EXHIBIT 10.5
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SECURITY AGREEMENT
SECURITY AGREEMENT made this 31st day of May, 2006, between TOUCHSTONE
APPLIED SCIENCE ASSOCIATES, INC. (the "Debtor"), with its principal
office at 0 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000-0000 and TD
BANKNORTH, N.A. (the "Bank"), with an office at 0 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxx 00000.
1. GRANT OF SECURITY INTEREST. To induce the making and continuation
of all the Debtor's present and future liabilities to the Bank under any
promissory note, guaranty or other obligation to the Bank including the
payment and performance of all obligations under the ISDA Agreement
dated May 31, 2006, and to secure all of those obligations, whether
direct or indirect, absolute or contingent, joint or several, presently
existing or hereafter incurred (the "Obligations") the Debtor hereby
grants to the Bank a continuing first lien security interest in all of
the Debtor's right, title and interest in and to the following described
property (together with all accessions and additions thereto,
substitutions therefor, and proceeds and products thereof, being called
the "Collateral"):
(a) all machinery, furniture, fixtures, equipment and other
personal property of the Debtor, now existing and hereafter
acquired;
(b) all work in process, materials and inventory of the Debtor,
now existing and hereafter acquired;
(c) all accounts, claims for monies due and other accounts
receivable of the Debtor, now existing and hereafter arising;
(d) all general intangibles of the Debtor, now existing and
hereafter arising;
(e) all documents, instruments, investment property and chattel
paper of the Debtor, now existing and hereafter acquired; and
(f) all other property and assets of the Debtor, now existing and
hereafter acquired.
All terms in this paragraph 1 shall include, but not be limited to, any
definitions thereof contained in the New York Uniform Commercial Code,
as the same may be amended, from time to time.
2. NATURE OF USE. The Debtor represents and warrants that:
(a) it is the owner of the Collateral and has good and marketable
title thereto, free and clear of all security interests, liens
and encumbrances;
(b) the Collateral is used or bought for use primarily in
business;
(c) if the Collateral consists of goods which are or are to become
fixtures, the description of the real property to which the
goods are attached or are to be attached, and the name of the
owner of such real property (if different from the Debtor),
are as follows: 0 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx,
which is owned by 26 Xxxxxx, LLC, 2258, LLC, 79-01 and SJM
Brewster, LLC.
3. LOCATION OF COLLATERAL. The Debtor represents that the place where
the Collateral will be kept is the same place as stated at the head of
this agreement. The Debtor will notify the Bank promptly, of any change
in such location(s).
4. COVENANTS. So long as any of the Obligations remain unpaid, the
Debtor agrees to:
(a) keep the Collateral free from all security interests, liens,
and encumbrances other than those granted to the Bank;
(b) keep the Collateral insured, at its own cost and expense,
naming the Bank as an insured, under a lender's loss payable
endorsement (or in any other manner designated by the Bank),
in such amounts, with such insurers, under such endorsements,
and against such risks as may be commercially reasonable and
acceptable to the Bank, and, on request, to deliver the
policies evidencing such insurance to the Bank;
(c) execute all documents requested by the Bank to perfect or
preserve the Bank's security interest in the Collateral (and
authorizes the Bank to execute any such documents as its
attorney-in-fact) and pay the cost of filing such documents;
(d) maintain such records and information with respect to the
Collateral and its financial condition and operations, as the
Bank may, from time to time, reasonably require, and allow the
Bank upon reasonable notice and during normal working hours,
to inspect such records and information and supply copies of
such records and information to the Bank; and
(e) immediately inform the Bank of any change in its name,
ownership, or business structure.
If the Debtor fails to keep the Collateral insured as provided herein or
fails to pay any tax upon or other charge or claim against the
Collateral, the Bank may, in addition to any other remedy it may have
(under this agreement or otherwise) pay the cost of such insurance or
the amount of such tax, other charge or claim, and the amount so paid,
together with interest at the highest rate of interest then allowable on
the Obligations secured hereby, shall be paid to the Bank by the Debtor
upon demand, and, until so paid, shall be a liability of the Debtor
secured by this Agreement.
5. EVENT OF DEFAULT. Upon the occurrence of an Event of Default
hereunder or under any Note, Loan Agreement or Guaranty executed on the
date hereof in connection with the transactions, contemplated thereby,
then, in any such event (each, an "Event of Default"), the Bank may, at
its option, declare all Obligations secured hereby immediately due and
payable, and the Bank may require the Debtor to assemble the Collateral
and make it available to the Bank at a place which is reasonably
convenient to the Bank and the Debtor. In addition, the Bank shall
have, and may exercise, all the rights and remedies conferred upon
secured parties by the Uniform Commercial Code and other applicable
laws. The Debtor hereby irrevocable appoints the Bank as Debtor's
attorney-in-fact, with full authority in the place and stead of Debtor
and in the name of Debtor or otherwise, upon the occurrence of an Event
of Default, to take any commercially reasonable action and to execute
any instrument that the Bank may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation: (a) to assign, pledge, convey or otherwise transfer title in
or dispose of the Collateral to any third person, and (b) to file any
claims, to take any commercially reasonable action or institute any
proceedings which the Bank may deem necessary or desirable to enforce
the rights of the Bank with respect to any of the Collateral.
6. NOTIFICATION OF OBLIGORS. At any time, after occurrence and the
continuance of an Event of Default by the Debtor, the Bank may notify
the obligors on any of the Collateral of the existence of its security
interest and direct them to make payments directly to the Bank. The
Debtor, at the request of the Bank, shall also take such actions and
hold any sums received from such obligors in trust for the Bank. Until
such time as the Bank elects to exercise such rights, the Debtor is
authorized, as agent of the Bank, to collect and enforce those
obligations.
7. Duties with respect to Collateral. The Bank shall have no duty to:
(a) collect, preserve, protect, insure or care for the Collateral
or any proceeds thereof;
(b) preserve rights of the Debtor or others;
(c) realize on the Collateral or any proceeds; or
(d) marshal the assets of the Debtor.
8. COSTS OF ENFORCEMENT. The Bank's reasonable expenses of realizing
upon the Collateral, including reasonable attorneys' fees, shall be paid
by the Debtor. Any notification of a sale or other disposition of the
Collateral (or of other action by the Bank) required to be given by the
Bank, will be sufficient if given personally or mailed by certified
mail, not less than five (5) days prior to the day on which such sale or
other disposition will be made, and such notification shall be deemed
reasonable notice.
9. MISCELLANEOUS. The waiver by the Bank of any default hereunder or
of any provision hereof shall not discharge the Debtor from liability
hereunder and such waiver shall be limited to the particular event of
default or to the particular provision and shall not operate as a waiver
of any subsequent default or of any other provision.
If there is more than one person or entity executing this agreement as
Debtor, their obligations hereunder shall be joint and several.
This agreement and the rights of the parties hereto shall be governed by
the laws of the State of New York and shall be binding upon and inure to
the benefit of the Bank, the Debtor, and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this agreement to be
executed the day and year first above written.
Witness/Attest: THE DEBTOR:
TOUCHSTONE APPLIED SCIENCE ASSOCIATES,
INC.
/s/ XXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXX
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Xxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxx, President
Attest: THE BANK:
TD BANKNORTH, N.A.
/s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX XXXXXXX
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Xxxxxxx X. Xxxxxx Xxxxxxx Xxxxxxx
