AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED
SECURITY AGREEMENT
This AMENDED AND RESTATED SECURITY
AGREEMENT (“Security
Agreement”) is executed effective as of June 30, 2010 by and among
HEMIWEDGE INDUSTRIES, INC. (formerly called Xxxxxxx Industries, Inc.), a
Delaware Corporation (“Industries”),
HEMIWEDGE VALVE CORPORATION, a Texas corporation (”Hemiwedge”)
(Industries and Hemiwedge being hereinafter sometimes collectively referred to
as the (“Grantors”)
and XXXX INVESTMENTS I, LLC., of 00000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxx, 00000,
(“Investments”)
and D. XXXXXXX XXXXXXXXXX (“XxXxxxxxxx”),
of 000 Xxxxx Xxxx Xxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx, 00000, (Investments and
XxXxxxxxxx herein collectively called the (“Secured
Parties”).
RECITALS:
A. The Grantors are liable
to the Secured Parties for the indebtedness and obligations described in that
certain Amended and Restated Loan Agreement (“Loan
Agreement”) and Amended and Restated Promissory Note (Demand Note)
(“Note”) and
all other loan documents executed by the Grantors in connection with such Loan
Agreement and Note, each of even date herewith (collectively, the “Loan
Documents”).
B. The Grantors have agreed
to secure payment of the indebtedness and obligations under the Loan Documents
and other indebtedness and obligations described herein (collectively, the
“Indebtedness”)
by granting the security interests described in this Security
Agreement.
C. Pursuant to an Assignment
of Note, Loan Documents and Security Interests (“Assignment
Agreement”) by and between the Secured Parties (as Assignees) and
Stillwater National Bank and Trust Company), a national bank domiciled in
Oklahoma (the “Prior
Lender”) the Secured Parties have taken an assignment of all
the liens, rights, titles and benefits of Prior Lender, under and pursuant to
that certain Amended and Restated Security Agreement, effective as of September
30, 2008, by and among the Borrowers, XXXXXXX MACHINE WORKS, INC (“Xxxxxxx”)
and the Prior Lender (the “Prior Lender
Security Agreement”), which Prior Lender Security Agreement was given in
consideration of and as collateral for all indebtedness and obligations of the
Grantors to the Prior Lender under a Loan and Consolidation Agreement and an
Amended and Restated Promissory Note (Term Note), each dated with effect from
September 30, 2008, among the Grantors, Xxxxxxx and the Prior Lender and certain
other documents identified and described in the Assignment Agreement
(collectively the “Prior Loan
Documents”).
D. This Security Agreement
grants the liens and security interests set forth herein and also extends,
renews, amends and restates in their entirety, but does not extinguish or
release, the Prior Security Agreement.
E. All of the Recitals set
forth in the Loan Agreement and not otherwise revised herein or in conflict
herewith are incorporated herein and made applicable to this Security Agreement
verbatim.
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F. A condition precedent to
the Secured Parties purchasing the Prior Loan Documents, for continuing to
extend and renew the indebtedness under by the Prior Loan Documents and for
executing the Loan Documents is that the Grantors shall execute and deliver this
Security Agreement to the Secured Parties.
G. The Grantors have each
determined that the execution, delivery and performance of this Security
Agreement directly benefits and are in the best interests of each such
Grantor.
WITNESSETH:
NOW, THEREFORE, in consideration of the
premises and the agreements herein and in order to induce the Secured Parties to
purchase the Prior Loan Documents and all liens and indebtedness of Grantors
thereunder from the Prior Lenders and to execute the Loan Documents, the
Grantors hereby each agree with the Secured Parties, for the benefit of each of
them, as follows:
Section
1. Definitions.
(a)
Reference is hereby made to the Loan Agreement for a
statement of the terms thereof. All capitalized terms used in this Security
Agreement and the recitals hereof which are defined in the Loan Agreement or in
Article 9 of the Uniform Commercial Code as in effect from time to time in the
State of Texas (the "Code") and which are not
otherwise defined herein shall have the same meanings herein as set forth
therein; provided, that terms
used herein which are defined in the Code as in effect in the State of Texas on
the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as the Secured Parties Amended
otherwise determine.
(b)
Further, the following terms shall have the respective
meanings provided for in the Code: "Accounts", "Cash Proceeds", "Chattel Paper",
"Commercial Tort Claim", "Commodity Account", "Commodity Contracts",
"Documents", "Equipment", "Fixtures", "Goods", "Instruments", "Inventory",
"Investment Property", "Letter-of-Credit Rights", "Noncash Proceeds", "Payment
Intangibles", "Proceeds", "Promissory Notes", "Record", "Security Account",
"Software", and "Supporting Obligations".
(c)
As used in this Security Agreement the terms defined in the opening
paragraph and Recitals hereto bear the meanings given to them in such opening
paragraph and Recitals, respectively, and, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:
“A/R
Facility” shall have the same meaning as set forth in the Loan
Agreement.
“Collateral”
means all property, assets or rights in which a security interest is granted
hereunder.
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"Copyright
Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).
"Copyrights"
means all domestic and foreign copyrights, whether registered or
unregistered, including, without limitation, all copyright rights throughout the
universe (whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"Deposit
Accounts" means all "deposit accounts" (as defined in the Code) or other
receipts, now owned or hereafter acquired by any Person or in which a Person has
or acquires any rights, covering, evidencing or representing proceeds of any of
the Collateral, including without limitation, proceeds of Accounts, General
Intangibles, Assigned Contracts and Pending Claims.
"General
Intangibles" means all "general intangibles" (as defined in the Code),
now or hereafter owned or acquired by a Person or in which a Person now or
hereafter has or acquires any rights, including but not limited to, all
obligations or indebtedness owing to a Person and all rights, title and interest
which a Person may now have or hereafter have, in or under all contracts, causes
of action (including without limitation, the Pending Claims), franchises, tax
refund claims, customer lists, intellectual property, license royalties,
goodwill, trade secrets, proprietary or confidential information, data bases,
business records, data, skill, expertise, experience, processes, models,
drawings, materials and records, permits and licenses, warranties, manuals,
software and other intangible property of every kind and nature.
“General
Intangible Accounts”
means all accounts receivable and right to receive payment of a monetary
obligation whether or not earned by performance, for General Intangibles,
including Intellectual Property, that have been sold, leased, licensed, assigned
or otherwise disposed of by Borrowers or either of them.
"Intellectual
Property" means the Copyrights, Trademarks and Patents.
“Liens”
has the meaning set forth in the Loan Agreement.
"Licenses"
means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.
“Loans”
means all outstanding loans and other financial accommodations granted
the Borrower under the Loan Documents.
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“Loan Documents”
means collectively, the Loan Documents, and all Related
Documents.
“Material Adverse
Effect” means (a) a material adverse change in, or a material adverse
effect upon, the assets, business, properties, prospects, condition (financial
or otherwise) results of operations of any Grantor, taken as a whole; (b) a
material impairment of the ability of any Grantor, taken as whole, to perform
any of their respective obligations under the Loan Documents; (c) a material
adverse change on any substantial portion of the Collateral; (d) a material
adverse effect on the perfection or priority of any lien granted to the Secured
Parties under the Loan Documents, taken as a whole; or (e) a material adverse
effect on the legality, validity, binding effect or enforceability against any
Grantor of the Loan Documents to which they are parties, except to the extent,
with respect to the preceding clauses (a) to (e), such material adverse effect
was caused by the Secured Parties or either of them.
"Motor Vehicles"
has the meanings given such term in Section
4(1).
“Obligations”
shall have the meaning set forth in Section
3.
“Parties”
means the parties to this Security Agreement and “Party”
means any one of them.
"Patent
Licenses'" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule II
hereto).
"Patents'"
means all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including, without limitation, all domestic and
foreign letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule II hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office, or in any similar office or agency of the United
States or any other country or any political subdivision thereof), and all
reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.
"Pending Claims"
means all right title and interest now or hereafter owned or acquired by
a Person or in which a Person now or hereafter has or acquires any rights,
arising pursuant to or in connection with claims or causes of action, however
asserted, against any other Person.
“Person”
means any individual, corporation, limited liability company, trust,
partnership, company, joint venture, governmental authority or other
entity.
“Permitted
Liens” has the meaning set forth in the Loan Agreement.
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“Related
Documents” has the meaning set forth in the Loan Agreement.
"Trademark
Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements and the right to prepare for sale or lease and sell or lease any and
all Inventory now or hereafter owned by any Grantor and now or hereafter covered
by such licenses (including, without limitation, all Trademark Licenses
described in Schedule
II hereto).
"Trademarks'"
means all domestic and foreign trademarks, service marks, collective
marks, certification marks, trade names, business names, d/b/a's, Internet
domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired or used by any Grantor (including, without limitation, all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a's, Internet domain names, trade
styles, designs, logos and other source or business identifiers described in
Schedule II
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are
used.
(d)
Other Interpretive
Provisions.
(i) The
meanings of defined terms herein are equally applicable to the singular and
plural forms of the defined terms. Whenever the context so requires,
the neuter gender includes the masculine and feminine, the single number
includes the plural, and vice versa, and in particular the word Grantor and
“Grantor” and “Secured Party” shall be so construed.
(ii) Section and Schedule references
are to this Agreement unless otherwise specified. The words “hereof”,
“herein”, and “hereunder, and words of similar import when used in this Security
Agreement shall refer to this Security Agreement as a whole and not any
particular provision in this Security Agreement.
(iii) The
term “including” is not limiting, and means “including, without
limitation”.
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(iv) In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including”; the words “to” and “until” each mean
“to but excluding”, and the word “through” means “to and
including”.
(v) Unless
otherwise expressly provided herein, (A) references to agreements (including
this Security Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments, restatements, supplements, and other
modifications thereto, and (B) references to any statute or regulation shall be
construed as including all statutory and regulatory provisions amending,
replacing, supplementing or interpreting such statue or regulation.
Section
2. Grant of Security
Interest. As collateral security for all of the Obligations (as defined
in Section 3
hereof), each Grantor hereby pledges and assigns to the Secured Parties for the
benefit of each of them jointly a continuing security interest in, all of the
following property of each such Grantor, wherever located and whether now or
hereafter existing and whether now owned or hereafter acquired, of every kind
and description, tangible or intangible (collectively, the "Collateral"), including, without
limitation, the following:
(a) all
Accounts
(b) all
Chattel Paper (whether tangible or electronic);
(c) all
Deposit Accounts, all cash, and all other property from time to time deposited
therein and the monies and property in the possession or under the control of
any Lender or any affiliate, representative, agent or correspondent of any
Lender;
(d) all
Documents;
(e) all
Equipment;
(f)
all Fixtures;
(g) all
General Intangibles (including, without limitation, all Payment
Intangibles);
(h) all
General Intangible Accounts;
(i) all
Goods;
(j) all
Instruments (including, without limitation, Promissory Notes);
(k) all
Inventory;
(l) all
Investment Property;
(m) all
Copyrights, Patents and Trademarks, and all Licenses;
(n)
all Letter-of-Credit Rights;
(o) all
Supporting Obligations;
(p) all
Pending Claims;
(q) all
Motor Vehicles;
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(r) all
assets and property of Grantors currently located in China or other parts of the
world outside of the United States, including all drawings, patterns, molds,
fixtures, gauges, tools and other materials used in the manufacture of Grantors’
products and inventory.
(s) all
other tangible and intangible personal property of each Grantor (whether or not
subject to the Code), including, without limitation, all bank and other accounts
and all cash and all investments therein, all proceeds, products, offspring,
accessions, rents, profits, income, benefits, substitutions and replacements of
and to any of the property of such Grantor described in the preceding clauses of
this Section 2
(including, without limitation, any proceeds of insurance thereon and all causes
of action, claims and warranties now or hereafter held by such Grantor in
respect of any of the items listed above), and including all books,
correspondence, files and other Records, all tapes, disks, cards, Software, data
and computer programs in the possession of or under the control of such Grantor
or any other Person from time to time acting for such Grantor that at any time
evidence or contain information relating to any of the property described in the
clause (preceding clauses of this Section 2 or are
otherwise necessary or helpful in the collection or realization
thereof;
(t)
all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
any and all of the foregoing Collateral; in each case howsoever such Grantor's
interest therein may arise or appear (whether by ownership, security interest,
claim or otherwise). Notwithstanding anything contained in this Security
Agreement to the contrary, in no event shall the Collateral include, and no
Grantor shall be deemed to have granted a security interest in any of such
Grantor's right, title or interest in any license, contract or agreement to
which such Grantor is a party as of the date hereof or any of its right, title
or interest thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement on the date hereof
result in a breach of the terms of, or constitute a default under, such license,
contract or agreement (other than to the extent that any such term (x) has been
waived or (y) would be rendered ineffective pursuant to Sections, 9.406, 9.408, 9.409 or other
applicable provisions of the Code of any relevant jurisdiction or any other
applicable law (including the Bankruptcy Code) or principles of equity);
provided, that in the case of this sub clause (ii), (A) immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and such Grantor shall be deemed to have granted a security
interest in, all such right, title and interest as if such provision had never
been in effect and (B) the foregoing exclusion shall in no way be construed so
as to limit, impair or otherwise affect the Secured Parties' unconditional
continuing security interest in and liens upon any rights or interests of the
Grantor in or to monies due or to become due under any such license, contract or
agreement.
Section
3. Security for
Obligations. The security interest created hereby in the Collateral
constitutes continuing collateral security for all of the following obligations,
whether now existing or hereafter incurred (collectively, the "Obligations"):
(a) the
prompt payment by each Grantor, as and when due and payable (whether by
scheduled maturity, required prepayment, acceleration demand or otherwise), of
all amounts from time to time owing by it in respect of the Loan Documents,
including, (i) all principal of and interest on the Loans, and (ii) all fees,
commissions, expense reimbursements, indemnifications and all other amounts due
or to become due under any Loan Document; and
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(b) the
due performance and observance by each Grantor of all of its other obligations
from time to time existing in respect of the Loan Documents.
Section
4. Representations and
Warranties. Each Grantor jointly and severally represents and
warrants as follows:
(a) Grantors’
Names. Schedule I hereto
sets forth (i) the exact legal name of each Grantor and (ii) the organizational
identification number of each Grantor (or indicates that such Grantor has no
organizational identification number).
(b) Due
Organization/Qualification. Each Grantor (i) is a corporation,
duly organized, validly existing and in good standing under the laws of the
state or jurisdiction of its organization as set forth on Schedule I hereto,
(ii) has all requisite power and authority to conduct its business as now
conducted and as presently contemplated and to execute, deliver and perform this
Security Agreement, and to consummate the transactions contemplated hereby, and
(iii) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect..
(c) Due
Authorization. The execution, delivery and performance by each
Grantor of this Security Agreement (i) have been duly authorized by all
necessary action, (ii) do not and will not contravene its charter or by-laws,
its limited liability company or operating agreement or its certificate of
partnership or partnership agreement, as applicable, or any applicable law or
any contractual restriction binding on or otherwise affecting it or any of its
properties, (iii) do not and will not result in or require the creation of any
Lien upon or with respect to any of its properties (other than pursuant to any
Loan Document), and (iv) do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to it or its
operations or any of its properties.
(d) Legal and Binding
Obligations. This Security Agreement is, and when executed and
delivered, will be, a legal, valid and binding obligation of such Grantor,
enforceable against such Grantor in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws.
(e) No Pending
Actions. There is no pending or, to the best knowledge of any
Grantor, threatened action, suit, proceeding or claim affecting any Grantor
before any court or other Governmental Authority or any arbitrator, that may
adversely affect the grant by any Grantor, or the perfection of the security
interests purported to be created hereby in the Collateral, or the exercise by
the Secured Parties of any of its rights or remedies hereunder.
(f) Tax
Returns. Except as otherwise specifically set forth in the
Loan Agreement, all federal, state and local tax returns and other
reports required by applicable law to be filed by any Grantor have been filed,
or extensions have been obtained, and all taxes, assessments and other
governmental charges imposed upon any Grantor or any property of any Grantor and
which have become due and payable on or prior to the date hereof have been paid,
except to the extent contested in good faith by proper proceedings which stay
the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof in accordance with GAAP.
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(g) Equipment/Fixtures/Goods/Inventory.
All Equipment, Fixtures, Goods and Inventory now existing are, and all
Equipment, Fixtures, Goods and Inventory hereafter existing will be, located
and/or based at the addresses specified therefor in Schedule III hereto
(as amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof). Each Grantor's chief place of business and chief
executive office, the place where such Grantor keeps its Records concerning
Trade Accounts and all originals of all Chattel Paper are located at the
addresses specified therefore in Schedule III
hereto. Set forth in Schedule IV hereto is
a complete and accurate list, as of the date of this Security Agreement, of each
Deposit Account, Securities Account and Commodities Account of each Grantor,
together with the name and address of each institution at which each such
Account is maintained, the account number for each such Account and a
description of the purpose of each such Account. Set forth in Schedule II hereto is
(i) a complete and correct list of each trade name used by each Grantor and (ii)
the name of, and each trade name used by, each Person from which such Grantor
has acquired any substantial part of the Collateral.
(h)
Licenses. Each
Grantor has delivered to the Secured Parties complete and correct copies of each
License described in Schedule II hereto,
including all schedules and exhibits thereto, which represents all of the
Licenses existing on the date of this Security Agreement. Each such License sets
forth the entire agreement and understanding of the parties thereto relating to
the subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of any Grantor or any of its Affiliates in respect thereof. Each License
now existing is, and each other License will be, the legal, valid and binding
obligation of the parties thereto, enforceable against such parties in
accordance with its terms. No default thereunder by any such party has occurred,
nor does any defense, offset, deduction or counterclaim exist thereunder in
favor of any such Party.
(i) Ownership of Intellectual
Property. The Grantors own or license, or otherwise have the
right to use, all trademarks, Patents and Copyrights, which are the only
trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, and rights of publicity
necessary to conduct their business in substantially the same manner as
conducted as of the date hereof. Schedule II hereto
sets forth a true and complete list of all Intellectual Property and Licenses
owned or used by each Grantor as of the date hereof. All such Intellectual
Property is subsisting and in full force and effect, has not been adjudged
invalid or unenforceable, is valid and enforceable and has not been abandoned in
whole or in part. Except as set forth in Schedule II, no such
Intellectual Property is the subject of any licensing or franchising agreement.
No Grantor has any knowledge of any conflict with the rights of others to any
Intellectual Property, no Grantor is now infringing or in conflict with any such
rights of others and, to the best of Grantor’s knowledge, no other Person is now
infringing or in conflict with any such properties, assets and rights owned or
used by any Grantor, except for such infringements or conflicts which,
individually or in the aggregate, could not have a Material Adverse Effect. No
Grantor has received any notice that it is violating or has violated the
trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity or other
intellectual property rights of any third party.
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(j) Ownership of
Collateral. The Grantors are and will be at all times the sole
and exclusive owners of, or otherwise have and will have adequate rights in, the
Collateral free and clear of any Lien except for (i) the Lien created by this
Security Agreement and (ii) the Permitted Liens. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording or filing office except (A) such as may
have been filed in favor of the Secured Parties relating to this Security
Agreement and (B) such as may have been filed to perfect or protect any
Permitted Lien.
(k)
No Contract
Breaches. The exercise by the Secured Parties of any of their
rights and remedies hereunder will not contravene any law or any material
contract or any contractual restriction binding on or otherwise affecting any
Grantor or any of its properties and will not result in, or require the creation
of, any Lien upon or with respect to any of its properties (other than pursuant
to this Security Agreement and the other Loan Documents).
(1)
No Filing
Required. No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or other regulatory
body, or any other Person, is required for (i) the grant by any Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral or (ii) the exercise by the Secured Parties of any of its rights and
remedies hereunder, except (A) for the filing under the Uniform Commercial Code
as in effect in the applicable jurisdictions of the financing statements as
described in Schedule
V hereto, all of which financing statements, filings, and other
recordings, as applicable, have been duly filed and are in full force and
effect, (B) with respect to the perfection of the security interest created
hereby in the United States Intellectual Property, for the recording of the
appropriate Assignment for Security in the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, (C) with respect to
the perfection of the security interest created hereby in foreign Intellectual
Property and Licenses, for registrations and filings in jurisdictions located
outside of the United States and covering rights in such jurisdictions relating
to the Intellectual Property and Licenses, (D) with respect to the perfection of
the security interest created hereby in motor vehicles (including, without
limitation, all trucks, trailers, tractors, service vehicles, automobiles and
other mobile equipment) for which the title to such motor vehicles is governed
by a certificate of title or ownership (collectively, the "Motor
Vehicles"), for the
submission of an appropriate application requesting that the Lien of the Secured
Parties be noted on the certificate of title or ownership, completed and
authenticated by the applicable Grantor, together with the certificate of title,
with respect to each Motor Vehicle, to the appropriate state agency, (E) with
respect to any action that may be necessary to obtain control of Collateral
described in Sections
5(i) and 5(k) hereof, the
taking of such action and (F) the taking possession of all Documents, Chattel
Paper, Instruments and cash constituting Collateral.
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(m)
Legal and Binding
Security Interest. This Security Agreement creates in favor of
each of the Secured Parties, a legal, valid and enforceable security interest in
the Collateral, as security for the Obligations. The Secured Parties' having
possession of all Instruments, Documents, Chattel Paper and cash constituting
Collateral and obtaining control of all Collateral described in Sections 5(i) and
5(k) hereof
from time to time, the recording of the appropriate Assignment for Security
executed pursuant hereto in the United States Patent and Trademark Office and
the United States Copyright Office, as applicable, the submission of an
appropriate application requesting that the Lien of the Secured Parties be noted
on the certificate of title or ownership, completed and authenticated by the
applicable Grantor, together with the certificate of title or ownership, with
respect to such Motor Vehicles, to the applicable state agency, and the filing
of the financing statements and the other filings and recordings, as applicable,
described in Schedule
V hereto and, with respect to the Intellectual Property hereafter
existing and not covered by an appropriate Assignment for Security, the
recording in the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, of appropriate instruments of assignment,
result in the perfection of such security interests. Such security interests
are, or in the case of Collateral in which any Grantor obtains rights after the
date hereof, will be, perfected, first priority security interests, subject only
to the Permitted Liens and the taking of actions described in this Section 4(m). Such
recordings and filings and all other action necessary or desirable to perfect
and protect such security interest have been duly taken, except for (i) the
Secured Parties’ having possession of Instruments, Documents, Chattel Paper and
cash constituting Collateral after the date hereof, (ii) the Secured Parties
obtaining control of any Collateral described in Sections 5(i) and
5(k) of this
Security Agreement after the date hereof, (iii) the other filings and
recordations described in Section 4(1) hereof,
and (iv) the submission of an appropriate application requesting that the Lien
of the Secured Parties be noted on the certificate of title or ownership with
respect to any Motor Vehicle, completed and authenticated by the applicable
Grantor, together with the certificate of title or ownership with respect to
such Motor Vehicle, to the applicable state agency.
(n)
No
Commercial Tort Claims. As of the date hereof, no Grantor
holds any Commercial Tort Claims or is aware of any such pending claims, except
for such claims described in Schedule
VI.
(o)
Hemiwedge’s
Stock. The shares and stock of Hemiwedge are (i) not dealt in
or traded on securities exchanges or in securities markets, (ii) securities for
purposes of Article 8 of any relevant Uniform Commercial Code, and
(iii) evidenced by a stock certificate.
Section
5. Covenants as to the
Collateral. So long as any of the Obligations shall remain outstanding
and all Commitments shall not have expired or terminated, unless the Secured
Parties shall otherwise consent in writing, then:
Page 11 of 38
(a) Further
Assurances. Each Grantor will at its expense, at any time and
from time to time, promptly execute and deliver all further instruments and
documents and take all further action that the Secured Parties may reasonably
request in order to (i) enable the Secured Parties to perfect and protect the
security interest purported to be created hereby; (ii) enable the Secured
Parties to exercise and enforce its rights and remedies hereunder in respect of
the Collateral; or (iii) otherwise effect the purposes of this Security
Agreement, including, without limitation: (A) marking conspicuously all Chattel
Paper, Licenses and Records pertaining to the Collateral with a legend, in form
and substance reasonably satisfactory to the Secured Parties, indicating that
such Chattel Paper, License or Collateral is subject to the security interest
created hereby, (B) executing and filing (to the extent, if any, that such
Grantor's signature is required thereon) or authenticating the filing of, such
financing or continuation statements, or amendments thereto, as may be necessary
or desirable or that the Secured Parties may reasonably request in order to
perfect and preserve the security interest purported to be created hereby, (C)
furnishing to the Secured Parties from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral in each case as the Secured Parties may
reasonably request, all in reasonable detail, (D) if any Collateral shall be in
the possession of a third party, notifying such Person of the Secured Parties'
security interest created hereby and obtaining a written acknowledgment from
such Person that such Person holds possession of the Collateral for the benefit
of the Secured Parties, which such written acknowledgement shall be in form and
substance reasonably satisfactory to the Secured Parties, (E) if at any time
after the date hereof, any Grantor acquires or holds any Commercial Tort Claim,
immediately notifying the Secured Parties in a writing signed by such Grantor
setting forth a brief description of such Commercial Tort Claim and granting to
the Secured Parties a security interest therein and in the proceeds thereof,
which writing shall incorporate the provisions hereof and shall be in form and
substance satisfactory to the Secured Parties, (F) upon the acquisition after
the date hereof by any Grantor of any Motor Vehicle or other item of Equipment
subject to a certificate of title or ownership causing the Secured Parties to be
listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Secured Parties, (G) if any Account shall
be evidenced by Promissory Notes or other Instruments or Chattel Paper,
delivering and pledging to the Secured Parties all such Promissory Notes,
Instruments or Chattel Paper, all in form and substance satisfactory to the
Secured Parties, and (H) taking all actions required by the Uniform Commercial
Code or by other law, as applicable, in any relevant Code jurisdiction, or by
other law as applicable in any foreign jurisdiction.
(b)
Location of Equipment
and Inventory. Each Grantor will keep the Equipment and
Inventory (other than used Equipment and Inventory sold in the ordinary course
of business in accordance with Section 5(g) hereof
and any Equipment and Inventory that is located on any Vessel) at one or more of
the locations specified therefor in Section 4(g) hereof
or, upon not less than thirty (30) days' prior written notice to the Secured
Parties accompanied by a new Schedule III hereto
indicating each new location of the Equipment and Inventory, at such other
locations in the continental United States, as the Grantors may elect, provided
that (i) all action has been taken to grant to the Secured Parties a perfected,
first priority security interest in such Equipment and Inventory (subject only
to Permitted Liens), and (ii) the Secured Parties' rights in such Equipment and
Inventory, including, without limitation, the existence, perfection and priority
of the security interest created hereby in such Equipment and Inventory, are not
adversely affected thereby.
(c) Condition of
Equipment. Each Grantor will maintain or cause the Equipment
to be maintained and preserved in good condition, repair and working order,
ordinary wear and tear excepted, and will forthwith, or in the case of any loss
or damage to any Equipment within a commercially reasonable time after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Secured Parties may reasonably
request to such end.
Page 12 of 38
(d) Property Taxes,
Etc. Each Grantor jointly and severally agrees to pay promptly
when due all property and other taxes, assessments and governmental charges or
levies imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment and Inventory, except to the extent otherwise
provided in the Loan Agreement.
(e) Insurance.
(i) Each
Grantor will maintain insurance with respect to its properties in accordance
with Section
7.15 of the Loan Agreement.
(ii) Reimbursement
under any liability insurance maintained by any Grantor pursuant to this Section 4.5 shall be
applied in accordance with the provisions of Section 4.5 of the
Loan Agreement.
(f)
Provisions
Concerning the Accounts and the Licenses.
(i) No
Grantor shall, without the prior written consent of the Secured Parties, change
(A) such Grantor’s name, identity or organizational structure, (B) its
jurisdiction of incorporation as set forth in Section 4(b) hereof,
or (C) its chief executive office as set forth on Schedule III hereto.
Each Grantor shall (x) immediately notify the Secured Parties upon obtaining an
organizational identification number, if on the date hereof such Grantor did not
have such identification number, and (y) keep adequate records concerning the
Chattel Paper and permit representatives of the Secured Parties pursuant to the
terms of the Loan Agreement to inspect and make abstracts from such Records and
Chattel Paper.
(ii) Each
Grantor will, except as otherwise provided in this Section 5(f),
continue to collect, at its own expense, all amounts due or to become due under
its Accounts in accordance with its usual business practices and terms of the
Loan Documents. In connection with such collections, each Grantor may (and, at
the Secured Parties’ direction, will) take such action as such Grantor or the
Secured Parties, as the case may be, deem necessary or advisable to enforce
collection or performance of General Intangible Accounts. Upon the
occurrence and during the continuance of any Default an Event of Default,
Secured Parties may send notice in writing to all General Intangible Accounts’
payers requesting them to make all payments on such Accounts directly to the
Secured Parties.
(iii) Upon
the occurrence and during the continuance of any breach or default under any
License described in Schedule II hereto by
any party thereto other than a Grantor, (A) the relevant Grantor will, promptly
after obtaining knowledge thereof, give the Secured Parties written notice of
the nature and duration thereof, specifying what action, if any, it has taken
and proposes to take with respect thereto, (B) no Grantor will, without the
prior written consent of the Secured Parties, declare or waive any such breach
or default or affirmatively consent to the cure thereof or exercise any of its
remedies in respect thereof, and (C) each Grantor will, upon written
instructions from the Secured Parties and at such Grantor’s expense, take such
action as the Secured Parties may deem necessary or advisable in respect
thereof.
Page 13 of 38
(iv) Each
Grantor will, at its expense, promptly deliver to the Secured Parties a copy of
each notice or other communication received by it by which any other party to
any License referred to in Schedule II hereto
purports to exercise any of its rights or affect any of its obligations
thereunder, together with a copy of any reply by such Grantor
thereto.
(v) Each
Grantor will exercise promptly and diligently each and every right which it may
have under each License (other than any right of termination) and will duly
perform and observe in all respects all of its obligations under each License
and will take all action necessary to maintain such Licenses in full force and
effect. No Grantor will, without the prior written consent of the Secured
Parties, cancel, terminate, amend or otherwise modify in any material respect,
or waive any provision of, any License referred to in Schedule II
hereto.
(g) Transfers and Other
Liens.
(i) Except
to the extent expressly permitted by the Loan Agreement, no Grantor will sell,
assign (by operation of law or otherwise), lease, license, exchange or otherwise
transfer or dispose of any of the Collateral.
(ii) Except
to the extent expressly permitted by the Loan Agreement, no Grantor will create,
suffer to exist or grant any Lien upon or with respect to any
Collateral.
(h) Intellectual
Property.
(i) If
applicable, each Grantor will execute and deliver the applicable Assignment for
Security required by the U.S. Patent Office in the form acceptable to the
Secured Parties. Each Grantor (either itself or through licensees)
will, and will cause each licensee thereof to, take all action necessary to
maintain all of the Intellectual Property in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force, free from any claim of abandonment for
non-use, and no Grantor will (nor permit any licensee thereof to) do any act or
knowingly omit to do any act whereby any Intellectual Property may become
invalidated; provided, however, that so long as no Event of Default has occurred
and is continuing, no Grantor shall have an obligation to use or to maintain any
Intellectual Property (A) that relates solely to any product or work, that has
been, or is in the process of being, discontinued, abandoned or terminated, (B)
that is being replaced with Intellectual Property substantially similar to the
Intellectual Property that may be abandoned or otherwise become invalid, so long
as the failure to use or maintain such Intellectual Property does not materially
adversely affect the validity of such replacement Intellectual Property and so
long as such replacement Intellectual Property is subject to the Lien created by
this Security Agreement or (C) that is substantially the same as another
Intellectual Property that is in full force, so long the failure to use or
maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such other
Intellectual Property is subject to the Lien and security interest created by
this Security Agreement. Each Grantor will cause to be taken all necessary steps
in any proceeding before the United States Patent and Trademark Office and the
United States Copyright Office or any similar office or agency in any other
country or political subdivision thereof to maintain each registration of the
Intellectual Property (other than the Intellectual Property described in the
proviso to the immediately preceding sentence), including, without limitation,
filing of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and payment of maintenance
fees, filing fees, taxes or other governmental fees. If any Intellectual
Property is infringed, misappropriated, diluted or otherwise violated in any
material respect by a third party, the Grantors shall (x) upon learning of such
infringement, misappropriation, dilution or other violation, promptly notify the
Secured Parties and (y) to the extent the Grantors shall deem appropriate under
the circumstances, promptly xxx for infringement, misappropriation, dilution or
other violation, seek injunctive relief where appropriate and recover any and
all damages for such infringement, misappropriation, dilution or other
violation, or take such other actions as the Grantors shall deem appropriate
under the circumstances to protect such Intellectual Property. Each Grantor
shall furnish to the Secured Parties, from time to time upon the Secured
Parties’ request, statements and schedules further identifying and describing
the Intellectual Property and Licenses, and such other reports in connection
with the Intellectual Property and Licenses as the Secured Parties may
reasonably request, all in reasonable detail and promptly upon request of the
Secured Parties, following receipt by the Secured Parties of any such
statements, schedules or reports, the Grantors shall modify this Security
Agreement by amending Schedule II hereto,
to include any Intellectual Property or License, as the case may be, which
becomes part of the Collateral under this Security Agreement, and the Grantors
shall execute and authenticate such documents and do such acts as shall be
necessary or, in the judgment of the Secured Parties, desirable to subject such
Intellectual Property and Licenses to the Lien and security interest created by
this Security Agreement. Notwithstanding anything herein to the contrary, upon
the occurrence and during the continuance of an Event of Default, no Grantor may
abandon or otherwise permit any Intellectual Property to become invalid without
the prior written consent of the Secured Parties, and if any such Intellectual
Property is infringed, misappropriated, diluted or otherwise violated in any
material respect by a third party, the Grantors will take such action as the
Secured Parties shall deem appropriate under the circumstances to protect such
Intellectual Property.
Page 14 of 38
(ii) In
no event shall any Grantor, either itself or through any agent, employee,
licensee or designee, file an application for the registration of any Trademark
or Copyright or the issuance of any Patent with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, or in any
similar office or agency of the United States or any country or any political
subdivision thereof unless it gives the Secured Parties prior written notice
thereof. Upon request of the Secured Parties, each Grantor shall execute,
authenticate and deliver any and all assignments, agreements, instruments,
documents and papers as the Secured Parties may reasonably request to evidence
the Secured Parties’ security interest hereunder in such Intellectual Property
and the General Intangibles of such Grantor relating thereto or represented
thereby, and each Grantor hereby appoints the Secured Parties its
attorney-in-fact to execute and/or authenticate and file all such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed, and such power (being coupled with an interest) shall be irrevocable
until the termination of all Commitments, the indefeasible repayment of all of
the Obligations in full and the termination of each of the Loan
Documents.
(i) [Intentionally
Deleted]
(j) Motor
Vehicles.
Page 15 of 38
(i) Each
Grantor shall (a) cause all Motor Vehicles, now owned or hereafter acquired by
any Grantor, which under applicable law are required to be registered, to be
properly registered in the name of such Grantor, (b) cause all Motor Vehicles,
now owned or hereafter acquired by any Grantor, the ownership of which under
applicable law (including without limitation, any Motor Vehicle Law), is
evidenced by a certificate of title or ownership, to be properly titled in the
name of such Grantor, with, upon Secured Parties’ request, the Secured Parties’
Lien noted thereon and (c) upon Secured Parties’ request, deliver to the Secured
Parties (or its custodian) originals of all such certificates of title or
ownership for such Motor Vehicles.
(ii) Upon
the acquisition after the date hereof by any Grantor of any Motor Vehicle or
other Equipment subject to a certificate of title or ownership (other than a
Motor Vehicle or Equipment to be acquired that is subject to a purchase money
security interest permitted by the Loan Agreement), such Grantor shall deliver
to the Secured Parties originals of the certificates of title or ownership for
such Motor Vehicle, together with the manufacturer’s statement of origin, and
,upon Secured Parties’ request, an application duly executed by the appropriate
Grantor to evidence the Secured Parties’ Lien thereon.
(iii) Each
Grantor hereby appoints the Secured Parties as its attorney in- fact, effective
the date hereof and terminating upon the termination of this Security Agreement,
for the purpose of (A) executing on behalf of such Grantor title or ownership
applications for filing with appropriate state agencies to enable Motor Vehicles
now owned or hereafter acquired by such Grantor to be retitled and the Secured
Parties listed as lienholder thereof, (B) filing such applications with such
state agencies, and (C) executing such other documents and instruments on behalf
of, and taking such other action in the name of, such Grantor as the Secured
Parties may deem necessary or advisable to accomplish the purposes hereof
(including, without limitation, for the purpose of creating in favor of the
Secured Parties a perfected Lien on the Motor Vehicles and exercising the rights
and remedies of the Secured Parties hereunder). This appointment as
attorney-in-fact is coupled with an interest and is irrevocable until the
termination of all Commitments, the indefeasible repayment of all Obligations in
full and the termination of each of the Loan Documents.
(iv) Any
certificates of title or ownership delivered pursuant to the terms hereof shall
be accompanied by odometer statements for each Motor Vehicle covered
thereby.
(v) So
long as no Event of Default shall have occurred and be continuing, upon the
request of any Grantor, the Secured Parties shall execute and deliver to such
Grantor such instruments as such Grantor shall reasonably request to remove the
notation of the Secured Parties as lienholder on any certificate of title for
any Motor Vehicle; provided that any such instruments shall be delivered, and
the release effective, only upon receipt by the Secured Parties of a certificate
from such Grantor, stating that the Motor Vehicle, the Lien on which is to be
released, is to be sold or has suffered a casualty loss (with title thereto
passing to the casualty insurance company therefor in settlement of the claim
for such loss), the amount that such Grantor will receive as sale proceeds or
insurance proceeds and any proceeds of such sale or casualty loss shall be paid
to the Secured Parties hereunder to be applied to the Obligations then
outstanding.
(k) Control of
Collateral. Each Grantor hereby agrees to take any or all
action that may be necessary or desirable or that the Secured Parties may
request in order for the Secured Parties to obtain control in accordance with
Sections 9.104, 9.105, 9.106, and 9.107 of the Code
with respect to the following Collateral: (i) Deposit Accounts, (ii) Electronic
Chattel Paper, (iii) Investment Property and (iv) Letter-of-Credit
Rights.
Page 16 of 38
(1) Inspection and
Reporting. Each Grantor shall permit the Secured Parties, or
any agents or representatives thereof or such professionals or other Persons as
the Secured Parties may designate at any time and from time to time, at the
expense of the Borrowers during normal business hours and upon reasonable
advance notice to the Grantors, (i) to examine and make copies of and abstracts
from such Grantor’s records and books of account, (ii) to visit and inspect its
properties, (iii) to verify materials, leases, notes, Inventory and other assets
of such Grantor from time to time, (iv) to conduct audits, physical counts,
appraisals and/or valuations, Phase I and Phase II Environmental Site
Assessments or examinations at the locations of such Grantor, and (v) to discuss
such Grantor’s affairs, finances and accounts with any of its directors,
officers, managerial employees, independent accountants or any of its other
representatives, in each case as provided in the Loan Agreement.
Section
6. Additional Provisions
Concerning the Collateral.
(a) Financing
Statements. Each Grantor hereby (i) authorizes the Secured
Parties at any time and from time to time to file financing statements,
continuation statements and amendments thereto, relating to the Collateral and
(ii) ratifies such authorization to the extent that the Secured Parties has
filed any such financing or continuation statements, or amendments thereto,
prior to the date hereof. A photocopy or other reproduction of this Security
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by
law.
(b) Power of
Attorney. Each Grantor hereby irrevocably appoints the Secured
Parties as its attorney-in-fact and proxy, with full authority in the place and
stead of such Grantor and in the name of such Grantor or otherwise,
from time to time in the Secured Parties’ discretion, to take any action and to
execute any instrument which the Secured Parties may deem necessary or advisable
to accomplish the purposes of this Security Agreement (subject to the rights of
a Grantor under this Security Agreement), including, without limitation, (i) to
obtain and adjust insurance required to be paid to the Secured Parties pursuant
to Section 5(e)
hereof, (ii) to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any Collateral, (iii) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper in connection with clause (i) or
(ii) above, (iv) to file any claims or take any action or institute any
proceedings which the Secured Parties may deem necessary or desirable for the
collection of any Collateral or otherwise to enforce the rights of the Secured
Parties with respect to any Collateral, and (v) to execute assignments, licenses
and other documents to enforce the rights of the Secured Parties with respect to
any Collateral. This power is coupled with an interest and is irrevocable until
the termination of all Commitments, the indefeasible repayment of all of the
Obligations in full and the termination of each of the Loan
Documents.
Page 17 of 38
(c)
Intellectual Property
License. For the purpose of enabling the Secured Parties to
exercise rights and remedies hereunder, at such time as the Secured Parties
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Grantor hereby grants to the Secured Parties, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to any Grantor) to use, assign, license or
sublicense any Intellectual Property now owned or hereafter acquired by any
Grantor, wherever the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
Notwithstanding anything contained herein to the contrary, but subject to the
provisions of the Loan Agreement that limit the right of a Grantor to dispose of
its property and Section 5(e) hereof,
so long as no Event of Default shall have occurred and be continuing, each
Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the Intellectual Property in
the ordinary course of its business. In furtherance of the foregoing, unless an
Event of Default shall have occurred and be continuing, the Secured Parties
shall from time to time, upon the request of a Grantor, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
such Grantor shall have certified are appropriate (in such Grantor’s judgment)
to allow it to take any action permitted above (including relinquishment of the
license provided pursuant to this Section 6(c) as to
any Intellectual Property). Further, upon the indefeasible payment in full of
all of the Obligations and after the cancellation or termination of the Loan,
the Secured Parties (subject to Section III hereof)
shall release and reassign to the Grantors all of the Secured Parties’ right,
title and interest in and to the Intellectual Property, and the Licenses, all
without recourse, representation or warranty whatsoever. The exercise of rights
and remedies hereunder by the Secured Parties shall not terminate the rights of
the holders of any licenses or sublicenses theretofore granted by any Grantor in
accordance with the second sentence of this Section 6(c). Each
Grantor hereby releases the Secured Parties from any claims, causes of action
and demands at any time arising out of or with respect to any actions taken or
omitted to be taken by the Secured Parties under the powers of attorney granted
herein other than actions taken or omitted to be taken through the Secured
Parties’ gross negligence or willful misconduct, as determined by a final
determination of a court of competent jurisdiction.
(d)
Secured Parties May
Perform. If any Grantor fails to perform any agreement
contained herein as and when required, the Secured Parties may itself perform,
or cause performance of, such agreement or obligation, in the name of such
Grantor or the Secured Parties, and the expenses of the Secured Parties incurred
in connection therewith shall be jointly and severally payable by the Grantors
pursuant to Section
8 hereof and shall be secured by the Collateral.
(e)
No Secured Party
Duty. The powers conferred on the Secured Parties hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Secured Parties shall have no duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
(f) No Secured Party
Liability. Anything herein to the contrary notwithstanding (i)
each Grantor shall remain liable under the Licenses and otherwise with respect
to any of the Collateral to the extent set forth therein to perform all of its
obligations thereunder to the same extent as if this Security Agreement had not
been executed, (ii) the exercise by the Secured Parties of any of its rights
hereunder shall not release any Grantor from any of its obligations under the
Licenses or otherwise in respect of the Collateral, and (iii) the Secured
Parties shall not have any obligation or liability by reason of this Security
Agreement under the Licenses or with respect to any of the other Collateral, nor
shall the Secured Parties be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
Page 18 of 38
(g) Subordination to A/R
Facility. Secured Parties agree that in the event any Grantor
obtains financing secured by its Accounts pursuant to an A/R Facility, each of
the Secured Parties shall, and do hereby, subordinate its lien and security
interest granted hereunder in Grantors’ Accounts to any lender or factor
granting financing to such Grantor under such A/R Facility so that such lender
or factor shall have a first priority security interest in, but only in, such
Grantor’s Accounts, and the Secured Parties’ security interests therein shall be
second in priority to such lender or factor.
Section
7. Remedies Upon
Default. If any Event of Default shall have occurred and be
continuing:
(a) Remedies Under the
Code. The Secured Parties may exercise in respect of the
Collateral, in addition to any other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party
upon default under the Code (whether or not the Code applies to the affected
Collateral), and also may (i) take absolute control of the Collateral,
including, without limitation, transfer into the Secured Parties’ name or into
the name of its nominee or nominees (to the extent the Secured Parties has not
theretofore done so) and thereafter receive, for the benefit of the Secured
Parties, all payments made thereon, give all consents, waivers and ratifications
in respect thereof and otherwise act with respect thereto as though it were the
outright owner thereof, (ii) require each Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Secured Parties
forthwith, assemble all or part of the Collateral as directed by the Secured
Parties and make it available to the Secured Parties at a place or places to be
designated by the Secured Parties that is reasonably convenient to both parties,
and the Secured Parties may enter into and occupy any premises owned or leased
by any Grantor where the Collateral or any part thereof is located or assembled
for a reasonable period in order to effectuate the Secured Parties’ rights and
remedies hereunder or under law, without obligation to any Grantor in respect of
such occupation, and (iii) without notice except as specified below and without
any obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Secured Parties’ offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as the
Secured Parties may deem commercially reasonable and/or (B) lease, license or
dispose of the Collateral or any part thereof upon such terms as the Secured
Parties may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale or any other disposition of the Collateral shall be
required by law, at least five (5) days’ prior notice to a Grantor of the time
and place of any public sale or the time after which any private sale or other
disposition of the Collateral is to be made shall constitute reasonable
notification. The Secured Parties shall not be obligated to make any sale or
other disposition of Collateral regardless of notice of sale having been given.
The Secured Parties may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against the Secured Parties arising by reason
of the fact that the price at which the Collateral may have been sold at a
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the Obligations, even if the
Secured Parties accepts the first offer received and does not offer the
Collateral to more than one offeree, and waives all rights that such Grantor may
have to require that all or any part of the Collateral be marshaled upon any
sale (public or private) thereof. Each Grantor hereby acknowledges that (i) any
such sale of the Collateral by the Secured Parties shall be made without
warranty, (ii) the Secured Parties may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth
in clauses (i) and (ii) above shall not adversely affect the commercial
reasonableness of any such sale of the Collateral. In addition to the foregoing,
(i) upon notice to any Grantor from the Secured Parties, each Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar thereto for any purpose described in such notice; (ii) the Secured
Parties may, at any time and from time to time, upon ten (10) days’ prior notice
to any Grantor, license, whether general, special or otherwise, and whether on
an exclusive or non-exclusive basis, any of the Intellectual Property,
throughout the universe for such term or terms, on such conditions, and in such
manner, as the Secured Parties shall in its sole discretion determine; and (iii)
the Secured Parties may, at any time, pursuant to the authority granted in Section 6 hereof
(such authority being effective upon the occurrence and during the continuance
of an Event of Default), execute and deliver on behalf of a Grantor, one or more
instruments of assignment of the Intellectual Property (or any application or
registration thereof), in form suitable for filing, recording or registration in
any country.
Page 19 of 38
(b) Cash and Cash
Proceeds. Any cash held by the Secured Parties as Collateral
and all Cash Proceeds received by the Secured Parties in respect of any sale of
or collection from, or other realization upon, all or any part of the Collateral
may, in the discretion of the Secured Parties, be held by the Secured Parties as
collateral for, and/or then or at any time thereafter applied (after payment of
any amounts payable to the Secured Parties pursuant to Section 8 hereof) in
whole or in part by the Secured Parties against, all or any part of the
Obligations in such order as the Secured Parties shall elect, consistent with
the provisions of the Loan Agreement. Any surplus of such cash or Cash Proceeds
held by the Secured Parties and remaining after indefeasible payment in full of
all of the Obligations after all Commitments have been terminated shall be paid
over to whomsoever shall be lawfully entitled to receive the same or as a court
of competent jurisdiction shall direct.
(c) Grantors’ Deficiency
Liability. In the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which the
Secured Parties are legally entitled, the Grantors shall be jointly and
severally liable for the deficiency, together with interest thereon at the
highest rate specified in the Loan Agreement for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees, costs, expenses and other
client charges of any attorneys employed by the Secured Parties to collect such
deficiency.
(d) Disposition of
Collateral. Each Grantor hereby acknowledges that if the
Secured Parties complies with any applicable state or federal law requirements
in connection with a disposition of the Collateral, such compliance will not
adversely affect the commercial reasonableness of any sale or other disposition
of the Collateral.
(e) No Marshalling
Required. The Secured Parties shall not be required to
xxxxxxxx any present or future collateral security (including, but not limited
to, this Security Agreement and the Collateral) for, or other assurances of
payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of the
Secured Parties’ rights hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that any Grantor lawfully
may, such Grantor hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
the Secured Parties’ rights under this Security Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Grantor hereby irrevocably waives the benefits of all such
laws.
Page
20 of 38
Section
8. Indemnity and
Expenses.
(a) Claims, Damages,
Etc. Each Grantor jointly and severally agrees to defend,
protect, indemnify and hold harmless each Secured Party from and against any and
all claims, damages, losses, liabilities, obligations, penalties, fees, costs
and expenses (including, without limitation, legal fees, costs, expenses, and
disbursements of counsel) to the extent that they arise out of or otherwise
result from this Security Agreement (including, without limitation, enforcement
of this Security Agreement), except claims, losses or liabilities resulting
solely and directly from such Person’s gross negligence or willful misconduct,
as determined by a final judgment of a court of competent
jurisdiction.
(b) Fees and
Courts. Each Grantor jointly and severally agrees to pay to
the Secured Parties upon demand the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and disbursements of counsel for
the Secured Parties and of any experts and agents (including, without
limitation, any collateral trustee which may act as agent of the Secured
Parties), which the Secured Parties may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Security
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral, (iii) the exercise
or enforcement of any of the rights of the Secured Parties hereunder, or (iv)
the failure by any Grantor to perform or observe any of the provisions
hereof.
Section
9. Notices, Etc. All
notices and other communications provided for hereunder shall be in writing and
shall be mailed (by certified mail, postage prepaid and return receipt
requested), telecopied or delivered, if to a Grantor, to it at its address
specified in the Loan Agreement and if to the Secured Parties, to them at their
addresses specified in the Loan Agreement; or as to any such Person, at such
other address as shall be designated by such Person in a written notice to such
other Person complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective (i) if sent by certified
mail, return receipt requested, when received or three (3) days after deposited
in the mails, whichever occurs first, (ii) if telecopied, when transmitted and
confirmation is received, or (iii) if delivered, upon delivery.
Section
10. Security Interest
Absolute. All rights of the Secured Parties, all Liens and all
obligations of each of the Grantors hereunder shall be absolute and
unconditional irrespective of (i) any lack of validity or enforceability of the
Loan Agreement or any other agreement or instrument relating thereto, (ii) any
change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Obligations, or any other amendment or waiver of
or consent to any departure from the Loan Agreement or any other Loan Document,
(iii) any exchange or release of, or non-perfection of any Lien on any
Collateral, or any release or amendment or waiver of or consent to departure
from any part of the Obligations, or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, any of the
Grantors in respect of the Obligations. All authorizations and agencies
contained herein with respect to any of the Collateral are irrevocable and
powers coupled with an interest.
Page
21 of 38
Section
11. Miscellaneous.
(a) Amendments. No
amendment of any provision of this Security Agreement shall be effective unless
it is in writing and signed by each Grantor and the Secured Parties, and no
waiver of any provision of this Security Agreement, and no consent to any
departure by any Grantor therefrom, shall be effective unless it is in writing
and signed by the Secured Parties, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b)
No Deemed
Waivers. No failure on the part of any Lender to exercise, and
no delay in exercising, any right hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies the Secured Parties provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Secured
Parties under any Loan Document against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights under any
other Loan Document against such party or against any other Person, including
but not limited to, any Grantor.
(c) Severability. Any
provision of this Security Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction and shall not render unenforceable or invalid any
other provisions of this Security Agreement not so prohibited or rendered
unenforceable, and such remaining provisions shall continue in full force and
effect.
(d) Continuing Security
Interest. This Security Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until (A) the indefeasible payment in full of all of the Obligations, and
(B) the termination of all of the Commitments; and (ii) be binding on each
Grantor and all other Persons who become bound as debtor to this Security
Agreement in accordance with Section 9.203(d) of
the Code and shall inure, together with all rights and remedies of the Secured
Parties hereunder, to the benefit of the Secured Parties and their respective
permitted successors, transferees and assigns. Without limiting the generality
of clause (ii) of the immediately preceding sentence, to the extent permitted
under the Loan Agreement, the Secured Parties may assign or otherwise transfer
their rights and obligations under this Security Agreement and any other Loan
Document, to any other Person and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to the Secured
Parties herein or otherwise. Upon any such assignment or transfer, all
references in this Security Agreement to any such Secured Party shall mean the
assignee of such Secured Party. None of the rights or obligations of
any Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Secured Parties, and any such assignment or transfer
shall be null and void.
Page
22 of 38
(e) Security Agreement
Termination. Upon the satisfaction in full of the Obligations
and the termination of all of the Commitments, (i) this Security Agreement and
the security interests and licenses created hereby shall terminate and all
rights to the Collateral shall revert to the Grantors and (ii) the Secured
Parties will, upon the Grantors’ request and at the Grantors’ expense, (A)
return to the Grantors such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof and (B) execute
and deliver to the Grantors such documents as the Grantors shall reasonably
request to evidence such termination, all without any representation, warranty
or recourse whatsoever.
(f) Governing
Law. THIS
AGREEMENT SHALL BE GOVERNED BY, CONSTRUEDAND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED
HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
(g) Legal
Action. ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE
COURTS OF THE STATE OF TEXAS OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF TEXAS, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS. WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
(h) Waiver of
Jury Trial. EACH OF THE GRANTORS AND
(BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE SECURED PARTIES WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN
STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
(i) Service of
Process. Each Grantor irrevocably consents to the service of
process of any of the aforesaid courts in any such action, suit or proceeding by
the mailing of copies thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address provided herein, such service to become effective ten (10) days after
such mailing.
Page
23 of 38
(j) Other Forms of
Service. Nothing contained herein shall affect the right of
the Secured Parties to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against any Grantor or any
property of any Grantor in any other jurisdiction.
(k) Waiver of
Punitive/Consequential Damages. Each Grantor irrevocably and
unconditionally waives any right it may have to claim or recover, in any legal
action, suit or proceeding arising out of this Security Agreement or any other
Loan Document, any special, exemplary, punitive or consequential
damages.
(1) Section
Headings. Section headings herein are included for convenience
of reference only and shall not constitute a part of this Security Agreement for
any other purpose.
(m) Counterpart
Signatures. This Security Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
constitute one in the same Security Agreement.
(n)
Joint and Several
Obligations. All of the obligations of the Grantors hereunder
are joint and several. The Secured Parties may, in its sole and absolute
discretion, enforce the provisions hereof against any of the Grantors and shall
not be required to proceed against all Grantors jointly or seek payment from the
Grantors ratably. In addition, the Secured Parties may, in its sole and absolute
discretion, select the Collateral of any one or more of the Grantors for sale or
application to the Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection ratably from the
Collateral owned by all of the Grantors. The release or discharge of any Grantor
by the Secured Parties shall not release or discharge any other Grantor from the
obligations of such Person hereunder.
(o) Amendment and
Restatement. The Parties hereto agree that, as set forth in
the recitals to this Security Agreement, with the intention that all
indebtedness, obligations, liens, and security interests relate back and
continue to run, without lapse, from the effective date of the Prior Loan
Documents and the date of attachment and perfection of the collateral under the
Prior Security Agreement. This Security Agreement continues, amends and restates
in its entirety but does not release or extinguish the Security Agreement. This
Security Agreement does not constitute a novation and, from and after the date
hereof, the Prior Security Agreement shall be of no force or effect except to
evidence the incurrence of each of the Grantor’s obligations thereunder and the
grant of Liens therein or pursuant thereto.
(p)
Construction. Grantors
and Secured Parties each acknowledge that each of them has had the benefit of
legal counsel of its own choice and has been afforded an opportunity to review
this Security Agreement and the other Loan Documents with its legal counsel and
that this Agreement and the other Loan Documents shall be construed as if
jointly drafted by Grantors and Secured Parties.
Page
24 of 38
(q) ENTIRE AGREEMENT;
AMENDMENT. THIS WRITTEN SECURITY AGREEMENT, THE OTHER LOAN
DOCUMENTS AND THE RELATED DOCUMENTS BETWEEN GRANTORS AND SECURED PARTIES
CONCERNING THE TERMS OF THE SECURITY INTERESTS GRANTED THEREUNDER REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEAOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL SECURITY
AGREEMENTS BETWEEN THE PARTIES. THE PROVISIONS OF THIS SECURITY
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND RELATED DOCUMENTS MAY ONLY BE AMENDED
OR WAIVED BY AGREEMENT IN WRITING SIGNED BY THE PARTIES.
[The signatures appear on the
following page]
Page
25 of 38
IN
WITNESS WHEREOF, each Grantor has caused this Security Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.
|
Grantors
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|
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By:
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|
|
Name: Xxxxxxx
X. Xxxxxxxx
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Title: CFO
and Secretary
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HEMIWEDGE
VALVE CORPORATION
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By:
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Name: Xxxxxxx
X. Xxxxxxxx
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Title: CFO
and Secretary
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Secured
Parties
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XXXX
INVESTMENTS I, INC.
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By:
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Name:
Xxxxxx Xxxx
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Title: Member
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Page
26 of 38
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By:
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D.
Xxxxxxx XxXxxxxxxx
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SCHEDULE
I
Grantors
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Company Name
|
Jurisdiction of Organization
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Organizational I.D.
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||
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Hemiwedge
Industries
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Delaware
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00-0000000
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||
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Hemiwedge
Valve
Corporation
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00-0000000
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Page
27 of 38
SHEDULE
II
Intellectual
Property
I. Patents and
Patent Applications in USA- See Attached Schedule (Owned by Hemiwedge but
Licensed to Tejas/Xxxxxxx)
II. Patents and
Patent Applications outside the USA-See Attached Schedule (Owned by Hemiwedge
but Licensed to Tejas/Xxxxxxx)
III. Tradenames
Company
Name
Hemiwedge Valve
Corporation
IV. Licences-See
Attached
(i) Trademark
Licenses
(ii) Patent
Licenses
Page
28 of 38
SCHEDULE
II
IV. LICENSES
LICENSES GRANTED BY
HEMIWEDGE
Pursuant
to that certain Intellectual Property Transfer Agreement dated as of October 14,
2008 by and among Hemiwedge (“Transferor”) and Tejas Research and
Engineering LP (“Transferee”), Hemiwedge licensed the Licensed Hemiwedge
Intellectual Property (see Schedule A attached hereto) to Tejas.
LICENSES GRANTED TO
HEMIWEDGE
Pursuant
to that certain Intellectual Property Transfer Agreement dated as of October 14,
2008 by and among Hemiwedge (“Transferor”) and Tejas Research and
Engineering LP (“Transferee”).
Tejas/Transferee
granted certain licenses back to Hemiwedge/Transferor as more particularly set
forth below and in Schedule B attached hereto:
(a) License for Hemiwedge
Cartridge Valves. TRANSFEREE grants to TRANSFEROR under the Licensed
Hemiwedge Intellectual Property the non-exclusive, royalty-free, and
sublicenseable right to make, use, sell, offer for sale, rent, offer for rent,
modify, reproduce, or otherwise commercialize or develop Hemiwedge Cartridge
Valves (i) for a production manifold above water on a production platform or
vessel in Canadian waters only, and (ii) in connection with offshore platforms
and other floating production vessels with TRANSFEROR’s ANSI class and API
Specification 6D product line.
(b) License for Sale of Mud
Diverter Valves. TRANSFEREE grants to TRANSFEROR under the
Licensed Hemiwedge Intellectual Property the non-exclusive, royalty-free, and
sublicenseable right to make, use, sell, offer for sale, rent, or offer for rent
Hemiwedge Products consisting of above-ground mud diverter valves within ANSI
class product specifications for a period of eighteen (18) months from the
Effective Date; provided,
however, that the parties shall share equally the profits (defined as net
revenue minus cost of goods sold and sales commissions) from all TRANSFEROR’s
sales or rentals of such mud diverter valves to any third party other than Black
Gold Rental Tools, Inc., of Corpus Christi, Texas (“Black Gold”). For
clarity, TRANSFEROR shall have the rights to all profits from sales or rentals
of such mud diverter valves to Black Gold.
(b)(1) Additional License for Sale
of Mud Diverter Valves.
Black
Gold. On October 30, 2009 TRANSFEREE grants to TRANSFEROR under the Licensed
Hemiwedge Intellectual Property a non-exclusive, royalty bearing,
non-sublicensable right to make, use, sell, offer for sale, rent, or offer for
rent Hemiwedge Products consisting of above-ground mud diverter valves within
ANSI class product specifications solely to Black Gold Rental Tools Inc of
Corpus Christi, Texas it being understood that no such license is being granted
to make, use, sell, offer for sale, rent, or offer for rent to any other party
under this Section other than Black Gold. The licenses granted under this
Section shall begin on April 18, 2010 and expire on October 18,
2013.
Page
29 of 38
(b)(2) MPO/CPD. On October
30, 2009 TRANSFEREE grants to TRANSFEROR under the Licensed Hemiwedge
Intellectual Property a non-exclusive, royalty bearing, non-sublicensable right
to make, use, sell, offer for sale, rent, or offer for rent Hemiwedge Products
consisting of above-ground mud diverter valves within ANSI class product
specifications solely to Managed Pressure Operations, PTE, LTD and or its joint
venture partner CPD Oilwell of Singapore (together “MPO/CPD”), it being
understood that no such license is being granted to make, use, sell, offer for
sale, rent, or offer for rent to any other party under this Section to any other
party under this Section other than MPO/CPD. The licenses granted under this
Section license shall be deemed effective on October 18, 2008 and expire on
October 18, 2013.
(b)(3) Royalties. In
consideration of the licenses granted pursuant to (b).(1). and (b)(2). above,
TRANSFEROR agrees to pay to TRANSFEREE a royalty equal to 5% of the gross
revenues received by TRANSFEROR and its affiliates in any way
relating to the sale, rental, lease or other transfer of Hemiwedge Products by
TRANSFEROR or its affiliates to Black Gold and MPO/CPD. All such payments shall
be made on a calendar quarter basis within 30 days after the end of each
quarter.
(c) License of Specialty Valves
Outside the Combined Fields of Use. TRANSFEREE grants to
TRANSFEROR under the Assigned Hemiwedge Intellectual Property the non-exclusive,
royalty-free, and sublicenseable right to make, use, sell, offer for sale, rent,
offer for rent, modify, reproduce, or otherwise commercialize or develop
Hemiwedge Products for any and all uses outside of any and all of the Combined
Fields of Use.
(d) Further
Licenses Granted to Hemiwedge. If Transferee prosecutes and maintains any of the
Licensed Hemiwedge Intellectual Property, Transferee shall grant to Transferor a
royalty free license to use any patent rights not within the Combined Fields of
Use.
Page
30 of 38
SCHEDULE A – LICENSED
HEMIWEDGE INTELLECTUAL PROPERTY
|
|
a.
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U.S.
Patent Number 4,962,911, titled “Hemiwedge Valve”
(expired)
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b.
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U.S.
Patent Number 5,333,834, titled “Valve
Driver”
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|
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c.
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U.S.
Patent Number 5,507,469, titled “Valve Actuator System for Initial Torque
Reduction”
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d.
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U.S.
Patent Number 7,357,145, titled “High-pressure, Hemi-wedge Cartridge
Valve”
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e.
|
U.S.
Patent Application Publication Number 2008/0093575, titled “Rotatable
Wedge Valve Mechanism And Method For
Manufacture”
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|
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f.
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U.S.
Patent Application Publication Number 2008/0099076, titled “Rotatable
Wedge Cartridge Valve Mechanism And Method For Assembly And
Disassembly”
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|
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g.
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U.S.
Patent Application Publication Number 2008/0179558 (U.S. Patent
Application Serial Number 11/699518), titled “Self-adjusting Seat For
Rotary Valve” (abandoned)
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|
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h.
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WO2008/051886,
titled “Rotatable Wedge Valve Mechanism And Method For
Manufacture”
|
|
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i.
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WO2008/055050,
titled “Rotatable Wedge Cartridge Valve Mechanism And Method For Assembly
And Disassembly”
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|
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j.
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WO1996/035068
(PCT/US96/05980), titled “Valve Actuator System for Initial Torque
Reduction” (expired)
|
|
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k.
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WO1994/023228
(PCT/US94/03360), titled “Valve Driver”
(expired)
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|
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l.
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Trademark
No.
0000000 -Xxxx: HEMIWEDGE
|
|
m.
|
00101
– PCT application Serial No. PCT/US2006/006206, filed February 22, 2006,
entitled “High-Pressure, Hemi-Wedge Cartridge Valve” with a
priority of Provisional Application Serial No. 60/658,548, filed March 4,
2005 entitled “High Pressure, Hemi-Wedge Cartridge
Valve” (Hemiwedge) –
Expired
|
|
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n.
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00102
– Australia National Phase Entry Application Serial No. 2006221029 with an
effective file date of February 22, 2006, and a priority of PCT
application Serial No. PCT/US2006/006206, filed February 22, 2006,
entitled “High-Pressure, Hemi-Wedge Cartridge Valve” with a
priority of Provisional Application Serial No. 60/658,548, filed March 4,
2005 entitled “High Pressure, Hemi-Wedge Cartridge Valve” (Hemiwedge) –
Pending
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Page
31 of 38
|
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o.
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00103
– Brazil National Phase Entry Application Serial
No. XX0000000-1 with an effective file date of February 22,
2006, and a priority of PCT application Serial No. PCT/US2006/006206,
filed February 22, 2006, entitled “High-Pressure, Hemi-Wedge
Cartridge Valve” with a priority of Provisional Application Serial No.
60/658,548, filed March 4, 2005 entitled “High Pressure, Hemi-Wedge
Cartridge Valve” (Hemiwedge) –
Pending
|
|
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p.
|
00104
– Canada National Phase Entry Application Serial No. 2599954 with an
effective file date of February 22, 2006, and a priority of PCT
application Serial No. PCT/US2006/006206, filed February 22, 2006,
entitled “High-Pressure, Hemi-Wedge Cartridge Valve” with a
priority of Provisional Application Serial No. 60/658,548, filed March 4,
2005 entitled “High Pressure, Hemi-Wedge Cartridge Valve” (Hemiwedge) –
Pending
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|
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q.
|
00105
– EPO National Phase Entry Application Serial No. 06735740.0 with an
effective file date of February 22, 2006, and a priority of PCT
application Serial No. PCT/US2006/006206, filed February 22, 2006,
entitled “High-Pressure, Hemi-Wedge Cartridge Valve” with a
priority of Provisional Application Serial No. 60/658,548, filed March 4,
2005 entitled “High Pressure, Hemi-Wedge Cartridge Valve” (Hemiwedge) –
Abandoned
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|
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r.
|
00201
– PCT application Serial No. PCT/US07/82048, filed October 22, 2007,
entitled “Rotatable Wedge Valve Mechanism and Method for
Manufacture” with a priority of Nonprovisional Application Serial No.
11/584,679, filed October 20, 2006, entitled “Rotable Wedge Valve
Mechanism and Method for Manufacture” (Hemiwedge) –
Expired
|
|
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s.
|
00205
- Canada National Phase Entry Application Serial No. 2,667,123; national
entry of 00201; entitled “Rotatable Wedge Valve Mechanism and Method for
Manufacture” (Hemiwedge) – Pending
|
|
|
t.
|
00301
– PCT application Serial No. PCT/US07/82613, filed October 26, 2007,
entitled “Rotatable Wedge Valve Mechanism and Method for Assembly and
Disassembly” with a priority of Nonprovisional Application Serial
No.11/588,685, filed October 26, 2007, entitled “Rotatable Wedge Cartridge
Valve Mechanism and Method for Assembly and Disassembly” (Hemiwedge) –
Expired
|
|
|
u.
|
00501
– PCT application Serial No. PCT/US10/37234, filed June 3, 2010, entitled
“Hemi-Wedge Verifiable Shutoff Valve” with a priority of Nonprovisional
Application Serial No. 12/478,496, filed June 4, 2009, entitled
“Hemi-Wedge Verifiable Shutoff Valve” (Hemiwedge) -
Pending
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Page
32 of 38
SCHEDULE B – XXXXXXX VALVE,
(ASSIGNEE FROM TEJAS) OWNED HEMIWEDGE INTELLECTUAL PROPERTY THAT
TRANSFEROR HAS LICENSE TO
|
|
a.
|
00202
- EPO National Phase Entry Application Serial No. 07844488.2; national
entry of 00201; entitled “Rotatable Wedge Valve Mechanism and Method for
Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
b.
|
00203
- Australia National Phase Entry Application Serial No. 2007309130;
national entry of 00201; entitled “Rotatable Wedge Valve Mechanism and
Method for Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
c.
|
00204
- Mexico National Phase Entry Application Serial No. MX/a/2009/004083;
national entry of 00201; entitled “Rotatable Wedge Valve Mechanism and
Method for Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
d.
|
00206
- UAE National Phase Entry Application Serial No. 353/2009; national entry
of 00201; entitled “Rotatable Wedge Valve Mechanism and Method for
Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
e.
|
00207
- Brazil National Phase Entry Application Serial No. PI 0717637-6;
national entry of 00201; entitled “Rotatable Wedge Valve Mechanism and
Method for Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
f.
|
00208
- India National Phase Entry Application Serial No. 2435/DELNP/2009;
national entry of 00201; entitled “Rotatable Wedge Valve Mechanism and
Method for Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
g.
|
00209
- Norway National Phase Entry Application Serial No. 2009 1506; national
entry of 00201; entitled “Rotatable Wedge Valve Mechanism and Method for
Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
h.
|
00210
- China National Phase Entry Application Serial No. 200780045104.2;
national entry of 00201; entitled “Rotatable Wedge Valve Mechanism and
Method for Manufacture” (Xxxxxxx Valve Company) –
Pending
|
|
|
i.
|
00302
- EPO National Phase Entry Application Serial No. 07863538.0; national
entry of 00301; entitled “Rotatable Wedge Cartridge Valve Mechanism and
Method for Assembly and Disassembly” (Xxxxxxx Valve Company) –
Pending
|
|
|
j.
|
00303
- Australia National Phase Entry Application Serial No. 2007313800;
national entry of 00301; entitled “Rotatable Wedge Cartridge Valve
Mechanism and Method for Assembly and Disassembly” (Xxxxxxx Valve Company)
– Pending
|
|
|
k.
|
00304
- Mexico National Phase Entry Application Serial No. MX/a/2009/004193;
national entry of 00301; entitled “Rotatable Wedge Cartridge Valve
Mechanism and Method for Assembly and Disassembly” (Xxxxxxx Valve Company)
– Pending
|
Page
33 of 38
|
|
l.
|
00305
- Canada National Phase Entry Application Serial No. 2,667,294; national
entry of 00301; entitled “Rotatable Wedge Cartridge Valve Mechanism and
Method for Assembly and Disassembly” (Xxxxxxx Valve Company) –
Pending
|
|
|
m.
|
00306
- UAE National Phase Entry Application Serial No. 382/2009; national entry
of 00301; entitled “Rotatable Wedge Cartridge Valve Mechanism and Method
for Assembly and Disassembly” (Xxxxxxx Valve Company) –
Pending
|
|
|
n.
|
00307
- Brazil National Phase Entry Application Serial No. PI 0718001-2;
national entry of 00301; entitled “Rotatable Wedge Cartridge Valve
Mechanism and Method for Assembly and Disassembly” (Xxxxxxx Valve Company)
– Pending
|
|
|
o.
|
00308
- India National Phase Entry Application Serial No. 2437/DELNP/2009;
national entry of 00301; entitled “Rotatable Wedge Cartridge Valve
Mechanism and Method for Assembly and Disassembly” (Xxxxxxx Valve Company)
– Pending
|
|
|
p.
|
00309
- Norway National Phase Entry Application Serial No. 2009 1507; national
entry of 00301; entitled “Rotatable Wedge Cartridge Valve Mechanism and
Method for Assembly and Disassembly” (Xxxxxxx Valve Company) –
Pending
|
|
|
q.
|
00310
- China National Phase Entry Application Serial No. 200780045093.8;
national entry of 00301; entitled “Rotatable Wedge Cartridge Valve
Mechanism and Method for Assembly and Disassembly” (Xxxxxxx Valve Company)
– Pending
|
Page
34 of 38
SCHEDULE
III
Locations of
Grantors
|
Company
|
Chief Executive
Office
|
Chief Place of
Business
|
Books and
Records
|
Inventory,
Equipment, Etc.
|
||||
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
|||||
|
Hemiwedge
Valve Corporation
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
0000
Xxxxx
Xxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
Page
35 of 38
SCHEDULE
IV
Bank
Accounts
|
Company
|
Bank or Broker
|
Address
|
Account Number
|
Purpose
|
||||
|
NA
|
N/A
|
N/A
|
N/A
|
|||||
|
Hemiwedge
Valve
Corporation
|
Xxxxx
Fargo
Bank
and Trust
Company
|
00000
Xxxxxxxxxx
Xxxx,
Xxxxxx
Xxxxx
00000
|
3214114674
|
Page
36 of 38
SCHEDULE
V
UCC-1 Financing
Statements
|
Filing Jurisdiction
|
Grantor
|
Secured Party
|
||
|
District
of Columbia
|
Xxxx
Investments I, LLC
|
|||
|
and
|
||||
|
D.
Xxxxxxx XxXxxxxxxx
|
||||
|
District
of Columbia
|
Hemiwedge
Valve Corporation
|
Xxxx
Investments I, LLC
|
||
|
and
|
||||
|
D.
Xxxxxxx XxXxxxxxxx
|
||||
|
Delaware
|
Xxxx
Investments I, LLC
|
|||
|
and
|
||||
|
D.
Xxxxxxx XxXxxxxxxx
|
||||
|
Texas
|
Hemiwedge
Valve Corporation
|
Xxxx
Investments I, LLC
|
||
|
and
|
||||
|
D.
Xxxxxxx
XxXxxxxxxx
|
Page
37 of 38
SCHEDULE
VI
Commercial Tort
Claims
NONE
Page
38 of 38
