Exhibit 10.36

 

SECOND AMENDMENT TO

SECURITY AGREEMENT

 

This Second Amendment to Security Agreement (this “Amendment”) effective as of
January 1, 2003, by and between Polar Molecular Corporation, a Delaware
corporation (the “Company”), and each of the employees and advisors of the
Company set forth on Exhibit A hereto (collectively, the “Secured Parties”)
hereby amends the Security Agreement dated as of January 30, 2002, by and
between the Company and the Secured Parties, as amended (the “Security
Agreement”). Capitalized terms used herein and otherwise not defined shall have
the meanings set forth in the Security Agreement.

 

RECITALS

 

WHEREAS, the Secured Parties have provided services to the Company without being
paid compensation and the Company has agreed to grant, pursuant to the terms of
the Security Agreement, the Secured Parties a security interest in the
Collateral to secure the payment of such sums; and

 

WHEREAS, the Company and the Secured Parties desire to amend the terms of the
Security Agreement to provide that the Company may incur additional working
capital loans in an aggregate principal amount of up to $400,000 (the “New
Loan”) and, to secure such New Loan, may grant a security interest to the new
lenders (the “New Lenders”) that would be superior to the security interest
granted to the Secured Parties pursuant to the Security Agreement.

 

NOW, THEREFORE, in consideration of the promises set forth therein and herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company hereby agrees as follows:

 

AGREEMENT

 

1. Subsections (a) and (b) of Section 4 of the Security Agreement shall be
amended to read in their entirety as follows:

 

“(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The address of the chief place
of business and chief executive office of the Company is 4600 5. Ulster, Suite
940, Denver, Colorado 80237.

 

(b) The Company is the legal and beneficial owner of the Collateral free and
clear of any lien, security interest, option or other charge or encumbrance,
except for the security interest created by the Existing Security Agreement, the
security interest granted to Lockhart Holdings, Inc. (“Lockhart”) under that
certain Security Agreement between the Company and Lockhart (the “Lockhart
Security Agreement”) effective as of October 22, 2001, the security interest
granted to

 

1

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Exhibit 10.36

 

certain investors investing up to an aggregate amount of $2,700,000 in the
Company under that certain Security Agreement (the “Investor Security
Agreement”) between the Company and the Investors (as defined in the Investor
Security Agreement), the security interest which may be granted to new lenders
(the “New Lenders”) lending up to an additional principal amount of $400,000
under a security agreement between the Company and the New Lenders (the “New
Lender Security Agreement”), and the security interest created by this Security
Agreement. No effective financing statement or other document similar in effect
covering all or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Affiliated, Lockhart, the
Investors, the New Lenders and the Secured Parties related to this Security
Agreement. The Company’s exact full legal name is, and for the previous five
year period has been, as set forth in the first paragraph of this Security
Agreement. The Company has no trade names or styles.”

 

2. Subsection (a) of Section 7 of the Security Agreement shall be amended to
read in its entirety as follows:

 

“(a) The Company shall not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any of the
Collateral, or (ii) after the Effective Date, create or permit to exist any
lien, security interest, option or other charge or encumbrance upon or with
respect to any of the Collateral with rights superior to those granted to the
Secured Parties under this Security Agreement except for the security interest
granted to Affiliated pursuant to the Existing Security Agreement, the security
interest granted to Lockhart pursuant to the Lockhart Security Agreement, the
security interest granted to the Investors pursuant to the Investor Security
Agreement, and the security interest granted to the New Lenders pursuant to the
New Lender Security Agreement.”

 

3. Section 7 of the Security Agreement shall be amended by adding a new
Subsection (c) thereto to read in its entirety as follows:

 

“(c) The Secured Parties hereby acknowledge and accept, that the Company will
grant, on a superior priority to the security interest granted by this Security
Agreement, additional security interests in the Collateral to the New Lenders
for purposes of obtaining the New Loan.”

 

4. Subsection (c) of Section 8 of the Security Agreement shall be amended to
read in its entirety as follows:

 

“(c) Except as otherwise provided herein, the Company shall incur any lien,
security interest or other charge or encumbrance against the Collateral superior
in rights to the security interest created in favor of the Secured Parties
pursuant to this Security Agreement, without the written consent of the Secured
Parties;”

 

5. In addition to the amendments provided above, Exhibit A to the Security

 

2

--------------------------------------------------------------------------------

Exhibit 10.36

 

Agreement shall be replaced in its entirety by Exhibit A attached to this
Amendment, and Schedule Ito the Security Agreement shall be replaced in its
entirety by Schedule Ito this Amendment.

 

6. The parties hereto acknowledge that, notwithstanding any of the provisions of
this Amendment, nothing in this Amendment intends to, or effectively alters the
creation or the attachment of the security interest granted to each of the
Secured Parties under the Security Agreement. Except as explicitly amended by
the terms of this Amendment, all of the terms of the Security Agreement shall
remain in full force and effect.

 

7. This Amendment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

 

The parties hereto have caused this Amendment to be executed to be effective as
of the date first set forth above.

 

THE COMPANY:

POLAR MOLECULAR CORPORATION

By:

 

  /s/ Mark L. Nelson

--------------------------------------------------------------------------------

   

Mark L. Nelson, President and

   

Chief Executive Officer

 

3

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Exhibit 10.36

 

SECURED PARTIES:

HOLME ROBERTS & OWEN LLP

By:

 

  /s/ Garth B. Jensen

--------------------------------------------------------------------------------

   

Garth B. Jensen, Partner

  /s/ Mark L. Nelson

--------------------------------------------------------------------------------

Mark L. Nelson, President and Chief Executive Officer

  /s/ C. B. Prakash

--------------------------------------------------------------------------------

Chandra Prakash, V.P.

  /s/ Alan L. Smith

--------------------------------------------------------------------------------

Alan L. Smith, V.P.

  /s/ Deborah Pilkington

--------------------------------------------------------------------------------

Deborah Pilkington, V.P.

  /s/ Delores Coy DeJongh

--------------------------------------------------------------------------------

Delores Coy-DeJongh, Sales Rep.

REISING, ETHTNGTON, BARNES, KISSELLE,

LEARMAN & MCCULLOCH, P.C.

  /s/ Paul J. Ethington

--------------------------------------------------------------------------------

Paul J. Ethington, Chairman of Board

 

4

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Exhibit 10.36

 

EXHIBIT A

 

EMPLOYEES AND ADVISORS

 

Holme, Roberts & Owen LLP

 

Mark L. Nelson

 

Chandra Prakash

 

Alan L. Smith

 

Deborah Pilkington

 

Delores Coy-DeJongh

 

Reising, Ethington, Barnes, Kisselle, Learman & McCullogh, P.C.

--------------------------------------------------------------------------------

SCHEDULE I

 

CERTAIN INTELLECTUAL PROPERTY

 

POLAR MOLECULAR CORPORATION

 

U.S. PATENTS

 

PATENT NO./ ISSUE DATE

--------------------------------------------------------------------------------

  

INVENTOR

--------------------------------------------------------------------------------

  

TITLE

--------------------------------------------------------------------------------

   EXPIRES

--------------------------------------------------------------------------------

4,516,981

5/14/85

  

Nelson, Jr., et al.

  

Residual Oil Sludge Dispersant

   1/09/04

4,673,411

6/16/87

  

Nelson, et al.

  

Anti-Gel Fuel Additive

   6/16/04

4,753,661

6/28/88

  

Nelson, et al.

  

Fuel Conditioner

   6/28/05

4,846,847

7/11/89

  

Nelson, et al.

  

Anti-Gel Fuel Composition

   7/11/06

6,488,723

  

Nelson, et al.

   Motor Fuel Additive Composition and Method for Preparation Thereof   
12/03/22

 

U.S. PATENT APPLICATIONS

 

SERIAL NO./ FILING DATE

--------------------------------------------------------------------------------

 

INVENTOR

--------------------------------------------------------------------------------

 

TITLE

--------------------------------------------------------------------------------

   EXPIRES

--------------------------------------------------------------------------------

 

SERIAL NO./ FILING DATE

--------------------------------------------------------------------------------

 

INVENTOR

--------------------------------------------------------------------------------

 

TITLE

--------------------------------------------------------------------------------

   EXPIRES

--------------------------------------------------------------------------------

 

1 OF 5

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POLAR MOLECULAR CORPORATION

 

FOREIGN PATENT APPLICATIONS AND PATENTS

 

MOTOR FUEL ADDITIVE COMPOSITION

AND METHOD FOR PREPARATION THEREOF

 

COUNTRY

--------------------------------------------------------------------------------

  

SERIAL NO./ FILING DATE

--------------------------------------------------------------------------------

  

PATENT NO./ ISSUE DATE

--------------------------------------------------------------------------------

   EXPIRES

--------------------------------------------------------------------------------

AUSTRALIA        

660,608

10/23/95

   3/05/11 BRAZIL         P1 9106137    3/05/06 CANADA   

2,077,666

 

3/5/91

  

Assigned to

FINLAYSON &

SINGLEHURST

   3/05/11 EPC    Countries Include: Britain, Austria, Belgium, Switzerland,
Germany, Germany, Denmark, Spain, France, Italy, Luxembourg, Netherlands, Sweden
and Greece   

0 518 966

12/27/95

   3/05/11 JAPAN        

2966927

8/13/99

   3/05/11 SOUTH KOREA        

151409

6/19/98

   3/05/11

 

2 OF 5

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POLAR MOLECULAR CORPORATION

 

FOREIGN PATENTS

 

RESIDUAL OIL SLUDGE DISPERSANT

 

COUNTRY

--------------------------------------------------------------------------------

  

PATENT NO.

--------------------------------------------------------------------------------

  

ISSUE DATE

--------------------------------------------------------------------------------

  

EXPIRES

--------------------------------------------------------------------------------

CANADA    1,262,855    11/14/89    11/14/06 BRITAIN    2,174,984    10/25/89   
5/07/06 ISRAEL    78742    10/14/90    5/09/06 FRANCE    2,581,563    5/09/90   
5/09/06 VENEZUELA    49761    5/09/86    5/09/01 ITALY    1,190,290    2/16/88
   5/08/06

 

3 OF 5

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POLAR MOLECULAR CORPORATION

 

FOREIGN PATENTS

 

FUEL CONDITIONER

 

COUNTRY

--------------------------------------------------------------------------------

  

PATENT. NO.

--------------------------------------------------------------------------------

  

ISSUE DATE

--------------------------------------------------------------------------------

  

EXPIRES

--------------------------------------------------------------------------------

BRAZIL

   P1 8603711-0    6/28/94    8/05/01

CANADA

   1,331,093    8/2/94    8/02/11

FRANCE

   2,602,240    7/5/91    8/01/06

ISRAEL

   79662    2/6/91    8/08/06

ITALY

   1,196,571    11/16/88    8/07/06

MEXICO

   168875    6/14/93    8/12/06

SOUTH AFRICA

   86/5501    7/23/86    7/23/06

SOUTH KOREA

   34765    7/30/90    8/06/06

TAIWAN

   42057    10/11/90    8/01/06

VENEZUELA

   49691    8/15/86    8/15/01

 

4 OF 5

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POLAR MOLECULAR CORPORATION

 

U.S. TRADEMARKS

 

TRADEMARK

--------------------------------------------------------------------------------

  

REG. NO.

--------------------------------------------------------------------------------

  

REG. DATE

--------------------------------------------------------------------------------

DURALT    1,966,891    4/09/96 DURASTA    1,966,886    4/09/96 DURAFLO   
1,972,823    5/07/96

 

FOREIGN TRADEMARKS

 

“DURALT”

 

COUNTRY

--------------------------------------------------------------------------------

  

SERIAL NO.

--------------------------------------------------------------------------------

  

FILING DATE

--------------------------------------------------------------------------------

INDONESIA

  

HC.01-01-1090

  

9/09/91

MEXICO

  

250,071

  

12/11/95

 

COUNTRY

--------------------------------------------------------------------------------

  

REG. NO.

--------------------------------------------------------------------------------

  

REG. DATE

--------------------------------------------------------------------------------

CANADA

   330,690    7/31/87

FRANCE

   1,355,576    5/21/86

BRITAIN (CL. 1)

   1,266,770    5/08/86

BRITAIN (CL. 4)

   1,300,476    2/10/87

ITALY

   475,056    3/30/87

ITALY

   600,326    7/12/93

JAPAN

   2,032,111    3/30/88

GERMANY

   1,131,163    11/28/88

PERU

   043153    1/30/98

VENEZUELA

   135012    9/23/92

 

5 OF 5