Document:

Exhibit
4.1

 

Form
of Stock Certificate

 

	
  

  	
  PRESIDENT
  SECRETARY B&G Foods, Inc. SEAL 1996 CORPORATE
  DELAWARE BGS This Certifies that is the owner of CUSIP
  05508R 10 6 SEE REVERSE FOR CERTAIN DEFINITIONS COMMON STOCK PAR VALUE $.01
  fully paid and non-assessable shares of the above Corporation transferable on
  the books of the Corporation by the holder hereof in person or by duly
  authorized attorney upon surrender of this Certificate properly endorsed.
  This Certificate is not valid unless countersigned and registered by the
  Transfer Agent and Registrar. In Witness Whereof, the said Corporation has
  caused this Certificate to be signed by its duly authorized officers and to
  be sealed with the Seal of the Corporation. Dated: Countersigned and
  Registered: THE BANK OF NEW YORK MELLON (NEW YORK) Transfer Agent and
  Registrar By Authorized Signature B&G Foods,
  Inc. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE Colors Selected for
  Printing: Logo is in EPS format; Prints in PMS Warm Red and Black. Intaglio
  prints in SC-20 Dark Brown. COLOR: This proof was printed from a digital file
  or artwork on a graphics quality, color laser printer. It is a good
  representation of the color as it will appear on the final product. However,
  it is not an exact color rendition, and the final printed product may appear
  slightly different from the proof due to the difference between the dyes and
  printing ink. PLEASE INITIAL THE APPROPRIATE SELECTION FOR THIS PROOF: OK AS
  IS OK WITH CHANGES MAKE CHANGES AND SEND ANOTHER PROOF THIS CERTIFICATE IS
  TRANSFERABLE IN JERSEY CITY, NJ, NEW YORK, NY AND PITTSBURGH, PA ABnote North America 711 ARMSTRONG LANE COLUMBIA,
  TENNESSEE 38401 (931) 388-3003 SALES: HOLLY GRONER
  931-490-7660 PROOF OF: AUGUST 4, 2010 B&G FOODS
  WO 2128 OPERATOR:JB NEW 

  

 

 

	
  

  	
  For value
  received, hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY
  OR OTHER IDENTIFYING NUMBER OF ASSIGNEE Please print or typewrite name and
  address including postal zip code of assignee shares of the capital stock
  represented by the within Certificate, and do hereby irrevocably constitute
  and appoint attorney, to transfer the said stock on the books of the
  within-named Corporation with full power of substitution in the premises.
  Dated Signature(s) Guaranteed: THE SIGNATURE(S) MUST BE GUARANTEED BY AN
  ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
  ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
  GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. The following
  abbreviations, when used in the inscription on the face of this certificate,
  shall be construed as though they were written out in full according to
  applicable laws or regulations: TEN COM TEN ENT JT TEN – – – as tenants in
  common as tenants by the entireties as joint tenants with right of
  survivorship and not as tenants in common UNIF GIFT MIN ACT/UNIF TRANS MIN
  ACT– Custodian (Cust) (Minor) under Uniform Gifts/Trans to Minors Act (State)
  Additional abbreviations may also be used though not in the above list.
  NOTICE: The signature to this assignment must correspond with the name as
  written upon the face of the Certificate in every particular, without
  alteration or enlargement or any change whatever. PLEASE INITIAL THE
  APPROPRIATE SELECTION FOR THIS PROOF: OK AS IS OK WITH CHANGES MAKE CHANGES
  AND SEND ANOTHER PROOF ABnote North America 711 ARMSTRONG LANE COLUMBIA,
  TENNESSEE 38401 (931) 388-3003 SALES: HOLLY GRONER 931-490-7660 PROOF OF: AUGUST
  4, 2010 B&G FOODS WO 2128 BK OPERATOR:JB NEWExhibit 10.1

 

CONVERTIBLE PROMISSORY NOTE

 

	
  $10,000,000

  	
   

  	
  Dated as of August 10, 2010

  

 

FOR
VALUE RECEIVED, the undersigned, BioSphere Medical, Inc., a Delaware
corporation (the “Borrower”), hereby promises to pay to the order of
Merit Medical Systems, Inc., a Utah corporation (the “Lender”) on the
dates specified in this Convertible Promissory Note (this “Note”), the
principal sum of TEN MILLION U.S.
dollars ($10,000,000) (the “Loan”).

 

Borrower
promises to pay principal and interest on the unpaid balance of the Loan from
and including the date the Loan is made to and including the date such amount
is paid in full on the dates and at a rate per annum specified in Section 4
hereof.

 

1.                                       Certain
Definitions.  As used
herein, the following terms shall have the corresponding meanings:

 

“Affiliate”
shall mean, as to any Person, any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person; provided, however, Lender shall not be deemed to be an Affiliate of
Borrower.  For purposes of this
definition, a Person (a “Controlled Person”) shall be deemed to be “controlled
by” another Person (a “Controlling Person”) if the Controlling Person
possesses, directly or indirectly, power to direct or cause the direction of
the management and policies of the Controlled Person whether by contract or
otherwise.

 

“Borrower”
shall have the meaning given to such term in the first paragraph of this Note.

 

“Borrower’s
Conversion Notice” shall have the meaning given to such term in Section
26(b) hereof.

 

“Borrower’s
Conversion Option” shall have the meaning given to such term in Section
26(b) hereof.

 

 “Business Day” shall mean a day other
than a Saturday, Sunday or other day on which commercial banks in the State of
Delaware  are authorized or
required by law to close.

 

“Certificate
of Designations” shall mean that certain Certificate of Designations,
Preferences and Rights of Series A Preferred Stock of BioSphere Medical, Inc.,
dated November 9, 2004, as amended by that certain Amendment No. 1 to
Certificate of Designations, Preferences and Rights of Series A Preferred Stock
of BioSphere Medical, Inc., dated May 18, 2005.

 

“Company Series A Preferred Stock” shall mean all shares of
Series A Preferred Stock of Borrower issued pursuant to the Certificate of
Designations.

 

 

“Default” shall mean an event which with notice or lapse of time
or both would become an Event of Default.

 

“Default
Interest Rate” shall mean an annual rate of interest equal to the Interest
Rate plus three percent (3%).

 

“Dollars”
and “$” shall mean lawful money of the United States.

 

“Event
of Default” has the meaning set forth in Section 10.

 

“GAAP” shall mean generally accepted accounting principles in
the United States of America, consistently applied.

 

“Governmental
Authority” shall mean the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank
organization, or other entity exercising executive, legislative, judicial,
taxing or regulatory powers or functions of or pertaining to government.

 

“Guarantor”
shall have its meaning set forth in the Guaranty.

 

“Guaranty”
shall mean that certain Guaranty, dated as of the date hereof, executed by
Guarantor in favor of Lender.

 

“Interest
Period” shall mean the period of time beginning on the first day of a each
calendar month and ending on last day of such calendar month, provided,
however, the first Interest Period shall commence on the date of the first
advance of Loan funds.

 

“Interest
Rate” shall mean an annual rate of interest equal to the sum of the Prime
Rate plus two percent (2.0%), increasing or decreasing with each increase or
decrease in the Prime Rate (as and when the Prime Rate changes as described
herein); provided, however, in no event shall the Base Rate be less than six
percent (6.0%).

 

“Lender”
shall have the meaning given to such term in the first paragraph of this Note,
together with its successors and/or permitted assigns.

 

“Lender’s
Account” shall mean the account held at Zions Bank, in the name of Merit
Medical Systems, Inc., with an ABA Routing Number of 124000054 and an Account
Number of: 550-00037-6, or such other account designated in writing by Lender.

 

“Lender’s
Conversion Option” shall have the meaning given to such term in Section
26(a) hereof.

 

 “Loan” shall mean the loan made by
Lender to Borrower in the original principal amount of up to $10,000,000.00 as
evidenced by this Note.

 

2

 

“Maturity
Date” shall mean  the earlier to occur of (a) February 10,
2012, or (ii) the consummation of any merger, consolidation, business
combination, tender offer or similar transaction (including without limitation
any Superior Proposal as defined in the Merger Agreement) in which the holders
of Borrower’s voting stock immediately prior to such transaction hold less than
a majority voting power of Borrower or any successor entity (excluding the
merger contemplated by the Merger Agreement), or such earlier date as the
Obligations become due and payable as provided herein.

 

“Merger
Agreement” shall mean that certain Agreement and Plan of Merger dated May
13, 2010, by and among Lender, Merit Bioacquisition Co. and Borrower.

 

“Note”
shall mean this Convertible Promissory Note.

 

“Obligations”
shall mean all of the obligations of Borrower under this Note.

 

“Officer’s
Certificate” shall mean a certificate executed by a Responsible Officer of
Borrower solely in his/her capacity as such.

 

“Person”
shall mean any natural person, corporation, division of a corporation,
partnership, limited liability company, trust, joint venture, association,
company, estate, unincorporated organization or Governmental Authority or any
agency or political subdivision thereof.

 

“Prime
Rate” shall mean, with respect to each Interest Period, the annual rate of
interest announced by Wells Fargo Bank, National Association (or, if Wells
Fargo Bank, National Association fails to publish a “prime rate” or “base rate”
another financial institution with a main or branch office in New York,
New York, selected, from time to time, by Lender) from time to time as its
“prime rate” or “base rate” in effect at its principal office in New York,
New York at 5:00 p.m., New York City time on the second (2nd) full Business Day prior to
the applicable Interest Period.

 

“Redemption
Date” shall have the meaning set forth in Section 7(a) of the Certificate
of Designations.

 

“Redemption
Notice” shall have the meaning set forth in Section 7(a) of the Certificate
of Designations.

 

“Redemption
Payment” shall have the meaning set forth in Section 7(a) of the
Certificate of Designations.

 

“Responsible
Officer” shall mean the chief executive officer, president, chief financial
officer, treasurer, vice president, controller or chief accounting officer of
Borrower.

 

“Securities
Act” shall have the meaning given to such term in Section 26(d) hereof.

 

3

 

 “Taxes” shall mean, with respect to any
Person, all taxes, assessments, imposts, duties, governmental charges or levies
imposed directly or indirectly on such Person or its income, profits or
property by any Government Authority.

 

2.                                       Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, restated, supplemented, extended,
amended and restated or otherwise modified, renewed or replaced (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person’s permitted successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Note in its entirety and not to any particular provision hereof,  and (d) all references herein to Sections
shall be construed to refer to Sections of this Note.  Capitalized terms used, but not otherwise
defined herein, shall have their respective meanings set forth in the Merger
Agreement.

 

3.                                       Loan Funding;
Conditions Precedent to Loan.  At least one (1) Business Day prior to the
Redemption Date, Lender hereby commits to fund the Loan to an account
designated by Borrower in the amount of the aggregate Redemption Payment
required to redeem all outstanding shares of Series A Preferred Stock, provided
that each of the following conditions precedent shall have been satisfied:

 

(a)   no Event of Default set
forth in section 10(b), 10(c) or 10(d) shall have occurred prior to the date a
valid Redemption Notice has been sent by Borrower to the holders of the Series
A Preferred Stock and such Event of, Default shall be continuing;

 

(b)   no Event of Default set
forth in section 10(a), 10(e), 10(f), 10(g), 10(h) or 10(i) shall have
occurred, and such event of Default shall be continuing;

 

(c)   a valid Redemption Notice
has been sent by Borrower to the holders of the Series A Preferred Stock;

 

(d)   the Redemption Date under
the Redemption Notice is prior to the Outside Date;

 

(e)   shares of the Series A
Preferred Stock remain outstanding;

 

(f)   Borrower has, on the date
which is three (3) Business Days prior to the Redemption Date, delivered an
Officer’s Certificate to Lender certifying (i) that each of the foregoing
conditions precedent have been fully satisfied by Borrower, (ii) that no holder
of the Series A Preferred Stock has exercised its right to convert all or any
portion of the Series A Preferred Stock into Company Common Stock as permitted
by the 

 

4

 

Certificate
of Designations, or if a holder has elected to convert all or a portion of the
Series A Preferred Stock into Company Common Stock, the name of the holder and
the amount of Series A Preferred Stock which such holder has elected to convert
into Company Common Stock, (iii) no holder of the Series A Preferred Stock has
objected to the validity of the Redemption Notice, except for such objections
that have been resolved (provided, if a holder of Series A Preferred Stock has
objected to the validity of the Redemption Notice, the funding of the Loan
shall be withheld only with respect to such objecting holder (assuming all
conditions for funding are met for each other holder of Series A Preferred
Stock)), and (iv) the amount of the aggregate Redemption Payment required to
redeem all shares of Series A Preferred Stock outstanding on that date.

 

Without limiting the generality of the foregoing, Lender’s obligation
to fund the Loan shall automatically terminate in the event (x) all outstanding
shares of the Series A Preferred Stock have been converted into Company Common
Stock, (y) the redemption of the Series A Preferred Stock does not occur prior
to the Outside Date, or (z) the Merger Agreement has been terminated (in
accordance with its terms) prior to the date a valid Redemption Notice has been
sent by Borrowers to the holders of the Series A Preferred Stock.

 

4.                                       Payments;
Prepayments.

 

(a)                                  Interest.  From the date Lender advances any portion of
the Loan until repayment of this Loan in full, interest (computed on the basis
of a year of 360 days assuming 12 equal 30 day months) shall accrue on the
outstanding principal amount of the Loan for each Interest Period at the Interest
Rate.  Any interest which has accrued and
not been paid shall be added to the outstanding principal balance on the Loan
on the last day of each Interest Period. 
Borrower shall not be required to make regularly scheduled payments of
principal or interest, except as otherwise expressly provided herein.

 

(b)                                 Mandatory Prepayments.  In the event (i) Lender has advanced proceeds
of the Loan for the payment of the Redemption Payment and a holder of the
Series A Preferred Stock subsequently elects to convert shares of Series A
Preferred Stock into Company Common Stock for which proceeds have been
advanced, or (ii) Borrower has not otherwise applied all of the proceeds of the
Loan to the payment of the Redemption Payment, then, in either case, within two
(2) Business Days of the Redemption Date, Borrower shall pay to Lender the
portion of the Loan funds not applied to the payment of the Redemption Price.

 

(c)                                  Optional Prepayments.  Borrower may, upon five (5) Business Day
prior written notice to Lender, prepay all or any portion of this Note at any
time, without premium or penalty.

 

(d)                                 Payment on the Maturity Date.  On the Maturity Date, the entire then
outstanding principal balance of this Note, together with all accrued but
unpaid interest (including any interest accruing at the Default Interest Rate),
and 

 

5

 

all other sums owed hereunder shall be due and payable in full in cash
without further notice or demand.

 

(e)                                  Default Interest.  Upon the occurrence and during the
continuance of an Event of Default, until the payment in full of all overdue
payments (including the entire Loan if the Loan has been accelerated) hereunder
or other cure of such Event of Default, interest (computed on the basis of a
year of 360 days assuming 12 equal 30 day months) shall accrue on the
outstanding principal amount of the Loan at the Default Interest Rate (in lieu
of the Interest Rate).

 

(f)   Late
Payment.  If any sum payable under
this Note or the Guaranty is not paid when due, Borrower shall pay to Lender
upon demand an amount equal to the lesser of two and one-half percent (2.50%)
of such unpaid sum or the maximum amount permitted by applicable law to defray
the expenses incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment.

 

(g)   Place
and Time of Payment.  All payments of
principal of and interest on this Note and all other amounts payable hereunder
shall be made exclusively in Dollars and immediately available funds without
deduction, set-off or counterclaim at Lender’s Account or such other payment
location or account as Lender may designate in writing to Borrower from time to
time without deduction or offset for or on account of any present or future
Taxes, duties or other charges levied or imposed on this Note or the proceeds
hereof, or upon Borrower or Lender by any Governmental Authority other than
taxes required by law to be withheld, paid or deducted.  Borrower agrees, upon the request of Lender,
to pay all Taxes, duties and other charges in addition to principal and
interest on this Note, exclusive of United States income Taxes and applicable
income Taxes of any state or local Governmental Authority.

 

(h)                                 Payments to be on Business Days.  Whenever any payment hereunder shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day.

 

5.                                       Application of
Payments.  So long as
no Event of Default exists, all payments received on account of the Loan shall
be applied to the payment of Obligations of Borrower in the following order of
priority: (a) to the out of pocket costs incurred by Lender
in collecting or attempting to collect this Note or other amounts due under the
Guaranty, or any costs of protecting or enforcing such rights, including,
without limitation, Lender’s attorneys’ fees (whether or not suit is brought);
(b) to any interest due at the Default Interest Rate; (c) to interest due at
the Interest Rate; and (d) to the payment of principal of the Loan.  Notwithstanding the foregoing, any payments
received during any period of time that an Event of Default exists, or
otherwise after the Maturity Date, shall be applied in such manner as Lender
may determine in its sole and absolute discretion.

 

6.                                       Representations
and Warranties. Borrower represents and warrants to Lender that as
of the date hereof:

 

6

 

(a)   Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted and is duly qualified to do business and,
where applicable as a legal concept, is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties it
owns, operates or leases or the nature of its activities, makes such
qualification necessary, except where such failure would have a material
adverse effect on Borrower or Borrower’s ability to pay and perform the
Obligations.

 

(b)   Borrower has (i) the
corporate power and authority to execute and deliver, and to perform its
obligations under, this Note and (ii) taken all necessary action to authorize
Borrower’s execution, delivery and performance of this Note;

 

(c)   this Note has been duly
executed and delivered by Borrower and constitutes the legal, valid and binding
obligations of Borrower enforceable in accordance with its respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors’ rights generally, general
equitable principles and an implied covenant of good faith and fair dealing;

 

(d)   the execution, delivery and
performance of this Note by Borrower will not (i) violate any provision of
Borrower’s certificate of incorporation or bylaws or any law or regulation
applicable to Borrower; (ii) violate, result in a breach of, or constitute a
default under, any agreement, document or instrument to which Borrower is a
party or is bound or by which its properties may be bound or affected where
such violation, breach or default would have a material adverse effect upon
Borrower or Borrower’s ability to pay and perform the Obligations; and (iii)
result in or require the creation or imposition of any lien upon the property,
assets, income, revenues, or rights in respect thereof of Borrower pursuant to
(A) any law or regulation applicable to Borrower, (B) the organizational
documents of Borrower or (C) any material agreement or instrument to which
Borrower is a party or is bound or by which its properties may be bound or
affected; and

 

(e)   no consent, approval or
authorization of, or registration, declaration or filing with, or other act by
or in respect of, any arbitrator, any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance of
this Note.

 

7.                                       Affirmative
Covenants.  Borrower
hereby agrees that, so long as the Loan or any other amount is owing to Lender
hereunder, Borrower shall:

 

(a)   Use the proceeds of the
Loan solely for the payment of the Redemption Payment and for no other
purposes;

 

7

 

(b)   Send a Redemption Notice to
each of the holders of the Series A Preferred Stock at the time and in the
manner required by the Merger Agreement and the Certificate of Designations,
and otherwise in accordance with all applicable laws;

 

(c)   Within three (3) Business
Days of Borrower’s delivery of a Redemption Notice, deliver a copy of each
Redemption Notice to Lender, certified by a Responsible Officer as being a
true, correct and complete copy of the Redemption Notice;

 

(d)   Deliver to Lender copies of
any written communications between Borrower and any holder of the Series A
Preferred Stock, sent or received after Borrower issues a Redemption Notice,
including, without limitation, any election by a holder of the Series A
Preferred Stock to convert all or any portion of such holder’s Series A
Preferred Stock into Company Common Stock, within two (2) Business Days of
Borrower’s receipt of such written communications; and

 

(e)   promptly notify Lender of
any Event of Default promptly after becoming aware thereof.  Each notice pursuant to this Section 7(e)
shall be accompanied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what action Borrower
proposes to take with respect thereto.

 

8.                                       Negative
Covenants.  Borrower
agrees that, so long as the Obligations are outstanding, Borrower shall not,
directly or indirectly, voluntarily or involuntarily, use the proceeds of the
Loan for any purpose other than the payment of the Redemption Payment.

 

9.                                       Further
Assurances. Upon the exercise by Lender of any power, right,
privilege or remedy pursuant to this Note which requires any consent, approval,
recording, qualification or authorization of any Governmental Authority,
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that Lender may be required to obtain from Borrower for such governmental
consent, approval, recording, qualification or authorization.

 

10.                                 Event of
Default.  Each of the following events
shall be an “Event of Default” under this Note and the Guaranty:

 

(a)   Borrower fails to (i) pay
any principal of or interest on the Loan when the same becomes due and payable,
or (ii) pay all amounts owing under this Note on the Maturity Date;

 

(b)   any representation or
warranty made by Borrower or Guarantor in this Note or the Guaranty to which it
is a party is false, incorrect or misleading in any material respect as of the
date made and such condition or circumstance would reasonably be expected to
constitute a Material Adverse Effect;

 

(c)   Borrower is in default
under any of Borrower’s other covenants set forth herein and not specifically
addressed in this Section 10, and shall fail to cure such default within ten
(10) days from the earlier of (i) a Responsible Officer having knowledge of
such default or (ii) written notice from Lender;

 

8

 

(d)   An “Event of Default,”
as such term is defined in the Guaranty, has occurred and is continuing under
the Guaranty;

 

(e)   Borrower or Guarantor
files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating
to, Borrower or Guarantor, now or hereafter in effect, or makes any assignment
for the benefit of creditors;

 

(f)   an involuntary
petition is filed against Borrower or Guarantor (unless such petition is dismissed
or discharged within 30 days), under any bankruptcy statute now or hereafter in
effect, or a custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) is appointed to take possession, custody
or control of any substantial portion of property of Borrower or Guarantor;

 

(g)   Borrower or Guarantor
admits in writing its inability to pay its debts;

 

(h)   any final judgment or
decree for the payment of money in excess of $100,000 is rendered against
Borrower or Guarantor and is not discharged and there is a period of thirty
(30) days following such judgment during which such judgment or decree is not
discharged, vacated, bonded pending appeal, waived or the execution thereof
stayed; or

 

(i)   any material provision
of any the Note or Guaranty shall, for any reason, cease to be valid and
binding on Borrower or Guarantor, or Borrower or Guarantor shall so assert in
any pleading filed in any court.

 

11.                               Remedies.  Upon the occurrence and continuation of an
Event of Default hereunder, all unpaid principal and other amounts owing
hereunder shall, at the option of Lender, or in the case of an Event of Default
pursuant to Sections 10 (e) or (f), automatically, become immediately due,
payable and collectible by Lender pursuant to applicable law.  Lender shall have all rights and remedies
available to it at law and in equity and such additional remedies provided
under the Guaranty and Merger Agreement.

 

12.                               Indemnity and
Expenses.

 

(a)   Without duplicating
any recovery Lender may obtain through any corresponding indemnification
provision of the Guaranty or the Merger Agreement, Borrower hereby agrees to
indemnify Lender and its officers, directors, employees and agents (each an “Indemnitee”)
from, and shall hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including the reasonable fees and expenses of counsel for each Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party to any such proceeding) that may at any time (including at any time
following the Maturity Date) be imposed on, asserted against or incurred by any
Indemnitee as a result of, or arising out of, or in any way related to or by
reason of any claim with respect to (i) any of the transactions
contemplated by this Note or the Guaranty or the execution, delivery or
performance of this Note or the 

 

9

 

Guaranty,
(ii) the extensions of credit under this Note or the actual or proposed
use by Borrower of any of the extensions of credit under this Note and/or (iii) the
exercise by Lender of its rights and remedies under the Note or the Guaranty;
provided, however, that Borrower shall not have any obligations to indemnify
any Indemnitee for any matter arising out of any Indemnitee’s negligence,
misconduct or breach of contract.

 

(b)   Borrower agrees to pay
or reimburse Lender for paying, upon demand: 
(i) all reasonable out-of-pocket costs and expenses of Lender
(including Lender’s attorney’s fees and experts engaged by Lender from time to
time), in connection with (A) any amendment, modification or waiver of any
of the terms of this Note or any the Guaranty (except to the extent requested
by Lender, or any assignee, participant or affiliate of Lender), (ii) all
actual out of pocket costs and expenses of Lender (including attorney’s fees
and expenses and experts’ fees and expenses in connection with any Event of
Default and any enforcement or collection proceedings resulting from such Event
of Default or in connection with the negotiation of any restructuring or “work-out”
(whether or not consummated) of the obligations of Borrower under this Note or
the obligations of Guarantor under the Guaranty, and (iii) all transfer,
stamp, documentary or other similar taxes, assessments or charges levied by any
Government Authority in respect of this Note or the Guaranty.

 

13.                               Notices.  All notices, requests, demands and consents
to be made hereunder to the parties hereto shall be made and delivered in the
manner set forth in Section 9.2 of the Merger Agreement.

 

14.                               Severability.  Any term or provision of this Note that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. 
If the final judgment of a court of competent jurisdiction declares that
any term or provision hereof is invalid or unenforceable, the parties hereto
agree that the court making such determination shall have the power to limit
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Note shall be enforceable
as so modified.  In the event such court
does not exercise the power granted to it in the prior sentence, the parties hereto
agree to replace such invalid or unenforceable term or provision with a valid
and enforceable term or provision that will achieve, to the extent possible,
the economic, business and other purposes of such invalid or unenforceable
term.

 

15.                               Usury Laws.  It is the intention of Borrower and Lender to
conform strictly to all applicable usury laws now or hereafter in force, and
any interest payable under this Note shall be subject to reduction to the
amount not in excess of the maximum legal amount allowed under the applicable
usury laws as now or hereafter construed by the courts having jurisdiction over
such matters.  If the maturity of this
Note is accelerated for any reason resulting from an Event of Default,
voluntary prepayment by Borrower or otherwise, then earned interest may never
include more than the maximum amount permitted by law, computed from the date
hereof until payment, and any interest in excess of the maximum amount
permitted by law shall be canceled automatically and, if theretofore paid,
shall at the option of the holder hereof either 

 

10

 

be
rebated to Borrower or credited on the principal amount of this Note, or if
this Note has been paid, then the excess shall be rebated to Borrower.  The aggregate of all interest contracted for,
chargeable, or receivable under this Note shall under no circumstances exceed
the maximum legal rate upon the unpaid principal balance of this Note remaining
unpaid from time to time.  If such
interest does exceed the maximum legal rate, it shall be deemed a mistake and
such excess shall be canceled automatically and, if theretofore paid, at the
option of the holder hereof either be rebated to Borrower or credited on the
principal amount of this Note, or if this Note has been repaid, then such excess
shall be rebated to Borrower.

 

16.                               Integration.  This Note, the Guaranty and the Merger
Agreement constitutes the entire agreement among Borrower and Lender and
supersedes any prior understandings, agreements or representations by or among
the parties hereto, or any of them, written or oral, with respect to the
subject matter hereof, and the parties hereto specifically disclaim reliance on
any such prior understandings, agreements or representations to the extent not
embodied in this Note, the Guaranty or the Merger Agreement.  Notwithstanding the foregoing, the
Confidentiality Agreement shall remain in effect in accordance with its terms.

 

17.                               Amendments in
Writing; No Waiver; Cumulative Remedies.

 

(a)   None of the terms or
provisions of this Note may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by Borrower and Lender.

 

(b)   Borrower hereby waives
diligence, presentment, demand, protest and notice of any kind whatsoever.  Lender shall not by any act (except by a
written instrument pursuant to paragraph (a) of this Section 17),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Event of Default or in any breach
of any of the terms and conditions hereof. 
No failure to exercise, nor any delay in exercising, on the part of
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  A waiver by Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Lender would otherwise have on any future occasion.

 

(c)   The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.

 

18.                               Successors and
Assigns.  This Note shall be binding
upon the successors and assigns of this Note and shall inure to the benefit of
Lender and its successors and assigns, provided, Borrower shall not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of Lender.

 

19.                               Counterparts. This Note may
be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
of 

 

11

 

the
parties hereto and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. 
This Note may be executed and delivered by facsimile or other electronic
transmission (including delivery through electronic mail).

 

20.                               Governing Law.  This Note shall be governed by and construed
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of laws of any jurisdictions other than those of the State of Delaware.

 

21.                               Submission to
Jurisdiction.  Each of
Borrower and Lender (a) consents to submit itself to the personal
jurisdiction of the Court of Chancery of the State of Delaware in any action or
proceeding arising out of or relating to this Note or any of the transactions
contemplated by this Note or the Guaranty, (b) agrees that all claims in
respect of such action or proceeding may be heard and determined only in such
court, (c) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (d) agrees not to bring any action or proceeding arising out of or
relating to this Note or any of the transactions contemplated by this Note or
the Guaranty in any other court.  Each of
the parties hereto waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto.  Any party hereto may make service on another
party by sending or delivering a copy of the process to the party to be served
at the address and in the manner provided for the giving of notices in
Section 9.2 of Merger Agreement. 
Nothing in this Section 21, however, shall affect the right of any
party to serve legal process in any other manner permitted by law.

 

22.                               Waiver of Jury
Trial.  EACH OF BORROWER AND LENDER
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS NOTE OR THE ACTIONS OF BORROWER OR LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

23.                               Attorney’s Fees.  If any action or other proceeding relating to
the enforcement of any provision of this Note is brought by any party hereto,
the prevailing party shall be entitled to recover reasonable attorney’s fees,
costs and disbursements (in addition to any other relief to which the
prevailing party may be entitled).

 

24.                               Reinstatement.  The obligations of Borrower under this Note
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of Borrower in respect of the Loan is rescinded or must
be otherwise restored by Lender, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise.

 

25.                               Time.  Time is of the essence of this Note and each
of the provisions hereof.

 

12

 

26.                               Optional
Conversion.

 

(a)   Lender’s
Conversion Option.  In the event the
Merger Agreement is terminated pursuant to Sections 8.1(a), 8.1(b), 8.1(c),
8.1(d), 8.1(e), 8.1(g) or 8.1(j) of the Merger Agreement, at any time
thereafter until all amounts owing under this Note have been paid in full, all
or any part of the outstanding principal amount of, and accrued interest under,
this Note shall be convertible, from time to time, at the option of Lender into
Company Common Stock at a price of $4.38 per share (the “Lender’s Conversion
Option”).  Lender shall exercise
Lender’s Conversion Option by giving written notice to Borrower of Lender’s
election to exercise Lender’s Conversion Option, which notice shall state
therein the amount of the unpaid principal amount and interest of this Note to
be converted and the name or names in which the certificate or certificates for
shares of Company Common Stock are to be issued.  Borrower shall, as soon as practicable
thereafter, issue and deliver to Lender a certificate or certificates for the
number of shares of Company Common Stock to which to Lender shall be entitled
upon conversion, and any other securities and property to which to Lender is
entitled upon such conversion under the terms of this Note, including a check
payable to Lender for any cash amounts payable as described in Section 26(c).  The conversion shall be deemed to have been
made immediately prior to the close of business on the date Borrower receives
notice of Lender’s election to exercise Lender’s Conversion Option, and the
Persons entitled to receive the shares of Company Common Stock upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Company Common Stock as of such date.  In case Borrower shall not at the time of
exercise of conversion into Company Common Stock have sufficient authorized but
unissued Company Common Stock to honor the conversion of the Note as outlined
above, Borrower shall give notice to Lender and then shall have thirty (30)
days in which to seek to amend its charter documents so as to provide for an
adequate number of shares of Company Common Stock, and Lender hereby covenants
to vote in favor of such an amendment to the extent Lender is entitled to vote
thereon.  If after such thirty (30) day
period Borrower still does not have sufficient authorized but unissued shares
of Company Common Stock, Lender may declare an Event of Default and/or demand
immediate repayment in cash of all outstanding principal and interest due under
this Note, or in the sole election of Lender, Borrower shall pay to Lender such
economic benefits as would have accrued to Lender if the number of shares of
Company Common Stock issuable to Lender or the number of shares of Company
Common Stock issuable on conversion thereof had been issued to Lender.

 

(b)   Borrower’s
Conversion Option.  In the event the
Merger Agreement is terminated pursuant to Sections 8.1(a), 8.1(b), 8.1(c),
8.1(d), 8.1(h), or 8.1(i) of the Merger Agreement, at any time thereafter
until all amounts owing under this Note have been paid in full, and so long as
no Event of Default shall exist, all or any part of the outstanding principal
amount of, and accrued interest under, this Note shall be convertible, from
time to time, at the option of Borrower into Company Common Stock at a price of
$4.38 per share (the “Borrower’s Conversion Option”).  Borrower shall exercise Borrower’s Conversion
Option by giving written notice to Lender of Borrower’s election to exercise
Borrower’s 

 

13

 

Conversion
Option (“Borrower’s Conversion Notice”), and shall state therein the
amount of the unpaid principal amount and interest of this Note to be
converted.  Within five (5) Business
Days of Lender’s receipt of Borrower’s Conversion Notice, Lender shall deliver
to Borrower the name or names in which the certificate or certificates for
shares of Company Common Stock are to be issued, provided, if Lender fails to
deliver such names, Borrower shall issue such certificates in the name of
Lender.  Borrower shall, as soon as
practicable thereafter, issue and deliver to Lender a certificate or certificates
for the number of shares of Company Common Stock to which to Lender shall be
entitled upon conversion, and any other securities and property to which to
Lender is entitled upon such conversion under the terms of this Note, including
a check payable to Lender for any cash amounts payable as described in Section 26(c).  The conversion shall be deemed to have been
made immediately prior to the close of business on the date Lender receives
Borrower’s Conversion Notice, and the Persons entitled to receive the shares of
Company Common Stock upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Company Common Stock as of such
date.  Borrower shall not be permitted to
exercise Borrower’s Conversion Notice unless Borrower has sufficient authorized
and unissued Company Common Stock to honor the conversion of the Note as
outlined above.

 

(c)   Fractional Shares;
Interest; Effect of Conversion.  No fractional shares shall be
issued upon conversion of all or any portion of the principal or interest owing
under this Note.  In lieu of Borrower
issuing any fractional shares to Lender upon the conversion of a portion, but
less than the entire principal or interest owing under this Note, Borrower
shall pay to Lender an amount equal to the product obtained by multiplying the
conversion price by the fraction of a share not issued pursuant to the previous
sentence. In lieu of Borrower issuing any fractional shares to Lender upon the
conversion of the entire principal and interest owing under this Note, Borrower
shall pay to Lender an amount equal to the excess of the unconverted portion of
the Note.  In addition, Borrower shall
pay to Lender any interest accrued on the principal amount converted and on the
principal amount to be paid to Borrower pursuant to the previous sentence
(which payment shall not relieve Borrower from making all payments of principal
and interest owing under this Note).

 

(d)   Compliance
with Securities Laws.  Borrower shall
cause any conversion of all or any portion of the principal or interest owing
under this Note to comply with all registration requirements under the
Securities Act of 1933, as amended (and together with the rules and
regulations promulgated thereunder, collectively, the “Securities Act”),
or such issuance of the shares shall be exempt from such registration
requirement and exempt from the application of the registration requirements of
the Securities Act.  If requested by
Borrower, Lender shall execute a certificate in customary form attesting to its
investment intent.

 

(e)   Stock
Fully Paid; Reservation of Shares. 
All shares that may be issued upon the conversion of this Note shall,
upon issuance, be duly authorized, 

 

14

 

validly issued, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof.  Borrower hereby covenants and agrees that at
all times during the period this Note is outstanding it shall reserve from its
authorized and unissued Company Common Stock for issuance and delivery upon
conversion of the Note such number of shares of its Company Common Stock as
shall be required for issuance and delivery upon the conversion.

 

(f)   Subdivision
or Combination of Company Common Stock. 
If Borrower at any time subdivides (by any stock split, stock dividend
or otherwise) one or more classes of its outstanding shares of Company Common
Stock into a greater number of shares, or combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Company Common
Stock into a smaller number of shares, the number of shares of Company Common
Stock issuable on conversion of this Note immediately prior thereto shall be
adjusted so that Lender shall be entitled to receive the kind and number of
shares of Company Common Stock or other securities of Borrower which it would
have owned or have been entitled to receive after the happening of any of the
events described above had the principal and/or interest owing under this Note
been converted immediately prior to the happening of such event or any record
date with respect thereto.  If Lender is
entitled to receive shares of two or more classes of capital stock of Borrower
pursuant to the foregoing upon conversion of all or any portion of the
principal or interest owing under Note, Lender shall determine the allocation
of the adjusted conversion price between the classes of capital stock.  After such allocation, the conversion
privilege and the conversion price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Company Common Stock.  An adjustment made
pursuant to this subsection (f) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.  Such adjustment shall be
made successively whenever such a subdivision, combination or reclassification
is made.

 

[Signature
Page to Follow]

 

15

 

IN
WITNESS WHEREOF, the undersigned has caused this Note to be duly executed as of
the day and year first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BioSphere
  Medical, Inc., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin J. Joyce

  
	
   

  	
  Name: Martin J. Joyce

  
	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  ACCEPTED AND AGREED TO:

  
	
   

  	
   

  
	
   

  	
  Merit Medical
  Systems, Inc., a Utah corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kent Stanger

  
	
   

  	
  Name: Kent Stanger

  
	
   

  	
  Title: Chief Financial
  Officer

  

 

16

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