to the laying of venue of such suit, action or proceeding in any of such
courts and waives any right to a trial by jury in any of such
courts.

    


    (B)           In
case any one or more of the provisions contained herein should be invalid,
illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

    


    (C)           All
rights of the Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all obligations of the Debtor shall bind the
successors or assigns of the Debtor.  All the provisions of this
Agreement shall be construed by and administered in accordance with the local
laws of the State of Minnesota..  This Agreement shall become
effective when it is signed by the Debtor.  The Debtor acknowledges
receipt of a copy of this Agreement.

    


    (D)           In
the absence of gross negligence or willful misconduct, neither the Secured Party
nor any attorney-in-fact appointed hereunder shall be liable to the Debtor or
any other person for any act or omission, any mistake of fact or any error of
judgment in exercising any right or remedy granted herein.

    


    REMAINDER
OF PAGE INTENTIONALLY BLANK

     

    
      
         

      

      
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    IN WITNESS WHEREOF, THE DEBTOR HAS
EXECUTED THIS AGREEMENT AS OF JULY __, 2007.

     

    
    

     

    
      	 	      
              DEBTOR:

              BIODRAIN
      MEDICAL, INC.

            
	 	 
	 	 
	 	      
              By:           /s/ Kevin
      Davidson

               Kevin
      Davidson, CEO

            


    

     

     

    PURCHASER(S):

    


    


    CORE FUND
MANAGEMENT, LP

    By:
Cascade Management LLC

    Its:
General Partner

    


    By:           /s/ David Baker                                           

     David Baker, Manager

     

    
      
         

      

      
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