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EXHIBIT 10.18
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 JLM INTERNATIONAL 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 defined 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 there of 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, 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. Section 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 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)
▇▇▇▇ 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, ▇▇▇▇ 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 of 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 obligors 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 obligors 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 obligors 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 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, ▇▇▇ 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 ▇▇▇
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 Debtors
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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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 Parry, 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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(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 EXPENSE
(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.
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 ANF 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 CLAIMS 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, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇, 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.
JLM INTERNATIONAL INC.
By: By:
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Name: Name:
Title: Title:
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Date: Date:
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