Exhibit 10.2
EXECUTION COPY
SECOND AMENDED AND RESTATED
SECURITY AGREEMENT
Dated June 6, 2006
From
POLYONE CORPORATION,
as Grantor,
to
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Collateral Trustee
TABLE OF CONTENTS
Section Page
- ------- ----
Section 1. Grant of Security............................................ 3
Section 2. Security for Obligations..................................... 3
Section 3. Representations and Warranties............................... 3
Section 4. Further Assurances........................................... 5
Section 5. As to Inventory.............................................. 6
Section 6. Insurance.................................................... 6
Section 7. Changes; Bailees............................................. 7
Section 8. Transfers and Other Liens.................................... 7
Section 9. Collateral Trustee Appointed Attorney-in-Fact................ 7
Section 10. Collateral Trustee May Perform............................... 8
Section 11. The Collateral Trustee's Duties.............................. 8
Section 12. Remedies..................................................... 8
Section 13. Indemnity and Expenses....................................... 9
Section 14. Amendments; Waivers.......................................... 10
Section 15. Notices; Etc................................................. 10
Section 16. Continuing Security Interest; Assignments under
the Guarantee and Agreement.................................. 10
Section 17. Release; Termination......................................... 10
Section 18. Execution in Counterparts.................................... 10
Section 19. Governing Law................................................ 10
Section 20. Intercreditor Agreement...................................... 10
Schedules I - Location, Chief Executive Office, Place Where Agreements
Are Maintained, Type Of Organization, Jurisdiction Of
Organization And Organizational Identification Number
Schedule II - Locations of Inventory
Schedule III - Changes in Name, Location, Etc.
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SECOND AMENDED AND RESTATED SECURITY AGREEMENT
SECOND AMENDED AND RESTATED SECURITY AGREEMENT, dated as of June 6,
2006 (as amended, amended and restated, supplemented or otherwise modified from
time to time, this "Agreement"), made by POLYONE CORPORATION, an Ohio
corporation (the "Grantor"), to U.S. BANK TRUST NATIONAL ASSOCIATION ("U.S.
Bank"), a national banking association (together with any successor collateral
trustee appointed pursuant to Article VII hereof, the "Collateral Trustee"), as
trustee for the Secured Holders (as hereinafter defined).
PRELIMINARY STATEMENTS.
1. The Geon Company, a Delaware corporation and predecessor in interest to the
Grantor ("Geon"), has made a guarantee dated as of December 22, 1997 (as
amended, supplemented or otherwise modified and in effect on the date hereof and
as the same may hereafter be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "Sunbelt Guarantee") in favor of each of the holders of the
Guaranteed Secured Senior Notes due 2017, Series G (as amended, supplemented or
otherwise modified and in effect on the date hereof and as the same may
hereafter be further amended, modified, extended, renewed, replaced, restated or
supplemented from time to time pursuant to the terms thereof, the "Sunbelt
Notes") issued by Sunbelt Cholor Alkali Partnership pursuant to the Note
Purchase Agreements, each dated December 22, 1997 between Sunbelt and the
purchasers of the Sunbelt Notes.
2. The Grantor has issued (i) 7 1/2% Debentures due 2015 (as amended,
supplemented or otherwise modified and in effect on the date hereof and as the
same may hereafter be further amended, modified, extended, renewed, replaced,
restated or supplemented from time to time pursuant to the terms thereof, the
"Geon Debentures") pursuant to that certain Indenture dated as of December 1,
1995 (as amended, supplemented or otherwise modified and in effect on the date
hereof and as the same may be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "Geon Indenture"), (ii) 8 7/8% Senior Notes due 2012 (as amended,
supplemented or otherwise modified and in effect on the date hereof and as the
same may hereafter be further amended, modified, extended, renewed, replaced,
restated or supplemented from time to time pursuant to the terms thereof, the
"2002 PolyOne Notes") pursuant to that certain Indenture dated as of April 23,
2002 (as amended, supplemented or otherwise modified and in effect on the date
hereof and as the same may be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "2002 PolyOne Indenture") and (iii) 10 5/8% Senior Notes due 2010
(as amended, supplemented or otherwise modified and in effect on the date hereof
and as the same may hereafter be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "2003 PolyOne Notes") pursuant to that certain Indenture dated as
of May 6, 2003 (as amended, supplemented or otherwise modified and in effect on
the date hereof and as the same may be further amended, modified, extended,
renewed, replaced, restated or supplemented from time to time pursuant to the
terms thereof, the "2003 PolyOne Indenture").
3. The Sunbelt Guarantee, the Sunbelt Notes, the Geon Indenture, the Geon
Debentures, the 2002 PolyOne Indenture, the 2002 PolyOne Notes, the 2003 PolyOne
Indenture and the 2003 PolyOne Notes, and each agreement and instrument
delivered by the Grantor pursuant to any of the foregoing, as the same may be
supplemented, amended or modified from time to time in accordance with the
provisions thereof, are collectively referred to herein as the "Existing
Indebtedness Agreements". Pursuant to the Sunbelt Guarantee, the Geon Indenture,
the 2002 PolyOne Indenture and the 2003 PolyOne Indenture, the Grantor has
agreed not to incur, and not to permit certain of its Subsidiaries to incur,
certain Liens (as therein defined) upon certain of its property or assets to
secure certain indebtedness without making
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effective provision whereby the obligations under the Existing Indebtedness
Agreements shall be secured equally and ratably with the indebtedness secured by
such Liens.
4. The Grantor has entered into that certain Amended and Restated Security
Agreement, dated as of May 6, 2003 (as amended to, but not including the date
hereof, the "Existing Security Agreement"), with the Collateral Trustee or its
predecessor, as corporate trustee, and Angelita Pena, an individual residing in
the State of New Jersey, or her predecessor, in each case not in an individual
capacity but as individual trustee.
5. Concurrently with the execution of this Agreement, the Grantor is entering
into a Guarantee and Agreement, dated as of June 6, 2006 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Guarantee and Agreement), with each of the financial institutions party
thereto, as beneficiary (collectively, the "Beneficiaries"), and Citicorp USA,
Inc., as administrative agent for the Beneficiaries thereunder (together with
any successor administrative agent appointed pursuant to Article VII of the
Guarantee and Agreement, the "Beneficiary Agent").
6. Concurrently with the execution of this Agreement, the Grantor is entering
into an amendment and restatement of that certain Collateral Trust Agreement,
dated as of May 6, 2003, among the Grantor and the Collateral Trustee or its
predecessor, as corporate trustee, and Angelita Pena, an individual residing in
the State of New Jersey, or her predecessor, in each case not in an individual
capacity but as individual trustee (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Collateral Trust
Agreement").
7. Concurrently with the execution of this Agreement, the Grantor is entering
into a an amendment and restatement to that certain Intercreditor Agreement,
dated as of May 6, 2003, among the Grantor, the Collateral Trustee or its
predecessor, as corporate trustee, and Angelita Pena, an individual residing in
the State of New Jersey, or her predecessor, in each case not in an individual
capacity but as individual trustee, and the other parties thereto (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Intercreditor Agreement"), pursuant to which the parties thereto shall have
agreed to certain matters with respect to, inter alia, the grant of security
interests hereunder.
8. This Agreement, the Collateral Trust Agreement, each Successor Collateral
Agreement (as defined in the Collateral Trust Agreement) and each other
agreement entered into by the Collateral Trustee at the direction of the
Required Representatives, including, without limitation, the Intercreditor
Agreement, are collectively referred to herein as the "Shared Collateral
Documents". The Shared Collateral Documents are intended to secure the Existing
Indebtedness Agreements, to the extent required to comply with the provisions of
the Existing Indebtedness Agreements, and the Guarantee and Agreement and it is
a condition to the occurrence of the Effective Date under the Guarantee and
Agreement that the Grantor shall have granted to the Collateral Trustee the
pledge and assignment of, and the lien and security interest in, certain
property and assets of the Grantor pursuant to the Shared Collateral Documents.
9. Terms defined in the Guarantee and Agreement or the Collateral Trust
Agreement and not otherwise defined in this Agreement are used in this Agreement
as defined in the Guarantee and Agreement or the Collateral Trust Agreement,
respectively. Further, unless otherwise defined in this Agreement or in the
Collateral Trust Agreement, terms defined in Article 9 of the UCC (as defined
below) are used in this Agreement as such terms are defined in such Article 9.
"UCC" means the Uniform Commercial Code as in effect, from time to time, in the
State of New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State
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of New York, "UCC" means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Beneficiaries to enter into the Guarantee and Agreement, the Grantor
hereby agrees with the Collateral Trustee for its benefit and in trust for the
ratable benefit of the Representatives and the Secured Holders to amend and
restate the Existing Security Agreement, effective as of the date hereof, as
follows:
Section 1. Grant of Security. The Grantor hereby assigns a security
interest in and pledges to the Collateral Trustee for its benefit and in trust
for the equal and ratable benefit of the Representatives and the Secured
Holders, and hereby grants to the Collateral Trustee for its benefit and in
trust for the equal and ratable benefit of the Representatives and the Secured
Holders a lien on and a security interest in, the Grantor's right, title and
interest in and to the following, in each case, as to each type of property
described below, whether now owned or hereafter acquired by the Grantor,
wherever located, and whether now or hereafter existing or arising
(collectively, the "Collateral"):
(a) all inventory in all of its forms, including, without limitation,
(i) all raw materials, work in process, finished goods and materials used
or consumed in the manufacture, production, preparation or shipping
thereof, (ii) goods in which the Grantor has an interest in mass or a joint
or other interest or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee) and (iii)
goods that are returned to or repossessed or stopped in transit by the
Grantor), and all accessions thereto and products thereof and documents
therefor, and all software related thereto, including, without limitation,
software that is imbedded in and is part of the inventory (any and all such
property being the "Inventory"); and
(b) all proceeds of the Collateral (including, without limitation,
proceeds that constitute property of the types described in clause (a) of
this Section 1 and, to the extent not otherwise included, (i) all payments
under insurance (whether or not the Collateral Trustee 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
and (ii) cash.
Notwithstanding anything else herein, the term "Collateral" shall not
include any Purchased Property (as such term is defined in the Intercreditor
Agreement) or any Post Default Property (as such term is defined in the
Intercreditor Agreement).
Section 2. Security for Obligations. This Agreement secures the
payment of all of the Secured Obligations of the Grantor. To the extent that the
security interests and Liens granted herein to, and the rights and benefits
herein conferred on, the Collateral Trustee on behalf of the Secured Holders
comprised of the Sunbelt Notes Holders, the Geon Debenture Holders, the 2002
PolyOne Notes Holders and the 2003 PolyOne Notes Holders, exceed the security
interests, Liens, rights and benefits required to be so granted or conferred by
the applicable Existing Indebtedness Agreement, such security interests, Liens,
rights and benefits shall be limited so as to provide to the Collateral Trustee,
on behalf of such Secured Holders and such Secured Holders only those security
interests, Liens, rights and benefits that are required by such Existing
Indebtedness Agreement.
Section 3. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) The Grantor is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization.
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(b) The execution, delivery and performance by the Grantor of this
Agreement and each other Transaction Document to which it is a party and
the consummation of the transactions contemplated hereby and thereby, are
within the Grantor's corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (i) the Grantor's charter
or code of regulations or (ii) law or any contractual restriction binding
on or affecting the Grantor.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for the due execution, delivery and performance by
the Grantor of this Agreement and each other Transaction Document to which
the Grantor is a party other than the filing of UCC financing statements in
the relevant jurisdiction.
(d) This Agreement and each other Transaction Document to which the
Grantor is a party, have been duly executed and delivered by the Grantor.
This Agreement and each other Transaction Document to which the Grantor is
a party are the legal, valid and binding obligations of the Grantor
enforceable against the Grantor in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and to general equitable
principles.
(e) The Grantor's exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth in Schedule I. The Grantor is located
(within the meaning of Section 9-307 of the UCC) and has its chief
executive office, in the state or jurisdiction set forth in Schedule I. The
information set forth in Schedule I with respect to the Grantor is true and
accurate in all respects. The Grantor has not previously changed its name,
location, chief executive office, place where it maintains its agreements,
type of organization, jurisdiction of organization or organizational
identification number from those set forth in Schedule I except as
disclosed in Schedule III.
(f) All of the Inventory is located at the places specified therefor
in Schedule II, as such Schedule II may be amended from time to time
pursuant to Section 5(a). The Grantor has not previously changed the
location of its Inventory except as set forth in Schedule III.
(g) The Grantor is the legal and beneficial owner of the Collateral
free and clear of any Lien, claim, option or right of others, except for
the security interest to be created under this Agreement or permitted under
the Guarantee and Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of such Collateral or
listing the Grantor or any trade name of the Grantor as debtor is on file
in any recording office, except such as may have been filed in favor of the
Collateral Trustee relating to the Transaction Documents or as otherwise
permitted under the Guarantee and Agreement.
(h) The Grantor has exclusive possession and control of the Inventory,
other than the Inventory that is (x) stored at any leased premises or
warehouse which leased premises or warehouse is so indicated on Schedule
II, as such Schedule II may be amended from time to time pursuant to
Section 5(a) or (y) in transit. In the case of Inventory located on leased
premises or in warehouses, no lessor or warehouseman of any premises or
warehouse upon or in which such Inventory is located has (i) issued any
warehouse receipt or other receipt in the nature of a warehouse receipt in
respect of any Inventory, (ii) issued any document for any of the
Inventory, (iii) to the knowledge of the Grantor, received notification of
any secured party's interest (other than the security interest to be
granted hereunder or previous notices sent by the Collateral Trustee) in
the Inventory or (iv) any Lien, claim or charge (based on contract, statute
or otherwise) on such Inventory.
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(i) Upon the filing of a financing statement with the Secretary of
State of the jurisdiction in which the Grantor is organized, all filings
and other actions necessary to perfect the security interest in the
Collateral created under this Agreement will have been duly made or taken
and will be in full force and effect, this Agreement creates in favor of
the Collateral Trustee for the benefit of the Representatives and the
Secured Holders a valid and, together with such filings and other actions
and except as otherwise permitted under the Guarantee and Agreement,
perfected first priority security interest in the Collateral, securing the
payment of the Secured Obligations.
(j) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is or will be required for (i) the grant by the Grantor of the
assignment, pledge and security interest granted hereunder or for the
execution, delivery or performance of this Agreement by the Grantor, (ii)
the perfection or maintenance of the assignment, pledge and security
interest created hereunder (including the first priority nature of such
assignment, pledge or security interest), except for the filing of
financing and continuation statements under the UCC, which financing
statements will, upon filing, have been duly filed and will be in full
force and effect, or (iii) the exercise by the Collateral Trustee of its
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of any portion of the Collateral by laws
affecting the offering and sale of securities generally.
Section 4. Further Assurances. (a) The Grantor agrees that from time
to time, at the expense of the Grantor, the Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the
Collateral Trustee may request, in order to perfect and protect any pledge or
security interest granted or purported to be granted by the Grantor hereunder or
to enable the Collateral Trustee to exercise and enforce their rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Grantor will promptly with respect to the
Collateral: (i) mark conspicuously each document included in Inventory and each
of its records pertaining to such Collateral with a legend, in form and
substance satisfactory to the Collateral Trustee, indicating that such document
or Collateral is subject to the security interest granted hereby; (ii) execute
or authenticate 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 Collateral Trustee may request, in order to perfect and
preserve the security interest granted or purported to be granted by the Grantor
hereunder; (iii) at the request of the Collateral Trustee, take all action to
ensure that the Collateral Trustee's security interest is noted on any
certificate of ownership related to any Collateral evidenced by a certificate of
ownership; and (iv) deliver to the Collateral Trustee evidence that all other
action that the Collateral Trustee may deem reasonably necessary or desirable in
order to perfect and protect the security interest created by the Grantor under
this Agreement has been taken.
(b) The Grantor hereby authorizes the Collateral Trustee to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral, in each case without the signature of the
Grantor, which shall be filed by the Collateral Trustee upon the receipt of an
instruction letter from the Beneficiary Agent requesting the taking of such
action and attaching the form of financing statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) The Grantor will furnish to the Collateral Trustee from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral
Trustee may reasonably request, all in reasonable detail.
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(d) The Grantor will hold and preserve its books and records
pertaining to any of the Collateral (including, without limitation, customer
lists, credit files, computer programs, owned software, printouts and other
owned computer materials and records) consistent with past practice, and will
permit representatives of the Collateral Trustee at any time during normal
business hours to inspect and make abstracts from such records and other
documents.
Section 5. As to Inventory. (a) The Grantor will keep the Inventory
(other than Inventory sold in the ordinary course of business) at the places
therefor specified on Schedule II or, upon 30 days' prior written notice to the
Collateral Trustee, at such other places designated by the Grantor in such
notice. Upon the giving of such notice, Schedule II shall be automatically
amended to add any new locations specified in the notice.
(b) The Grantor will cause the Inventory to be maintained and
preserved in accordance with current practices, and will forthwith, or in the
case of any loss or damage to any of such Inventory as soon as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection with the maintenance and preservation thereof
that are necessary or desirable to such end. The Grantor will promptly furnish
to the Collateral Trustee a statement respecting any loss or damage exceeding
$1,000,000 to any of the Inventory.
(c) The Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Inventory, except to the extent payment thereof is not required by
the Guarantee and Agreement. In producing its Inventory, the Grantor will comply
with all requirements of applicable law, including, without limitation, the Fair
Labor Standards Act.
Section 6. Insurance. (a) The Grantor will, at its own expense,
maintain insurance with respect to the Inventory in such amounts, against such
risks, in such form and with such insurers, as is usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Grantor operates. The policy of the Grantor for liability
insurance shall provide for all losses with respect to the Grantor's Inventory
to be paid on behalf of the Collateral Trustee and the Grantor as their
interests may appear, and each policy for property damage insurance shall
provide for all covered losses with respect to the Grantor's Inventory (except
for losses of less than $1,000,000 per occurrence) to be paid directly to the
Collateral Trustee. Such policy shall in addition (i) name the Grantor and the
Collateral Trustee as insured parties thereunder (without any representation or
warranty by or obligation upon the Collateral Trustee) as their interests may
appear, (ii) contain the agreement by the insurer that any loss with respect to
the Grantor's Inventory thereunder shall be payable to the Collateral Trustee
notwithstanding any action, inaction or breach of representation or warranty by
the Grantor, (iii) provide that there shall be no recourse against the
Collateral Trustee for payment of premiums or other amounts with respect thereto
and (iv) provide that at least 10 days' prior written notice of cancellation or
of lapse shall be given to the Collateral Trustee by the insurer. The Grantor
will, at the request of the Collateral Trustee, deliver to the Collateral
Trustee a certificate of insurance with respect to such insurance and, as often
as the Collateral Trustee may reasonably request, a report of a reputable
insurance broker with respect to such insurance.
(b) Reimbursement under any liability insurance maintained by the
Grantor pursuant to this Section 6 may be paid directly to the Person who shall
have incurred liability covered by such insurance.
(c) So long as no Actionable Default shall have occurred and be
continuing, all insurance payments received by the Collateral Trustee in
connection with any loss, damage or destruction of any Inventory will be
released by the Collateral Trustee to the Grantor. Upon the occurrence and
during the
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continuance of any Actionable Default, all insurance payments in respect of such
Inventory shall be paid to the Collateral Trustee and shall, in the Collateral
Trustee's sole discretion, (i) be released to the Grantor or (ii) be held as
additional Collateral hereunder or applied as specified in the Collateral Trust
Agreement.
Section 7. Changes; Bailees. (a) The Grantor will not change its name,
type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Schedule I without
first giving at least 30 days' prior written notice to the Collateral Trustee
and taking all action required by the Collateral Trustee for the purpose of
perfecting or protecting the security interest granted by this Agreement. The
Grantor will not become bound by a security agreement authenticated by another
Person (determined as provided in Section 9-203(d) of the UCC) without giving
the Collateral Trustee 30 days' prior written notice thereof and taking all
action required by the Collateral Trustee to ensure that the perfection and
first priority nature of the Collateral Trustee's security interest in the
Collateral will be maintained. If the Grantor does not have an organizational
identification number and later obtains one, it will forthwith notify the
Collateral Trustee of such organizational identification number.
(b) If any Collateral is at any time in the possession or control of a
lessor, warehouseman, bailee or agent, and if the Collateral Trustee so requests
at any time, the Grantor will (i) notify such lessor, warehouseman, bailee or
agent of the security interest created hereunder, (ii) instruct such lessor,
warehouseman, bailee or agent to hold all such Collateral solely for the
Collateral Trustee's account subject only to the Collateral Trustee's
instructions (which shall permit such Collateral to be removed by the Grantor in
the ordinary course of business until the Collateral Trustee notifies such
lessor, warehouseman, bailee or agent that an Actionable Default has occurred
and is continuing), (iii) use commercially reasonable efforts, to cause such
lessor, warehouseman, bailee or agent to authenticate a record acknowledging
that it holds possession of such Collateral for the Collateral Trustee's benefit
and shall act solely on the instructions of the Collateral Trustee without the
further consent of the Grantor or any other Person, and (iv) make such
authenticated record available to the Collateral Trustee, subject to Section
5.01(j) of the Guarantee and Agreement.
Section 8. Transfers and Other Liens. The Grantor agrees that it will
not (i) sell, assign or otherwise dispose of, or grant any option with respect
to, any of the Collateral, other than sales of Inventory in the ordinary course
of business and sales, assignments and other dispositions of Collateral, and
options relating to Collateral, permitted under the terms of the Guarantee and
Agreement, or (ii) create or suffer to exist any Lien upon or with respect to
any of the Collateral except for the pledge, assignment and security interest
created under this Agreement and Liens permitted under the Guarantee and
Agreement.
Section 9. Collateral Trustee Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Collateral Trustee the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time upon the occurrence
and during the continuance of an Actionable Default in the Collateral Trustee's
discretion, to take any action and to execute any instrument that the Collateral
Trustee may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) in consultation with the Grantor, to obtain and adjust insurance
required to be paid to the Collateral Trustee pursuant to Section 6;
(b) in consultation with the Grantor when appropriate, to ask for,
demand, collect, sue for, recover, compromise, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of
the Collateral;
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(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above;
and
(d) in consultation with the Grantor when appropriate, to file any
claims or take any action or institute any proceedings that the Collateral
Trustee may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Collateral Trustee
with respect to any of the Collateral.
Section 10. Collateral Trustee May Perform. If the Grantor fails to
perform any agreement contained herein, the Collateral Trustee may, as the
Collateral Trustee deem necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, themselves perform, or cause performance
of, such agreement, and the expenses of the Collateral Trustee incurred in
connection therewith shall be payable by the Grantor under Section 13.
Section 11. The Collateral Trustee's Duties. (a) The powers conferred
on the Collateral Trustee hereunder are solely to protect the Representatives
and the Secured Holders' 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 their possession and the accounting for moneys actually received
by them hereunder, the Collateral Trustee shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Representative or Secured Holder has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Collateral Trustee shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in their possession if
such Collateral is accorded treatment substantially equal to that which they
accord their own property. The parties hereto acknowledge and agree that in
acting under this Agreement the Collateral Trustee shall be entitled to all
rights and benefits accorded to them under the Collateral Trust Agreement.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Trustee may from time to time, when the Collateral Trustee deems it
to be reasonably necessary, appoint one or more subagent (each a "Subagent") for
the Collateral Trustee hereunder with respect to all or any part of the
Collateral. In the event that the Collateral Trustee so appoints any Subagent
with respect to any Collateral, (i) the assignment and pledge of such Collateral
and the security interest granted in such Collateral hereunder shall be deemed
for purposes of this Agreement to have been made to such Subagent, in addition
to the Collateral Trustee, for the ratable benefit of the Representatives and
the Secured Holders, as security for the Secured Obligations of the Grantor,
(ii) such Subagent shall automatically be vested, in addition to the Collateral
Trustee, with all rights, powers, privileges, interests and remedies of the
Collateral Trustee hereunder with respect to such Collateral, and (iii) the term
"Collateral Trustee," when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Trustee with respect to
such Collateral, shall include such Subagent; provided, however, that no such
Subagent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Collateral Trustee.
Section 12. Remedies. Notwithstanding any other provision of this
Agreement, any exercise of remedies by the Collateral Trustee pursuant to this
Agreement shall be subject to the terms of the Intercreditor Agreement, for as
long as it shall remain in effect. If any Actionable Default shall have occurred
and be continuing:
(a) The Collateral Trustee may, with the consent of the Required
Representatives, and shall at the request of the Required Representatives
(as provided in the Collateral Trust
8
Agreement), exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to them, all
the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may:
(i) require the Grantor to, and the Grantor hereby agrees that it will at
its expense and upon request of the Collateral Trustee forthwith, assemble
all or part of the Collateral as directed by the Collateral Trustee and
make it available to the Collateral Trustee at a place and time to be
designated by the Collateral Trustee that is reasonably convenient to all
parties and reasonable given the nature of the Collateral ; (ii) 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 Collateral
Trustee's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Collateral Trustee may deem commercially
reasonable; (iii) occupy any premises owned or leased by the Grantor where
the Collateral or any part thereof is assembled or located for a reasonable
period in order to effectuate their rights and remedies hereunder or under
law, without obligation to the Grantor in respect of such occupation; and
(iv) exercise any and all rights and remedies of the Grantor under or in
connection with the Collateral, or otherwise in respect of the Collateral,
including, without limitation, those set forth in Section 9-607 of the UCC.
The Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to the Grantor 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 Collateral Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Trustee 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.
(b) Any cash held by or on behalf of the Collateral Trustee and all
cash proceeds received by or on behalf of the Collateral Trustee 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 Collateral Trustee, be held
by the Collateral Trustee as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Trustee pursuant to Section 13) in whole or in part by the Collateral
Trustee for the ratable benefit of the Representatives and the Secured
Holders against, all or any part of the Secured Obligations, as set forth
in Section 5.01 of the Collateral Trust Agreement.
(c) All payments received by the Grantor in respect of the Collateral
shall be received in trust for the benefit of the Collateral Trustee, shall
be segregated from other funds of the Grantor and shall be forthwith paid
over to the Collateral Trustee in the same form as so received (with any
necessary indorsement).
Section 13. Indemnity and Expenses. (a) The Grantor agrees to
indemnify, defend and save and hold harmless the Collateral Trustee, each
Representative and each Secured Holder and each of their Affiliates and their
respective officers, directors, employees, agents and advisors (each, an
"Indemnified Party") from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent such claim,
damage, loss, liability or expense resulted from such Indemnified Party's gross
negligence or willful misconduct.
(b) The Grantor will upon demand pay to the Collateral Trustee the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Trustee may incur in connection with (i) the administration of
9
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 Collateral Trustee, the
Representatives or the other Secured Holders hereunder or (iv) the failure by
the Grantor to perform or observe any of the provisions hereof.
Section 14. Amendments; Waivers. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Collateral Trustee, the Representatives or
any other Secured Holder to exercise, and no delay in exercising any right
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
Section 15. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
in the case of any Representative or the Collateral Trustee, addressed to each
at their respective address specified in the Collateral Trust Agreement and, in
the case of the Grantor, at 33587 Walker Road, Avon Lake, Ohio 44012, Attention:
Treasurer; or, as to any party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and other
communications shall be effective upon receipt. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or Schedule hereto shall be effective as delivery of an original
executed counterpart thereof.
Section 16. Continuing Security Interest; Assignments under the
Guarantee and Agreement. This Agreement creates a continuing security interest
in the Collateral and shall (a) remain in full force and effect until all of the
Collateral is released and this Agreement is terminated in accordance with
Section 8.02 of the Collateral Trust Agreement, (b) be binding upon the Grantor,
its successors and assigns and (c) inure, together with the rights and remedies
of the Collateral Trustee hereunder, to the benefit of the Collateral Trustee,
the Representatives on behalf of themselves and on behalf of the Secured Holders
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Secured Holder may assign or
otherwise transfer all or any portion of its rights and obligations under the
applicable Secured Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Secured Holder herein or otherwise, in each case as provided in of the
applicable Secured Agreement.
Section 17. Release; Termination. All or any portion of the Collateral
shall be released by the Collateral Trustee solely on the terms and subject to
the conditions set forth in Article VIII of the Collateral Trust Agreement.
Section 18. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
Section 19. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Section 20. Intercreditor Agreement. In the event of any conflict
between the provisions of this Agreement and the provisions of the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall govern.
10
IN WITNESS WHEREOF, the Grantor has executed this Agreement or caused
this Agreement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
Grantor: POLYONE CORPORATION,
an Ohio corporation, as Grantor
By
-------------------------------------
Title:
---------------------------------
Schedule I to the
Amended and Restated Security Agreement
LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION,
JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER
Chief Executive
Office Type of Type of Jurisdiction of Organizational
Grantor Location Organization Organization Organization I.D. No.
- ------- -------- ------------------ ------------ --------------- --------------
PolyOne Ohio 33587 Walker Road, Corporation Ohio 34-1730488
Corporation Avon Lake, Ohio
44012
Schedule I - 1
Schedule II to the
Amended and Restated Security Agreement
LOCATIONS OF INVENTORY
[ATTACHED]
Schedule II - 1
Schedule III to the
Amended and Restated Security Agreement
CHANGES IN NAME, LOCATION, ETC.
(1) Changes in the Grantor's Name (including new grantor with a new name and
names associated with all predecessors in interest of the Grantor):
PolyOne Corporation was formed on August 31, 2000 upon the
consolidation of The Geon Company, a Delaware corporation ("Geon") and
M.A. Hanna Company, a Delaware corporation ("Hanna"). Geon operated
under its name from 1993 and Hanna operated under its name from 1985,
until consolidation into PolyOne Corporation.
(2) Changes in the Grantor's Location:
None.
(3) Changes in the Grantor's Chief Executive Office:
None.
(4) Changes in Location of Inventory:
None.
(5) Changes in the Type of Organization:
None.
(6) Changes in the Jurisdiction of Organization:
None.
(7) Changes in the Organizational Identification Number:
None.
Schedule III - 1