EXHIBIT 10.5
FORM OF
UNIVERSAL PACKAGING SYSTEMS, INC.
SECURED NOTE
$__________ June 10, 1999
Section 1. General.
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a. UNIVERSAL PACKAGING SYSTEMS, INC., a California corporation
the "Company"), for value received, hereby promises to pay Jafra Cosmetics
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International, Inc., a Delaware corporation (the "Holder") (or such person's
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permitted transferees), the aggregate principal amount of______Dollars
($________) (the "Principal Amount") plus interest as set forth below.
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Capitalized terms used herein and not otherwise defined shall have the meanings
given to such terms in the Asset Purchase Agreement dated as of June 10, 1999
between the Holder and the Company (the "Asset Purchase Agreement").
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b. This Note (this "Note") shall accrue interest at a rate per
annum of eight percent (8%) with respect to the unpaid Principal Amount plus any
accrued but unpaid interest thereon (the "Interest"). Interest shall be paid,
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together with principal, in 36 equal monthly installments of $_____ commencing
on January 1, 2000, in such coin or currency of the United States of America as
at the time of payment shall be legal tender therein for the payment of public
and private debts. The Company agrees to pay additional interest at the rate
of____% per annum on any overdue principal ten days after due date and (to the
full extent permitted by applicable law) on any overdue Interest from the due
date thereof until the obligation of the Company with respect to the payment
thereof shall be discharged. Interest shall be calculated on the basis of a 365
(or 366, as applicable)-day year and the actual number of days elapsed.
Section 2. Prepayments. Company may, at its sole discretion, at any
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time prepay this Note, without penalty or premium, in whole or in part, together
with all accrued and unpaid interest on the principal amount so prepaid to the
date of such prepayment.
Section 3. Grant of Security Interest. As collateral security for the
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prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations (defined below), the
Company hereby grants to the Holder a security interest in all of the Assets
(collectively "Collateral"), and all products and proceeds of the foregoing
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Collateral. For the purposes of this Note, the term "proceeds" includes
whatever is receivable or received when Collateral or proceeds is sold,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without limitation, all rights to
payment, including return premiums, with respect to any insurance relating
thereto. For the purpose of this Note, "Obligations" means the collective
reference to all obligations and liabilities of the Company in respect of the
unpaid Principal Amount of, and Interest on (including, without limitation,
interest accruing after the maturity of this Note and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Company, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), this Note.
Section 4. Power of Attorney. Only after the occurrence of and during
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the continuation of an Event of Default, the Company shall irrevocably appoint
the Holder as the Company's attorney-in-fact to exercise such rights and powers
as the Company might exercise with respect to the Collateral, including, without
limitation, the right to (a) collect by legal proceedings or otherwise and
endorse, receive and receipt for all dividends, interest, payments, proceeds and
other sums and property now or hereafter payable on or on account of the
Collateral; (b) enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender, accept,
hold or apply other property in exchange for the Collateral; (c) insure, process
and preserve the Collateral; (d) transfer the Collateral to its own or its
nominee's name; and (e) make any compromise or settlement, and take any action
it deems advisable, with respect to the Collateral. The Company agrees to
reimburse the Holder upon demand for any costs and expenses, including, without
limitation, attorneys' fees, the Holder may incur while acting as the Company's
attorney-in-fact hereunder, all of which costs and expenses are included in the
Obligations secured hereby.
Section 5. Further Documents. The Company agrees to execute and
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deliver or to cause to be executed and delivered to the Holder from time to time
such UCC-1 financing statements as the Holder may request, and such confirmatory
or supplementary security agreements, financing statements and other documents,
instruments or agreements as the Holder may reasonably request, which are in the
Holder's judgment necessary or desirable to obtain for the Holder the benefit of
the this Note and the Collateral.
Section 6. Covenants.
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For as long as any amounts are owing to the Holder under this Note:
a. The Company shall maintain the assets to be sold to the
Company pursuant to the Asset Purchase Agreement (the "Assets") and not sold by
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the Company with the permission of Jafra, in good working order and condition,
reasonable wear and tear excepted;
b. The Company shall use the Assets for the manufacture,
packaging and sale of only the Holder's products, and not for or in connection
with the manufacture, packaging or sale of products of any other person or
entity or for any other purpose; if it should interfere with Holder's
requirements.
c. The Company shall promptly give notice to the Holder of: (i)
the occurrence of any Event of Default (defined below) under Section 9 hereof;
(ii) any default or event of default under any contractual obligation of the
Company or any litigation, investigation or proceeding between the Company any
other party which, in either case, if not cured or adversely determined would
have a material adverse effect on the business, operations, property
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or condition (financial or otherwise) of the Company or the enforceability of
this Note (a "Material Adverse Effect"); or (iii) the occurrence of any event
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having a Material Adverse Effect;
d. The Company shall keep and maintain at its own cost and
expense reasonably satisfactory and complete records of the Collateral,
including, without limitation, records of all payments received and all credits
granted with respect to the Collateral, and shall mark such records to evidence
this Note and the liens and the security interests created hereby. For the
Holder's further security, the Holder shall have a security interest in all of
the Company's books and records pertaining to the Collateral;
e. The Company shall, upon reasonable written advance notice to
the Company and at reasonable intervals, or at any time and from time to time
after the occurrence and during the continuation of an Event of Default (as
defined below), give the Holder reasonable access during normal business hours
to all the books, correspondence and records of the Company relating to the
Assets, and the Holder and its representatives may examine the same, and to the
extent reasonable take extracts therefrom and make photocopies thereof. The
Company agrees to render to the Holder, at the Company's reasonable cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto. The Holder and its representatives shall also have the right,
upon reasonable advance notice to the Company to enter during normal business
hours into and upon any premises where any of the Assets are located for the
purpose of inspecting the same, observing their use or otherwise protecting the
Holder's interests therein.
f. The Company shall not create, incur, assume or suffer to
exist any lien upon any of the Assets (other than the liens of the Holder as
permitted have under and under the Asset Purchase Agreement); and
g. The Company shall not convey, sell, lease, assign, transfer
or otherwise dispose of any of the Assets without the prior written consent of
the Holder, which the Holder may withhold in its sole discretion.
Section 7. Replacement of Note.
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Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note and, in case of loss, theft
or destruction, of indemnity reasonably satisfactory to it, or, in the case of
mutilation or at the request of the Holder, upon surrender and cancellation of
this Note, and in all cases upon reimbursement to the Company of all reasonable
expenses incidental thereto, the Company will make and deliver a new Note of
like tenor in lieu of this Note. A holder, through the Holder, may also request
that this Note be exchanged for one or more Notes of like tenor in the same
aggregate principal amount as such Note being exchanged and appropriate notation
on any newly issued Note to indicate which holders have an interest therein.
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Section 8. Amendments and Waivers.
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No covenant, agreement or condition contained in this Note may be
amended or waived (either generally or in a particular instance and either
retroactively or prospectively) without the prior written consent of the Holder
(in its sole discretion) and the Company. Any such amendment or waiver shall be
binding upon each of the Holder, each future holder of this Note and the
Company. Upon the request of the Company, the Holder or any holder of this Note
shall submit this Note to the Company so that this Note may be marked to
indicate such amendment or waiver, and any Note issued thereafter shall bear a
similar notation referring to any such amendment or continuing waiver.
Section 9. Events of Default.
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a. In case of the occurrence of any of the following events (an
"Event of Default"):
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i. default shall be made in the payment of the principal
of or interest on this Note, when and as the same shall become due and
payable, whether at the due date thereof or by acceleration thereof or
otherwise and such default, in the case of interest due, shall continue
unremedied for ten (10) Business Days after written notice from the holder
of this Note to the Company of such default;
ii. the Company shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator for itself or all or a
substantial part of its property, (B) admit in writing its inability to pay
its debts as they mature, (C) make a general assignment for the benefit of
creditors, (D) be adjudicated a bankrupt or insolvent, (E) file a voluntary
petition in bankruptcy or petition or answer seeking a reorganization or an
arrangement with its creditors, (F) take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute or file an answer admitting the material
allegations of a petition filed against it in any proceeding under any such
law or (G) take any corporate definitive action for the purpose of
effecting any of the foregoing;
iii. an order, judgment or decree shall be entered, without
the application, approval or consent of the Company, by any court of
competent jurisdiction, approving a petition seeking reorganization of the
Company or all or a substantial part of the assets of the Company, or
appointing a receiver, trustee or liquidator of the Company, and such
order, judgment or decree shall continue unstayed and in effect for any
period of 60 days;
iv. any material breach by the Company of any material
provision of this Note (other than those described in subpart (i) of this
Section 6(a)), the Asset Purchase Agreement or that certain Manufacturing
Agreement dated as of June 10, 1999 between the Holder and the Company, and
the failure to cure such breach within the
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applicable grace period, or if none is specified, within thirty (30) days
after written notice from the Holder to the Company of such default; or
v. the Company shall default in any payment of principal
or interest of any indebtedness or contingent obligation of the Company
beyond the period of grace provided in the instrument or agreement under
which such indebtedness or contingent obligation was created;
then, the Holder may declare this Note to be forthwith due and payable,
whereupon this Note shall become forthwith due and payable, both as to principal
and interest, without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived; provided that in the case of any such
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declaration based upon a default in the payment of the principal of this Note,
the Holder shall provide the Company with not less than five (5) Business Days'
prior written notice thereof.
b. In case any one or more of the Events of Default shall have
occurred and be continuing, the holder of this Note may proceed to protect and
enforce its rights either by suit in equity and/or by action at law, whether for
the specific performance of any covenant or agreement contained in this Note or
in aid of the exercise of any power granted in this Note, or proceed to enforce
the payment of this Note or to enforce any other legal or equitable right of a
holder of this Note.
c. No remedy conferred hereunder is intended to be exclusive of
any other remedy and each and every such remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or hereafter existing at law
or in equity or by statute or otherwise. No course of dealing between the
Company and the holder of this Note or any delay on the part of the holder of
this Note in exercising its rights hereunder shall operate as a waiver of any
rights of such holder.
d. The Company hereby waives notice of protest, dishonor,
intent to accelerate, acceleration and all other notices of any type or
character, demand, presentment for payment, protest, diligence in collecting or
bringing suit and notice, other than required service, with respect to the
filing of suit for the purpose of fixing liability.
Section 10. Extension of Maturity.
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Should the principal of and interest on this Note become due and
payable on other than a Business Day, the maturity hereof shall be extended to
the next succeeding Business Day, and principal and interest shall be payable
thereon at the rate per annum herein specified during such extension.
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Section 11. Successors and Assigns.
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The provisions of this Note shall be binding upon and inure to the
benefit of the Company and its successors and permitted assigns, and to the
holder and its successors and permitted assigns and their respective heirs,
executors, administrators and duly appointed legal representatives who shall
succeed to the holder's rights and obligations in, to and under this Note.
Section 12. Notices.
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All notices, demands or other communications hereunder shall be in
writing and shall be deemed to have been duly given on the date of delivery, if
delivered in person, and on the date of receipt, if sent by facsimile
transmission (with telephonic and mail confirmation) or by recognized overnight
carrier service (e.g., Federal Express or United Parcel Service), and three (3)
business days after mailing by United States mail, certified or registered with
return receipt requested, postage prepaid, addressed to the parties at their
addresses set forth below:
(i) if to Holder to:
Jafra Cosmetics International, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Vice President, Manufacturing
Fax: 000-000-0000
with a copy to:
Office of the General Counsel
Fax: 000-000-0000
(ii) if to the Company:
Universal Packaging Systems, Inc.
0000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxxxx Liberal
Fax: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxx, Xxxxx & Xxxxx, ALC
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
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Fax: 000-000-0000
Either party may change its address from time to time for purposes of
notice or other communication hereunder by giving notice to the other party in
accordance with this section.
Section 13. Governing Law.
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THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT
OF LAW PROVISION OR RULE (WHETHER IN THE STATE OF CALIFORNIA OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA.
Section 14. Interest Deficit.
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If the provisions of this Note would at any time require payment by
the Company to the holder of any amount of interest in excess of the maximum
amount then permitted by applicable law, the interest payments to the holder
shall be reduced but only to the extent necessary so that such holder shall not
receive interest in excess of such maximum amount. If, as a result of the
foregoing, a holder shall receive interest payments under the Note in an amount
less than the amount otherwise provided hereunder, such deficit (hereinafter
called the "Interest Deficit") will, to the fullest extent permitted by
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applicable law, cumulate and will be carried forward (without interest) until
the payment in full of this Note or such earlier time as it may be paid.
Interest otherwise payable to the holder under the Note for any subsequent
period shall be increased by the maximum amount of the Interest Deficit that may
be so added without causing such holder to receive interest in excess of the
maximum amount then permitted by the law applicable thereto.
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IN WITNESS WHEREOF, the Company has duly executed and delivered this
Note as of the date first written above.
UNIVERSAL PACKAGING SYSTEMS, INC.
By:______________________
Name:
Title:
By:______________________
Name:
Title:
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