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EXHIBIT 10.17
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as it may hereafter be amended, supplemented,
restated, replaced or otherwise modified from time to time, the
"AGREEMENT") is dated as of May 12, 1994 and entered into by and between
OLEFINS MARKETING INC., (the "DEBTOR") a corporation organized under the
laws of Delaware and CAISSE NATIONALE DE CREDIT AGRICOLE, NEW YORK BRANCH
(the "SECURED PARTY").
PRELIMINARY STATEMENTS
The Debtor has issued to the Secured Party a Demand Promissory Note, of
even date herewith (as it may hereafter be amended, supplemented, restated,
renewed, replaced or otherwise modified from time to time, the "NOTE"). It
is a condition precedent to the making of loans by the Secured Party the
repayment of which is evidenced by the Note that the Debtor shall have
granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Secured Party to make loans the repayment of which is evidenced by the Note
and for other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the Debtor hereby agrees with the Secured
Party as follows:
SECTION 1. DEFINITIONS. The following terms used in this Agreement shall
have the following meanings:
"CONTRACTUAL OBLIGATIONS", as applied to any Person (as deemed below),
means any provision of any security issued by that Person or of any
material indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person is a party or by which
it or any material amount of its properties is bound or to which it or any
material amount of its properties is subject.
"EVENT OF DEFAULT", shall have the meaning given such term in Section 17 of
this Agreement.
"LIEN", as applied to any Person, means any lien, mortgage, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, and any agreement to
give any security interest).
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"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments, agencies and political subdivisions thereof.
SECTION 2. GRANT OF SECURITY. The Debtor hereby assigns to the Secured
Party, and hereby grants to the Secured Party a security interest in, all
of the Debtor's right, title and interest in and to the collateral listed
in sub-section A and B below, in each case whether now or hereafter
existing or in which the Debtor now has or hereafter acquires an interest
and wherever the same may be located (the "COLLATERAL"):
A. (i) All equipment in all of its forms, all parts thereof and all
replacements thereof, spare parts and accessions thereto (any and all
such equipment, parts, replacements, spare parts and accessions being
the "EQUIPMENT");
(ii) All inventory in all of its forms, including, but not
limited to, (a) all goods held by the Debtor for sale or to be
furnished under contracts of service or furnished (b) all raw
materials, work in process, finished goods, and materials used or
consumed in the manufacture, packing, shipping, advertising, selling,
furnishing or production of such inventory or otherwise used or
consumed in the Debtor's business, (c) goods in which the Debtor has
an interest in mass or a joint or other interest or right of any kind
and (d) goods which are returned to or repossessed by the Debtor and,
with regard to all of the above, all additions and accessions thereto
and replacements thereof (all such inventory, accessions and products
being the "INVENTORY");
(iii) All rights and claims to the payment or receipt of money or
other forms of consideration of any kind, including, but not limited
to, any and all such rights and claims in, to and under, all accounts,
contract rights, chattel paper, instruments, general intangibles,
guaranties, letters of credit, documents, drafts, acceptances, tax
refunds, rights to performance, judgments taken on any rights and
claims otherwise included in this clause (c) and all rights in, to and
under all documents, instruments, documents of title, transport or
otherwise related to the Inventory, security agreements, and other
contracts securing or otherwise relating to any such rights and claims
to the payment or receipt of money or other forms of consideration
(any and all such rights and claims to the payment or receipt of money
or other forms of consideration being the "PAYMENT RIGHTS", and any
and all such security agreements and other contracts being the
"RELATED CONTRACTS");
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(iv) All books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software
(owned by the Debtor or in which it has an interest) that at any time
evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or
realization thereupon;
(v) All plant fixtures, business fixtures and other fixtures
and storage and office facilities, and all additions and accessions
thereto and replacements thereof and products thereof;
(vi) All trademarks (including the goodwill relating
thereto), tradenames, business names, patents and copyrights of the
Debtor;
(vii) All deposit accounts of the Debtor, including, without
limitation, deposit accounts maintained with the Secured Party; and
(viii) All proceeds of any and all of the foregoing Collateral
and, to the extent not otherwise included, all payments under
insurance (whether or not the Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS"
includes whatever is receivable or received when Collateral or
proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including returned
premiums, with respect to any insurance relating thereto.
B. All personal property of the Debtor which is or shall be financed
by the Secured Party or is in, or shall come into the possession or
control of the Secured Party, including without limitation, inventory,
goods, documents (including any documents made available to the Debtor
pursuant to trust receipts or other security agreements) and present
or future accounts receivable resulting from the sale of goods, the
purchase of which was financed by the Secured Party or for which the
Secured Party has made advances; and the products and proceeds
thereof, together with all improvements and additions thereto whether
same be cash, accounts, chattel paper, instruments, notes, drafts,
acceptances, contract rights or general intangibles.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures and the
Collateral is collateral security for the prompt payment or performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. sec.362(a) whether or not a claim is allowed therefor) of
all obligations of every nature of the Debtor to the Secured Party, now or
hereafter existing,
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including, without limitation, the obligations of the Debtor under the
Note, any other promissory note, document or instrument delivered pursuant
thereto and all amendments, extensions or renewals thereof, and in any case
whether for principal, interest (including, without limitation, interest
that, but for the filing of a petition in bankruptcy with respect to the
Debtor, would accrue on such obligations), attorneys' fees, expenses or
otherwise, whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owed with others, direct or indirect,
(including participations or any interest of Secured Party in indebtedness
of the Debtor to others), absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or
extinguished and later increased, created or incurred and all or any
portion of such obligations that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from the
Secured Party as a preference, fraudulent transfer or otherwise (all such
obligations being the "UNDERLYING DEBT"), and including, without
limitation, all obligations of every nature of the Debtor now or hereafter
existing under this Agreement (all such obligations of the Debtor, together
with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 4. THE DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Debtor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as
if this Agreement had not been executed, (b) the exercise by the Secured
Party of any of the rights hereunder shall not release the Debtor from any
of its duties or obligations under the contracts and agreements included in
the Collateral and (c) the Secured Party shall not have any obligation or
liability under any contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Secured Party be obligated to
perform any of the obligations or duties of the Debtor thereunder or to
take any action to collect or enforce any claim for payment assigned
hereunder. In the event the Secured Party shall make any disbursement in
performing the obligations of the Debtor under any such contract or
agreement such shall be added to the Secured Obligations and be secured by
the Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants as follows:
(a) Organization and Powers. The Debtor is a limited partnership duly
organized, validly existing and in good standing under the laws of
Delaware, and has all requisite power and authority to own and operate
its properties, to carry on its business as now conducted and proposed
to be conducted and to enter into this Agreement and carry out the
transactions contemplated hereby and thereby.
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(b) Good Standing. The Debtor is in good standing wherever necessary
to carry on its present business and operations, except in
jurisdictions in which the failure to be in good standing has not had
and will not have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise)
of the Debtor and its subsidiaries, taken as a whole.
(c) Authorization. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
by the Debtor.
(d) No Conflict. The execution, delivery and performance by the
Debtor of this Agreement will not (i) violate the organizational
documents of the Debtor, (ii) violate any provision of law applicable
to the Debtor, or any order, judgment or decree of any court or other
agency of government binding on the Debtor, the violation of which
could have a material adverse effect on the business, operations,
assets or financial condition of the Debtor, (iii) be in conflict
with, result in a breach of, or constitute (with due notice or lapse
of time or both) a default in any Contractual Obligation of the
Debtor, (iv) result in or require the creation or imposition of any
material Lien of any nature whatsoever upon any of its material
properties or assets (except for the security interest created by this
Agreement), or (v) require the approval of any Person under any
Contractual Obligation of the Debtor except for those institutions
listed on Schedule I hereto which institutions have given their
written approval, a copy of which has been provided to the Secured
Party.
(e) Binding Obligation. This Agreement constitutes the legally valid
and binding obligation of the Debtor, enforceable against it in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws or
equitable principles relating to or limiting creditors' rights
generally.
(f) Location of Equipment and Inventory. All of the Equipment and
Inventory is located at the places specified in Schedule II hereto.
(g) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have
been delivered to the Secured Party duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(h) Payment Rights Valid. Each Payment Right constitutes the legally
valid and binding obligation of the party obligated to pay the same
(the "ACCOUNT DEBTOR"). Each such Payment Right complies with the
provisions of all applicable laws and regulations, whether federal,
state or local, applicable thereto (including, without limitation, any
usury law, the Federal Truth in Lending Act and Regulation Z of the
Federal Reserve System). None of the Payment Rights
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is evidenced by a promissory note or other instrument, other than a
check, that has not been delivered to the Secured Party, pursuant to
sub-section (g) hereof.
(i) Ownership of Collateral. Except for the interests disclosed in
Schedule III hereto and the security interest created by this
Agreement, the Debtor owns the Collateral free and clear of any Lien.
Except with respect to the interests disclosed in Schedule III hereto
and such as may have been filed in favor of the Secured Party relating
to this Agreement, no effective financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office.
(j) Perfection. This Agreement creates a valid, perfected and, except
for the interests disclosed in Schedule III hereto, first priority
security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly
taken.
(k) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority
or regulatory body is required either (i) for the grant by the Debtor
of the security interest granted hereby or for the execution, delivery
or performance of this Agreement by the Debtor or (ii) for the
perfection of or the exercise by the Secured Party of its rights and
remedies hereunder (except as may have been taken by or at the
direction of the Debtor).
(1) Other Information. All information heretofore, herein or
hereafter supplied to the Secured Party by or on behalf of the Debtor
with respect to the Collateral is accurate and complete in all
respects.
(m) Office Locations: Fictitious Names. The chief place of business,
the chief executive office and the office where the Debtor keeps its
records regarding the Payment Rights and all originals of all chattel
paper that evidence Payment Rights is the address indicated below the
Debtor's signature hereto. The Debtor does not do business under any
trade-name or fictitious business name.
SECTION 6. FURTHER ASSURANCES.
(a) The Debtor agrees that from time to time, at the expense of the
Debtor, the Debtor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Secured Party may request, in
order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, the
Debtor will: (i) xxxx conspicuously
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each chattel paper included in the Payment Rights and each Related
Contract, (ii) at the request of the Secured Party, xxxx conspicuously
each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Secured Party, indicating that
such Collateral is subject to the security interest granted hereby;
(iii) if any Payment Right shall be evidenced by a promissory note or
other instrument (excluding checks), deliver and pledge to the Secured
Party hereunder such note or instrument duly endorsed and accompanied
by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Secured Party; (iv) at the request
of the Secured Party, deliver and pledge to the Secured Party all
promissory notes and other instruments (including checks) and all
original counterparts of chattel paper constituting Collateral duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Secured
Party; (v) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Secured Party may request, in
order to perfect and preserve the security interests granted or
purported to be granted hereby, (vi) from time to time at any
reasonable time, upon demand by the Secured Party exhibit the
Collateral to and allow inspection of the Collateral by the Secured
Party, or persons designated by the Secured Party and (vii) at the
Secured Party's request, appear in and defend any action or proceeding
that may affect the Debtor's title to or the Secured Party's security
interest in the Collateral.
(b) The Debtor hereby authorizes the Secured Party to file one or
more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of
the Debtor. A carbon, photographic or other reproduction of this
Agreement or a financing statement signed by the Debtor shall be
sufficient as a financing statement.
(c) The Debtor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
the Secured Party may reasonably request, all in reasonable detail.
SECTION 7. COVENANTS OF THE DEBTOR. The Debtor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement, or any applicable
statute, regulation or ordinance or any policy of insurance covering
the Collateral;
(b) notify the Secured Party of any change in the Debtor's name,
identity or structure within 15 days of such change;
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(c) give the Secured Party 30 days' prior written notice of any
change in the Debtor's chief place of business;
(d) if the Secured Party gives value to enable the Debtor to acquire
rights in or the use of any Collateral, use such value for such
purposes;
(e) 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
Collateral, except to the extent the validity thereof is being
contested in good faith; provided that Debtor shall in any event pay
such taxes, assessments, governmental charges or levies not later than
five days prior to the date of any proposed sale under any judgement,
writ or warrant of attachment entered or filed against the Debtor as a
result of the failure to make such payment;
(f) deliver to the Secured Party at its request, from time to time,
financial statements or other financial information, in form,
substance and scope satisfactory to the Secured Party; and
(g) notify the Secured Party of any Event of Default or which it has
knowledge.
SECTION 8. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY. The
Debtor shall:
(a) keep the Equipment and Inventory (other than Inventory sold in
the ordinary course of business) at the places therefor specified on
Schedule II hereto or, upon 30 days' prior written notice to the
Secured Party, at such other places in jurisdictions where all action
that may be necessary or desirable, or that the Secured Party may
request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to
such Equipment and Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and
tear excepted, and shall forthwith, or in the case of any loss or
damage to any of the Equipment as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs,
replacements, and other improvements in connection therewith that are
necessary or desirable to such end. The Debtor shall promptly furnish
to the Secured Party a statement respecting any loss or damage to any
of the Equipment; and
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(c) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, the Debtor's cost
therefor and (where applicable) the current price list for such
Inventory;
SECTION 9. INSURANCE.
(a) The Debtor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in such amounts, against such
risks, in such form and with such insurers, as shall be satisfactory
to the Secured Party from time to time. Such insurance shall include,
without limitation, property damage insurance and liability insurance.
Each policy for property damage insurance shall provide for all losses
(except for losses of less than $50,000 per occurrence) to be paid
directly to the Secured Party. Each policy shall in addition (i) name
the Debtor and the Secured Party as insured parties thereunder
(without any representation or warranty by or obligation upon the
Secured Party) as their interests may appear, (ii) contain an
agreement by the insurer that any loss thereunder shall be payable to
the Secured Party notwithstanding any action, inaction or breach of
representation or warranty by the Debtor, (iii) have attached thereto
the Lender's Loss Payable Endorsement or its equivalent, or a Loss
Payable clause acceptable to the Secured Party, (iv) provide that
there shall be no recourse against the Secured Party for payment of
premiums or other amounts with respect thereto and (v) provide that at
least 30 days' prior written notice of cancellation, material
amendment, reduction in scope or limits of coverage or of lapse shall
be given to the Secured Party by the insurer. The Debtor shall, if so
requested by the Secured Party, deliver to the Secured Party original
or duplicate policies of such insurance and, as often as the Secured
Party may reasonably request, a report of a reputable insurance broker
with respect to such insurance. Further, the Debtor shall, at the
request of the Secured Party, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements
of Section 6(a) and cause the respective insurers to acknowledge
notice of such assignment.
(b) Reimbursement under any liability insurance maintained by the
Debtor pursuant to this Section 9 may be paid directly to the person
who shall have incurred liability covered by such insurance. In case
of any loss involving damage to Equipment or Inventory when subsection
(c) of this Section 9 is not applicable, the Debtor shall make or
cause to be made the necessary repairs to or replacements of such
Equipment or Inventory, and any proceeds of insurance maintained by
the Debtor pursuant to this Section 9 shall be paid to the Debtor as
reimbursement for the costs of such repairs or replacements.
(c) Upon (i) the occurrence and during the continuance of any Event
of Default, or (ii) the actual or constructive total loss (in excess
of $25,000 per occurrence) of any Equipment or Inventory, all
insurance payments in respect of
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such Equipment or Inventory shall be paid to and applied by the
Secured Party as specified in Section 19 hereof.
SECTION 10. SPECIAL COVENANTS WITH RESPECT TO PAYMENT RIGHTS AND RELATED
CONTRACTS.
(a) The Debtor shall keep its chief place of business, chief
executive office and the office where it keeps its records concerning
the Payment Rights and Related Contracts, and all originals of all
chattel paper that evidence Payment Rights, at the location therefor
specified in Section 5 hereof or, upon 30 days' prior written notice
to the Secured Party, at such other locations in a jurisdiction where
all action that may be necessary or desirable, or that the Secured
Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies
hereunder with respect to such Payment Rights and Related Contracts
shall have been taken. The Debtor will hold and preserve such records
and chattel paper and will permit representatives of the Secured Party
at any time during normal business hours to inspect and make abstracts
from such records and chattel paper and the Debtor agrees to render to
the Secured Party, at the Debtor's cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of the Secured Party, the Debtor shall
deliver to the Secured Party complete and correct copies of each
Related Contract.
(b) The Debtor shall, for not less than 5 years from the date on
which such Payment Right arose, maintain (i) complete records of each
Payment Right, including records of all payments received, credits
granted and merchandise returned and (ii) all documentation relating
thereto.
(c) The Debtor shall duly fulfill all obligations on its part to be
fulfilled under or in connection with the Payment Rights and the
Related Contracts and shall do nothing to impair the rights of the
Secured Party therein.
(d) Except as otherwise provided in this subsection (d) of this
Section 10, the Debtor shall continue to collect, at its own expense,
all amounts due or to become due the Debtor under the Payment Rights
and Related Contracts. In connection with such collections, the Debtor
may take (and, at the Secured Party's direction, shall take) such
action as the Debtor or the Secured Party may deem necessary or
advisable to enforce collection of the Payment Rights; provided,
however, that the Secured Party shall have the right at any time,
whether or not there shall be the occurrence an Event of Default all
without prior written notice to the Debtor of its intention to do so,
to notify the Account Debtors or obligers under any Payment Rights of
the assignment of such Payment Rights to the Secured Party
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and to direct such Account Debtors or obligers to make payment of all
amounts due or to become due to the Debtor thereunder directly to the
Secured Party, to notify each Person maintaining a lockbox or similar
arrangement to which Account Debtors or obligers under any Payment
Rights have been directed to make payment to remit all amounts
representing collections on checks and other payment items from time
to time sent to or deposited in such lockbox or other arrangement
directly to the Secured Party and, upon such notification and at the
expense of the Debtor, to enforce collection of any such Payment
Rights and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Debtor might
have done. After notice from the Secured Party to the Account Debtors
referred to in the proviso to the preceding sentence, (i) all amounts
and proceeds (including checks and other instruments) received by the
Debtor in respect of the Payment Rights and the Related Contracts
shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of the Debtor and
shall be forthwith paid over or delivered to the Secured Party in the
same form as so received (with any necessary endorsement) to be held
as cash collateral and applied as provided by Section 19, and (ii) the
Debtor shall not adjust, settle or compromise the amount or payment of
any Payment Right, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 11. DEPOSIT ACCOUNTS. Upon the occurrence and during the
continuance of an Event of Default, the Secured Party may exercise dominion
and control over, and refuse to permit further withdrawals (whether of
money, securities, instruments or other property) from deposit accounts
maintained with the Secured Party constituting part of the Collateral.
SECTION 12. LICENSE OF PATENTS, TRADEMARKS AND TRADENAMES. The Debtor
hereby assigns, transfers and conveys to the Secured Party, effective upon
the occurrence of any Event of Default, the nonexclusive right and license
to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by the Debtor that relate to the Collateral and any
other collateral granted by the Debtor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the
extent necessary to enable the Secured Party to use, possess and realize on
the Collateral and any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of the
Secured Party and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure,
deed in lieu of foreclosure or otherwise. Such right and license is
granted free of charge, without requirement that any monetary payment
whatsoever be made to the Debtor.
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SECTION 13. Transfers and Other Liens. The Debtor shall not, without the
prior written consent of the Secured Party:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary
course of business; and
(b) except for the interests disclosed in Schedule III hereto and the
security interest created by this Agreement, create or suffer to exist
any Lien upon or with respect to any of the Collateral to secure the
indebtedness of the Debtor or other obligations of any Person.
SECTION 14. THE SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Debtor hereby
irrevocably appoints the Secured Party the Debtor's attorney-in-fact, with
full authority in the place and stead of the Debtor and in the name of the
Debtor, the Secured Party or otherwise, from time to time in the Secured
Party's discretion to take any action and to execute any instrument that
the Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by the
Debtor or paid to the Secured Party pursuant to Section 9 hereof.
(b) 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 of the Collateral,
(c) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b)
above,
(d) to file any claims or take any action or institute any
proceedings that the Secured Party may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the
rights of the Secured Party with respect to any of the Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by
the Secured Party in its sole discretion, and such payments made by
the Secured Party to become obligations of the Debtor to the Secured
Party, due and payable immediately without demand,
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and
other documents relating to the Collateral; and
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(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owner thereof
for all purposes, and to do, at the Secured Party's option and the
Debtor's expense, at any time, or from time to time, all acts and
things that the Secured Party deems necessary to protect, preserve or
realize upon the Collateral and the Secured Party's security interest
therein, in order to effect the intent of this Agreement, all as fully
and effectively as the Debtor might do.
SECTION 15. SECURED PARTY MAY PERFORM. If the Debtor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by the Debtor under
Section 20.
SECTION 16. THE SECURED PARTY'S DUTIES AND LIABILITIES.
(a) The powers conferred on the Secured Party 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 Party 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. The Secured Party shall be deemed to
exercise reasonable care in the custody and preservation of such
Collateral if such Collateral is accorded treatment substantially
equal to that which the Secured Party accords its own property.
(b) The Secured Party shall not be liable to the Debtor (i) for any
loss or damage sustained by it, or (ii) for any loss, damage,
depreciation or other diminution in the value of any of the Collateral
that may occur as a result of, in connection with or that is in any
way related to (x) any exercise by the Secured Party of any right or
remedy under this Agreement or (y) any other act of or failure to act
by the Secured Party, except to the extent that the same shall be
determined by a judgment of a court of competent jurisdiction to be
the result of acts or omissions on the part of the Secured Party
constituting gross negligence or willful misconduct.
(c) No claim may be made by the Debtor against the Secured Party or
its affiliates, officers, directors, employees, attorneys or agents
for any special, indirect, or consequential damages in respect of any
breach of wrongful conduct (whether the claim therefor is based on
contract, tort or duty imposed by law) in connection with, arising out
of or in any way related to the transactions contemplated and
relationship established by this agreement, or any act, omission or
event occurring in connection therewith except a claim resulting from
gross
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negligence or willful misconduct on the part of the secured party or
any of its affiliates, officers, directors, employees, attorneys or
agents; and the Debtor hereby waives, releases and agrees not to xxx
upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
SECTION 17. EVENTS OF DEFAULT.
The making of a demand for payment under the Note, or the occurrence of an
Event of Default (as defined in the Note) under the Note, or the breach of
any provision or covenant of the Debtor under this Agreement or if any
representation or warranty made by Debtor hereunder or to any other lender
of the Debtor shall be or shall become false or untrue shall each
constitute an Event of Default hereunder (collectively an "Event of
Default").
SECTION 18. REMEDIES. If any Event of Default shall have occurred and be
continuing, the Secured Party may exercise in respect of the Collateral,
(a) all the rights and remedies of a secured party in connection
with a default by a debtor under the Uniform Commercial Code of
the State of New York (the "CODE") (whether or not the Code
applies to the affected Collateral),
(b) all of the rights and remedies provided for in this
Agreement and any other agreement between the Debtor and the
Secured Party and
(c) such other rights and the remedies as may be provided by law
or otherwise (such rights and remedies of the Secured Party to be
cumulative and nonexclusive).
The Secured Party also may (i) require the Debtor to, and the Debtor
hereby agrees that it will at its expense and upon the request of the
Secured Party forthwith, assemble all or part of the Collateral as
directed by the Secured Party and make it available to the Secured
Party at a place to be designated by the Secured Party that is
reasonably convenient to both parties, (ii) enter onto the property
where any Collateral is located and take possession thereof with or
without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or
otherwise prepare the Collateral for disposition in any manner to the
extent the Secured Party deems appropriate, (iv) take possession of
the Debtor's premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of the
Debtor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation and (v) without notice except as
specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, and
at such price
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15
or prices and upon such other terms as the Secured Party may deem
commercially reasonable. The Debtor agrees that, in the event notice
cannot be waived, at least five (5) days' notice to the Debtor of the
time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Secured Party 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.
After the occurrence of an Event of Default, the Secured Party shall
have no obligation to make further loans or financial accommodations
available to the Debtor under the Note or any other agreement and all
Secured Obligations shall be immediately due and owing to Secured
Party.
The Secured Party may retain any of the Debtor's directors, officers
and employees, in each case upon such terms as the Secured Party and
any such person may agree, notwithstanding the provisions of any
employment, confidentiality or non-disclosure agreement between any
such Person and the Debtor and the Debtor hereby waives its rights
under any such agreement and consents to each such retention.
SECTION 19. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere
in this Agreement, all proceeds received by the Secured Party in respect of
any sale of, collection from or other realization upon all or any part of
the Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as Collateral for, and/or then, or at any other time
thereafter applied, in full or in part by the Secured Party against the
Secured Obligations in the following order of priority:
(a) To the payment of all costs and expenses of such sale, collection
or other realization and all other expenses, liabilities and advances
made or incurred by the Secured Party in connection therewith and all
amounts for which the Secured Party is entitled to indemnification
hereunder and all advances made by the Secured Party hereunder for the
account of the Debtor and for the payment of all costs and expenses
paid or incurred by the Secured Party in connection with the exercise
of any right or remedy hereunder, all in accordance with Section 20
hereof;
(b) To the payment of the Secured Obligations in such order manner
and sequence as the Secured Party shall elect; and
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16
(c) After payment in full of the amounts specified in the preceding
subparagraphs, to the payment to or upon the order of the Debtor, or
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 20. INDEMNITY AND EXPENSES.
(a) The Debtor agrees to indemnify the Secured Party from and against
any and all claims, losses and liabilities growing out of or resulting
from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from
the Secured Party's gross negligence or willful misconduct.
(b) The Debtor will upon demand pay to the Secured Party the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, that the
Secured Party may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
the Secured Party hereunder or (iv) the failure by the Debtor to
perform or observe any of the provisions hereof.
SECTION 21. WAIVER OF HEARING. The Debtor expressly waives any
constitutional or other right to a judicial hearing prior to the time the
Secured Party takes possession or disposes of the Collateral as provided in
Section 18 hereof.
SECTION 22. WAIVER OF JURY TRIAL ETC.. THE DEBTOR AND THE SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. THE DEBTOR HEREBY ALSO WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON A CLAIM OF LACHES, SET-OF OR ANY COUNTER-CLAIM NATURE AND ANY
OBJECTION BASED UPON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES. THE DEBTOR AND THE SECURED
PARTY EACH ACKNOWLEDGE THAT THESE WAIVERS ARE A MATERIAL INDUCEMENT FOR THE
DEBTOR AND THE SECURED PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
THE DEBTOR AND THE SECURED PARTY HAVE ALREADY RELIED ON SUCH WAIVERS ARE
ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON SUCH
WAIVERS IN THEIR RELATED FUTURE DEALINGS. THE DEBTOR AND THE SECURED PARTY
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED SUCH
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WAIVERS WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
MAKE SUCH WAIVERS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THESE WAIVERS
ARE IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
SECTION 23. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the indefeasible payment in full of the Secured
Obligations and termination of the Secured Party's obligation to lend under
the Note, (b) be binding upon the Debtor, its successors and assigns and
(c) inure, together with the rights and remedies of the Secured Party
hereunder, to the benefit of the Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), the Secured Party may assign or otherwise transfer the Note to
any other person or entity, and such other benefits in respect thereof
granted to Secured Party herein or otherwise. Upon the indefeasible payment
in full of the Secured Obligations and termination of the Secured Party's
obligation to lend under the Note, the security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the
Debtor. Upon any such termination, the Secured Party will, at the Debtor's
expense, execute and deliver to the Debtor such documents as the Debtor
shall reasonably request to evidence such termination.
SECTION 24. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Debtor herefrom, shall
in any event be effective unless the same shall be in writing and signed by
the Secured Party, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 25. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including facsimile
communication) and mailed or telecopied or delivered to the Debtor or the
Secured Party, by overnight courier or messenger, as the case may be,
addressed to it at the address of such party specified on the signature
page hereof, or as to either party at such other address as shall be
designated by such party in a written notice to each other party complying
as to delivery with the terms of this Section. All such notices and other
communications shall be effective when sent addressed as aforesaid.
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SECTION 26. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings brought against the Debtor with respect to this Agreement may
be brought in any state or federal court of competent jurisdiction in the
State of New York and by execution and delivery of this Agreement the
Debtor accepts for itself and in connection with the Collateral, generally
and unconditionally, the nonexclusive jurisdiction of the aforesaid courts
and waives any defense of forum non conveniens and irrevocably agrees to be
bound by any judgement rendered thereby in connection with this Agreement.
The Debtor designates and appoints CT Corporation Systems, 0000 Xxxxxxxx,
Xxx Xxxx, XX, 00000, and such other Persons as may hereafter be selected by
the Debtor irrevocably agreeing in writing to so serve, as its agent to
receive on its behalf service of all process in any such proceedings in any
such court, such service being hereby acknowledged by the Debtor to be
effective and binding service in every respect. A copy of any such process
so served shall be mailed by registered mail to the Debtor, at its address
as specified in Section 25 hereof, except that unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity
of service of process. If any agent appointed by the Debtor refuses to
accept service, the Debtor hereby agrees that service upon it by mail shall
constitute sufficient notice. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right
of the Secured Party to bring proceedings against the Debtor in the courts
of any other jurisdiction.
SECTION 27. GOVERNING LAW, TERMS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. UNLESS OTHERWISE DEFINED
HEREIN, TERMS USED IN ARTICLE 9 OF THE CODE IN THE STATE OF NEW YORK ARE
USED HEREIN AS THEREIN DEFINED.
SECTION 28. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute
a part of this Agreement or be given any substantive effect.
SECTION 29. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 30. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
Agreement to be duly executed and delivered as of the date first above
written.
OLEFINS MARKETING INC.
By : By :
---------------------------- ----------------------------
Name: Name:
Title : Title :
------------------------- --------------------------
Date : Date :
------------------------- --------------------------
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20
SCHEDULE I
TO SECURITY AGREEMENT
Required Consents
Page 20
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SCHEDULE II
SECURITY AGREEMENT QUESTIONNAIRE
The undersigned ("Debtor") is entering into a Security Agreement with
Caisse Nationale de Credit Agricole, New York Branch. In connection with
the Security Agreement, Debtor is required to answer the following
questions:
1. What is Debtor's exact name as it appears in its certificate of
incorporation (or, if not a corporation, the Debtor's complete
name)?
Olefins Marketing, Inc.
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2. Has Debtor ever changed its name? If so, state each other name
Debtor has had.
Yes, Olefins Trading, Inc
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3. Does Debtor do business under any other name? If so, state each
such name.
No
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4. Does Debtor use or had Debtor used any trade names or trade
styles? If so, list each of them.
No
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5. Has Debtor changed its identity or corporate structure in any way
within the past four months? Changes in corporate structure would
include incorporation of a partnership or acquisitions. If any
such change has taken place, indicate the nature of such change
and give the names of each corporation or other entity that was
incorporated, merged or consolidated with or acquired by Debtor in
such transaction (including each name under which each such
corporation or entity has done business) and the address of each
place of business of each such incorporation, merger,
consolidation or acquisition and within four months prior to the
date of this questionnaire.
No
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6. State the complete address (including the county) of Debtor's
chief executive office and, if different from it chief executive
office, of the office where Debtor keeps its books and records
relating to its accounts or contract rights.
0000 Xxxxxx Xxxxx Xxxxxxx
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Xxxxx, Xxxxxxx 00000
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Hillsbrough County
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7. Has Debtor's chief executive office or office where Debtor keeps
its books and records relating to its accounts or contract rights
been located at any other address during the past four months? If
so, specify each such address (including the county).
No
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8. State the complete address (including the county) of each other
place of business that Debtor presently has.
NA
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9. State the complete address (including the county) of each place of
business that Debtor has had in the past four months, other than
those listed in the answers to questions 6, 7 and 8.
NA
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10. State the complete address (including the county) of each location
where Debtor keeps any inventory or equipment, other than the
place of business listed in the answers to questions 6,7 and 8.
NA
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11. Has any of Debtor's inventory or equipment been located during the
past four months at any location other than the location listed in
the answers to questions 6,7,8,9 and 10? If so, state the complete
address (including the county) of each such location.
No
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12. Does any person or entity other than Debtor have possession of
any of Debtor's inventory or equipment? If so, state the name and
address (including the country) of each such person or entity.
No
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13. When Debtor purchases goods, are there any places in which such
goods might in the usual course of the purchase transaction be
located, even temporarily for purposes of transshipment? If so,
state the complete address (including the county) of each such
location.
No
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14. Has Debtor acquired any of its inventory or equipment other than
in the ordinary course of business? If so, specify the nature of
any such acquisition
No
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15. Does Debtor own or have an interest in any goods other than
inventory or equipment, such as crops, minerals or the like? If
so, please describe such goods and state the complete address
(including the county) where such goods are located.
No
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16. Federal Tax I.D. Number of Debtor
00-0000000
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SCHEDULE III
TO SECURITY AGREEMENT
Existing Liens and Encumbrances
Page 26
