SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of September 17, 1999,
by and between COVOL TECHNOLOGIES, INC.(the "Grantor"), a Delaware corporation
with an address at 0000 Xxxxx Xxxxxxxx Xxxx, Xxxx, Xxxx 00000; and ASPEN CAPITAL
RESOURCES, LLC (the "Lender"), a Utah limited liability company with an address
at 0000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx, Xxxx 00000.
The Grantor and Lender are parties to a Securities Purchase Agreement,
dated as of the date hereof (as amended and modified from time to time, the
"Purchase Agreement"), pursuant to which the Grantor will issue and sell and the
Lender will purchase the convertible secured debentures (the "Debentures") of
the Grantor. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Purchase Agreement and the Debentures.
The Lender has agreed to make certain loans to the Grantor. The
obligation of the Lender to lend under the Debentures is conditioned on, among
other things, the execution and delivery by the Grantor of this Agreement.
Accordingly, the Grantor and the Lender, hereby agree as follows:
1. DEFINITIONS.
As used herein, the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code as in effect in the State of
Utah.
"Collateral" means (a) all of the Grantor's right, title and interest
in and to (i) that certain License and Binder Purchase Agreement, dated as of
June 26, 1998, between the Grantor and Xxxxxx L.L.C. (the "Licensee"), a
Delaware limited liability company, a copy of which is attached hereto as
Exhibit "A" and incorporated herein by this reference, and (ii) all subsequent
and future license agreements or similar agreements between the Grantor and
Xxxxxx LLC, or the Grantor and any other party which relate to the facilities
that are the subject of (i) above (collectively, as such agreements may be
amended, restated or modified from time to time, the "License Agreement"), and
(b) all proceeds of any and all of the foregoing Collateral and, to the extent
not otherwise included, all payments under insurance (whether or not the Lender
is the loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral.
"Obligations" means all indebtedness, obligations and other liabilities
of the Grantor to the Lender now or hereafter arising pursuant to the Purchase
Agreement, including, without limitation, the indebtedness evidenced by the
Debentures.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other entity.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. In addition, the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation."
2. GRANT OF SECURITY INTEREST.
The Grantor hereby pledges and grants a continuing security interest
in, and a right of setoff against, the Collateral to the Lender, to secure
payment, performance and observance by the Grantor of the Obligations.
3. REPRESENTATIONS AND WARRANTIES.
The Grantor makes the representations and warranties set forth in this
Section 3 to the Lender.
3.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate or otherwise requested by Lender to create, preserve,
protect and perfect the security interest granted by the Grantor to the Lender
hereby in respect of the Collateral will be delivered to Lender upon execution
of this Agreement or, if requested by Lender, will be delivered to Lender within
three (3) Business Days after the date of such request.
3.2 Principal Location. The Grantor's mailing address, and the location
of its chief executive office, is the address set forth in the preamble to this
Agreement (as the same may be modified pursuant to Section 4.4); the Grantor has
no other places of business.
3.3 No Other Names. The Grantor conducted business as Enviro-Fuels
Technology during 1993 and 1994, as Environmental Technologies Group
International during 1994 and 1995 and as Covol Technologies, Inc. since 1995.
Except as discussed herein, the Grantor does not conduct and has not conducted
since 1993 any trade or business under any name except the name in which it has
executed this Agreement. The Grantor has not been a party to any merger or
consolidation in the last five years.
3.4 No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated has been
filed in any jurisdiction except financing statements naming the Lender as
secured party.
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3.5 Patents. The Grantor owns and possesses all right, title and
interest in and to, or has a valid and enforceable license to use, all patents
described in the License Agreement.
3.6 License Agreement. Each License Agreement constitutes a legal,
valid and binding obligation of the Grantor, enforceable by and against the
Grantor in accordance with its terms, except to the extent limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application related to the enforcement of creditor's rights generally
and (b) general principles of equity. The Grantor is not in default, nor to the
knowledge of the Grantor is there any basis for a valid claim of default, and to
the Grantor's knowledge no event has occurred which, with notice or lapse of
time, would constitute a default, under the License Agreement, and to the
knowledge of the Grantor no licensee is in default under any such License
Agreement.
3.7 Collateral. The Grantor has good title to the Collateral, free and
clear of all claims, liens and encumbrances, except the security interest
created by this Agreement. The Grantor has all requisite power and authority to
pledge and grant the security interest in the Collateral for the purposes
contemplated in this Agreement and to create a first lien on the Collateral in
favor of the Lender and this Agreement shall create a valid first lien upon and
perfected first priority security interest in the Collateral subject to no prior
security interest, lien, encumbrance or other restriction. This Agreement, when
executed, has been duly and validly executed and is the legal, valid and binding
obligation of the Grantor and is enforceable against the Grantor by the Lender
in accordance with its terms.
3.8 Claims. The Collateral is not the subject of any present or
threatened suit, action, arbitration, administrative or other proceeding, and
the Grantor knows of no reasonable grounds for the institution of any such
proceedings. No authorization, approval or other action by, and not notice to or
filing with, any governmental authority or regulatory body is required either
(i) for the pledge by the Grantor of the Collateral pursuant to this Agreement
or for the execution, delivery or performance of this Agreement by the Grantor
or (ii) for the exercise by the Lender of any remedies with respect to the
Collateral.
4. COVENANTS.
Grantor hereby covenants and agrees that from the date of this
Agreement, and thereafter until this Agreement is terminated:
4.1 Inspection and Verification. The Lender and such Persons as the
Lender may designate shall have the right, at any reasonable time or times upon
three (3) days prior notice and during Grantor's usual business hours, to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records), and the premises upon which any of the Collateral is
located, to discuss Grantor's affairs with the officers of Grantor and their
independent auditors to verify under reasonable procedures the validity, amount,
quality, quantity, value and condition of, or any other matter relating to, the
Collateral.
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4.2 Records and Reports. The Grantor will maintain complete and
accurate books and records with respect to the Collateral, and furnish to the
Lender such reports relating to the Collateral as the Lender shall from time to
time reasonably request.
4.3 Financing Statements and Other Actions. The Grantor will execute
and deliver to the Lender all financing statements and amendments thereto and
other documents, and take such other actions, as are from time to time
reasonably requested by the Lender in order to perfect and to maintain and
protect the validity, enforceability and perfected status of the first priority
perfected security interest in the Collateral or to enable the Lender to
exercise and enforce its rights and remedies hereunder with respect to the
Collateral.
4.4 Change in Location or Name. The Grantor will not (a) maintain a
place of business at any location other than the location specified in the
preamble to this Agreement, (b) change its name, or (c) change its mailing
address, unless, in each case, the Grantor shall have given the Lender at least
thirty (30) days' prior written notice thereof, including the new address or
name, and delivered any financing statements or other documents requested by the
Lender.
4.5 Other Financing Statements. The Grantor will not sign or authorize
the signing on its behalf of any financing statement naming it as debtor which
covers all or any portion of the Collateral, except financing statements naming
the Lender as secured party.
4.6 Exclusivity. The Grantor will not sell, convey or otherwise dispose
of any interest in the Collateral or create, incur or permit to exist any
pledge, mortgage, lien, charge or encumbrance or any security interest
whatsoever in or with respect to any of the Collateral other than that created
hereby, without the prior written consent of the Lender, which consent will not
be unreasonably withheld..
4.7 Defense. The Grantor will defend at its sole expense, the Lender's
right, title and security interest in and to the Collateral against the claims
of any person, firm, corporation or other entity.
4.8. Intellectual Property Covenants. The Grantor shall:
(a) consistent with commercially reasonable practices, not
perform or omit to perform any act whereby any patent rights necessary for the
License Agreement may become dedicated, invalidated or unenforceable;
(b) consistent with commercially reasonable practices,
prosecute diligently any necessary patent, trademark or copyright application
which is pending with respect to the License Agreement as of the date of this
Agreement or hereafter and otherwise maintain all rights in and to the patents
necessary under the License Agreement, including making all necessary filings
and recordings and paying all required fees and taxes to record and maintain its
registration and ownership of each such patent described in the License
Agreement;
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(c) not impair any of the Lender's rights of action described
herein.
4.9 Grant of License to Use Patents. For the purpose of enabling the
Lender to exercise its rights and remedies upon an Event of Default, the Grantor
hereby grants to the Lender an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to the Grantor) to use, license
or sublicense any of the patents and all of the patent rights described in the
License Agreement to the extent not inconsistent with the terms of the License
Agreement, wherever the same may be located. Except as set forth in the
preceding sentence, the Lender shall have no obligations or liabilities
regarding any or all of the patents by reason of, or arising out of, this
Agreement.
5. REMEDIES UPON DEFAULT.
5.1 Remedies upon Default. If any Event of Default shall occur, whether
or not all of the Obligations shall have become due and payable, the Lender may,
in addition to its rights under the Purchase Agreement and the Debentures,
exercise any or all of the rights and remedies provided (i) in this Agreement,
or (ii) to a secured party when a debtor is in default under a security
agreement governed by the Code or any other applicable law.
5.2 Specific Performance. The Grantor agrees that, in addition to all
other rights and remedies granted to the Lender in this Agreement and under the
Debentures, the Lender shall be entitled to specific performance and injunctive
and other equitable relief, and the Grantor further agrees to waive any
requirement for the securing or posting of any bond or other security in
connection with the obtaining of any such specific performance and injunctive or
other equitable relief.
5.3 Grantor's Secured Liabilities Upon Event of Default. Upon the
request of the Lender after the occurrence of an Event of Default, the Grantor
will promptly:
(a) Assemble and make available to the Lender the Collateral
and all records relating thereto at the Company's principal place of business.
(b) Permit the Lender, or the Lender's representatives and
Lenders, to enter any premises where all or any part of the Collateral, or the
books and records relating thereto, or both, are located, to take possession of
all or any part of the Collateral and to remove all or any part of the
Collateral.
5.4 Remedies Cumulative. All rights, powers and remedies contained in
this Agreement or afforded by law shall be cumulative and all shall be available
to the Lender until the Obligations have been paid in full.
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6. WAIVERS, AMENDMENTS AND REMEDIES.
No delay or omission of the Lender to exercise any right, power or
remedy granted under this Agreement shall impair such right, power or remedy or
be construed to be a waiver of any Event of Default or an acquiescence therein,
and any single or partial exercise of any such right, power or remedy shall not
preclude other or further exercise thereof or the exercise of any other right,
power or remedy, and no waiver, amendment or other variation of the terms,
conditions or provisions of this Agreement whatsoever shall be valid unless
signed by each of the parties hereto, and then only to the extent specifically
set forth in such writing.
7. COLLECTION OF RECEIVABLES; PROCEEDS.
7.1 Collection of Receivables. Grantor hereby covenants and agrees that
the Lender may at any time after the occurrence of an Event of Default, by
giving the Grantor written notice, elect to enforce collection of any proceeds
of any and all of the Collateral, including any Earned Royalty and any payment
of profits from sales of Proprietary Binder Material (each as defined in the
License Agreement) and to require that such proceeds be paid directly to the
Lender. In such event, the Grantor covenants and agrees to, and shall permit the
Lender to, promptly notify the account debtors or obligors under the License
Agreement of the Lender's interest therein and direct such account debtors or
obligors to make payment of all amounts then or thereafter due under the License
Agreement directly to the Lender. Upon receipt of any such notice from the
Lender, the Grantor shall thereafter hold in trust for the Lender all amounts
and proceeds received by it with respect to the License Agreement or any other
Collateral, shall segregate all such amounts and proceeds from other funds of
the Grantor, and shall at all times thereafter promptly deliver to the Lender
all such amounts and proceeds in the same form as so received, whether by cash,
check, draft or otherwise, with any necessary endorsements.
7.2 Payment of Proceeds from Collateral. Upon the receipt by the
Licensee of notice from the Lender of the occurrence of an Event of Default by
the Company pursuant to the Purchase Agreement or the Debentures issued pursuant
thereto, the Grantor acknowledges and agrees that the Licensee shall (a) make no
further payments to the Company under (i) the License Agreement, including any
Earned Royalty (as defined in the License Agreement ), or (ii) any other
agreement between the Company and the Licensee with respect to the Facility, and
(b) make all payments otherwise due to the Company under (i) the License
Agreement , including any Earned Royalty, or (ii) any other agreement between
the Company and the Licensee with respect to the Facility, to the Lender as
specified by the Lender in the notice referred to above.
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The Grantor further acknowledges and agrees that, notwithstanding
anything to the contrary contained in Section 3.4 of the License Agreement, (i)
payments with respect to the License Agreement, including Earned Royalty shall
be due as specified in Section 3.4 of the License Agreement and (ii) payments
shall be made in accordance with this Agreement and shall be deemed paid when
paid to the Lender. The Grantor further acknowledges and agrees that payments
made by the Licensee to the Lender under this Agreement shall be deemed to
satisfy the Licensee's corresponding payment obligations under the Licence
Agreement. The Grantor hereby agrees to continue to perform all of its
obligations under the License Agreement.
7.3 Application of Proceeds. (a) Upon the occurrence of an Event of
Default, the Lender shall have the continuing and exclusive right to apply or
reverse and re-apply any and all payments to any portion of the Obligations. To
the extent that the Grantor makes a payment or payments to the Lender or the
Lender receives any payment or proceeds of the Collateral, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds,
the Obligations or part thereof intended to be satisfied and this Agreement
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by such party.
(b) Should the Lender receive proceeds of the Collateral, the
Lender shall apply the proceeds of such amounts withdrawn as follows:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Lender in connection with such collection or sale or otherwise
in connection with this Agreement or any of the Obligations, including but not
limited to all court costs and the reasonable fees and expenses of its Lenders
and legal counsel, the repayment of all advances made by the Lender hereunder on
behalf of the Grantor and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder.
SECOND, to the payment in full of all unpaid interest and
penalties on the Debentures.
THIRD, to the payment in full of the unpaid principal amount
of the Debentures, to be applied on a pro rata basis.
FOURTH, to the payment and discharge in full of the
Obligations (other than those referred to above).
FIFTH, to the Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
8. GENERAL PROVISIONS.
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8.1 Compromises and Collection of Collateral. The Grantor recognizes
that setoffs, counterclaims, defenses and other claims may be asserted by
obligors with respect to certain of the proceeds of any and all of the
Collateral, including any Earned Royalty and any payment of profits from sales
of Proprietary Binder Material, that certain of such proceeds may be or become
uncollectible in whole or in part and that the expense and probability of
success in litigating disputed Collateral proceeds may exceed the amount that
reasonably may be expected to be recovered with respect to such Collateral
proceeds. In view of the foregoing, the Grantor agrees that the Lender may at
any time and from time to time compromise with the obligor on any Collateral
proceeds, accept in full payment of any Collateral proceeds such amount as the
Lender in its sole discretion shall determine, or abandon any Collateral
proceeds, and any such action by the Lender shall be commercially reasonable so
long as the Lender acts in good faith based on information known to it at the
time it takes any such action.
8.2 Secured Party Performance of Grantor Secured Liabilities. Without
having any obligation to do so, the Lender may, upon notice to the Grantor,
perform or pay any obligation which the Grantor has agreed to perform or pay in
this Agreement but has not performed or paid and the Grantor shall reimburse the
Lender for any amounts paid or incurred pursuant to this Section 8.2. The
Grantor's obligation to reimburse the Lender pursuant to the preceding sentence
shall be an Obligation payable on demand and shall bear interest at the rate of
2.5% per month from the date of payment until payment in full.
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8.3 Authorization for Secured Party To Take Certain Action. Upon the
occurrence of an Event of Default or with the consent of the Grantor, which
consent shall not be unreasonably withheld, the Grantor irrevocably authorizes
the Lender at any time and from time to time in the sole discretion of the
Lender, and irrevocably appoints the Lender as its attorney-in-fact to act on
behalf of the Grantor, in the name of the Grantor or otherwise, from time to
time in the Lender's discretion, to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation (a) to execute on
behalf of the Grantor as debtor and to file financing statements necessary or
desirable in the Lender's sole discretion to perfect and to maintain the
perfection and priority of the Lender's security interest in the Collateral; (b)
to endorse, deposit and collect any cash and other proceeds of the Collateral;
(c) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Lender in its sole discretion deems necessary or
desirable to perfect and to maintain the perfection and priority of the Lender's
security interest in the Collateral; (d) to enforce payment of the Earned
Royalty and the payments from sales of Proprietary Binder Material in the name
of the Lender or the Grantor; (e) to cause the proceeds of any Collateral
received by the Lender to be applied to the Obligations; (f) to sign the
Grantor's name on any invoice or xxxx of lading relating to any Collateral,
including any Earned Royalty and Proprietary Binder Material profits, on drafts
against customers, on schedules and assignments of such Collateral, on notices
of assignment, financing statements and other public records, on verifications
of accounts and on notices to licensees; (g) to send requests for verification
of any Collateral or any proceeds therefrom, including Earned Royalty and
Proprietary Binder Material profits to licensees or account debtors (provided
that this clause (g) shall not limit the Lender's rights under Section 4.01);
(h) to do all things necessary to carry out this Agreement; (i) to grant or
issue any exclusive or nonexclusive license under the Collateral to any Person,
to the extent consistent with the terms of the License Agreement, and (j) to
assign, pledge, convey or otherwise transfer title in or to or dispose of the
Collateral to anyone, including without limitation, to make assignments,
recordings, registrations and applications therefor in the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency of the United States, any State thereof or any other country or
political subdivision thereof, and to execute and deliver any and all
agreements, documents, instruments of assignment or other papers necessary or
advisable to effect any of the foregoing or the recordation, registration,
filing or perfection thereof. The Grantor ratifies and approves all acts of such
attorney-in-fact. The Lender will not be liable for any acts or omissions except
those determined pursuant to a final, non-appealable order of a court of
competent jurisdiction to have resulted solely from the Lender's gross
negligence or willful misconduct. The power conferred on the Lender hereunder is
solely to protect its interests in the Collateral and shall not impose any duty
upon the Lender to exercise such power. This power, being coupled with an
interest, is irrevocable.
8.4 Grantor Remains Liable. Anything contained in this Agreement to the
contrary notwithstanding, (a) the Grantor shall remain solely liable to perform
its duties and obligations under the License Agreement included in the
Collateral to the extent set forth therein to the same extent as if this
Agreement had not been executed, (b) the exercise by the Lender of any of its
rights and remedies hereunder shall not release any Grantor from any of its
duties or obligations under the License Agreement included in the Collateral
except to the extent the exercise of such rights renders the performance of such
duties or obligations by the Grantor impracticable under any such agreement or
contract, and (c) the Lender shall not have any obligation or liability under
any License Agreement included in the Collateral by reason of this Agreement,
and the Lender shall not be obligated in any manner to perform any of the
obligations or duties of the Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
9. MISCELLANEOUS
9.1 Security Interest Absolute. All rights of the Lender hereunder, the
security interest granted hereby, and all obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Debentures, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Debentures or any other agreement or
instrument, (c) any exchange, release or non-perfection of any other Collateral,
or any release, amendment or waiver of, or consent to or departure from, any
guaranty for all or any of the Obligations, or (d) any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
Grantor in respect of the Obligations or in respect of this Agreement.
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9.2 Lender's Fees and Expenses; Indemnification. (a) The Grantor agrees
to pay upon demand to the Lender the amount of all reasonable expenses,
including the fees and expenses of its counsel and of any experts of the Lender,
which the Lender may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Lender hereunder, or (iv) the failure by
the Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the Purchase Agreement or any Related Documents (as defined in the
Purchase Agreement) the Grantor agrees to indemnify the Lender against, and
defend and hold it harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable fees, disbursements and
other charges of counsel, incurred by or asserted against it arising out of, in
any way connected with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not the Lender is a
party thereto; provided that such indemnity shall not, as to the Lender, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of the Lender.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured by this Agreement. The provisions of this Section
9.2 shall remain operative and in full force and effect regardless of the
termination of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Debentures, the invalidity or
unenforceability of any term or provision of this Agreement, or any
investigation made by or on behalf of the Lender. All amounts due under this
Section 9.2 shall be payable on written demand therefor and shall bear interest
at the rate of 2.5% per month from the date incurred by Lender until paid in
full
9.3 No Amendment of License the Agreements. The Grantor hereby agrees
not to amend or waive any provision of the License Agreements without the
written consent (which shall not be unreasonably withheld) of the Lender.
9.4 Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns,
except that the Grantor shall not be permitted to assign this Agreement or any
interest herein or in the Collateral or any part thereof, or otherwise pledge,
encumber or grant any option with respect to the Collateral or any part thereof,
or any cash or property held by the Lender as Collateral under this Agreement,
except as contemplated by this Agreement or the Debentures.
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9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF UTAH WITHOUT
GIVING EFFECT TO THE LAWS OF CONFLICT OR CHOICE OF LAWS OF THE STATE OF UTAH OR
ANY OTHER JURISDICTION THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER
THAN THOSE OF THE STATE OF UTAH.
9.6 Consent to Jurisdiction and Service of Process. With respect to
jurisdiction, service of process, jury trial and all other procedural matters
the Grantor agrees that the provisions of Section 12.11 of the Purchase
Agreement apply to this Agreement mutatis mutandis.
9.7 Notices. All communications and notices hereunder shall be in
writing and given as provided in the Debentures.
9.8 Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal and unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
9.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
9.10 Termination. (a) This Agreement and the security interest granted
hereby shall terminate only after all the Obligations have been indefeasibly
paid in full and the Lender has no further commitment to lend under the
Debentures, at which time the Lender shall execute and deliver to the Grantor
all Uniform Commercial Code termination statements and similar documents
prepared by the Grantor which the Grantor shall reasonably request to evidence
such termination.
(b) Notwithstanding anything to the contrary contained in this
Agreement, this Agreement shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Grantor for
liquidation or reorganization, should the Grantor become insolvent or make an
assignment for any benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the obligations, whether as a "voidable preference",
"fraudulent conveyance" or otherwise, all as though such payment, or any part
thereof, is rescinded, reduced, restored or returned.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Grantor: COVOL TECHNOLOGIES, INC.
Attest:
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx, General Counsel & Xxxxxx X. Xxxxxxx, Chief Financial
Corporate Secretary Officer
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx, Executive Vice
President
Lender: ASPEN CAPITAL RESOURCES, LLC
By: /s/ Xxx X. Xxxxxxx
----------------------------------
Xxx X. Xxxxxxx, Manager
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