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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March __, 1997 (together with all
amendments, if any from time to time hereto, this "Security Agreement"), among
the Grantors identified as such on the signature pages hereof (each, a "Grantor"
and collectively "Grantors"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, in its capacity as Agent for Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of the
date hereof among Xxxx Perfumes Corp. ("Borrower"), the other Persons named
therein as Credit Parties, Agent and the Persons named therein as Lenders
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
Lenders have agreed to make Loans to Borrower;
WHEREAS, in order to induce Agent and Lenders to enter into the
Credit Agreement and other Loan Documents and to induce Lenders to make the
Loans as provided for in the Credit Agreement, Grantors have agreed to grant a
continuing security interest in the Collateral (as hereinafter defined) to
secure the Obligations;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Credit Agreement or in
Annex A thereto. All other undefined terms contained in this Security Agreement,
unless the context indicates otherwise, have the meanings provided for by
Article 9 of the Uniform Commercial Code as in effect in the State of New York
(the "Code") to the extent the same are used or defined therein.
2. GRANT OF SECURITY INTEREST.
(a) To secure the prompt and complete payment, performance and
observance of all of the Obligations, each Grantor hereby grants, assigns,
conveys, mortgages, pledges, hypothecates and transfers to Agent, for itself and
the benefit of Lenders, a security interest in its right, title and interest in,
to and under the following,
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whether now owned by or owing to, or hereafter acquired by or arising in favor
of such Grantor (including under any trade names, styles or derivations
thereof), and whether owned or consigned by or to, or leased from or to, such
Grantor, and regardless of where located (all of which being hereinafter
collectively referred to as the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all goods;
(ix) all Instruments;
(x) all Inventory;
(xi) all Investment Property (other than Stock of Subsidiaries
of such Grantor except as provided in the Pledge
Agreement);
(xii) all Credit Party Accounts, Disbursement Accounts, and all
other deposit and other bank accounts and all deposits
therein;
(xiii) all money, cash or cash equivalents of any Grantor; and
(xiv) to the extent not otherwise included, all Proceeds and
products of the foregoing and all accessions to,
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substitutions and replacements for, and rents and profits
of, each of the foregoing.
(b) In addition, to secure the prompt and complete payment,
performance and observance of the Obligations and in order to induce Agent and
Lenders as aforesaid, each Grantor hereby grants to Agent, for itself and the
ratable benefit of Lenders, a security interest in the property of such Grantor
held by Agent or any Lender, consisting of property described above in Section
2(a) now or hereafter in the possession or custody of or in transit to Agent or
any Lender, for any purpose, including safekeeping, collection or pledge, for
the account of such Grantor, or as to which such Grantor may have any right or
power.
3. AGENT'S AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S AND LENDERS'
OBLIGATIONS.
(a) It is expressly agreed by Grantors that, anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither Agent nor any
Lender shall have any obligation or liability under any Contract or License by
reason of or arising out of this Security Agreement or the granting herein of a
security interest therein or the receipt by Agent or any Lender of any payment
relating to any Contract or License pursuant hereto. Neither Agent nor any
Lender shall be required or obligated in any manner to perform or fulfill any of
the obligations of any Grantor under or pursuant to any Contract or License, or
to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party
under any Contract or License, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) Agent may at any time after a Default or Event of Default shall
have occurred and be continuing, without prior notice to any Grantor, notify
Account Debtors, parties to the Contracts and obligors in respect of Instruments
and Chattel Paper, that the Accounts and the right, title and interest of any
Grantor in and under such Contracts, Instruments and Chattel Paper have been
assigned to Agent, and that payments shall be made directly to Agent. Upon the
request of Agent, each Grantor shall so notify Account Debtors, parties to
Contracts and obligors in respect of Instruments and Chattel Paper.
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(c) Agent may at any time in Agent's own name or in the name of any
Grantor communicate with Account Debtors, parties to Contracts, obligors in
respect of Instruments and obligors in respect of Chattel Paper to verify with
such Persons, to Agent's satisfaction, the existence, amount and terms of any
such Accounts, Contracts, Instruments or Chattel Paper. If a Default or Event of
Default shall have occurred and be continuing, each Grantor, at its own expense,
shall cause the certified independent public accountants then engaged by such
Grantor to prepare and deliver to Agent and each Lender at any time and from
time to time promptly upon Agent's request the following reports with respect to
each Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as
Agent may request. Each Grantor, at its own expense, shall deliver to Agent the
results of each physical verification, if any, which such Grantor may in its
discretion have made, or caused any other Person to have made on its behalf, of
all or any portion of its Inventory.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants that:
(a) Each Grantor is the sole owner of each item of the Collateral in
which it purports to grant a security interest hereunder, and has good and
marketable title thereto free and clear of any and all Liens other than
Permitted Encumbrances.
(b) No effective security agreement, financing statement, equivalent
security or Lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except such as
may have been filed (i) in the United States Patent and Trademark Office by any
Grantor in favor of Nomura Holding America Inc., CIBC Xxxxx Xxxxx Securities
Corp., or Freemont Financial Corporation as against the Collateral so identified
on Attachments II and III to Schedule IV hereto, for which releases have been
filed but not yet recorded in the United States Patent and Trademark Office as
of the Closing Date, (ii) by any Grantor in favor of Agent pursuant to this
Security Agreement, and (iii) in connection with any other Permitted
Encumbrances.
(c) This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on Schedule I hereto, a perfected security interest in favor of Agent,
for itself and the ratable benefit of Lenders, in the Collateral with respect to
which a security interest may be perfected by filing pursuant to the Code. That
Lien is prior to all other Liens, except Permitted Encumbrances that would be
prior to Liens in favor of Agent for the
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benefit of Agent and Lenders as a matter of law, and is enforceable as such as
against any and all creditors of and purchasers from any Grantor (other than
purchasers of Inventory in the ordinary course of business). All action by any
Grantor necessary or desirable to protect and, upon the filing of the
appropriate financing statements listed on Schedule I hereto, perfect such
security interest in each item of the Collateral has been duly taken.
(d) Schedule II hereto lists all Instruments and Chattel Paper of
each Grantor. All action by any Grantor necessary or desirable to protect and
perfect the security interest of Agent in each item set forth on Schedule II
(including the delivery of all originals thereof to Agent and the legending of
all Chattel Paper as required by Section 5(b) hereof) has been duly taken. The
security interest of Agent, for the benefit of Agent and Lenders, in the
Collateral listed on Schedule II hereto is prior to all other Liens, except
Permitted Encumbrances that would be prior to the Liens in favor of Agent as a
matter of law, and is enforceable as such against any and all creditors of and
purchasers from any Grantor.
(e) Each Grantor's chief executive office, principal place of
business, corporate offices, all warehouses and premises where Collateral is
stored or located, and the locations of all of its books and records concerning
the Collateral are set forth on Schedule III hereto.
(f) With respect to the Accounts, (i) they represent bona fide sales
of Inventory or rendering of services to Account Debtors in the ordinary course
of each Grantor's business and are not evidenced by a judgment, Instrument or
Chattel Paper; (ii) the amounts shown on all invoices, statements and Collateral
Reports which may be delivered to the Agent with respect thereto are actually
and absolutely owing to such Grantor as indicated thereon and are not in any way
contingent; (iii) no payments have been or shall be made thereon except payments
immediately delivered to the applicable Credit Party Accounts or the Agent as
required pursuant to the terms of Annex C to the Credit Agreement; (iv) except
as specifically disclosed in a current Borrowing Base Certificate delivered to
Agent, there are no setoffs, claims or disputes existing or asserted with
respect thereto and no Grantor has made any agreement with any Account Debtor
for any extension of time for the payment thereof, any compromise or settlement
for less than the full amount thereof, any release of any Account Debtor from
liability therefor, or any deduction therefrom except a discount or allowance
allowed by such Grantor in the ordinary course of its business for prompt
payment and disclosed to Agent; (v) to each Grantor's knowledge, except as
specifically disclosed in a Collateral Report delivered to Agent, there are no
facts, events or occurrences which
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in any way impair the validity or enforceability thereof or could reasonably be
expected to reduce the amount payable thereunder as shown on any Grantor's books
and records and any invoices, statements and Collateral Reports delivered to
Agent and Lenders with respect thereto; (vi) to each Grantor's knowledge, all
Account Debtors have the capacity to contract; (vii) except as specifically
disclosed in a Collateral Report delivered to Agent, no Grantor has received any
notice of proceedings or actions which are threatened or pending against any
Account Debtor which might result in any adverse change in such Account Debtor's
financial condition; and (viii) except as specifically disclosed in a Collateral
Report delivered to Agent, no Grantor has knowledge that any Account Debtor is
unable generally to pay its debts as they become due.
(g) With respect to any Inventory scheduled or listed on any
statement, Collateral Report or other report delivered to Agent pursuant to the
terms of this Security Agreement or the Credit Agreement, (i) such Inventory is
located at one of the applicable Grantor's locations set forth on Schedule III
hereto, as applicable, (ii) no Inventory is now, or shall at any time or times
hereafter be stored at any other location without Agent's prior consent, and if
Agent gives such consent, each applicable Grantor will concurrently therewith
obtain, to the extent required by the Credit Agreement, bailee, landlord and
mortgagee agreements, (iii) the applicable Grantor has good and merchantable
title to such property and such property is not subject to any Lien or security
interest or document whatsoever except for the security interest granted to
Agent, for the benefit of Agent and Lenders, and except for Permitted
Encumbrances described in clause (f) of the definition thereof on Inventory that
is not Eligible Inventory, (iv) except as specifically disclosed in a Collateral
Report delivered to Agent, such Inventory is Eligible Inventory of good and
merchantable quality, free from any defects, (v) such property is not subject to
any licensing, patent, royalty, trademark, trade name or copyright agreements
with any third parties which would require any consent of any third party upon
sale or disposition of that Inventory or the payment of any monies to any third
party as a precondition of such sale or other disposition, except as set forth
in the Licenses listed on Attachment IV to Schedule IV hereto, pursuant to which
any Grantor has obtained rights or an option to acquire rights to use any
Intellectual Property thereunder, and (vi) the completion of manufacture, sale
or other disposition of such property by Agent following an Event of Default
shall not require the consent of any Person and shall not constitute a breach or
default under any contract or agreement to which any Grantor is a party or to
which such property is subject, except as set forth in the Licenses listed on
Attachment IV to Schedule IV hereto, pursuant to which any Grantor has obtained
rights or an option to acquire rights to use any Intellectual Property
thereunder.
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(h) No Grantor has any interest in, or title to, any U.S. or
Canadian Patent, Trademark, Copyright registration or application or any U.S. or
Canadian License except as set forth in Schedule IV hereto. This Security
Agreement is effective to create a valid and continuing Lien on and, upon filing
of the Copyright Security Agreement with the United States Copyright Office,
filing of the Patent Security Agreement and the Trademark Security Agreement
with the United States Patent and Trademark Office and the filing of the
appropriate financing statements listed on Schedule I hereto, perfected security
interests in favor of Agent in each Grantor's U.S. Patent, Trademark and
Copyright registrations and applications and such perfected security interests
are enforceable as such as against any and all creditors of and purchasers from
any Grantor. Upon proper and timely filing of the Copyright Security Agreement
with the United States Copyright Office, proper and timely filing of the Patent
Security Agreement and the Trademark Security Agreement with the United States
Patent and Trademark Office and the filing of the appropriate financing
statements listed on Schedule I hereto, all action necessary or desirable to
protect and perfect Agent's security interest in each Grantor's U.S. Patent,
Trademark and Copyright registrations and applications shall have been duly
taken.
5. COVENANTS. Each Grantor covenants and agrees with Agent, for the
benefit of Agent and Lenders, that from and after the date of this Security
Agreement and until the Termination Date:
(a) Further Assurances; Pledge of Instruments. At any time and from
time to time, upon the written request of Agent and at the sole expense of
Grantors, each Grantor shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further actions as Agent
may deem desirable to obtain the full benefits of this Security Agreement and of
the rights and powers herein granted, including (i) using its reasonable best
efforts to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Agent of any License or Contract held by
such Grantor or in which such Grantor has any rights not heretofore assigned,
(ii) filing any financing or continuation statements under the Code with respect
to the Liens and security interests granted hereunder or under any other Loan
Document, (iii) transferring Collateral to Agent's possession (for the benefit
of Agent and Lenders) if such Collateral consists of Chattel Paper, Instruments
or if a security interest in such Collateral can be perfected only by
possession, or if requested by Agent, and (iv) obtaining, or using its best
efforts to obtain, waivers of Liens, if any exist, from landlords and mortgagees
to the extent required under the Credit Agreement. Each Grantor also hereby
authorizes Agent, for itself and the ratable benefit of Lenders, to file any
such financing or continuation statements without the
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signature of such Grantor to the extent permitted by applicable law. If any
amount payable under or in connection with any of the Collateral is or shall
become evidenced by any Instrument, such Instrument, other than checks and notes
received in the ordinary course of business, shall be duly endorsed in a manner
satisfactory to Agent immediately upon such Grantor's receipt thereof.
(b) Maintenance of Records. Grantors shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. Grantors shall xxxx their books and records pertaining to the
Collateral to evidence this Security Agreement and the security interests
granted hereby. All Chattel Paper shall be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are subject to the
security interest of General Electric Capital Corporation, as Agent, for the
benefit of itself as a Lender and certain other Lenders." For Agent's further
security, Grantors agree that Agent shall have a special property right and
security interest in all of any Grantor's books and records pertaining to the
Collateral and, upon the occurrence and during the continuance of any Event of
Default, Grantors shall deliver and turn over any such books and records to
Agent or to its representatives at any time on demand of Agent. Upon notice from
Agent (except no such notice shall be required upon the occurrence or during the
continuance of a Default or Event of Default), Grantors shall permit any
representative of Agent to inspect such books and records and shall provide
photocopies thereof to Agent, for the benefit of Agent and Lenders, as more
specifically set forth in the Credit Agreement.
(c) Covenants Regarding Patent, Trademark and Copyright Collateral.
(i) Each Grantor shall notify Agent immediately if it knows or has
reason to know that any application or registration relating to any of its
Patents, Trademarks or Copyrights (now or hereafter existing) may become
abandoned or dedicated, other than in the ordinary course of its business,
or of any adverse determination or development (including the institution
of, or any such determination or development in, any proceeding in the
United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding any Grantor's ownership of any Patent,
Trademark or Copyright, including its right to keep and maintain the same.
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(ii) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for the
registration of any Patent, Trademark or Copyright with the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency without giving Agent prior written notice
thereof, and, upon request of Agent, Grantor shall execute and deliver any
and all Patent Security Agreements, Copyright Security Agreements or
Trademark Security Agreements as Agent may request to evidence Agent's
security interest in such Patent, Trademark or Copyright, and the General
Intangibles of such Grantor relating thereto or represented thereby.
(iii) Grantors shall take all actions necessary or requested by
Agent to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of the U.S. and
Canadian Patents, Trademarks and Copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition and interference and
cancellation proceedings, unless the applicable Grantor shall reasonably
determine that such U.S. and Canadian Patent, Trademark or Copyright is
not material to the conduct of its business.
(iv) In the event that any of the Patent, Trademark or Copyright
Collateral is infringed upon, or misappropriated or diluted by a third
party, such Grantor shall notify Agent promptly after such Grantor learns
thereof. Such Grantor shall, unless such Grantor shall reasonably
determine that such Patent, Trademark or Copyright Collateral is in no way
material to the conduct of its business or operations, take any actions as
Agent shall deem appropriate under the circumstances to protect such
Patent, Trademark or Copyright Collateral.
(d) Indemnification. In any suit, proceeding or action brought by
Agent or any Lender relating to any Account, Chattel Paper, Contract, Document,
General Intangible or Instrument for any sum owing thereunder or to enforce any
provision of any Account, Chattel Paper, Contract, Document, General Intangible
or Instrument, each Grantor will save, indemnify and keep Agent and Lenders
harmless from and against all expense (including reasonable attorneys' fees and
expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by any Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor,
except in the case of Agent or any Lender, to the extent
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such expense, loss, or damage is attributable solely to the gross negligence or
willful misconduct of Agent or such Lender as finally determined by a court of
competent jurisdiction. All such obligations of Grantors shall be and remain
enforceable against and only against Grantors and shall not be enforceable
against Agent or any Lender.
(e) Compliance with Terms of Accounts, etc. In all material
respects, each Grantor will perform and comply with all obligations in respect
of its Accounts, Chattel Paper, Contracts and Licenses and all other agreements
to which it is a party or by which it is bound relating to the Collateral.
(f) Limitation on Liens on Collateral. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Encumbrances, and will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.
(g) Limitations on Modifications of Accounts. Grantors shall
promptly notify Agent if any Grantor grants any extension of the time of payment
of any of the Accounts, Chattel Paper or Instruments or compromises, compounds
or settles the same for less than the full amount thereof, or if any Grantor
releases, wholly or partly, any Person liable for the payment thereof, or allows
any credit or discount whatsoever thereon other than any such action taken in
the ordinary course of business of such Grantor.
(h) Limitations on Disposition. No Grantor will sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so except as permitted by the Credit Agreement.
(i) Further Identification of Collateral. Grantors will, if so
requested by Agent, furnish to Agent, as often as Agent requests, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Agent may reasonably request, all
in such detail as Agent may specify.
(j) Notices. Grantors will advise Agent promptly, in reasonable
detail, (i) of any Lien (other than Permitted Encumbrances) or claim made or
asserted against any of the Collateral, and (ii) of the occurrence of any other
event which would
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have a material adverse effect on the aggregate value of the Collateral or on
the security interests created hereunder or under any other Loan Document.
6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
On the Closing Date each Grantor shall execute and deliver to Agent
a power of attorney (the "Power of Attorney") substantially in the form attached
hereto as Exhibit A. The power of attorney granted pursuant to the Power of
Attorney is a power coupled with an interest and shall be irrevocable until the
Termination Date. The powers conferred on Agent, for the benefit of Agent and
Lenders, under the Power of Attorney are solely to protect Agent's interests
(for the benefit of Agent and Lenders) in the Collateral and shall not impose
any duty upon Agent or any Lender to exercise any such powers. Agent agrees that
(a) it shall not exercise any power or authority granted under the Power of
Attorney unless an Event of Default has occurred and is continuing, and (b)
Agent shall account for any moneys received by Agent in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of Attorney
provided that none of Agent or any Lender shall have any duty as to any
Collateral, and Agent and Lenders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers. NONE OF AGENT,
LENDERS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO
ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
7. REMEDIES; RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it under
this Security Agreement, the Credit Agreement, the other Loan Documents and
under any other instrument or agreement securing, evidencing or relating to any
of the Obligations, if any Event of Default shall have occurred and be
continuing, Agent may exercise all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, each Grantor
expressly agrees that in any such event Agent, without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon such Grantor or
any other Person (all and each of which demands,
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advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code and other applicable law), may forthwith enter upon the
premises of such Grantor where any Collateral is located through self-help,
without judicial process, without first obtaining a final judgment or giving
such Grantor or any other Person notice and opportunity for a hearing on Agent's
claim or action and may collect, receive, assemble, process, appropriate and
realize upon the Collateral, or any part thereof, and may forthwith sell, lease,
assign, give an option or options to purchase, or sell or otherwise dispose of
and deliver said Collateral (or contract to do so), or any part thereof, in one
or more parcels at a public or private sale or sales, at any exchange at such
prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. Agent or any Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase for the benefit of Agent and Lenders,
the whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Grantor hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. Agent
shall have the right to conduct such sales on any Grantor's premises or
elsewhere and shall have the right to use any Grantor's premises without charge
for such time or times as Agent deems necessary or advisable.
Each Grantor further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at places which Agent shall select,
whether at such Grantor's premises or elsewhere. Until Agent is able to effect a
sale, lease, or other disposition of Collateral, Agent shall have the right to
hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or its value or for any
other purpose deemed appropriate by Agent. Agent shall have no obligation to any
Grantor to maintain or preserve the rights of such Grantor as against third
parties with respect to Collateral while Collateral is in the possession of
Agent. Agent may, if it so elects, seek the appointment of a receiver or keeper
to take possession of Collateral and to enforce any of Agent's remedies (for the
benefit of Agent and Lenders), with respect to such appointment without prior
notice or hearing as to such appointment. Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale to
the Obligations as provided in the Credit Agreement, and only after so paying
over such net proceeds, and after the payment by Agent of any other amount
required by any provision of law, need Agent account for the surplus, if any, to
any Grantor. To the maximum extent permitted by applicable law, each Grantor
waives all claims, damages, and demands against Agent or any Lender arising out
of the repossession, retention or sale of the Collateral except such as arise
solely out of the gross negligence or willful misconduct
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of Agent or such Lender as finally determined by a court of competent
jurisdiction. Each Grantor agrees that ten (10) days prior notice by Agent of
the time and place of any public sale or of the time after which a private sale
may take place is reasonable notification of such matters. Grantors shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all Obligations, Grantors also being liable
for any attorneys' fees incurred by Agent or any Lender to collect such
deficiency.
(b) Grantors agree to pay any and all costs of Agent or any Lender,
including attorneys' fees and expenses, incurred in connection with the
enforcement of any of its rights and remedies hereunder.
(c) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the
purpose of enabling Agent to exercise rights and remedies under Section 7 hereof
(including, without limiting the terms of Section 7 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Agent, for the benefit of Agent and Lenders, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof, provided that the goods
manufactured pursuant to any such license or sublicense shall be substantially
similar in quality to those previously manufactured by such Grantor and that
samples of such goods are sent to such Grantor so that such Grantor can verify
that such quality has been so maintained.
9. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL.
Agent and each Lender shall use reasonable care with respect to the Collateral
in its possession or under its control. Neither Agent nor any Lender shall have
any other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of Agent or such Lender, or any
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income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto.
10. REINSTATEMENT. This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
11. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give or
serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and either shall be delivered in person
with receipt acknowledged or by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy answerback
addressed as follows:
(a) If to Agent, at:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx Xxxxxxxxxxx 00000-0000
Attention: Accounts Manager - Renaissance
Telecopier Number: (000) 000-0000
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with copies to:
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Telecopier Number: (000) 000-0000
and:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel - Commercial Finance
Telecopier Number (000) 000-0000
(b) If to any Lender, at the address of such Lender specified in
the Credit Agreement.
(c) If to any Grantor, at the address of such Grantor specified on
Schedule V hereto.
with a copy to:
Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx - 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopier Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) Business Days after the same shall have been deposited
with the United States mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (ii) upon transmission, when sent by
telecopy and confirmed by telecopy answerback, (iii) one (1) Business Day after
deposit with a reputable overnight carrier with all charges prepaid, or (i) when
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delivered, if hand delivered by messenger. Failure or delay in delivering copies
of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
12. SEVERABILITY. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Agent, Lenders and
Grantors with respect to the matters referred to herein and therein.
13. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any Lender
shall by any act, delay, omission or otherwise be deemed to have waived any of
its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and then only to the extent therein set forth. A waiver
by Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise have had
on any future occasion. No failure to exercise nor any delay in exercising on
the part of Agent or any Lender, any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.
None of the terms or provisions of this Security Agreement may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by Agent and Grantors.
14. LIMITATION BY LAW. All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Security Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or
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in part, or not entitled to be recorded, registered or filed under the
provisions of any applicable law.
15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 10
hereof, this Security Agreement shall terminate upon the Termination Date.
16. SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of such
Grantor) and shall, together with the rights and remedies of Agent, for the
benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the security interest granted to Agent, for
the benefit of Agent and Lenders, hereunder. No Grantor may assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this
Security Agreement.
17. COUNTERPARTS. This Security Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH
GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTORS, AGENT AND LENDERS
PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO
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THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT
AGENT, LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW
YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH ON SCHEDULE V HERETO AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT,
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OR OTHERWISE, AMONG AGENT, LENDERS AND GRANTORS ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH,
THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO.
20. Section Titles. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
21. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.
22. Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Security Agreement and, specifically,
the provisions of Section 18 and Section 19, with its counsel.
23. Benefit of Lenders. All security interests granted or
contemplated hereby shall be for the benefit of Agent and Lenders, and all
proceeds or payments realized from Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Credit Agreement.
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IN WITNESS WHEREOF, each Grantor has caused this Security Agreement
to be executed and delivered by its duly authorized officer as of the date first
set forth above.
GRANTORS:
XXXX PERFUMES CORP.
By: ____________________________________
Name: __________________________________
Title: _________________________________
COSMAR CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
GREAT AMERICAN COSMETICS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
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MEM COMPANY, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
RENAISSANCE COSMETICS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
ARISTOCRAT LEATHER PRODUCTS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
XXXXXX XXXXXX, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
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ENGLISH LEATHER, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
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ACCEPTED AND ACKNOWLEDGED BY:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
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EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by
___________________, a _____________ corporation ("Grantor") to General Electric
Capital Corporation, a New York corporation (hereinafter referred to as
"Attorney"), as Agent for itself and the benefit of Lenders, under a Credit
Agreement and a Security Agreement, both dated as of March __, 1997 and other
documents (the "Loan Documents"). No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall be required to inquire into or seek confirmation from Grantor as
to the authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which is
intended to grant to Attorney unconditionally the authority to take and perform
the actions contemplated herein, and Grantor irrevocable waives any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by Grantor without Attorney's
written consent.
Grantor hereby irrevocably constitutes and appoints Attorney (and
all officers, employees or agents designated by Attorney), with full power of
substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Loan Documents and, without limiting the generality of the
foregoing, Grantor hereby grants to Attorney the power and right, on behalf of
Grantor, without notice to or assent by Grantor, and at any time, to do the
following: (a) open mail for Grantor, and ask, demand, collect, give
acquittances and receipts for, take possession of, endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, and notices in connection with any property
of Grantor; (b) effect any repairs to any asset of Grantor, or continue or
obtain any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and adjust all claims under such policies of
insurance, and make all determinations and decisions with respect to such
policies; (c) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against Grantor or its property;
(d) defend any suit,
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action or proceeding brought against Grantor if Grantor does not defend such
suit, action or proceeding or if Attorney believes that Grantor is not pursuing
such defense in a manner that will maximize the recovery to Attorney, and
settle, compromise or adjust any suit, action, or proceeding described above
and, in connection therewith, give such discharges or releases as Attorney may
deem appropriate; (e) file or prosecute any claim, litigation, suit or
proceeding in any court of competent jurisdiction or before any arbitrator, or
take any other action otherwise deemed appropriate by Attorney for the purpose
of collecting any and all such moneys due to Grantor whenever payable and to
enforce any other right in respect of Grantor's property; (f) cause the
certified public accountants then engaged by Grantor to prepare and deliver to
Attorney at any time and from time to time, promptly upon Attorney's request,
the following reports: (1) a reconciliation of all accounts, (2) an aging of all
accounts, (3) trial balances, (4) test verifications of such accounts as
Attorney may request, and (5) the results of each physical verification of
inventory; (g) communicate in its own name with any party to any Contract with
regard to the assignment of the right, title and interest of such Grantor in and
under the Contracts and other matters relating thereto; (h) execute, in
connection with any sale provided for in any Loan Document, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral and to otherwise direct such sale or resale, all as though Attorney
were the absolute owner of the property of Grantor for all purposes, and (i)
execute the Assignment of Marks attached as Exhibit A to the Trademark Security
Agreement, as though Attorney were the absolute owner of the Trademarks
identified therein for all purposes, and do, at Attorney's option and Grantor's
expense, at any time or from time to time, all acts and other things that
Attorney reasonably deems necessary to perfect, preserve, or realize upon
Grantor's property or assets and Attorney's Liens thereon, all as fully and
effectively as Grantor might do. Grantor hereby ratifies, to the extent
permitted by law, all that said attorneys shall lawfully do or cause to be done
by virtue hereof.
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IN WITNESS WHEREOF, this Power of Attorney is executed by
Grantor pursuant to the authority of its board of directors this ___ day of
March, 1997.
___________________________________
By: ____________________________________
Name: __________________________________
Title: _________________________________
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