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EXHIBIT 10.139
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of December 4, 1996 among Cosmar
Corporation, a Delaware corporation (the "Borrower"), Renaissance Cosmetics,
Inc., a Delaware corporation (the "Parent Guarantor"), Xxxx Perfumes Corp.,
Great American Cosmetics, Inc., Houbigant (1995) Limited/Houbigant (1995)
Limitee and MEM Company, Inc. (together with the Parent Guarantor, the
"Guarantors") and CIBC Wood Gundy Securities Corp., as collateral agent for the
lenders or other financial institutions or entities party, as lenders, to the
Credit Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Agent").
The Borrower, the Guarantors and certain lenders are parties
to a Credit Agreement dated as of December [ ], 1996 (as modified and
supplemented and in effect from time to time, the "Credit Agreement"),
providing, subject to the terms and conditions thereof, for extensions of credit
to be made by said lenders to the Borrower.
To induce said lenders to enter into the Credit Agreement and
to extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Debtor (as
hereinafter defined) has agreed to pledge, mortgage and grant a security
interest in the Pledged Collateral (as hereinafter defined) as security for the
Secured Obligations (as hereinafter defined). Accordingly, the parties hereto
agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"Accounts" shall have the meaning ascribed thereto in Section
3(e) hereof.
"Collateral Account" shall have the meaning ascribed thereto
in Section 4.1(a) hereof.
"Contracts" shall mean all contracts, undertakings, or other
agreements, as the same may be amended from time to time, and (a) all rights of
any Debtor to receive moneys due and to become due thereunder or in connection
therewith, (b) all rights of any Debtor to damages arising out of or for breach
or default in respect thereof and (c) all rights of any Debtor to exercise
remedies thereunder, except for any Contract that cannot be assigned by the
Debtor which is a party thereto without the consent of the other party or
parties thereto or which would be breached or violated by the grant of a
security interest therein, provided that the Borrower and each of the Guarantors
shall use their reasonable best efforts to obtain a consent to, or a waiver or
amendment to allow, such assignment promptly after the Closing Date, whereupon
such Contract, as so modified or amended, shall be deemed Pledged Collateral
hereunder.
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"Copyright Collateral" shall mean all Copyrights, whether now
owned or hereafter acquired by any Debtor, that are material to the condition
(financial or otherwise), business or operations of the Parent Guarantor, the
Borrower and Subsidiaries of Parent Guarantor, taken as a whole, including each
Copyright identified in Annex 2 hereto.
"Copyrights" shall mean all copyrights, copyright
registrations and applications for copyright registrations, including, without
limitation, all renewals and extensions thereof, the right to recover for all
past, present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"Debtor" shall mean the Borrower and each of the Guarantors.
"Documents" shall have the meaning ascribed thereto in Section
3(k) hereof.
"Equipment" shall have the meaning ascribed thereto in Section
3(i) hereof.
"Instruments" shall have the meaning ascribed thereto in
Section 3(f) hereof.
"Intellectual Property" shall mean, collectively, all
Copyright Collateral, all Patent Collateral and all Trademark Collateral,
together with (a) all inventions, processes, production methods, proprietary
information, know-how and trade secrets; (b) all licenses or user or other
agreements granted to any Debtor with respect to any of the foregoing, in each
case whether now or hereafter owned or used including, without limitation, the
licenses or other agreements with respect to the Copyright Collateral, the
Patent Collateral or the Trademark Collateral, listed in Annex 5 hereto, except
for any license that cannot be assigned by the Debtor which is a party thereto
without the consent of the other party or parties thereto or which would be
breached or violated by the grant of a security interest therein, provided that
the Borrower and each of the Guarantors shall use their reasonable best efforts
to obtain a consent to, or a waiver or amendment to allow, such assignment
promptly after the Closing Date, whereupon such license, as so modified or
amended, shall be deemed Pledged Collateral hereunder; (c) all information,
customer lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys, engineering
reports, test reports, manuals, materials standards, processing standards,
performance standards, catalogs, computer and automatic machinery software and
programs; (d) all field repair data, sales data and other information relating
to sales or service of products now or hereafter manufactured; (e) all
accounting information and all media in which or on which any information or
knowledge or data or records may be recorded or stored and all computer programs
used for the compilation or printout of such information,
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knowledge, records or data; (f) all licenses, consents, permits, variances,
certifications and approvals of governmental agencies now or hereafter held by
any Debtor; and (g) all causes of action, claims and warranties now or hereafter
owned or acquired by the Debtors in respect of any of the items listed above
that in the case of (a) through (g) are material to the condition (financial or
otherwise), business or operations of the Parent Guarantor, the Borrower and the
Subsidiaries of the Parent Guarantor, taken as a whole.
"Inventory" shall have the meaning ascribed thereto in Section
3(g) hereof.
"Issuers" shall mean, collectively, the respective Material
Subsidiaries identified beneath the names of the Debtors on Annex 1 hereto under
the caption "Issuer," together with any corporation created or acquired after
the date hereof that is a Material Subsidiary, the capital stock of which is
required to be pledged hereunder pursuant to the Credit Agreement.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title thereto is governed by a
certificate of title or ownership.
"Patent Collateral" shall mean all Patents, whether now owned
or hereafter acquired by any Debtor that are material to the condition
(financial or otherwise), business or operations of the Parent Guarantor, the
Borrower and the Subsidiaries of the Parent Guarantor, taken as a whole,
including each Patent identified in Annex 3 hereto, excluding, however, the
Patents identified as "Excluded Patents" on said Annex 3.
"Patents" shall mean all patents and patent applications,
including, without limitation, the inventions and improvements described and
claimed therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties, damages and
payments now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, the right to xxx for past, present and future
infringements thereof, and all rights corresponding thereto throughout the
world.
"Pledged Collateral" shall have the meaning ascribed thereto
in Section 3 hereof.
"Pledged Stock" shall have the meaning ascribed thereto in
Section 3(a) hereof; provided that, Pledged Stock shall not include any shares
of capital stock of MEM Company, Inc. so long as it constitutes Margin Stock.
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"Secured Obligations" shall mean, collectively, (a) the
principal of and interest on the Loans made by the Lenders to, and the Notes
held by each Lender of, the Borrower and all other amounts from time to time
owing to the Creditors by the Borrower under the Loan Documents, (b) all
obligations of any Debtor arising under any Interest Rate Agreement between any
Debtor and any Lender, (c) all obligations of the Guarantors under the Credit
Agreement and the other Loan Documents (including, without limitation, in
respect of their Guarantees under Section 9 of the Credit Agreement) and (d) all
obligations of the Debtors to the Creditors hereunder.
"Special Event of Default" shall mean any Event of Default
that arises pursuant to Section 7.1, 7.3, 7.6 or 7.7 of the Credit Agreement.
"Stock Collateral" shall mean, collectively, the Pledged
Collateral described in clauses (a) through (c) of Section 3 hereof and the
proceeds of and to any such property and, to the extent related to any such
property or such proceeds, all books, correspondence, credit files, records,
invoices and other papers.
"Trademark Collateral" shall mean all Trademarks, whether now
owned or hereafter acquired by any Debtor, that are material to the condition
(financial or otherwise), business or operations of the Parent Guarantor, the
Borrower and Subsidiaries of Parent Guarantor, taken as a whole, including each
Trademark identified in Annex 4 hereto. Notwithstanding the foregoing, the
Trademark Collateral does not and shall not include any Trademark that would be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
"Trademarks" shall mean all trade names, trademarks and
service marks, logos, trademark and service xxxx registrations, and applications
for trademark and service xxxx registrations, including, without limitation, all
renewals of trademark and service xxxx registrations, all rights corresponding
thereto throughout the world, the right to recover for all past, present and
future infringements thereof, all other rights of any kind whatsoever accruing
thereunder or pertaining thereto, together, in each case, with the product lines
and goodwill of the business connected with the use of, and symbolized by, each
such trade name, trademark and service xxxx.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2. Representations and Warranties. Each Debtor
represents and warrants to the Creditors that:
(a) Such Debtor is the sole beneficial owner of the
Pledged Collateral in which it purports to grant a security interest pursuant to
Section 3 hereof and no Lien exists or will exist upon such Pledged Collateral
at any time (and no
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right or option to acquire the same exists in favor of any other Person) except
for (i) Liens which would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) Liens expressly permitted under Section 6.2 of the Credit
Agreement, and (iii) the pledge and security interest in favor of the Agent for
the benefit of the Lenders created or provided for herein, which pledge and
security interest shall (upon the filing of the financing statements and other
filings delivered by the Borrower pursuant to the Credit Agreement in locations
specified by the Debtors to the Agent or possession of Collateral which is
required for perfection) constitute a first priority perfected pledge and
security interest (except for Liens expressly permitted by Section 6.2 of the
Credit Agreement) in and to all of such Pledged Collateral (other than the
Non-Perfected Collateral subject to compliance with Section 5.15 of the Credit
Agreement).
(b) The Pledged Stock represented by the certificates
identified under the name of such Debtor in Annex 1 hereto is, and all other
Pledged Stock in which such Debtor shall hereafter grant a security interest
pursuant to Section 3 hereof will be, duly authorized, validly existing, fully
paid and non-assessable and none of such Pledged Stock is or will be subject to
any contractual restriction, or any restriction under the charter or by-laws of
the respective Issuer of such Pledged Stock, upon the transfer of such Pledged
Stock (except for any such restriction contained herein or in the Credit
Agreement or as permitted by the Credit Agreement).
(c) The Pledged Stock represented by the certificates
identified under the name of such Debtor in Annex 1 hereto constitutes all of
the issued and outstanding shares of capital stock of any class of the Issuers
beneficially owned by such Debtor on the date hereof or such percentage of the
capital stock of any Issuer created or acquired after the date hereof that is
required to be pledged hereunder pursuant to the Credit Agreement (whether or
not registered in the name of such Debtor) and said Annex 1 correctly
identifies, as at the date hereof, or, with respect to any Issuer created or
acquired after the date hereof, as of the date of pledge hereunder, the
respective Issuers of such Pledged Stock, the respective class and par value of
the shares comprising such Pledged Stock and the respective number of shares
(and registered owners thereof) represented by each such certificate.
(d) As of the date hereof, (x) the Intercompany Notes
delivered to the Collateral Agent on the date hereof constitute all of the
Intercompany Notes of such corporations; and (y) other than the Intercompany
Notes, no Debtor owns, directly or indirectly, any other Intercompany Notes of
any Debtor.
(e) Annexes 2, 3 and 4 hereto, respectively, set
forth under the name of such Debtor a complete and correct list of all
Copyrights, Patents and Trademarks owned by such Debtor on the date hereof, that
are material to the condition (financial or otherwise), business or operations
of the Parent Guarantor, the Borrower and Subsidiaries of Parent Guarantor,
taken as a whole, which have been
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registered or for which an application for registration has been made; except
pursuant to licenses and other user agreements entered into by such Debtor in
the ordinary course of business, all of which are listed in Annex 5 hereto, on
and as of the date hereof (i) such Debtor owns and possesses the right to use,
and has done nothing to authorize or enable any other Person to use, any
Copyright, Patent or Trademark listed in said Annexes 2, 3 and 4, and (ii) all
registrations listed in said Annexes 2, 3 and 4 are valid and in full force and
effect; and except as may be set forth in said Annex 5, such Debtor owns and
possesses the right to use all such Copyrights, Patents and Trademarks on and as
of the date hereof.
(f) Annex 5 hereto sets forth a complete and correct
list of all licenses and other user agreements included in the Intellectual
Property on the date hereof, that are material to the condition (financial or
otherwise), business or operations of the Parent Guarantor, the Borrower and
Subsidiaries of Parent Guarantor, taken as a whole.
(g) To the best of such Debtor's knowledge, on and as
of the date hereof: (i) except as set forth in Annex 5 hereto, there is no
violation by others of any right of such Debtor with respect to any Copyright,
Patent or Trademark listed in Annexes 2, 3 and 4 hereto, respectively, under the
name of such Debtor and (ii) such Debtor is not infringing in any respect upon
any Copyright, Patent or Trademark of any other Person; and no proceedings have
been instituted or are pending against such Debtor or, to the best of such
Debtor's knowledge, threatened, and no claim against such Debtor has been
received by such Debtor, alleging any such violation, except as may be set forth
in said Annex 5, except with respect to clauses (i) and (ii) where any of the
foregoing could not reasonably be expected to have a Material Adverse Effect.
(h) Any goods now or hereafter produced by such
Debtor or any of its Subsidiaries included in the Pledged Collateral have been
and will be produced in compliance with the requirements of the Fair Labor
Standards Act of 1938, as amended, except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
Section 2. Collateral. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations owing by such Debtor, each Debtor hereby
pledges and mortgages to the Agent, for the benefit of the Creditors as
hereinafter provided, and grants to the Agent, for the benefit of the Creditors
as hereinafter provided, a security interest in, all of such Debtor's right,
title and interest in the following property, whether now owned by such Debtor
or hereafter acquired and whether now existing or hereafter coming into
existence (all being collectively referred to herein as "Pledged Collateral"):
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(a) the shares of common and/or preferred stock of
the Issuers represented by the certificates identified in Annex 1 hereto under
the name of such Debtor and all other shares of capital stock of whatever class
of the Issuers, now or hereafter owned by such Debtor, in each case together
with the certificates evidencing the same (collectively, the "Pledged Stock");
(b) all shares, securities, moneys or property
representing a dividend on any of the Pledged Stock, or representing a
distribution or return of capital upon or in respect of the Pledged Stock, or
resulting from a split-up, revision, reclassification or other like change of
the Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or otherwise
in respect of, the Pledged Stock;
(c) all Intercompany Notes;
(d) without affecting the obligations of such Debtor
under any provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger in which an Issuer is not
the surviving corporation, all shares of each class of the capital stock of the
successor corporation owned by the Debtors (unless such successor corporation is
such Debtor itself) formed by or resulting from such consolidation or merger;
(e) all accounts and general intangibles (each as
defined in the Uniform Commercial Code) of such Debtor constituting any right to
the payment of money, including (but not limited to) all moneys due and to
become due to such Debtor in respect of any loans or advances or for Inventory
or Equipment or other goods sold or leased or for services rendered, all moneys
due and to become due to such Debtor under any guarantee (including a letter of
credit) of the purchase price of Inventory or Equipment sold by such Debtor and
all tax refunds (such accounts, general intangibles and moneys due and to become
due being herein called collectively "Accounts");
(f) all instruments, chattel paper or letters of
credit (each as defined in the Uniform Commercial Code) of such Debtor
evidencing, representing, arising from or existing in respect of, relating to,
or securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of exchange and
trade acceptances (herein collectively called "Instruments");
(g) all inventory (as defined in the Uniform
Commercial Code) of such Debtor, all goods obtained by such Debtor in exchange
for such inventory, any products made or processed from such inventory including
all substances, if any, commingled therewith or added thereto, and any such
inventory as is temporarily out of such Debtor's custody or possession,
including inventory held by
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others on consignment, inventory on the premises of others and items in transit
(herein collectively called "Inventory");
(h) all Intellectual Property and all other accounts
(as defined in the Uniform Commercial Code) not constituting Accounts;
(i) all equipment (as defined in the Uniform
Commercial Code) of such Debtor, including all Motor Vehicles (herein
collectively called "Equipment");
(j) all Contracts;
(k) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of such Debtor covering, evidencing or
representing Inventory or Equipment (herein collectively called "Documents");
(l) all rights, claims and benefits of such Debtor
against any Person arising out of, relating to or in connection with Inventory
or Equipment purchased by such Debtor, including, without limitation, any such
rights, claims or benefits against any Person storing or transporting such
Inventory or Equipment;
(m) the balance from time to time in the Collateral
Account; and
(n) all other tangible and intangible personal
property of such Debtor, including, without limitation, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Debtor described in the
preceding clauses of this Section 3 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by any Debtor in respect of any of the items listed above) and,
to the extent related to any property described in said clauses or such
proceeds, products and accessions, all books, correspondence, credit files,
records, invoices and other papers, including without limitation all tapes,
cards, computer runs and other papers and documents in the possession or under
the control of such Debtor or any computer bureau or service company from time
to time acting for such Debtor.
Section 4. Cash Proceeds of Collateral.
4.1 Collateral Account.
(a) There is hereby established with the Agent a cash
collateral account (the "Collateral Account") in the name and under the sole
dominion and control of the Agent into which there shall be deposited from time
to time certain cash proceeds of any of the Pledged Collateral as provided in
Section 4.2 below
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(including proceeds of insurance covering the Pledged Collateral) and into which
the Debtors may from time to time deposit any additional amounts that any of
them wishes to pledge to the Agent for the benefit of the Lenders as additional
collateral security hereunder.
(b) The balance from time to time in the Collateral
Account shall constitute part of the Pledged Collateral hereunder and shall not
constitute payment of the Secured Obligations until applied as hereinafter
provided. So long as no Special Event of Default has occurred and is continuing,
the Agent shall remit the collected balance outstanding to the credit of the
Collateral Account to or upon the order of the respective Debtor as such Debtor
shall from time to time instruct; provided, however, that any amounts deposited
in the Collateral Account in respect of Casualty Events, Recovery Events,
takings, destructions or loss of title with respect to Mortgaged Real Property
shall be disbursed to the relevant Debtor in periodic installments consistent
with the provisions of Section 2.5A(ii) of the Credit Agreement. However, at any
time following the occurrence and during the continuance of a Special Event of
Default, the Agent may (and, if instructed by the Required Lenders, shall) in
its (or their) discretion apply or cause to be applied (subject to collection)
the balance from time to time outstanding to the credit of the Collateral
Account to the payment of the Secured Obligations in the manner specified in
Section 5.9 hereof. The balance from time to time in the Collateral Account
shall be subject to withdrawal only as provided herein.
(c) If requested by the Borrower and agreed to by any
Lender that is an original Lender, and subject to documentation reasonably
satisfactory to the Agent and such Lender, the Agent shall designate such Lender
as a collateral sub-agent for the Agent in respect of all or any portion of the
Collateral Account and provide written notice to the Borrower of such
designation.
4.2 Proceeds of Accounts. At any time after the
occurrence and during the continuance of an Event of Default, each Debtor shall,
upon the request of the Agent, instruct all account debtors and other Persons
obligated in respect of all Accounts to make all payments in respect of the
Accounts either (a) directly to the Agent (by instructing that such payments be
remitted to a post office box which shall be in the name and under the control
of the Agent) or (b) to one or more other banks in the United States of America
(by instructing that such payments be remitted to a post office box which shall
be in the name and under the control of the Agent) under arrangements, in form
and substance satisfactory to the Agent, pursuant to which such Debtor shall
have irrevocably instructed such other bank (and such other bank shall have
agreed) to remit all proceeds of such payments directly to the Agent for deposit
into the Collateral Account. All payments made to the Agent, as provided in the
preceding sentence, shall be immediately deposited in the Collateral Account. In
addition to the foregoing, each Debtor agrees that, if the proceeds of any
Pledged Collateral hereunder (including the payments made in respect of
Accounts) shall be received by it, such Debtor shall as promptly as possible
deposit such
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proceeds into the Collateral Account. Until so deposited, all such proceeds
shall be held in trust by such Debtor for and as the property of the Agent and
the Lenders and shall not be commingled with any other funds or property of such
Debtor.
4.3 Investment of Balance in Collateral Account.
Amounts on deposit in the Collateral Account shall be invested from time to time
in such Permitted Investments as the respective Debtor (or, after the occurrence
and during the continuance of an Event of Default, the Agent) shall determine,
which Permitted Investments shall be held in the name and be under the control
of the Agent; provided, however, that at any time after the occurrence and
during the continuance of an Event of Default, the Agent may (and, if instructed
by the Required Lenders, shall) in its (or their) discretion at any time and
from time to time elect to liquidate any such Permitted Investments and to apply
or cause to be applied the proceeds thereof to the payment of the Secured
Obligations in the manner specified in Section 5.9 hereof.
Section 5. Further Assurances; Remedies. In furtherance of
the grant of the pledge and security interest pursuant to Section 3 hereof, the
Debtors hereby jointly and severally agree with each Lender and the Agent as
follows:
5.1 Delivery and Other Perfection. Each Debtor shall:
(a) if any of the above-described shares or
securities (or only if an Event of Default has occurred and is continuing,
moneys or property) required to be pledged by such Debtor under clauses (a),
(b), (c) and (d) of Section 3 hereof are received by such Debtor, forthwith
either (x) transfer and deliver to the Agent such shares or securities so
received by such Debtor (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers duly
executed in blank), all of which thereafter shall be held by the Agent, pursuant
to the terms of this Agreement, as part of the Pledged Collateral or (y) take
such other action as the Agent shall deem necessary or appropriate to duly
record the Lien created hereunder in such shares, securities, moneys or property
in said clauses (a), (b), (c) and (d);
(b) deliver and pledge to the Agent any and all
Instruments, endorsed and/or accompanied by such instruments of assignment and
transfer in such form and substance as the Agent may request; provided, however,
that so long as no Event of Default shall have occurred and be continuing, such
Debtor may retain for collection in the ordinary course any Instruments received
by such Debtor in the ordinary course of business and the Agent shall, promptly
upon request of such Debtor, make appropriate arrangements for making any other
Instrument pledged by such Debtor available to such Debtor for purposes of
presentation, collection or renewal (any such arrangement to be effected, to the
extent deemed appropriate by the Agent, against trust receipt or like document);
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(c) give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable (in the judgment of the Agent) to create,
preserve, perfect or validate the security interest granted pursuant hereto or
to enable the Agent to exercise and enforce its rights hereunder with respect to
such pledge and security interest, including, without limitation, after the
occurrence and during the continuance of an Event of Default, causing any or all
of the Stock Collateral to be transferred of record into the name of the Agent
or its nominee; provided, however, that notices to account debtors in respect of
any Accounts or Instruments shall be subject to the provisions of clause (i)
below;
(d) keep full and accurate books and records relating
to the Pledged Collateral, and stamp or otherwise xxxx all such material books
and records in such manner as the Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(e) furnish to the Agent upon its request statements
and schedules further identifying and describing the Copyright Collateral, the
Patent Collateral and the Trademark Collateral, respectively, and such other
reports in connection with the Copyright Collateral, the Patent Collateral and
the Trademark Collateral, as the Agent may reasonably request, all in reasonable
detail;
(f) promptly upon request of the Agent, following
receipt by the Agent of any statements, schedules or reports pursuant to clause
(e) above, modify this Agreement by amending Annexes 2, 3 and/or 4 hereto, as
the case may be, to include any Copyright, Patent or Trademark that becomes part
of the Pledged Collateral under this Agreement;
(g) permit representatives of the Agent, upon
reasonable notice, at any time during normal business hours to inspect and make
abstracts from its books and records pertaining to the Pledged Collateral;
(h) upon the occurrence and during the continuance of
any Event of Default, permit representatives of the Agent to be present at such
Debtor's place of business to receive copies of all communications and
remittances relating to the Pledged Collateral, and forward copies of any
notices or communications received by such Debtor with respect to the Pledged
Collateral, all in such manner as the Agent may require; and
(i) upon the occurrence and during the continuance of
any Event of Default, upon request of the Agent, except as otherwise expressly
provided herein, promptly notify (and such Debtor hereby authorizes the Agent so
to notify) each account debtor in respect of any Accounts or Instruments that
such Pledged Collateral has been assigned to the Agent for the benefit of the
Lenders hereunder,
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and that any payments due or to become due in respect of such Pledged Collateral
are to be made directly to the Agent.
5.2 Other Financing Statements and Liens. Except as
otherwise expressly permitted under Section 6.2 of the Credit Agreement, without
the prior written consent of the Agent (granted with the authorization of the
Required Lenders), no Debtor shall file or suffer to be on file, or authorize or
permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Pledged Collateral in which the
Agent is not named as the sole secured party for the benefit of the Lenders.
5.3 Preservation of Rights. The Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Pledged Collateral.
5.4 Special Provisions Relating to Certain
Collateral.
(a) Stock Collateral.
(1) The Debtors will cause the Pledged Stock to
constitute at all times, with respect to any Issuer existing on the
date hereof, 100% or, with respect to any Issuer created or acquired
after the date hereof, the percentage required by the Credit Agreement
to be pledged hereunder, of the total number of shares of each class of
capital stock of each Issuer then outstanding.
(2) So long as no Event of Default shall have
occurred and be continuing, the Debtors shall have the right to
exercise all voting, consensual and other powers of ownership
pertaining to the Stock Collateral for all purposes not inconsistent
with the terms of this Agreement, the Credit Agreement, the Notes or
any other instrument or agreement referred to herein or therein;
provided, however, that the Debtors jointly and severally agree that
they will not vote the Stock Collateral in any manner that is
inconsistent with the terms of this Agreement, the Credit Agreement,
the Notes or any such other instrument or agreement; and the Agent
shall execute and deliver to the Debtors or cause to be executed and
delivered to the Debtors all such proxies, powers of attorney, dividend
and other orders, and all such instruments, without recourse, as the
Debtors may reasonably request for the purpose of enabling the Debtors
to exercise the rights and powers that they are entitled to exercise
pursuant to this Section 5.4(a).
(3) The Debtors shall be entitled to receive and
retain any dividends on the Stock Collateral to the extent that the
payment of such dividends is permitted by the Credit Agreement.
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(4) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Agent
or any Lender exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other relief or
remedy available to it under applicable law or under this Agreement,
the Credit Agreement, the Notes or any other agreement relating to such
Secured Obligation, all dividends and other distributions on the Stock
Collateral shall be paid directly to the Agent and retained by it as
part of the Pledged Collateral, subject to the terms of this Agreement,
and, if the Agent shall so request in writing, the Debtors jointly and
severally agree to execute and deliver to the Agent appropriate
additional dividend, distribution and other orders and documents to
that end; provided, however, that if such Event of Default is cured,
unless the Secured Obligations have been declared or have by their
terms become due and payable, any such dividend or distribution
theretofore paid to the Agent shall, upon request of the Debtors
(except to the extent theretofore applied to the Secured Obligations),
be returned by the Agent to the Debtors.
(b) Intellectual Property.
(1) For the purpose of enabling the Agent, during the
continuance of an Event of Default, to exercise rights and remedies
under Section 5.5 hereof at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other
purpose, each Debtor upon the occurrence and during the continuation of
an Event of Default grants to the Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to such Debtor) to use, assign, license
or sublicense any of the Intellectual Property now owned or hereafter
acquired by such Debtor, wherever the same may be located, including in
such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs
used for the compilation or printout thereof. Any use or license of the
Trademarks will conform to the quality standards previously maintained
by the relevant Debtor.
(2) Notwithstanding anything contained herein to the contrary,
but subject to the provisions of Section 6.6 of the Credit Agreement
that limit the right of the Debtors to dispose of their respective
property, so long as no Event of Default shall have occurred and be
continuing, the Debtors will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary
course of the business of the Debtors. In furtherance of the foregoing,
unless an Event of Default shall have occurred and be continuing the
Agent shall from time to time, upon the request of the respective
Debtor, execute and deliver any instruments, certificates or other
documents, in the form so requested, that such Debtor shall have
certified are
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appropriate (in its judgment) to allow it to take any action permitted
above. Further, upon the payment in full of all of the Secured
Obligations and cancellation or termination of the Commitments or
earlier expiration of this Agreement or release of the Pledged
Collateral, the Agent shall grant back to the Debtors the license
granted pursuant to clause (1) immediately above. The exercise of
rights and remedies under Section 5.5 hereof by the Agent shall not
terminate the rights of the holders of any licenses or sublicenses
theretofore granted by the Debtors in accordance with the first
sentence of this clause (2).
(3) The Agent agrees that it will not exercise any of its
rights and remedies pursuant to Section 5.5 hereof prior to having
received the required consents, if any, under any licensing agreements
to which any Debtor is a party to the exercise of such rights and
remedies.
(c) Motor Vehicles. At any time after the occurrence and
during the continuance of an Event of Default, each Debtor shall, upon the
request of the Agent, deliver to the Agent originals of the certificates of
title or ownership for the Motor Vehicles, and any other Equipment covered by
certificates of title or ownership, owned by it with the Agent listed as
lienholder.
5.5 Events of Default, Etc. During the period during which
an Event of Default shall have occurred and be continuing:
(a) each Debtor shall, at the request of the Agent,
assemble the Pledged Collateral owned by it at such place or places, reasonably
convenient to both the Agent and such Debtor, designated in its request;
(b) the Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Pledged Collateral and
may extend the time of payment, arrange for payment in installments, or
otherwise modify the terms, of any of the Pledged Collateral;
(c) the Agent shall have all of the rights and remedies
with respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform Commercial Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Pledged Collateral as if the Agent were the sole and
absolute owner thereof (and each Debtor agrees to take all such action as may be
appropriate to give effect to such right);
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(d) the Agent in its discretion may, in its name or in the
name of the Debtors or otherwise, demand, xxx for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for
any of the Pledged Collateral, but shall be under no obligation to do so; and
(e) the Agent may, upon ten business days' prior written
notice to the Debtors of the time and place, with respect to the Pledged
Collateral or any part thereof that shall then be or shall thereafter come into
the possession, custody or control of the Agent, the Lenders or any of their
respective agents, sell, lease, assign or otherwise dispose of all or any part
of such Pledged Collateral, at such place or places as the Agent deems best, and
for cash or for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of performance or notice
of intention to effect any such disposition or of the time or place thereof
(except such notice as is required above or by applicable statute and cannot be
waived), and the Agent or any Lender or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Pledged Collateral so
disposed of at any public sale (or, to the extent permitted by law, at any
private sale) and thereafter hold the same absolutely, free from any claim or
right of whatsoever kind, including any right or equity of redemption (statutory
or otherwise), of the Debtors, any such demand, notice and right or equity being
hereby expressly waived and released. In the event of any sale, assignment, or
other disposition of any of the Trademark Collateral, the goodwill connected
with and symbolized by the Trademark Collateral subject to such disposition
shall be included, and the Debtors shall supply to the Agent or its designee,
for inclusion in such sale, assignment or other disposition, all Intellectual
Property relating to such Trademark Collateral. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.5, including by virtue of the exercise of the license granted to the Agent in
Section 5.4(b) hereof, shall be applied in accordance with Section 5.9 hereof.
The Debtors recognize that, by reason of certain prohibitions contained
in the Securities Act of 1933, as amended, and applicable state securities laws,
the Agent may be compelled, with respect to any sale of all or any part of the
Pledged Collateral, to limit purchasers to those who will agree, among other
things, to acquire the Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. The Debtors
acknowledge that any such private sales may be at prices and on terms less
favorable to the Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agree that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Agent shall have no obligation to engage in public sales and
no obligation to delay the sale of any Pledged Xxxxxxxxxx
00
00
for the period of time necessary to permit the respective Issuer or issuer
thereof to register it for public sale.
The Agent agrees that any public or private sale of the
Pledged Collateral will be held in a commercially reasonable manner.
5.6 Deficiency. If the proceeds of sale, collection or
other realization of or upon the Pledged Collateral pursuant to Section 5.5
hereof are insufficient to cover the costs and expenses of such realization and
the payment in full of the Secured Obligations, the Debtors shall remain liable
for any deficiency.
5.7 Removals, Name Change, Etc. Without at least 30 days'
prior written notice to the Agent, no Debtor shall (i) maintain any of its books
and records with respect to the Pledged Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or Equipment
located in the United States to be located anywhere, other than (A) at the
address indicated beneath the signature of the Borrower to the Credit Agreement
or at one of the locations identified in Annex 6 hereto or (B) at the premises
of a Person processing or storing such Inventory or Equipment, unless by the
later of April 30, 1997 or the date upon which such Person first comes into
possession of such Inventory or Equipment, the Debtor shall have taken such
steps as are reasonably requested by the Collateral Agent to perfect the
security interest of the lenders on such Inventory and Equipment (to the extent
it may be perfected) or (C) in transit from one of such locations to another or
(ii) change its corporate name, or the name under which it does business, from
the name shown on the signature pages hereto.
5.8 Private Sale. No Creditors shall incur liability as a
result of the sale of the Pledged Collateral, or any part thereof, at any
private sale pursuant to Section 5.5 hereof conducted in a commercially
reasonable manner. Each Debtor hereby waives any claims against any Creditor
arising by reason of the fact that the price at which the Pledged Collateral may
have been sold at any such private sale held in a commercially reasonable manner
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if the Agent
accepts the first offer received and does not offer the Pledged Collateral to
more than one offeree.
5.9 Application of Proceeds. Except as otherwise herein
expressly provided and except as provided below in this Section 5.9, the
proceeds of any collection, sale or other realization of all or any part of the
Pledged Collateral pursuant hereto, and any other cash at the time held by the
Agent under Section 4 hereof or this Section 5, shall be applied by the Agent:
First, to the payment of the reasonable costs and expenses of
such collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Agent and the fees and expenses
of its agents and counsel,
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and all expenses incurred and advances made by the Agent in connection
therewith;
Next, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Lenders holding the same may
otherwise agree; and
Finally, to the payment to the respective Debtor, or its
successors or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining.
As used in this Section 5, "proceeds" of Pledged Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Pledged Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Debtors or any issuer of or obligor on
any of the Pledged Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or
powers granted by this Agreement to the Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Agent is hereby appointed the attorney-in-fact of each
Debtor for the purpose of carrying out the provisions of this Section 5 and
taking any action and executing any instruments that the Agent may deem
reasonably necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, upon and during the
continuance of any Event of Default, so long as the Agent shall be entitled
under this Section 5 to make collections in respect of the Pledged Collateral,
the Agent shall have the right and power to receive, endorse and collect all
checks made payable to the order of any Debtor representing any dividend,
payment or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same.
5.11 Perfection. Prior to or concurrently with the
execution and delivery of this Agreement, each Debtor shall (i) initiate the
filing of such financing statements and other documents in such offices as the
Agent may reasonably request to perfect the security interests granted by
Section 3 of this Agreement with respect to the Collateral other than the
Non-Perfected Collateral, (ii) deliver to the Agent all certificates identified
in Annex 1 hereto, accompanied by undated stock powers duly executed in blank
and (iii) deliver to the Agent all Intercompany Notes required to be delivered
pursuant to the Credit Agreement. With respect to the Non-Perfected Collateral,
each Debtor will comply with Section 5.15 of the Credit Agreement.
5.12 Termination. When all Secured Obligations shall have
been paid in full and the Commitments of the Lenders under the Credit Agreement
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shall have expired or been terminated, this Agreement shall terminate, and the
Agent shall forthwith cause to be assigned, transferred and delivered, against
receipt but without any recourse, warranty or representation whatsoever, any
remaining Pledged Collateral and money received in respect thereof, to or on the
order of the respective Debtor and to be released and canceled all licenses and
rights referred to in Section 5.4(b) hereof. The Agent shall also execute and
deliver to the respective Debtor upon such termination or upon the sale or other
disposition of Property permitted by Section 6.5, 6.6 or 6.14 of the Credit
Agreement such Uniform Commercial Code termination statements, certificates for
terminating the Liens on the Motor Vehicles and such other documentation as
shall be reasonably requested by the respective Debtor to effect the termination
and release of the Liens on the Pledged Collateral.
5.13 Expenses. The Debtors jointly and severally agree to
pay to the Agent all reasonable out-of-pocket expenses (including expenses for
legal services of every kind) of, or incident to, the enforcement of any of the
provisions of this Section 5, or performance by the Agent of any obligations of
the Debtors in respect of the Pledged Collateral which the Debtors have failed
or refused to perform, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement in respect of any of the
Pledged Collateral, and for the care of the Pledged Collateral and defending or
asserting rights and claims of the Agent in respect thereof, by litigation or
otherwise, including expenses of insurance, and all such expenses shall be
Secured Obligations to the Agent secured under Section 3 hereof.
5.14 Further Assurances. Each Debtor agrees that, from
time to time upon the written request of the Agent, such Debtor will execute and
deliver such further documents and do such other acts and things as the Agent
may reasonably request in order fully to effect the purposes of this Agreement.
Section 6. Miscellaneous.
6.1 No Waiver. No failure on the part of the Agent or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Agent or any of
its agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
6.2 Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of New York
without regard to the principles of conflicts of law.
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6.3 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at as specified pursuant to the Credit Agreement and shall be deemed
to have been given at the times specified in the Credit Agreement.
6.4 Waivers, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by
each Debtor and the Agent (with the consent of the Required Lenders). Any such
amendment or waiver shall be binding upon each Creditor, each holder of any of
the Secured Obligations and each Debtor.
6.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of each Debtor, the Creditors and each holder of any of the Secured Obligations
(provided, however, that no Debtor shall assign or transfer its rights or
obligations hereunder without the prior written consent of the Creditors).
6.6 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
6.7 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
6.8 Agents. The Agent may employ agents and attorneys-in-
fact in connection herewith and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
6.9 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Creditors in order
to carry out the intentions of the parties hereto as nearly as may be possible
and (ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered as of the day and year
first above written.
COSMAR CORPORATION
By:________________________________
Name:
Title:
RENAISSANCE COSMETICS, INC.
By:________________________________
Name:
Title:
XXXX PERFUMES CORP.
By:________________________________
Name:
Title:
GREAT AMERICAN COSMETICS, INC.
By:________________________________
Name:
Title:
HOUBIGANT (1995) LIMITED/
HOUBIGANT (1995) LIMITEE
By:________________________________
Name:
Title:
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MEM COMPANY, INC.
By:________________________________
Name:
Title:
CIBC WOOD GUNDY SECURITIES
CORP.,
as Agent
By:________________________________
Name:
Title:
23
ANNEX 1
PLEDGED STOCK
[See Section 2(b)]
BORROWER
--------
Certificate Registered
Issuer No. Owner Number of Shares
------ ----------- ---------- -----------------
GUARANTORS
----------
Certificate Registered
Issuer No. Owner Number of Shares
------ ----------- ---------- ----------------
