Document:

Exhibit 10.1

 

THIRD MODIFICATION TO CREDIT AGREEMENT AND
PROMISSORY NOTE

 

This THIRD MODIFICATION TO CREDIT AGREEMENT
AND PROMISSORY NOTE (this “Agreement”) is made as of the 29th day of
June, 2005, by and between BIOSPHERE MEDICAL, INC., a Delaware corporation (the
“Borrower”), and BROWN BROTHERS HARRIMAN & CO., a New York general
partnership with an office at 40 Water Street, Boston, Massachusetts 02109 (the
“Lender”), in the following circumstances:

 

A.            Lender
has established a revolving line of credit with Borrower in the maximum amount
of $3,000,000, (the “Loan”) which Loan is evidenced by the Promissory Note
dated June 30, 2004 made by Borrower in favor of Lender (the “Note”).

B.            The
Loan is governed, in part, by the Credit Agreement dated May 17, 2002 by
and between Borrower and Lender, as amended from time to time, and is secured
by, among other things, the Security Agreement dated May 17, 2002 by and
between Borrower and Lender (the “Security Agreement”).

C.            Borrower
has requested that Lender extend the maturity date of the Loan, and Lender has
agreed to Borrower’s request, but only upon the terms and conditions set forth
herein and in the documents executed in connection herewith.

 

NOW, THEREFORE, in consideration of the
parties’ agreements set forth herein,

 

for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             The
Credit Agreement is hereby amended, from and after the date hereof, as follows:

 

1.1           Section 1.1
is hereby deleted in its entirety and the following Section 1.1 is
substituted therefore and inserted in place thereof:

 

“1.1         Credit Facility – Credit Availability.  Subject to the terms and conditions hereof,
Borrower may until the earlier to occur of June 29, 2007 (“Maturity”) or
an Event of Default, as hereinafter defined, borrow, repay and reborrow funds
from the Lender, as set forth below; provided however that the aggregate
principal amount of all advances outstanding at any one time under the Credit
Facility, shall not in the aggregate exceed (a) the Borrowing Base, as
defined below, or (b) $3,000,000, whichever is less (the “Credit
Availability”); and provided further, however, that notwithstanding anything
contained herein to the contrary, in no event shall Borrower have the right to
borrow or shall Lender have the obligation to make any advance under the Credit
Facility at any time that

 

 

a condition which, with the
giving of notice or the passage of time, or both, would constitute an Event of
Default hereunder, shall exist.”

 

2.             The
Note is hereby amended, from and after the date hereof, as follows:

 

2.1           The
reference to “June 29, 2005” in the third line of the first paragraph of
the Note is hereby deleted and the date June 29, 2007” is substituted
therefore and inserted in place thereof.

 

3.             All
security for the Loan and the Note now existing or hereafter granted to Lender,
including without limitation all security evidenced, granted or governed by the
Security Agreement and any other of the documents evidencing, governing or
relating to the Loan (collectively, the “Loan Documents”), shall be security
for the Loan and the Note, and for all obligations of Borrower under this
Agreement, under the Note and under the Credit Agreement, as amended by this
Agreement.

 

4.             All
references to the Credit Agreement and/or Note, wherever, whenever or however
made or contained, are hereby deemed to be references to the Credit Agreement
or Note, as applicable, as previously amended and as modified by this Agreement.  By signing this Agreement in the space
indicated below, Borrower hereby affirms and restates all of the
representations, warranties, covenants, and agreements made and set forth in
the Credit Agreement and in all other Loan Documents.  ALL OF THE PROVISIONS OF THE CREDIT AGREEMENT
AND THE NOTE, AS PREVIOUSLY AMENDED AND AS AMENDED HEREBY, REMAIN IN FULL FORCE
AND EFFECT.

 

5.             From
and after the date hereof, the Security Agreement is hereby amended to provide
that the obligations secured by such Security Agreement includes, without
limitation, all of Borrower’s obligations under the Note and Credit Agreement,
as hereby amended.  Borrower hereby
reaffirms the grant of the lien of the Security Agreement.

 

6.             Concurrently
with the execution and delivery of this Agreement, or within ten (10) days
following Lender’s written request, Borrower shall pay to Lender all expenses
incurred in connection with this Agreement, including without limitation all
legal fees and expenses.

 

7.             By
executing this Agreement on behalf of Borrower in the space designated below,
the individual so signing represents and warrants to Lender that he or she has
full power and authority to execute this Agreement and to bind Borrower, and
that all corporate actions necessary to authorize and approve execution of this
Agreement, and by such individual, have been taken prior to the execution
hereof.

 

8.             The
failure of any party to insist upon strict performance of a covenant hereunder
or of any obligations hereunder, irrespective of the length of time for which
such failure continues, shall not be a waiver of such party’s right to demand
strict compliance in the future.  No
consent or waiver, express or implied, to or of any breach constitute a consent
or waiver to or of any other breach or default in the performance of

 

 

the same or any other obligation hereunder.  No term or provision of this Agreement may be
waived unless such waiver is in writing and signed by any party against whom
such waiver is sought to be enforced.

 

9.             This
Agreement shall be binding upon and shall inure to the benefit of Borrower and
Lender, and their respective heirs, administrators, executors, successors, and
assigns.  This Agreement has been made in
the Commonwealth of Massachusetts and shall be governed, construed, applied,
and enforced in accordance with the laws of such state without resort to its
conflict of laws rules.  Whenever
possible, each provision of this Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law; should any provision
of this Agreement be declared invalid for any reason in any jurisdiction, such
declaration shall have no effect upon the remaining portions of this
Agreement.  In addition, the entirety of
this Agreement shall continue in full force and effect in all jurisdictions and
said remaining portions of this Agreement shall continue in full force and
effect in the subject jurisdiction as if this Agreement had been executed with
the invalid portions thereof deleted.

 

10.           All
notices and communications provided for herein shall be in writing and shall be
deemed effective when sent in accordance with Section 18 of the Security
Agreement, as amended hereby.

 

11.           IN
THE EVENT THAT LENDER BRINGS ANY ACTION OR PROCEEDING IN CONNECTION HEREWITH IN
ANY COURT OF RECORD OF THE COMMONWEALTH OF MASSACHUSETTS, OR THE UNITED STATES
DISTRICT COURT LOCATED IN SUCH COMMONWEALTH, BORROWER HEREBY IRREVOCABLY
CONSENTS TO AND CONFERS PERSONAL JURISDICTION OF SUCH COURT OVER BORROWER BY
SUCH COURT.  IN ANY SUCH ACTION OR
PROCEEDING, BORROWER HEREBY WAIVES PERSONAL SERVICE OR ANY SUMMONS, COMPLAINT
OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE UPON BORROWER
BY MAILING A COPY OF SUCH SUMMONS, COMPLAINT OR OTHER PROCESS BY UNITED STATES
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO BORROWER AT THE
ADDRESS SET FORTH IN THE CREDIT AGREEMENT. 
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT. 
BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OR RIGHT BY JURY, AND EACH MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST IN RESPECT OF ANY CLAIM
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENTS CONTEMPLATED TO BE OR EXECUTED IN CONNECTION HEREWITH OR
ANY CAUSE OR CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY.  LENDER
IS HEREBY AUTHORIZED

 

 

TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER. 
EXCEPT S PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. 
BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE OR ATTORNEY OF LENDER
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (B) ACKNOWLEDGES
THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.

 

 

IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date first set forth above.

 

	
  Witnessed by:

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BIOSPHERE MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Michael Megna

  	
   

  	
  By:

  	
    /s/ MARTIN J. JOYCE

  	
   

  
	
   

  	
   

  	
  Martin J. Joyce

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BROWN BROTHERS HARRIMAN & CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ [Illegible]

  	
   

  	
  By:

  	
    /s/ J. EDWARD HALL

  	
   

  
	
   

  	
   

  	
  J. Edward Hall

  
	
   

  	
   

  	
  Managing DirectorExhibit 10.1

 

MASTER
SECURITY AGREEMENT

dated as of June 28, 2005
(“Agreement”)

 

THIS
AGREEMENT is between Oxford Finance Corporation (together with
its successors and assigns, if any, “Secured
Party”) and Nitromed, Inc.
(“Debtor”).  Secured Party has an office at 133 N. Fairfax
Street, Alexandria, VA 22314.  Debtor is
a corporation organized and existing under the laws of the state of Delaware (“the
State”).  Debtor’s mailing address and
chief place of business is 125 Spring Street, Lexington, Massachusetts, 02421.

 

1.                                      CREATION
OF SECURITY INTEREST.

 

Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on the collateral schedule now
or in the future annexed to or made a part of this Agreement (“Collateral Schedule”), and in and against
all additions, attachments, accessories and accessions to such property, all
substitutions, replacements or exchanges therefor, and all insurance and/or
other proceeds thereof (all such property is individually and collectively
called the “Collateral”).  This security interest is given to secure the
payment and performance of all debts, obligations and liabilities of any kind
whatsoever of Debtor to Secured Party arising under the Debt Documents (as
defined below) including but not limited to the payment and performance of the
Promissory Note and Collateral Schedule No. 001 (“Note”), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Note, debts,
obligations and liabilities are called the “Indebtedness”).

 

2.                                      REPRESENTATIONS,
WARRANTIES AND COVENANTS OF DEBTOR.

 

Debtor
represents, warrants and covenants as of the date of this Agreement and as of
the date of the Note that:

 

(a)                                  Debtor’s exact legal name is as set forth in
the preamble of this Agreement and Debtor is, and will remain, duly organized,
existing and in good standing under the laws of the State set forth in the
preamble of this Agreement, has its chief executive offices at the location
specified in the preamble, and is, and will remain, duly qualified and licensed
in every jurisdiction wherever necessary to carry on its business and
operations, except where the failure to qualify would not have a material
adverse effect on Debtor;

 

(b)                                 Debtor has adequate power and capacity to
enter into, and to perform its obligations under this Agreement, each Note and
any other documents evidencing, or given in connection with, any of the
Indebtedness (all of the foregoing are called the “Debt Documents”);

 

(c)                                  This Agreement and the other Debt Documents
have been duly authorized, executed and delivered by Debtor and constitute
legal, valid and binding agreements enforceable in accordance with their terms,
except to the extent that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws;

 

(d)                                 No approval, consent or withholding of
objections is required from any governmental authority or instrumentality with
respect to the entry into, or performance by Debtor of any of the Debt
Documents, except any already obtained;

 

(e)                                  The entry into, and performance by, Debtor of
the Debt Documents will not (i) violate any of the organizational
documents of Debtor or any judgment, order, law or regulation applicable to
Debtor, or (ii) result in any breach of or constitute a default under any
contract to which Debtor is a party, or result in the creation of any lien,
claim or encumbrance on any of Debtor’s property (except for liens in favor of
Secured Party and liens in favor of General Electric Capital Corporation (“GECC”)
under that certain Master Security Agreement dated as of June 28, 2005
between GECC and Debtor (the “GECC Loan”)) pursuant to any indenture, mortgage,
deed of trust, bank loan, credit agreement, or other agreement or instrument to
which Debtor is a party;

 

(f)                                    There are no suits or proceedings pending in
court or before any commission, board or other administrative agency against or
affecting Debtor which would, in the aggregate, have a material adverse effect
on Debtor, its business or operations, or its ability to perform its
obligations under the Debt Documents, nor does Debtor have reason to believe
that any such suits or proceedings are threatened;

 

 

(g)                                 All financial statements delivered to Secured
Party in connection with the Indebtedness have been prepared in accordance with
generally accepted accounting principles, and since the date of the most recent
financial statement, there has been no material adverse change in Debtor’s
financial condition;

 

(h)                                 The Collateral is not, and will not be, used
by Debtor for personal, family or household purposes;

 

(i)                                     The Collateral is, and will remain, in good
condition and repair (ordinary wear and tear excepted) and Debtor will not be
negligent in its care and use;

 

(j)                                     Debtor is, and will remain, the sole and
lawful owner, and in possession of, the Collateral, and has the sole right and
lawful authority to grant the security interest described in this Agreement;

 

(k)                                  The Collateral is, and will remain, free and
clear of all liens, claims and encumbrances of any kind whatsoever, except for (i) liens
in favor of Secured Party and GECC under the GECC Loan, (ii) liens for
taxes not yet due or for taxes being contested in good faith and which do not
involve, in the judgment of Secured Party, any risk of the sale, forfeiture or
loss of any of the Collateral, (iii) inchoate materialmen’s, mechanic’s,
repairmen’s and similar liens arising by operation of law in the normal course
of business for amounts which are not delinquent, (iv) liens on New
Property (as such term is defined in the attached Collateral Schedule) acquired
with purchase-money debt or non-cash equity, and (v) capital leases and
purchase money security interests in connection with the acquisition of
machinery, equipment and similar capital assets not to exceed $1,000,000 in the
aggregate over the term of the Note (all of such liens are called “Permitted Liens”). Secured Party agrees to
release its lien and permit the grant of third-party liens on Debtor’s Accounts
Receivable and Inventory under the conditions and terms outlined in the
Financial Covenants Addendum No. 001 dated as of June 28, 2005 and
such liens shall also constitute Permitted Liens;

 

(l)                                     Debtor is and will remain in full compliance
with all laws and regulations applicable to it including, without limitation, (i) ensuring
that no person who owns a controlling interest in or otherwise controls Debtor
is or shall be (Y) listed on the Specially Designated Nationals and Blocked
Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or
any other similar lists maintained by OFAC pursuant to any authorizing statute,
Executive Order or regulation or (Z) a person designated under Section 1(b),
(c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar Executive Orders,
and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations and government
guidance on BSA compliance and on the prevention and detection of money laundering
violations; and

 

(m).                            Debtor shall not sell, transfer, assign,
mortgage, pledge, lease, grant a security interest in, or encumber (except for
Permitted Liens as defined in subsection (k) of this Section) any of its
Intellectual Property as defined in Section 7 below, or enter into any
agreement, document, instrument or other arrangement (except with or in favor
of Secured Party and General Electric Capital Corporation) with any entity
which directly or indirectly prohibits or has the effect of prohibiting Debtor
from selling, transferring, assigning, mortgaging, pledging, leasing, granting
a security interest in or upon, or encumbering any of Debtor’s Intellectual
Property; provided, however, that Debtor may grant exclusive or non-exclusive
licenses with respect to components of Debtor’s Intellectual Property, whether
in connection with joint ventures or corporate collaborations or otherwise, in
the ordinary course of business.

 

3.                                      COLLATERAL.

 

(a)                                  Until the declaration of any default, Debtor
shall remain in possession of the Collateral; except that Secured Party shall
have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral in
which Secured Party’s security interest may be perfected only by
possession.  Secured Party may inspect
any of the Collateral during normal business hours after giving Debtor
reasonable prior notice.  If Secured
Party asks, Debtor will promptly notify Secured Party in writing of the
location of any Collateral.

 

(b)                                 Debtor shall (i) use the Collateral only
in its trade or business, (ii) maintain all of the Collateral in good
operating order and repair, normal wear and tear excepted, (iii) use and
maintain the Collateral only in compliance with manufacturers recommendations
and all applicable laws, and (iv) keep all of the Collateral free and
clear of all liens, claims and encumbrances (except for Permitted Liens).

 

(c)                                  Secured Party does not authorize and Debtor
agrees it shall not (i) part with possession of any of the Collateral
(except to Secured Party or for maintenance and repair), (ii) remove any
of the Collateral from the continental United States, or (iii) sell, rent,
lease, mortgage, license, grant a security interest in or otherwise transfer or
encumber (except for Permitted Liens) any of the Collateral.

 

 

(d)                                 Debtor shall pay promptly when due all taxes,
license fees, assessments and public and private charges levied or assessed on
any of the Collateral, on its use, or on this Agreement or any of the other
Debt Documents unless contested in good faith, subject to maintaining
appropriate reserves.  At its option, if
Debtor fails to do so, Secured Party may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Collateral
(except for Permitted Liens) and may pay for the maintenance, insurance and
preservation of the Collateral and effect compliance with the terms of this
Agreement or any of the other Debt Documents. 
Debtor agrees to reimburse Secured Party, on demand, all reasonable
costs and expenses incurred by Secured Party in connection with such payment or
performance and agrees that such reimbursement obligation shall constitute
Indebtedness.

 

(e)                                  Debtor shall, at all times, keep accurate and
complete records of the Collateral, and Secured Party shall have the right to
inspect and make copies of all of Debtor’s books and records relating to the
Collateral during normal business hours, after giving Debtor reasonable prior
notice.

 

4.                                      INSURANCE.

 

(a)                                  Debtor shall at all times bear the entire risk
of any loss, theft, damage to, or destruction of, any of the Collateral from
any cause whatsoever.

 

(b)                                 Debtor agrees to keep the Collateral insured
against loss or damage by fire and extended coverage perils, theft, burglary,
and for any or all Collateral which are vehicles, for risk of loss by
collision, and if requested by Secured Party, against such other risks as
Secured Party may reasonably require. The insurance coverage shall be in an
amount no less than the full replacement value of the Collateral, and
deductible amounts, insurers and policies shall be acceptable to Secured
Party.  Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage.  Each policy shall name Secured Party as a
loss payee, shall provide for coverage to Secured Party regardless of the
breach by Debtor of any warranty or representation made therein, shall not be
subject to co-insurance, and shall provide that coverage may not be canceled or
altered by the insurer except upon thirty (30) days prior written notice to
Secured Party.  Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured
Party shall not act as Debtor’s attorney-in-fact unless Debtor is in
default.  So long as Debtor is not in
default, proceeds of insurance shall be applied, at the option of Debtor, to
repair or replace the Collateral or to reduce any of the Indebtedness.  In the event Debtor is in default, proceeds
of insurance shall be applied, at the option of Secured Party, to repair or
replace the Collateral or to reduce any of the Indebtedness.

 

5.                                      REPORTS.

 

(a)                                  Debtor shall promptly notify Secured Party of (i) any
change in the name of Debtor, (ii) any change in the state of its
incorporation, organization or registration, (iii) any relocation of its
chief executive offices, (iv) any relocation of any of the Collateral, (v) any
of the Collateral being lost, stolen, missing, destroyed, materially damaged or
worn out, or (vi) any lien, claim or encumbrance other than Permitted
Liens attaching to or being made against any of the Collateral.

 

(b)                                 Debtor will deliver to Secured Party financial
statements as follows.  If Debtor is a
publicly held company, then Debtor agrees to provide quarterly unaudited
statements and annual audited statements, certified by a recognized firm of
certified public accountants, within 10 days after the statements are provided
to the Securities and Exchange Commission (“SEC”).  All such statements are to be prepared using
generally accepted accounting principles (“GAAP”)
and, if Debtor is a publicly held company, are to be in compliance with SEC
requirements.

 

6.                                      FURTHER
ASSURANCES.

 

(a)                                  Debtor shall, upon request of Secured Party,
furnish to Secured Party such further information, execute and deliver to
Secured Party such documents and instruments (including, without limitation,
Uniform Commercial Code financing statements) and shall do such other acts and
things as Secured Party may at any time reasonably request relating to the
perfection or protection of the security interest created by this Agreement or
for the purpose of carrying out the intent of this Agreement.  Without limiting the foregoing, Debtor shall
cooperate and do all acts deemed necessary or advisable by Secured Party to
continue in Secured Party a perfected first security interest in the Collateral
subject to the rights of GECC, and shall obtain and furnish to Secured Party
any landlord waivers and similar documents as may be from time to time
requested by, and in form and substance satisfactory to, Secured Party.

 

 

(b)                                 Debtor authorizes Secured Party to file a
financing statement and amendments thereto describing the Collateral and
containing any other information required by the applicable Uniform Commercial
Code.  Debtor irrevocably grants to
Secured Party the power to sign Debtor’s name and generally to act on behalf of
Debtor to execute and file applications for title, transfers of title,
financing statements, notices of lien and other documents pertaining to any or
all of the Collateral; this power is coupled with Secured Party’s interest in
the Collateral.  Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain and promptly deliver to Secured Party such certificate showing the lien
of this Agreement with respect to the Collateral.  Debtor ratifies its prior authorization for
Secured Party to file financing statements and amendments thereto describing
the Collateral and containing any other information required by the Uniform
Commercial Code if filed prior to the date hereof.

 

(c)                                  Debtor shall indemnify and defend the Secured
Party, its successors and assigns, and their respective directors, officers and
employees, from and against all claims, actions and suits (including, without
limitation, related reasonable attorneys’ fees) of any kind whatsoever arising,
directly or indirectly, in connection with any of the Collateral.

 

7.                                      DEFAULT
AND REMEDIES.

 

(a)                                  Debtor shall be in default under this
Agreement and each of the other Debt Documents if:

 

(i)                                     Debtor breaches its obligation to pay when due
any installment or other amount due or coming due under any of the Debt
Documents and fails to cure the breach within ten (10) days;

 

(ii)                                  Debtor, without the prior written consent of
Secured Party, attempts to or does sell, rent, lease, license, mortgage, grant
a security interest in, or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral, except as permitted by Section 3(c), the
Financial Covenants Addendum No. 001 or the Collateral Schedule 001
of even date herewith;

 

(iii)                               Debtor breaches any of its insurance
obligations under Section 4 and fails to cure such breach within ten (10) days;

 

(iv)                              Debtor breaches any of its other obligations
under any of the Debt Documents and fails to cure that breach within thirty
(30) days after written notice from Secured Party;

 

(v)                                 Any warranty, representation or statement made
by Debtor in any of the Debt Documents or otherwise in connection with any of
the Indebtedness shall be false or misleading in any material respect when
made;

 

(vi)                              Any material portion of the Collateral is
subjected to attachment, execution, levy, seizure or confiscation in any legal
proceeding or otherwise, and no bond is posted or protective order obtained to
remove such risk of attachment, execution, levy, seizure or confiscation;

 

(vii)                           Debtor breaches or is in default under any
other agreement between Debtor and Secured Party after expiration of the
applicable grace or cure period;

 

(viii)                        Debtor or any guarantor or other obligor for
any of the Indebtedness (collectively “Guarantor”)
dissolves, terminates its existence, becomes insolvent or ceases to do business
as a going concern;

 

(ix)                                A receiver is appointed for all or of any
material part of the property of Debtor or any Guarantor, or Debtor or any
Guarantor makes any assignment for the benefit of creditors;

 

(x)                                   Debtor or any Guarantor files a petition under
any bankruptcy, insolvency or similar law, or any such petition is filed
against Debtor or any Guarantor and is not dismissed within forty-five (45) days;

 

(xi)                                Debtor’s improper filing of an amendment or
termination statement relating to a filed financing statement describing the
Collateral;

 

 

(xii)                             There is a material adverse change in the
Debtor’s financial condition such that Secured Party reasonably determines that
the Debtor’s ability to repay any Indebtedness (whether then due or scheduled
to become due) in accordance with its terms under the Agreement has been
materially impaired;

 

(xiii)                          Debtor defaults under any other material
obligation in excess of $500,000 for (A) borrowed money, (B) the
deferred purchase price of property or (C) payments due under any lease
agreement;

 

(xiv)                         At any time during the term of this Agreement
Debtor experiences a change of control such that any person or entity acquires
either more than 50% of the voting stock of Debtor or all or substantially all
of Debtor’s assets, in either case, without Secured Party’s prior written
consent; or

 

(xv)                            Debtor sells, transfers, assigns,
mortgages, pledges, leases, grants a security interest in or encumbers any or
all of Debtor’s Intellectual Property, now existing or hereafter acquired, in
violation of Section 2(m).  Intellectual Property is defined in
Collateral Schedule No. 001 and shall exclude New Property (as
defined in Collateral Schedule No. 001).  For purposes of this
paragraph xv, licenses or sublicenses by the Debtor of its Intellectual
Property as part of a research and development or similar arrangement
shall be excluded.  Debtor shall provide Lessor with a listing of licenses
and sublicenses granted to third parties within ten (10) days of
receipt of written request.

 

(b)                                 If Debtor is in default, the Secured Party, at
its option, may declare any or all of the Indebtedness to be immediately due
and payable, without demand or notice to Debtor or any Guarantor.  The accelerated obligations and liabilities
shall bear interest (both before and after any judgment) until paid in full at
the lower of eighteen percent (18%) per annum or the maximum rate not
prohibited by applicable law.

 

(c)                                  If Debtor is in default, Debtor agrees and
acknowledges that any third person who may at any time possess all or any
portion of the Collateral shall be deemed to hold, and shall hold, the
Collateral as the agent of, and as pledge holder for, Secured Party. Secured
Party may at any time give notice to any third person described in the
preceding sentence that such third person is holding the Collateral as the
agent of, and as pledge holder for, the Secured Party.

 

(d)                                 After default, Secured Party shall have all of
the rights and remedies of a Secured Party under the Uniform Commercial Code,
and under any other applicable law. 
Without limiting the foregoing, Secured Party shall have the right to (i) notify
any account debtor of Debtor or any obligor on any instrument which constitutes
part of the Collateral to make payment to the Secured Party, (ii) with or
without legal process, enter any premises where the Collateral may be and take
possession of and remove the Collateral from the premises or store it on the
premises, (iii) sell the Collateral at public or private sale, in whole or
in part, and, to the extent permitted by law, have the right to bid and
purchase at said sale, or (iv) lease or otherwise dispose of all or part
of the Collateral, applying proceeds from such disposition to the obligations
then in default.  If requested by Secured
Party, Debtor shall promptly assemble the Collateral and make it available to
Secured Party at a place to be designated by Secured Party which is reasonably
convenient to both parties.  Secured
Party may also render any or all of the Collateral unusable at the Debtor’s
premises and may dispose of such Collateral on such premises without liability
for rent or costs.  Any notice that
Secured Party is required to give to Debtor under the Uniform Commercial Code
of the time and place of any public sale or the time after which any private
sale or other intended disposition of the Collateral is to be made shall be
deemed to constitute reasonable notice if such notice is given to the last
known address of Debtor at least ten (10) days prior to such action.

 

(e)                                  Proceeds from any sale or lease or other
disposition shall be applied: first, to all costs of repossession, storage, and
disposition including without limitation attorneys’, appraisers’, and
auctioneers’ fees; second, to discharge the obligations then in default; third,
to discharge any other Indebtedness of Debtor to Secured Party, whether as
obligor, endorser, guarantor, surety or indemnitor; fourth, to expenses
incurred in paying or settling liens and claims against the Collateral; and
lastly, to Debtor, if there exists any surplus. 
Debtor shall remain fully liable for any deficiency.

 

(f)                                    Debtor agrees to pay all reasonable attorneys’
fees and other costs incurred by Secured Party in connection with the
enforcement, assertion, defense or preservation of Secured Party’s rights and
remedies under this Agreement, or if prohibited by law, such lesser sum as may
be permitted. Debtor further agrees that such fees and costs shall constitute
Indebtedness.

 

(g)                                 Secured Party’s rights and remedies under this
Agreement or otherwise arising are cumulative and may be exercised singularly
or concurrently.  Neither the failure nor
any delay on the part of the Secured Party to exercise any right, power or
privilege under this Agreement shall operate as a waiver, nor shall any single
or partial exercise of any right, power or privilege preclude any other or
further exercise of that or any other right, power or privilege.  SECURED PARTY SHALL NOT BE DEEMED TO HAVE
WAIVED ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT,
INSTRUMENT OR PAPER SIGNED BY DEBTOR UNLESS SUCH

 

 

WAIVER IS EXPRESSED IN
WRITING AND SIGNED BY SECURED PARTY.  A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion.

 

(h)                                 DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE
THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE
INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED
PARTY.  THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED
IN ANY COURT. THIS WAIVER IS IRREVOCABLE. 
THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING.  THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. 
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

 

8.                                      MISCELLANEOUS.

 

(a)                                  This Agreement, any Note and/or any of the
other Debt Documents may be assigned, in whole or in part, by Secured Party
without notice to Debtor, and Debtor agrees not to assert against any such
assignee, or assignee’s assigns, any defense, set-off, recoupment claim or
counterclaim which Debtor has or may at any time have against Secured Party for
any reason whatsoever.  Debtor agrees that if Debtor
receives written notice of an assignment from Secured Party, Debtor will pay
all amounts payable under any assigned Debt Documents to such assignee or as
instructed by Secured Party.  Debtor also
agrees to confirm in writing receipt of the notice of assignment as may be reasonably
requested by Secured Party or assignee.

 

(b)                                 All notices to be given in connection with
this Agreement shall be in writing, shall be addressed to the parties at their
respective addresses set forth in this Agreement (unless and until a different
address may be specified in a written notice to the other party), and shall be
deemed given (i) on the date of receipt if delivered in hand or by
facsimile transmission, (ii) on the next business day after being sent by
express mail, and (iii) on the fourth business day after being sent by
regular, registered or certified mail. 
As used herein, the term “business day” shall mean and include any day
other than Saturdays, Sundays, or other days on which commercial banks in New
York, New York are required or authorized to be closed.

 

(c)                                  Secured Party may correct patent errors and
fill in all blanks in this Agreement or in the Collateral Schedule consistent
with the agreement of the parties.

 

(d)                                 Time is of the essence of this Agreement.  This Agreement shall be binding, jointly and
severally, upon all parties described as the “Debtor” and their respective
heirs, executors, representatives, successors and assigns, and shall inure to
the benefit of Secured Party, its successors and assigns.

 

(e)                                  This Agreement and the Debt Documents
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior understandings (whether
written, verbal or implied) with respect to such subject matter.  THIS AGREEMENT AND THE DEBT DOCUMENTS SHALL
NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT ONLY BY A
WRITING SIGNED BY BOTH PARTIES.  Section headings
contained in this Agreement have been included for convenience only, and shall
not affect the construction or interpretation of this Agreement.

 

(f)                                    This Agreement shall continue in full force
and effect until all of the Indebtedness has been indefeasibly paid in full to
Secured Party or its assignee.  This
Agreement shall automatically be reinstated if Secured Party is ever required
to return or restore the payment of all or any portion of the Indebtedness (all
as though such payment had never been made).

 

(g)                                 Debtor authorizes Secured Party to use its
name, logo and/or trademark with notice to and consent by Debtor, in connection
with certain promotional materials that Secured Party may disseminate to the
public.  The promotional materials may
include, but are not limited to, brochures, video tape, internet website, press
releases, advertising in newspaper and/or other periodicals, lucites, and any
other materials relating the fact that Secured Party has a financing
relationship with Debtor and such materials may be developed, disseminated and
used with Debtor’s review.  Nothing
herein obligates Secured Party to use Debtor’s name, logo and/or trademark, in
any promotional materials of Secured Party.

 

 

(h)                                 THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
COLLATERAL.

 

 

IN
WITNESS WHEREOF,
Debtor and Secured Party, intending to be legally bound hereby, have duly
executed this Agreement in one or more counterparts, each of which shall be
deemed to be an original, as of the day and year first aforesaid.

 

	
   

  	
  SECURED PARTY:

  	
  DEBTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  Oxford
  Finance Corporation

  	
  Nitromed, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. Altenburger

  	
   

  	
  By:

  	
  /s/ Lawrence E. Bloch

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael J. Altenburger

  	
   

  	
  Name:

  	
  Lawrence E. Bloch

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  	
  Title:

  	
  Chief Financial Officer and Chief

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Business Officer

  	
   

  	
   

  
																	

 

 

COLLATERAL SCHEDULE NO. 001

 

Part of
Master Security Agreement dated as of June 28, 2005 as amended from time
to time

(the “Contract”) between Oxford Finance Corporation (the “Secured Party”) and

Nitromed, Inc. (the “Debtor”).

 

As
security for the full and faithful performance by the Debtor of all of the
terms and conditions upon the Debtor’s part to be performed under the Contract
and any other obligation of the Debtor to the Secured Party now or hereafter in
existence, the Debtor does hereby grant to the Secured Party a security
interest in the property listed below (all hereinafter collectively called the “Collateral”). Capitalized terms used but not defined in this
Schedule have the meanings provide to them by the Uniform Commercial Code
(“UCC”) as adopted in the Commonwealth of Virginia.

 

All of Debtor’s
personal property and Fixtures now owned or hereafter acquired and wherever
located including but not limited to the following:

 

1.                                       All
Goods (including Inventory, Equipment and Fixtures), now owned or hereafter
acquired and wherever located, complete with any and all attachments,
accessions, additions, replacements, improvements, modifications and
substitutions thereto and therefor and all proceeds including insurance
proceeds and products thereof and therefrom.

 

2.                                       All
Accounts, Deposit Accounts, Documents, Investment Property, Instruments,
General Intangibles (including contract rights, but excluding “Intellectual
Property” as defined below) and Chattel Paper, now owned or hereafter acquired
and wherever located, and all proceeds thereof and therefrom.

 

Notwithstanding the
above, the Collateral shall not include, any Intellectual Property or
products (or interests in any Intellectual Property or products (including any
royalties)) acquired, whether by purchase, license or otherwise, on or after
the execution of the Contract (collectively, “New Property”) nor shall the
Contract limit any indebtedness secured by any New Property provided that debt or non-cash equity (e.g. stock) is
used to acquire New Property. In the event that the Debtor uses cash to
purchase New Property, Secured Party’s existing lien will extend to
such New Property. Secured Party also agrees not to unreasonably refuse the
release its lien in such New Property if Debtor decides to pursue debt or
equity financing with respect to such assets at a later date. Any debt used to
acquire New Property would be secured solely by a lien on such New Property.

 

“Intellectual Property”
means all of Debtor’s right, title and interest in and to patents, patent
rights (and applications and registrations therefore), trademarks and service
marks (and applications and registrations therefore), inventions, copyrights,
mask works (and applications

 

 

and registrations
therefore), trade names, trade styles, software and computer programs, source
code, object code, trade secrets, methods, processes, know how, drawings,
specifications, descriptions, and all memoranda, notes, and records with
respect to any research and development, all whether now owned or subsequently
acquired or developed by Debtor and whether in tangible or intangible form or
contained on magnetic media readable by machine together with all such magnetic
media.

 

In the event of a default
by the Debtor with respect to any of the conditions, terms, covenants and
provisions under the Contract or other agreement, Secured Party shall have the
rights and remedies of a secured party under both the UCC and the Contract,
with respect to the Collateral.

 

This
Agreement shall run to the benefit of the Secured Party’s successors and
assigns.

 

	
  Dated:

  	
  June 28, 2005

  	
   

  	
   

  
	
   

  	
   

  
	
  Oxford
  Finance

  	
  Nitromed, Inc.

  
	
   

  	
   

  
	
  Corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael J. Altenburger

  	
   

  	
  By:

  	
  /s/ Lawrence E.
  Bloch

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  	
  Title:

  	
  Chief Financial
  Officer and Chief

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Business Officer

  	
   

  
													

 

 

FINANCIAL COVENANTS

 

ADDENDUM NO. 001

 

TO MASTER SECURITY AGREEMENT

 

DATED AS OF JUNE 28, 2005

 

THIS ADDENDUM NO. 001 (this “Addendum No. 001”) is made as of the
28th day of June, 2005, amends and supplements the above referenced agreement
(the “Agreement”), between Oxford Finance Corporation (together with
its successors and assigns, if any, “Secured
Party”) and Nitromed, Inc.
(“Debtor”) and is hereby
incorporated into the Agreement as though fully set forth therein.  Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Agreement.

 

The
Agreement is hereby amended by adding the following:

 

FINANCIAL COVENANTS.

 

Debtor shall, at
all times during the term of the Agreement, comply with the following:

 

(a)                                                           Secured
Party agrees to release its lien and permit the grant of third-party liens on
Debtor’s Accounts Receivable and Inventory at any time after the date of the
Agreement if one of the following conditions is met:

 

1.               Debtor’s Cash
Runway (as defined below), in months, is greater than the remaining term (in
months) of this Agreement; or

 

2.               Debtor agrees to
the following Cash Runway Covenant: 
Debtor will maintain a Cash Runway of one year at all times.  If Debtor’s Cash Runway drops below this
amount, then Debtor agrees to provide for the benefit of Secured Party, within
ten (10) business days, a Letter of Credit (in form and substance
satisfactory to Secured Party) equal to 75% of the then outstanding loan
balance and execute any documentation requested by Secured Party related to the
Letter of Credit.

 

Cash Runway is defined as
the number of months of cash Debtor has left, calculated by using its current
cash balance and its past quarter’s Cash Burn rate (as defined below),
excluding non-recurring extraordinary charges.

 

Cash Burn shall be
defined as net income (loss) for the immediate preceding fiscal quarter, plus
non-cash charges, plus 1/4 of current maturities of long term debt as of the
quarter’s end.

 

 

(b)                                                          COMPLIANCE REPORTS.  Debtor’s Authorized Representative shall
certify periodically that Debtor is in compliance with the requirements of subsection (a) above.  Such notification and certification shall be
provided within forty-five (45) days after the end of each fiscal quarter (the “Compliance Date”), reflecting such information
as of the end of such fiscal quarter.  If
Debtor fails timely to provide such notification and compliance certificates,
within fifteen (15) days after the Compliance Date, such failure shall be
deemed a default under the Agreement if not cured within two (2) business
days after notice from Secured Party.  The reports required under this section are
in addition to and not a substitute for the reports required under the REPORTS Section of
the Agreement.

 

All financial items in the preceding paragraphs shall
be derived in accordance with generally accepted accounting principles in the
United States of America (“GAAP”).

 

Except as expressly
modified hereby, all terms and provisions of the Agreement shall remain in full
force and effect.  This Addendum No.001
is not binding or effective with respect to the Agreement until by authorized
representatives of Secured Party and Debtor.

 

 

IN WITNESS WHEREOF, Debtor and Secured Party have caused this Addendum No. 001 to be
executed by their duly authorized representatives as of the date first above
written.

 

	
   

  	
  Secured Party:

  	
  Debtor:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Oxford Finance Corporation

  	
  Nitromed, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. Altenburger

  	
   

  	
  By:

  	
  /s/ Lawrence E.
  Bloch

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael J. Altenburger

  	
   

  	
   

  	
  Name:

  	
  Lawrence E.
  Bloch

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  	
   

  	
   

  	
  Title:

  	
  Chief Financial
  Officer and Chief Business

  	
   

  
	
   

  	
   

  	
   

  	
  Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
																				

 

 

PROMISSORY
NOTE

 

June 28,
2005

(Date)

 

FOR
VALUE RECEIVED, Nitromed, Inc.  a Delaware corporation located at the address
stated below (“Maker”) promises,
jointly and severally if more than one, to pay to the order of Oxford Finance Corporation or any
subsequent holder hereof (each, a “Payee”)
at its office located at 133 N. Fairfax
Street, Alexandria, VA 22314 or at such other place as Payee or the
holder hereof may designate, the principal sum of Ten Million and 00/100 Dollars ($10,000,000), with interest on
the unpaid principal balance, from the date hereof through and including the
dates of payment, at a fixed interest rate of Nine and Ninety-Five Hundredths
percent (9.95%) per annum, to be paid in lawful money of the United States, in
Thirty-Six (36) consecutive monthly installments of principal and interest as
follows:

 

	
  Periodic

  	
   

  	
   

  	
   

  
	
  Installment

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thirty-five (35)

  	
   

  	
  $

  	
  319,785.56

  	
   

  
					

 

each (“Periodic Installment”)
and a final installment which shall be in the amount of the total outstanding
principal and interest.  The first
Periodic Installment shall be due and payable on July 1, 2005 and the
following Periodic Installments and the final installment shall be due and
payable on the same day of each succeeding month (each, a “Payment Date”).  Such installments have been calculated on the
basis of a 360 day year of twelve 30-day months.  Each payment may, at the option of the Payee,
be calculated and applied on an assumption that such payment would be made on
its due date.

 

The acceptance by Payee of
any payment which is less than payment in full of all amounts due and owing at
such time shall not constitute a waiver of Payee’s right to receive payment in
full at such time or at any prior or subsequent time.

 

The
Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

 

This Note is secured by a
Master Security Agreement dated as of June 28, 2005, (“Security Agreement”).

 

Time
is of the essence hereof.  If any
installment or any other sum due under this Note or the Security Agreement is
not received within five (5) days after its due date, the Maker agrees to
pay, in addition to the amount of each such installment or other sum, a late
payment charge of five percent (5%) of the amount of said installment or other
sum, but not exceeding any lawful maximum. 
If (i) Maker fails to make payment of any amount due hereunder
within ten (10) days after the same becomes due and payable; or (ii) Maker
is in default under, or fails to perform under any term or condition contained
in the Security Agreement beyond any applicable grace or cure period, then the
entire principal sum remaining unpaid, together with all accrued interest
thereon and any other sum payable under this Note or the Security Agreement, at
the election of Payee, shall immediately become due and payable, with interest
thereon at the lesser of eighteen percent (18%) per annum or the highest rate
not prohibited by applicable law from the date of such accelerated maturity
until paid (both before and after any judgment).

 

The
Maker may prepay in full, but not in part, and only after the first
annual anniversary date of this Note, its entire indebtedness hereunder upon payment of the entire
indebtedness plus an additional sum as a premium equal to the following
percentages of the remaining principal balance for the indicated period:

 

Following
the first annual anniversary date of this Note and prior to the second annual
anniversary date of this Note: three percent (3%)

 

Thereafter
and prior to the third annual anniversary date of this Note: one percent (1%)
and zero percent (0%) thereafter, plus all other sums due hereunder or under
any Security Agreement.

 

It
is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law.  If any such excess interest is contracted
for, charged or

 

 

received
under this Note or any Security Agreement, or if all of the principal balance
shall be prepaid, so that under any of such circumstances the amount of
interest contracted for, charged or received under this Note or any Security
Agreement on the principal balance shall exceed the maximum amount of interest
permitted by applicable law, then in such event (a) the provisions of this
paragraph shall govern and control, (b) neither Maker nor any other person
or entity now or hereafter liable for the payment hereof shall be obligated to
pay the amount of such interest to the extent that it is in excess of the
maximum amount of interest permitted by applicable law, (c) any such
excess which may have been collected shall be either applied as a credit
against the then unpaid principal balance or refunded to Maker, at the option
of the Payee, and (d) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof.  It is further agreed that
without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under this Note or any Security Agreement
which are made for the purpose of determining whether such rate exceeds the
maximum lawful contract rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the indebtedness evidenced
hereby, all interest at any time contracted for, charged or received from Maker
or otherwise by Payee in connection with such indebtedness; provided, however,
that if any applicable state law is amended or the law of the United States of
America preempts any applicable state law, so that it becomes lawful for the
Payee to receive a greater interest per annum rate than is presently allowed,
the Maker agrees that, on the effective date of such amendment or preemption,
as the case may be, the lawful maximum hereunder shall be increased to the
maximum interest per annum rate allowed by the amended state law or the law of
the United States of America, but not to exceed the contract rate.

 

The
Maker and all sureties, endorsers, guarantors or any others (each such person,
other than the Maker, an “Obligor”)
who may at any time become liable for the payment hereof jointly and severally
consent hereby to any and all extensions of time, renewals, waivers or
modifications of, and all substitutions or releases of, security or of any
party primarily or secondarily liable on this Note or any Security Agreement or
any term and provision of either, which may be made, granted or consented to by
Payee, and agree that suit may be brought and maintained against any one or
more of them, at the election of Payee without joinder of any other as a party
thereto, and that Payee shall not be required first to foreclose, proceed
against, or exhaust any security hereof in order to enforce payment of this
Note.  The Maker and each Obligor hereby
waives presentment, demand for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, and all other notices in connection herewith,
excluding notices provided in the Security Agreement or required by applicable
law, as well as filing of suit (if permitted by law) and diligence in
collecting this Note or enforcing any of the security hereof, and agrees to pay
(if permitted by law) all expenses incurred in collection, including Payee’s
actual reasonable attorneys’ fees.

 

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER
AND PAYEE RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER
AND PAYEE.  THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED
IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.)  THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY
RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. 
IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

 

This
Note and other Debt Documents, as defined in Section 2(b) of the
Security Agreement, constitute the entire agreement of the Maker and Payee with
respect to the subject matter hereof and supercedes all prior understandings,
agreements and representations, express or implied.

 

No
variation or modification of this Note, or any waiver of any of its provisions
or conditions, shall be valid unless in writing and signed by an authorized
representative of Maker and Payee.  Any
such waiver, consent, modification or change shall be effective only in the
specific instance and for the specific purpose given.

 

 

Any
provision in this Note or any of the other Debt Documents which is in conflict
with any statute, law or applicable rule shall be deemed omitted, modified
or altered to conform thereto.

 

	
   

  	
  Nitromed, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/ James G Ham, III

  	
   

  	
  By:

  	
  /s/ Lawrence E. Bloch

  	
   

  
	
   

  	
  (Witness)

  	
   

  	
   

  
	
   

  	
  James G. Ham, III

  	
   

  	
  Name:

  	
  Lawrence E. Bloch

  	
   

  
	
   

  	
  (Print name)

  	
   

  	
   

  
	
   

  	
  125 Spring Street

  	
   

  	
   

  	
   

  
	
   

  	
  Lexington, MA 02421

  	
   

  	
  Title:

  	
  Chief Financial Officer and
  Chief Business Officer

  	
   

  
	
   

  	
  (Address)

  	
   

  
	
   

  	
   

  
	
   

  	
  Federal Tax ID #: 22-3159793

  
	
   

  	
   

  
	
   

  	
  Address: 125 Spring Street,
  Lexington, MA 02421

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]