Special Security Agreement: Definition & Sample

A special security agreement is a type of contract between lenders and borrowers that provides for the lender to take possession of property used as collateral if the borrower fails to make payments. The loan agreements are also known as “UCC-1 Financing Statements” in some states. A special security agreement is a type of contract between lenders and borrowers that provides for the lender to take possession of property used as collateral if the borrower fails to make payments. These loan agreements are also known as “UCC-1 Financing Statements” in some states, but they can vary state by state so it is important you speak with your attorney about what will work best for your business before signing any contracts or agreements.

Common Sections in Special Security Agreements

Below is a list of common sections included in Special Security Agreements. These sections are linked to the below sample agreement for you to explore.

Special Security Agreement Sample

LYONDELL CHEMICAL COMPANY,

as a Grantor and as Borrowers’ Agent

EQUISTAR CHEMICALS, LP,

HOUSTON REFINING LP,

LYONDELLBASELL ACETYLS LLC,

LYONDELLBASELL INDUSTRIES, N.V.,

THE OTHER GRANTORS FROM TIME TO TIME PARTY HERETO,

as Administrative Agent

TABLE OF CONTENTS

AGREEMENT dated as of April 30, 2010 among LYONDELL CHEMICAL COMPANY, a Delaware corporation, as a Grantor and as Borrowers’ Agent; EQUISTAR CHEMICALS, LP, a Delaware limited partnership, HOUSTON REFINING LP, a Delaware limited partnership, LYONDELLBASELL ACETYLS LLC, a Delaware limited liability company and LYONDELLBASELL INDUSTRIES, N.V., a naamloze vennootschap (a public limited liability company) formed under the laws of The Netherlands, and the other Grantors party hereto, each as a Grantor; and CITIBANK, N.A., as Administrative Agent.

WHEREAS, each Borrower has entered into the Credit Agreement described in Section 1 hereof, pursuant to which such Borrower intends to borrow funds and obtain letters of credit for the purposes set forth therein;

WHEREAS, each Borrower has guaranteed the foregoing obligations of each other Borrower;

WHEREAS, each Borrower is willing to secure its obligations under the Credit Agreement, by granting Liens on its assets to the Administrative Agent as provided in the Collateral Documents;

WHEREAS, each Guarantor is an affiliate of the Borrowers (or, in the case of any Guarantor who is a Borrower, each other Borrower), will derive substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement and has guaranteed the foregoing obligations of each Borrower (or, in the case of any Guarantor who is a Borrower, each other Borrower) and is willing to secure its guarantee thereof by granting Liens on its assets to the Administrative Agent as provided in the Collateral Documents;

WHEREAS, the Lenders and the Fronting Banks are not willing to make loans or issue or participate in letters of credit under the Credit Agreement unless (i) the foregoing obligations of each Borrower are secured as described above and (ii) each guarantee thereof is secured by Liens on assets of the relevant Guarantor as provided in the Collateral Documents;

WHEREAS, concurrently herewith the Grantors are entering into certain other security agreements with respect to the Collateral to secure their obligations under the Senior Term Loan Facility, the Senior Notes and the Plan Roll-Up Notes and priority under each of these security agreements will be regulated by the Intercreditor Agreement;

WHEREAS, subject to the Intercreditor Agreement, upon any foreclosure or other enforcement of the Collateral Documents, the net proceeds of the relevant Collateral are to be received by or paid over to the Administrative Agent and applied as provided herein;

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1 . Definitions .

(a) Terms Defined in Credit Agreement . Capitalized terms used in this Agreement but not defined in subsection (b) or (c) of this Section 1 have, as used herein, the respective meanings provided for in the Credit Agreement. The rules of construction specified in Sections 1.02 and 1.05 of the Credit Agreement also apply to this Agreement.

(b) Terms Defined in UCC . As used herein, each of the following terms has the meaning specified in the UCC:

Certificate of Title

Tangible Chattel Paper

9-102

(c) Additional Definitions . The following additional terms, as used herein, have the following meanings:

“ Collateral ” means the Non-Company Collateral and the Company Collateral.

“ Control ” has the meaning specified in UCC Section 8-106, 9-104 or 9-106, as may be applicable to the relevant Collateral.

“ Copyright License ” means any agreement now or hereafter in existence granting to any Grantor, or pursuant to which any Grantor grants to any other Person, any right to use, copy, reproduce, distribute, prepare derivative works, display or publish any records or other materials on which a Copyright is in existence or may come into existence.

“ Copyrights ” means all the following: (i) all copyright rights in any published or unpublished work of authorship, whether copyrightable or not, databases and other compilations of information, and user manuals and other training documentation related thereto, copyrights therein and thereto arising under the laws of the United States or any other country, (ii) all registrations and applications for copyrights under the laws of the United States or any other country, including registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, (iii) all renewals of any of the foregoing, (iv) all claims for, and rights to sue for, past or future infringements of any of the foregoing, and (v) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof.

“ Credit Agreement ” means the Credit Agreement dated as of April 8, 2010 among the Company, the Borrowers, the lenders party thereto, Citibank, N.A., as Administrative Agent and Co-Collateral Agent, Wells Fargo Capital Finance, LLC, as Co-Collateral Agent and the other agents and parties thereto.

“ Excluded Collateral ” means, to the extent expressly excluded from the collateral securing the Plan Roll-Up Notes, the Senior Notes and the Senior Term Loan Facility, (i) any fee-Owned Real Property with a value of less than $25 million and all Real Property leasehold interests (other than interest in ground leases agreed on the Funding Date), (ii) motor vehicles and other assets covered by a Certificate of Title, (iii) letter of credit rights, commercial tort claims and deposit accounts, other than (x) the Restricted Accounts and (y) such letter of credit rights, commercial tort claims and deposit accounts that constitute Proceeds or Supporting Obligations of any Collateral, (iv) the Equity Interests of any

Unrestricted Subsidiary, joint venture or of any special purpose subsidiary whose material assets are comprised solely of the Equity Interests of such joint venture, where the pledge of such Equity Interests would be prohibited by any applicable contractual requirement pertaining to such joint venture, (v) Equity Interests in each of (a) PO Offtake, LP and (b) POSM II Properties Partnership, L.P., in each case to the extent that and only for so long as the pledge of such Equity Interests is prohibited by the terms of the organizational documents of such entity or any joint venture agreement to which such entity is subject, (vi) any Equipment owned by a Grantor that is subject to a purchase money security interest (within the meaning of Section 9-103 of the UCC) so long as the contract or other agreement in which such security interest is granted prohibits the creation of any other security interest on such, (vii) any contract, lease, license, Intellectual Property or other document so long as (and only to the extent that) the grant of a security interest therein would (a) violate a restriction in such contract, lease, license, Intellectual Property or documents or under any law, regulation, permit, order or decree of any Governmental Authority, unless and until all required consents shall have been obtained (for the avoidance of doubt, the restrictions described herein shall not include negative pledges or similar undertakings in favor of a lender or other financial counterparty), (b) invalidate or terminate such contract, lease, instrument, license, Intellectual Property, or other document or the rights therein or thereunder, or (c) give any other party in respect of any such Intellectual Property, or expressly give any other party in respect of any such contract, lease, instrument, license or other document, the right to invalidate or terminate such contract, lease, instrument, license, Intellectual Property, or other document or its obligations thereunder and (viii) any Equity Interests to the extent that, and for so long as, such a pledge of such Equity Interests would violate law applicable thereto; provided, however, that the limitations set forth in clause (vii) above shall not affect, limit, restrict or impair the grant by a Grantor of a security interest pursuant to this Agreement in any such Collateral to the extent that an otherwise applicable prohibition or restriction on such grant is rendered ineffective by any applicable law, including the UCC.

“ Grantors ” means each Borrower and the Guarantors.

“ Intellectual Property ” means all intellectual and industrial property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other confidential or proprietary intellectual property, software and all registrations, additions and improvements to, and books and records describing or used in connection with, any of the foregoing.

“ License ” means any Patent License, Trademark License, Copyright License or other license or sublicense agreement relating to Intellectual Property to which any Grantor is a party.

“ Original Grantor ” means any Grantor that grants a Lien on any of its assets hereunder on the Funding Date.

“ own ” refers to the possession of sufficient rights in property to grant a security interest therein as contemplated by UCC Section 9-203, and “ acquire ” refers to the acquisition of any such rights.

“ Patent License ” means any agreement now or hereafter in existence granting to any Grantor, or pursuant to which any Grantor grants to any other Person, any right with respect to any Patent or any invention now or hereafter in existence, whether patentable or not, whether a patent or application for patent is in existence on such invention or not, and whether a patent or application for patent on such invention may come into existence or not.

“ Patents ” means (i) inventions, patentable designs, all letters patent and design letters patent of the United States or any other country and all applications for letters patent or design letters patent of the United States or any other country, including applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, and all reissues, divisions, continuations, continuations in part, revisions and extensions of any of the foregoing, (ii) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (iii) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof.

“ Permitted Liens ” means (i) the Transaction Liens and (ii) any other Liens on the Collateral permitted to be created or assumed or to exist pursuant to Section 7.06 of the Credit Agreement.

“ Personal Property Collateral ” means all property included in the Collateral except Real Property Collateral.

“ Pledged ”, when used in conjunction with any type of asset, means at any time an asset of such type that is included (or that creates rights that are included) in the Collateral at such time. For example, “Pledged Equity Interest” means an Equity Interest that is included in the Collateral at such time.

“ Post-Petition Interest ” means any interest that accrues after the commencement of any case, proceeding or other action, relating to the bankruptcy, insolvency or reorganization of any one or more of the Grantors (or would accrue but for the operation of applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable as a claim in any such proceeding.

“ Proceeds ” means all proceeds of, and all other profits, products, rents or receipts, in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of, or other realization upon, any Collateral, including all claims of the relevant Grantor against third parties for loss of, damage to or destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any Collateral, and any condemnation or requisition payments with respect to any Collateral.

“ Real Property Collateral ” means all real property (including leasehold interests in real property) included in the Collateral.

“ Related Parties ” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employers, agents and advisors of such Person and such Person’s Affiliates.

“ Restricted Account ” has the meaning specified in the Credit Agreement.

“ Secured Agreement ”, when used with respect to any Secured Obligation, refers collectively to each instrument, agreement or other document that sets forth obligations of any Borrower, obligations of a guarantor and/or rights of the holder with respect to such Secured Obligation.

“ Secured Guarantee ” means, with respect to each Guarantor, its guarantee of the Secured Obligations under the Guarantee Agreement (including any guarantee supplement delivered pursuant to Section 16 thereof).

“ Secured Obligations ” means the “Obligations” under and as defined in the Credit Agreement.

“ Secured Parties ” means the holders from time to time of the Secured Obligations.

“ Security Agreement Supplement ” means a Security Agreement Supplement, substantially in the form of Exhibit A, signed and delivered to the Administrative Agent for the purpose of adding a Subsidiary as a party hereto pursuant to Section 16 and/or adding additional property to the Collateral.

“ Trademark License ” means any agreement now or hereafter in existence granting to any Grantor, or pursuant to which any Grantor grants to any other Person, any right to use any Trademark.

“ Trademarks ” means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, service marks, logos, brand names, trade dress, designs and all other source or business identifiers, and the rights in any of the foregoing which arise under applicable law, (ii) the goodwill of the business symbolized thereby or associated with each of them, (iii) all registrations and applications in connection therewith and all renewals of any of the foregoing, including registrations and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, including those described in Schedule 11(a) to the Perfection Certificate, (iv) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (v) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof.

“ Transaction Liens ” means the Liens granted by the Grantors under the Collateral Documents.

“ 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 Transaction Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than 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.

SECTION 2 . Grant of Transaction Liens .