EXHIBIT 10.36
The parties hereto have entered into a separate License Agreement under certain
Intellectual Property as defined in the License Agreement which allows Licensee
to do any and all things with respect to any inventory obtained as a result of
any liens or security interests granted hereunder as if Licensee were the owner
of all Intellectual property covering such inventory.
SECURITY AGREEMENT SUPPLEMENT - INVENTORY
From: Xxxxxx Industries, Inc.
0000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
and
Systemone Technologies, Inc.
0000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
To: CAPITAL FACTORS, INC.
000 Xxxx Xxxxxxxx Xxxx Rd, 5th Floor
Boca Raton, Florida 33432
Gentlemen:
This is a security agreement supplement to our underlying Factoring
Agreement with you executed on the 26 day of November, 1997. It is hereby
incorporated into said Factoring Agreement (hereinafter sometimes called "The
Agreement"), and is a part thereof. Each of the terms defined in the Agreement,
unless otherwise defined herein, shall have the same meaning when used herein.
Where two or more entities have executed this agreement and the Agreement, the
obligations of such entities shall be joint and several, and each
representation, warranty, covenant and agreement set forth herein and in the
Factoring Agreement and any other agreement entered into between the parties
hereto shall be deemed to have been made jointly and/or severally by each such
entity unless the context of this agreement otherwise so states.
1. In addition to your other security, we hereby pledge to you and
grant you a continuing general lien on and security interest in all Inventory
now and hereafter owned by us and all substitutions, additions and replacements
thereof. The term "Inventory" means and includes all merchandise intended for
sale by us and all raw materials, goods in process, finished goods, materials
and supplies of every nature used or usable in connection with the manufacture,
packing, shipping, advertising or sale of such merchandise. We warrant that all
Inventory is and will be owned by us, free of all other liens, security interest
and encumbrances, and that we are the owners of the Inventory at wholesale and
are not a mercantile establishment selling at retail. All of such Inventory will
be kept at our address shown above and in the event of any change in location,
we will immediately notify you; but your lien and security interest will be
maintained despite the location of the Inventory. We will, at our expense,
defend the Inventory against any claims or demands adverse to your interest
therein, and will promptly pay, when due, all claims, taxes or assessments
levied against us on the Inventory. In the event we fail to pay such claims,
taxes and assessments, or fail to keep the Inventory free from any other lien or
security interest, you may make expenditures for such purposes and any amount so
expended shall be secured hereby and will be repaid with interest on demand at
the maximum rate allowable by law.
2. Your lien and security interest shall extend and attach to
Inventory which is presently in existence and which is owned by us or in which
we have an interest, and all Inventory which we purchase or in which we may
acquire an interest at any time and from time to time in the future, whether
such Inventory is in transit or in our constructive, actual or exclusive
occupancy or possession or not, or held by us or others for your account and
wherever the same may be located, including, but without limiting the generality
of the foregoing, all Inventory which may be located on our premises or upon the
premises of any carriers, forwarding agents, truckers, warehousemen, vendors,
selling agents, finishers, converters or other third parties who may have
possession of the collateral.
3. Your lien on the Inventory shall continue through all stages of
manufacture and shall, without further act, attach to goods in process, to the
finished goods, to the accounts receivable or other proceeds resulting from the
sale or other disposition thereof and to all such Inventory as may be returned
to us by customers. Forthwith and from time to time hereafter,
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we shall provide you with one or more separate written statements, dated and
signed by us, describing, designating, identifying and evaluating all Inventory
now and hereafter owned by us, confirming your lien and security interest. Upon
the sale, exchange or other disposition of the Inventory, the security interest
and lien created and provided for herein shall without break in continuity and
without further formality or act continue in and attach to the instruments for
the payment of money, accounts, contract rights, documents of titles, shipping
documents, chattel paper and all other cash and non-cash proceeds of such sale,
exchange or disposition, including Inventory returned or rejected by customers
or repossessed by either of us. As to any such sale, exchange or disposition,
you shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin and reclamation.
4. The Inventory shall be additional security for all obligations to
you under The Agreement as originally existing and as hereby and at any time
heretofore or hereafter supplemented or amended as well as for all other loans
and advances to us or for our account by you, whether now existing or hereafter
arising, and for all commissions, obligations, indebtedness, interest charges
and expenses chargeable to our account or due from us from time to time, however
created and however arising, whether or not evidenced by notes or other
instruments, including any and all obligations and indebtedness of any
subsidiary or affiliate (including any parent company) of ours, and including
officers of such, to you or your subsidiaries and affiliates (including any
parent company) all hereinafter called the "Obligations". With respect to all
Inventory as well as all accounts, Accounts Receivables, and other security, you
shall be entitled to all of the rights and remedies set forth in The Agreement.
5. Upon our request, you may make Advances to us prior to our sale of
Inventory, and if you so require, we will execute a note or notes or other
instruments of indebtedness in form satisfactory to you evidencing any loans or
advances to us. Any such Advances will be made at your sole discretion, will be
charged by you to us and will bear interest payable in the manner and at the
rate specified in The Agreement, unless such advance is evidenced by a note or
an instrument of indebtedness, in which event the terms thereof shall be
controlling. All such Advances shall be payable by us on demand (unless
otherwise provided in a note or instrument of indebtedness) and recourse to the
security therefor will not be required at any time. The amount of all such loans
and advances and the relation thereof to the value of the Inventory will be
determined by you alone.
6. We shall be obligated to maintain a ratio of N/A the amount of
Inventory to the amount of the loan on Inventory at all times in acceptable
Inventory valued at cost or market, whichever is lower, excluding all obsolete
Inventory.
7. Except for sales made in the regular course of our business, we
shall not sell, encumber or dispose of or permit the sale, encumbrance or
disposal of any Inventory without your prior written consent. As sales are made
in the regular course of business, we shall, in accordance with the provisions
of The Agreement, immediately execute and deliver to you schedules and
assignments of all Receivables created by us. Any collateral assigned to you
under The Agreement or this supplement shall be additional security for the
payment of all sums owing by us to you for loans or advances pursuant to this
supplement. If sales are made for cash, we shall immediately deliver to you the
identical checks, cash or other forms of payment which we receive. All payments
received by you on account of cash sales of Inventory, as well as on account of
Receivables, will be credited to our account in accordance with the provisions
of The Agreement.
8. If any Inventory remains in the possession or control of any of
our agents or processors, we shall notify such agents or processors of your
lien, and upon request shall instruct them to hold all such Inventory for your
account and subject to your instructions. We agree to maintain books and records
pertaining to the Inventory in such detail, form and scope as you shall require,
and we agree to notify you promptly of any change in our name, mailing address,
principal place of business or location of the Inventory. We will also advise
you promptly, in sufficient detail, of any substantial change relating to the
type, quantity or quality of the Inventory, or any event which would have a
material effect on the value of the Inventory or on the lien and security
interest granted to you herein. A physical listing of all Inventory, wherever
located, shall be taken by us whenever requested by you, and a copy of each such
physical listing shall be supplied to you. You may examine and inspect the
Inventory at any time. We will execute and deliver to you from time to time,
upon demand, such supplemental agreements or documents relating to Inventory, or
instruments of indebtedness, in order that the full intent and purpose of this
agreement may be carried into effect.
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9. We warrant and represent that we have not and will not during the
period that we are indebted to you for any loans, advances or Obligations, enter
into any agreement of any kind, the effect of which will create any prior or
superior rights, security interests or liens upon any of our assets in which you
have a security interest in favor of any person, firm or corporation.
10. At our own expense, we shall keep the Inventory (whether or not in
transit) continuously insured in amounts not less than its full insurable value
by a reputable and highly rated insurance company or companies acceptable to you
against loss or damage from fire, hazards included within the term "extended
coverage", theft and such other risks as you may require, in such form and for
such periods as shall be satisfactory to you. Each insurance policy shall
provide, that loss and proceeds thereunder shall be payable to you as your
interest may appear, and which policy shall provide at least ten (10) days'
written notice of cancellation to you. We shall deliver to you on demand all
such insurance policies or other evidence of compliance satisfactory to you and
we shall renew each policy at our own expense and shall deliver satisfactory to
you and we shall renew each policy at our own expense and shall deliver
satisfactory evidence thereof to you not less than thirty (30) days before its
expiration date. If we fail to do so, you may procure such insurance and the
cost of such insurance shall be secured hereby and will be payable to you with
interest on demand at the maximum rate allowable by law. You may act as
attorney-in-fact for us in obtaining, adjusting, settling and cancelling such
insurance and endorsing any instruments relating thereto, and in the event of
loss or damage to the Inventory, your option to the Obligations (whether or not
matured) or to the repair or replacement of the Inventory after receiving proof
satisfactory to you of such repair or replacement.
11. If we should default in the payment of any Obligation due to you
hereunder or otherwise, or in the performance of any provision of The Agreement
(including, without limitation, this supplement and any other supplements
thereto), or if a petition under the Bankruptcy Act is filed by or against us,
or action in receivership instituted, or if we make an assignment for benefit of
creditors, suspend business or become insolvent, or if an attachment be levied
or tax lien be filed against any of the Inventory, or if you deem yourself or
your security insecure, then you may declare this agreement in default and all
amounts owing under The Agreement (including, without limitation, this
supplement and any other supplements thereto) and all other Obligations owing by
us to you shall, without demand or notice, immediately become due and payable
(notwithstanding that the maturity date or dates expressed in any evidence of
such indebtedness may be otherwise) and you may foreclose your lien or security
interest in the Inventory in any way permitted by law, and shall have, without
limitation, the remedies of a secured party under the Florida Uniform Commercial
Code or any other applicable law. You may thereupon enter our premises without
legal process and without incurring liability to us remove the same to such
place as you may deem advisable, or you may require us to assemble and make the
Inventory available to you at a convenient place, or take and maintain
possession on our premises and, with or without having the Inventory at the time
or place of sale, you may sell or otherwise dispose of all or any part of the
Inventory whether in its then condition or after further preparation or
processing, either at public or private sale or at any broker's board, in lots
or in bulk, for cash or for credit, at any time or place, in one or more sales,
and upon such terms and conditions as you may elect. At any such sale you may be
the purchaser. If any Inventory shall require rebuilding, repairing,
maintenance, preparation, or is in process or other unfinished state, you shall
have the right, at your option, to do such rebuilding, repairing, preparation,
processing or completion of manufacturing, for the purpose of putting the
Inventory in such saleable form as you shall deem appropriate. IF YOU USE LEGAL
PROCESS, CONTRACTUAL OR OTHER REMEDY TO OBTAIN POSSESSION OF THE INVENTORY WE
WAIVE ANY RIGHT TO ANY NOTICE OF HEARING AND/OR HEARING TO WHICH WE MIGHT
OTHERWISE BE ENTITLED PRIOR TO RECOVERY OF THE INVENTORY.
12. In the event of any public or other sale of the Inventory, the
proceeds from any sale shall first be applied to any costs and expenses in
securing possession of the Inventory, storing, repairing and finishing for sale,
and to any expenses in connection with the sale. The net proceeds will be
applied toward the payment of any and all Obligations to you under The
Agreement, this supplement or any other supplements thereto, and otherwise,
including interest, attorney's fees, which we hereby expressly agree to pay in
the event of any default hereunder and your referral to an attorney, and all
other costs and expenses. Application of the net proceeds as to particular
Obligations or as to principal or interest shall be in your absolute discretion.
Any deficiency will be paid to you forthwith upon demand and any surplus will be
paid to us if we are not indebted to you under any other Obligation. The
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enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative.
13. To the extent that any of our obligations to you are now or
hereafter secured by property other than the Inventory or by the guaranty,
endorsement or property of any other person, firm or corporation, then you shall
have the right to proceed against such other property, guarantor, or endorser
upon our default in the payment of any obligation or in any of the terms,
covenants or conditions contained herein, and you shall have the right in your
sole discretion to determine which rights, security, liens, security interests
or remedies you shall at any time pursue, relinquish, subordinate, modify or
take any other action with respect thereto, without in any way modifying or
affecting any of them or any of your rights hereunder.
14. Any notice to us shall be in writing and shall be deemed
sufficiently made if delivered personally or if transmitted by postage pre-paid
first class mail (airmail if international) or by telegraph or by telex with
confirmed answerback, to the respective address appearing on the face of this
agreement for such person (or, if none appears, to any address for such person
then registered in your records). Any notice to you shall be directed to the
attention of a vice-president or higher ranking officer of yours and shall be
made in writing in the foregoing manner and shall be deemed sufficient when
received by you at the following address: 000 Xxxx Xxxxxxxx Xxxx Xx., Xxxx
Xxxxx, Xxxxxxx 00000. Any party may change its address for notice by given
written notice of the change in accordance with this paragraph.
15. As we are a corporation, partnership or other business entity, we
hereby further represent and warrant to you that: (a) we are duly organized,
validly existing and in good standing under the laws of the jurisdiction of our
creation and are duly qualified or licensed to do business in those
jurisdictions where the nature of our business requires us to be so qualified or
licensed; (b) we have all requisite power and authority (corporate or otherwise)
to conduct our business, to own our properties, to execute and deliver this
agreement, and to perform our obligations under the same; (c) the execution,
delivery and performance of this agreement have been duly authorized by all
necessary actions (corporate or otherwise) and do not require the consent or
approval of our stockholders (if a corporation) or of any other person whose
consent has not been obtained; and (d) the execution, delivery and performance
of this agreement does not had shall not conflict with any provision of our
by-laws or articles of incorporation (if a corporation), partnership agreement
(if a partnership) or trust agreement or other document pursuant to which we
were created and exist, nor conflict with any other agreement by which we are
bound.
16. The lien, rights and security interest granted to you hereunder
are to continue in full force and effect, notwithstanding the termination of The
Agreement or the fact that the principal account maintained in our name on your
books may from time to time be temporarily in a credit position, until the final
payment to you in full of all obligations and indebtedness due you by us,
together with interest thereon, and your delay or omission to exercise any right
shall not be deemed a waiver thereof or of any other right, unless such waiver
be in writing. A waiver on one occasion shall not be construed as a bar to or
waiver of any other rights or remedies on any future occasion.
17. This agreement, which is subject to modification only in writing,
is supplementary to and is to be considered as part of the Agreement and shall
take effect when dated, accepted and signed in Fort Lauderdale, Florida by one
of your officers. This agreement shall be interpreted according to the laws of
the state of Florida and shall inure to the benefit of an be binding upon the
parties hereto, their successors and assigns.
Very truly yours,
Attest: XXXXXX INDUSTRIES, INC.
_________________________
By:/s/ XXXX X. XXXXXX (Seal)
----------------------
Xxxx X. Xxxxxx
Its: Chief Executive Officer
(Seal) On: November 26, 1997
and
Attest: SYSTEMONE TECHNOLOGIES, INC.
_________________________ By: /S/ XXXX X. XXXXXX
--------------------------
Xxxx X. Xxxxxx
Its: Chief Executive Officer
Accepted at Boca Raton, Florida, on the 26 day of November, 1997.
Attest: CAPITAL FACTORS, INC.
_________________________ By: /S/ XXXXXXXXXXX XXXXXXXXX
---------------------------
Xxxxxxxxxxx Xxxxxxxxx
Assistant Vice President
On: November 26, 1997
