Exhibit 10.5
SECURITY AGREEMENT
AUGUST 15, 2005
This Security Agreement ("Agreement") is made this Fifteenth day of August
2005, between RIO VISTA OPERATING PARTNERSHIP L.P. ("Debtor") and
TRANSMONTAIGNE PRODUCT SERVICES INC. ("Creditor") for good and valuable
consideration, receipt of which is hereby acknowledged.
ARTICLE I - DEBTOR'S WARRANTIES AND REPRESENTATIONS.
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Debtor makes the following warranties and representations to Creditor:
SECTION 1.1. Debtor is a limited partnership, organized under the laws
of the state of Delaware in good standing with its principal place of business
at 000 Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
SECTION 1.2. The exact legal name of Debtor is Rio Vista Operating
Partnership L.P., and Debtor uses no other names or marks, and has no other
locations, unless listed on Exhibit A attached hereto.
SECTION 1.3. Debtor owns the Collateral, free from all liens, security
interests, or encumbrances, except as shown on Exhibit A hereto, and Debtor will
defend the Collateral against all claims and demands not so shown.
ARTICLE II - SECURITY INTERESTS.
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SECTION 2.1. Debtor hereby grants Creditor a continuing security
interest in all of Debtor's Collateral, as that term is defined in Section
3.1(d) of the Purchase and Sale Agreement, dated August 15, 2005 between Debtor
and Creditor ("P&S Agreement"), and all supporting obligations of every nature,
rights to payment of money, insurance refund claims and all other insurance
claims and proceeds with respect to the Collateral, and all of Debtor's books
and records and all recorded data of any kind or nature, regardless of the
medium of recording, including, without limitation, all software, writings,
plans, specifications and schematics concerning the Collateral, and all
proceeds, products, additions and accessions to the Collateral to secure the
payment of Debtor's indebtedness to Creditor in the amount of $1,300,000.00 (the
"Indebtedness"), arising upon Creditor's advance of such amount to Debtor under
the terms of the P&S Agreement, together with any renewals or extensions
thereof, and whether such Indebtedness is from time to time reduced and
thereafter increased, or entirely extinguished and thereafter re-incurred.
SECTION 2.2. Debtor acknowledges and agrees that, with respect to any term
used herein that is defined in either Article 9 of the Uniform Commercial Code
in force in the jurisdiction in which this security agreement is signed, when it
is signed, or Article 9 in force at any relevant time or jurisdiction relating
to the Collateral, the meaning to be given with respect to any particular item
of property shall be that under the more encompassing of the two
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definitions. The Debtor further acknowledges that this security agreement is
intended to, and covers, all assets of the Debtor described as Collateral under
Section 3.1 of the P&S Agreement and that Creditor may file a financing
statement which so states. Debtor hereby ratifies, authorizes and authenticates
any acts taken by Creditor which occurred prior to the execution of this
agreement for the filing of an initial financing statement, in lieu of financing
statement or any other financing statement.
ARTICLE III - DEBTOR'S COVENANTS.
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Debtor covenants and agrees with Creditor as follows:
SECTION 3.1. Debtor shall notify Creditor immediately in writing if
Debtor: (i) changes or adds a name or xxxx to its business; (ii) changes in any
respect the form under which its business is operated;, (iii) changes or adds a
business location; or (iv) changes its state of organization or registration.
SECTION 3.2. Debtor shall keep its books and records for the Collateral at
its principal place of business. Debtor shall not move such books and records,
or the Collateral, without written consent of Creditor.
SECTION 3.3. Debtor shall keep the Collateral free of unpaid charges,
liens, security interests, and encumbrances (except those listed in Exhibit A or
granted to Creditor) and shall pay when due all taxes and assessments with
respect to the Collateral or its use or operation.
SECTION 3.4. Creditor shall have the right to inspect and make an inventory
of the Collateral, and to examine Debtor's books and records concerning the
Collateral at all reasonable times and wherever located.
SECTION 3.5. Debtor shall obtain and maintain coverage insuring the
Collateral against fire, theft, and extended coverage risks ordinarily included
in similar policies, all subject to Creditor's approval, with proceeds payable
to Debtor and to Creditor as their interests may appear. All policies shall
require at least 15 days' written notice to Creditor before any material change
or cancellation. Debtor shall give Creditor a certificate or a copy of each such
policy within 15 days after the date of this Agreement.
SECTION 3.6. Debtor shall notify Creditor within five days if Debtor
becomes involved in any new claim or dispute, or in any litigation or other
proceeding before any court, tribunal, or similar body, in which any potential
recovery from Debtor may exceed $50,000.
SECTION 3.7. Debtor shall not merge, consolidate, or acquire all or
substantially all of the assets of any other person or entity without written
notice to Creditor.
SECTION 3.8. Debtor and Creditor agree that all payments received by
Creditor for payment of any of the Indebtedness shall be applied to the oldest
portion of the Indebtedness, whether evidenced by invoices or otherwise, unless
otherwise applied by Creditor.
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ARTICLE IV - DEBTOR DEFAULT.
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Any of the following shall be an event of Debtor default under this
Agreement:
SECTION 4.1. Failure of Debtor to pay any Indebtedness when due.
SECTION 4.2. Failure of Debtor to perform any obligation under this
Agreement and/or any other agreement with or in favor of Creditor.
SECTION 4.3. Making false statements to Creditor, or withholding any
information with the intent to deceive Creditor.
SECTION 4.4. Loss, theft, damage or destruction, levy, seizure, or
attachment of any of the Collateral, unless such Collateral is either (i) fully
covered by insurance, or (ii) replaced as Collateral by property of equal or
greater value, or unless (iii) any such levy, seizure, or attachment is released
or dissolved within three days after it is made.
SECTION 4.5. A change in the financial or other condition of Debtor or the
Collateral such that in Creditor's opinion Creditor's risks are increased or the
value or security of the Collateral is impaired.
SECTION 4.6. Debtor's dissolution or termination of existence, or
insolvency of Debtor; or Debtor's inability to pay its debts as they mature; or
the appointment of a receiver of any property of Debtor; or Debtor's filing of a
voluntary petition in bankruptcy; or the adjudication of Debtor as a bankrupt;
or any transfer, without prior written consent by Creditor, of a substantial
part of Debtor's property.
ARTICLE V - CREDITOR'S REMEDIES.
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Upon any Debtor default, Creditor at its option and without demand or
notice to Debtor, may have any one or more of the following remedies, plus other
remedies available under applicable law:
SECTION 5.1. Declare all Indebtedness due and payable, with interest
thereon, from the date of default until paid, at the rate of 10% per annum or
the maximum rate permitted by law, whichever is less, unless a different rate is
required by any applicable instrument.
SECTION 5.2. Take possession of the Collateral wherever located; and Debtor
hereby authorizes Creditor to enter upon Debtor's premises and secure or
identify the Collateral as Creditor's.
SECTION 5.3. Sell or otherwise dispose of the Collateral at public or
private, sale, whether or not Debtor is present at the sale, on such terms and
in such manner as Creditor may determine in compliance with the applicable
Uniform Commercial Code (hereinafter referred to as the Code) and Debtor
expressly agrees that reasonable notice of the time and place of the sale shall
be ten days.
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SECTION 5.4. Make demand for, and Debtor promptly shall deliver to
Creditor, in kind, the proceeds of any sale or other disposition of Collateral;
and Creditor shall have the right to notify any or all account Debtors of Debtor
of Creditor's security interest, and to require remittance directly to Creditor
of all sums due Debtor, and Debtor hereby authorizes Creditor, in its sole and
absolute discretion, to compromise and settle any claims of the Debtor against
third persons in a commercially reasonable manner, and to endorse Debtor's name
on any instruments received in payment of an account.
SECTION 5.5. If a default hereunder also is a default under any other
agreement between Debtor and Creditor, including, without limitation, the P&S
Agreement, then Creditor shall have the right to pursue its remedies under such
agreement and under this Agreement, successively or concurrently, or otherwise
as Creditor may determine, and Creditor shall not thereby be stopped or
prevented from pursuing any other remedy it may have under such agreement, or
under this Agreement, or by law.
SECTION 5.6. Make demand for, and Debtor promptly shall pay to Creditor any
deficiency if proceeds of any sale or other disposition of Collateral are
insufficient to satisfy the Indebtedness; and, in addition, Debtor shall
reimburse Creditor upon demand for all costs and expenses incurred by Creditor
in retaking, holding, and preparing the Collateral for disposition, and in the
sale or other disposition, and for all attorneys' fees, legal costs and
expenses, and collection fees incurred by Creditor in the exercise of its rights
and remedies under this Agreement and in the collection of Indebtedness. All
such costs and expenses also shall be Indebtedness, secured under this
Agreement.
SECTION 5.7. In the event that the security interest held by Creditor in
the LPG Tanks is foreclosed and the LPG Tanks are acquired by any party other
than Debtor, then Debtor shall provide an access easement to the LPG Tanks over
and across Debtor's leasehold premises arising under BND Lease No. 2823 for the
purposes of inspecting, maintaining, disassembling and removing the LPG Tanks.
ARTICLE VI - GENERAL.
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SECTION 6.1. Debtor hereby authorizes Creditor to prepare and/or file
and/or add additional information as it becomes available, or otherwise transmit
any and all records, including but not limited to writings or other written
documents, if applicable, which Creditor in its sole discretion shall deem
necessary to create and perfect a security interest consistent with this
Security Agreement or with any future grant of a security interest authenticated
by Debtor, (such authentication can be by any medium, written or unwritten,
including but not limited to telephone, electronic transmission or a writing)
including but not limited to a security agreement, initial financing statement,
financing statement, in lieu of financing statement, amendments and continuation
statements, by any means authorized by law, whether such law is currently in
effect or becomes effective after the execution hereof, including electronic
filing. Debtor understands and agrees that by executing this agreement, Debtor
has hereby authenticated (as that term is defined in the applicable commercial
code) this agreement as a record and (1) authorizes Creditor to (1) prepare and
file such record(s) without the signature of Debtor, (2) to file such writing
bearing any general, generic or super-generic description of the collateral
authorized by
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the applicable code and (3) authorizes Creditor to file any future records which
shall hereby be deemed authenticated (as defined in the applicable commercial
code) by Debtor.
SECTION 6.2. All notices shall be in writing and delivered personally
or by certified mail, postage prepaid, to the other party at the following
addresses:
To Creditor:
TransMontaigne Product Services Inc.
Attn: President
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
To Debtor:
Xxxxxxx Xxxxxx
Rio Vista Operating Partnership L.P.
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
With a copy (which shall not constitute effective notice) to:
Xxx Xxxxxxxx
Penn Octane Corporation
000 Xxxxxx Xxxxxx Xxx 000
Xx Xxxxxxx, XX 00000
or other address given by notice, and shall be effective when delivered
personally or as shown on the receipt, or if none, 48 hours after deposit in the
mails.
SECTION 6.3. This Agreement shall inure to the benefit of and shall
bind each of the parties and their respective heirs, representatives,
successors, and assigns; but Debtor shall not assign any interest or obligation
herein without prior written consent of Creditor.
SECTION 6.4. If any provision hereof is held to be invalid, the other
provisions shall remain enforceable unless deletion of the invalid material will
defeat the essential purposes of the parties as expressed herein.
SECTION 6.5. The terms of this Agreement are intended by the parties as the
complete, final, and exclusive statement of their agreement as to the matters
described herein, and may not be contradicted by evidence of any prior or
contemporaneous oral or written agreement.
SECTION 6.6. If two or more parties are referred to herein as Debtor, they
shall be jointly and severally liable under this Agreement, and the liability of
each shall not be affected as to a party by the termination or release of any
party or security of or from any other party.
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SECTION 6.7. This Agreement and all transaction contemplated herein or
resulting herefrom shall be governed by and construed in accordance with Texas
law.
Executed as of the date first given above.
TRANSMONTAIGNE PRODUCT RIO VISTA OPERATING PARTNERSHIP L.P.
SERVICES INC. By: Rio Vista Operating GP LLC, general
partner
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx Xxxxxx
Title: President Title: President
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EXHIBIT "A"
Security Agreement dated August 15, 2005
Debtor: Rio Vista Operating Partnership L.P.
Other Debtor Names or Marks: None
Other Debtor Locations: None
Liens, Security Interests, or Encumbrances on Collateral: BND, Lenders and
Secured Debt Lender
