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Exhibit 10.11
SECURITY AGREEMENT - TRADEMARKS
AGREEMENT made as of this 1st day of July, 1994 between HOUBIGANT,
INC., a Delaware corporation, located at 0000 Xxxxxxxx Xxxx Xxxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Grantor"), NEW FRAGRANCE LICENSE CORP., a
Delaware corporation, located at c/x Xxxx Xxxx & Company, Three Pickwick Plaza,
Greenwich, Connecticut 06830 ("Licensee"), and CHEMICAL BANK NEW JERSEY, N.A.,
individually and as agent (the "Bank Agent") for CHEMICAL BANK NEW JERSEY, N.A.
and NATIONAL WESTMINSTER BANK, USA (collectively, the "Banks") located at X.X.
Xxx 0000, Xxx Xxxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the License Agreement (as defined below).
WHEREAS, on November 18, 1993 (the "Filing Date"), Licensor, together
with certain affiliates, filed a voluntary petition for relief under chapter 11
of Title 11, United States Code (the "Bankruptcy Code"), in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").
Grantor's chapter 11 case is being jointly administered by the Bankruptcy Court
under procedurally consolidated case no. 93 B 45767 (JLG) (the "Bankruptcy
Case");
WHEREAS, Grantor has adopted, used and is using, and is the owner of
the entire right, title and interest in and to, certain trademarks and designs;
WHEREAS, Grantor and Licensee have entered Into a license agreement
dated May , 1994 (and executed on or about May 2, 1994), as modified on May 12,
1994 and as further modified on June 1, 1994 (the "License Agreement"), pursuant
to which Grantor has granted Licensee certain rights to use the Trademarks for
the Products in the Territories (as defined in the License Agreement) as listed
on Schedule A thereto;
WHEREAS, pursuant to an Order of the Bankruptcy Court dated June 2,
1994, the Bankruptcy Court, inter alia, (a) authorized and approved Grantor's
implementation and effectuation of the License Agreement, and (b) authorized and
empowered Grantor to execute and deliver such additional documents and
instruments as may be necessary or appropriate to consummate the transactions
contemplated by the License Agreement, including, without limitation, this
Security Agreement (the "Approval Order");
WHEREAS, both prior to and subsequent to the Filing Date, Licensor and
certain of its affiliates incurred certain indebtedness to the Banks (in the
aggregate, the "Bank Debt") under certain pre-petition and post-Filing Date loan
documents (collectively, the "Bank Loan Documents");
WHEREAS, the Banks hold valid, first priority, duly perfected liens
against and security interests in and to all or substantially all assets of
Grantor, including, without limitation, the Trademarks, to secure repayment of
the Bank Debt; and
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WHEREAS, the Banks have consented to permit Grantor to grant Licensee a
second priority lien against and security interest in and to the Trademarks for
the Products in the Territories, which lien and security interest shall be in
all respects subordinate in right and priority to the lien and security interest
of the Banks in and to the Trademarks, and subject further to the terms and
provisions of the License Agreement and this Security Agreement;
NOW, THEREFORE, IT IS AGREED that, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantor does hereby
grant to Licensee a security interest in all of its right, title and interest in
and to each of the Trademarks for the Products in the Territories, as set forth
below.
1. Grant of Security Interest. Subject to the terms and provisions of
this Agreement, this security interest shall secure the prompt payments,
performance and observances of all Obligations (as hereinafter defined) by
Grantor. The grant of this security interest by Grantor to Licensee shall be in
all respects subordinate in right and priority to the lien and security interest
of the Banks in and to the Trademarks.
2. Definitions.
(a) "Obligations" shall mean any and all obligations of
any kind incurred by Grantor to Licensee arising
under the License Agreement including, without
limitation, the liabilities and obligations evidenced
by or issued, created or arising in connection with
this Agreement, that arise, result from, or are
connected to Grantor's rejection or disaffirmance of
the License Agreement pursuant to Section 365 of the
Bankruptcy Code in any subsequent case under chapter
11 of the Bankruptcy Code commenced by the Grantor (a
"Rejection Event").
(b) "Enforcement" means, collectively or individually,
for (i) Licensee to declare a "Rejection Event" under
the License Agreement; and/or (ii) the Banks and/or
the Bank Agent to demand payment in full of or
accelerate the indebtedness of Grantor to the Banks
and to commence the judicial or nonjudicial
enforcement of any of the rights and remedies under
the Bank Loan Documents or any anticipated plan of
reorganization of Grantor, as the case may be.
(c) "Enforcement Notice" means a written notice delivered
in accordance with Section 11 hereof, which notice
shall (i) if delivered by Licensee, state that an
"Rejection Event" under the License Agreement has
occurred, specify the nature of such Rejection Event,
and announce that an Enforcement Period (as
hereinafter defined) has commenced and (ii) if
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delivered by the Banks or the Bank Agent, state that
an "Event of Default" under the Bank Loan Documents
with respect to Grantor's failure to make a payment
or Grantor's breach of a financial covenant or any
anticipated plan of reorganization of Grantor, as the
case may be, has occurred and that the applicable
cure period, if any, has expired and the Event of
Default has not been cured by Grantor, and shall
specify the nature of such event of default, and
announce that an Enforcement Period has commenced.
(d) "Enforcement Period" means the period of time
following the receipt by either the Bank Agent or
Licensee of an Enforcement Notice delivered by the
other until the earlier of the following: (i) Grantor
shall have paid its obligations in full to the Banks
under the Bank Loan Documents; (ii) Grantor has cured
the Rejection Event which gave rise to Licensee's
Enforcement Notice; (iii) the party delivering an
Enforcement Notice agrees in writing to (a) rescind
its Enforcement Notice and (b) terminate the
Enforcement Period.
3. Representations and Warranties. Grantor hereby represents, warrants,
covenants and agrees as follows:
(a) Grantor has not abandoned any of the Trademarks for the
Products in the Territories.
(b) Except as provided otherwise in the License Agreement,
Grantor will, at Licensee's expense, perform all acts and execute all documents
requested by Licensee at any time to evidence, perfect, maintain, record and
enforce this security interest in the Trademarks for the Products in the
Territories or otherwise in furtherance of the provisions of this Agreement, and
Grantor hereby authorizes Licensee to execute and file one or more financing
statements (and similar documents) or copies thereof, in substantially the form
annexed as Exhibit "A" hereto and made a part hereof, or of this Security
Agreement, with respect to the Trademarks for the Products in the Territories,
signed only by Licensee;
(c) Except as provided otherwise in the License Agreement,
Grantor will not do any act, or omit to do any act, whereby the Trademarks may
become abandoned, invalidated, unenforceable, avoided or avoidable and, to the
extent required by the terms and provisions of the License Agreement, shall
notify Licensee immediately if it knows of any reason or has reason to know that
any application, registration or recording may become abandoned, canceled,
invalidated, avoided or avoidable;
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(d) Provided such action is not inconsistent with or
prohibited by the License Agreement, or this Agreement, Licensee may, at its
sole discretion and expense, pay any amount or do any act required of Grantor
hereunder or requested by Licensee to preserve, defend, protect, maintain,
record or enforce Grantor's obligations contained herein, the Obligations, the
Trademarks for the Products in the Territories, or the right, title and interest
granted Licensee herein, and which Grantor fails to do or pay;
(e) Subject to the provisions of the License Agreement, if
Grantor files an application(s) for the registration of a Trademark with the
United States Patent and Trademark Office or any similar office or agency in the
United States, which Trademark, if registered, would constitute Licensee's
collateral under this Agreement, Grantor shall promptly notify Licensee of such
registration and, to the extent required by this Agreement or the License
Agreement, as the case may be, and upon request by Licensee, and subject to
receipt of the prior written consent of the Banks thereto, execute and deliver
any and all agreements, instruments and documents necessary or appropriate to
evidence Licensee's security interest in such Trademark upon its registration;
(f) The Trademarks for the Products in the Territories now
owned by Grantor are valid and subsisting and in full force and effect. Subject
to the valid, duly existing and perfected security interest of the Banks
therein, Grantor has the sole, full and clear title thereto, and, with the
consent of the Banks, the right and power to grant the security interest herein
granted. The Trademarks for the Products in the Territories are not subject to
any liens, claims, mortgages, assignments, licenses, security interests or
encumbrances of any nature whatsoever, except as otherwise specifically set
forth herein and on Schedule B annexed hereto;
(g) Subject to the terms and provisions of the License
Agreement, so long as there are Obligations owing to Licensee, Grantor will not
assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security
interest in or lien upon that is prior or senior in right to the lien and
security interest herein granted to Licensee, encumber, or otherwise dispose of
any of the Trademarks for the Products in the Territories, without the prior
written consent of the Banks and Licensee, and nothing in this Agreement shall
be deemed a consent by Licensee to any such action except as expressly permitted
herein;
(h) As of the date hereof, Grantor does not have any
Trademarks for the Products in the Territories registered in, or the subject of
pending applications in, the United States Patent and Trademark Office or any
similar office or agency in the United States that would be subject to the terms
of the License Agreement and/or this Agreement, other than those that may be
described in Schedule D to the License Agreement and made a part hereof;
(i) Subject to the terms and provisions of the License
Agreement, Grantor will render any assistance necessary to Licensee in any
proceeding before the United States Patent and Trademark Office or any similar
office
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or agency in the United States to maintain each application and registration of
the Trademarks, including, without limitation, filing of renewals, affidavits of
use, affidavits of incontestability and opposition, interference and
cancellation proceedings.
4. Rights and Remedies. Each of the Bank Agent and Licensee agrees to
use its best efforts to give an Enforcement Notice to the other prior to
commencement of Enforcement. In the event of the issuance by Licensee of Notice
of a Rejection Event and during an Enforcement Period, Licensee shall have the
following rights and remedies (to the extent permitted by applicable law) in
addition to all other rights and remedies of Licensee, whether under law, the
Obligations, or otherwise, all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively or concurrently, without
(except as provided herein) notice to, or consent by Grantor: (a) neither
Grantor nor any affiliate or subsidiary thereof shall make any use of the
Trademarks or any xxxx similar thereto for any purpose; (b) Licensee may, at any
time and from time to time, upon ten (10) days prior notice to Grantor, license,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, the Collateral, throughout the United States of America,
its territories and possessions, for such term or terms, on such conditions, and
in such manner, as Licensee shall in its sole discretion determine; (c) Licensee
may, at any time and from time to time, upon ten (10) days' prior notice to
Grantor, assign, sell, or otherwise dispose of, the Collateral or any of it,
either with or without special or other conditions or stipulations, with power
to buy the Collateral or any part of it, and with power also to execute
assurances, and do all other acts and things for completing the assignment, sale
or disposition which Licensee shall, in its sole discretion, deem appropriate or
proper; and (d) in addition to the foregoing, in order to implement the
assignment, sale or other disposal of any of the Collateral pursuant to
subparagraph 4(c) hereof, Licensee may at any time, pursuant to the authority
granted in the Powers of Attorney described in paragraph 5 hereof, execute and
deliver on behalf of Grantor, one or more instruments of assignment of the
Trademarks (or any application, registration or recording thereof), in form
suitable for filing, recording or registration. Grantor agrees to pay when due
all costs incurred in any such transfer of the Collateral, including any taxes,
fees and attorneys' fees, and all such costs not so paid shall be added to and
deemed additional advances under the License Agreement. Licensee may apply the
proceeds actually received from any such license, assignment, sale or other
disposition to the reasonable costs and expenses thereof, including, without
limitation, reasonable attorneys' fees and all legal, travel and other expenses
which may be incurred by Licensee as a result of Grantor's breach of
Obligations, and Grantor shall remain liable and will pay Licensee on demand any
deficiency remaining to compensate Licensee for any such breach. Nothing herein
contained shall be construed as requiring Licensee to take any such action at
any time. In the event of any such license, assignment, sale or other
disposition of the Collateral, or any of it, after the occurrence of a Rejection
Event, Grantor shall supply its know-how and expertise relating to the
manufacture and sale of the products and services bearing the Trademarks to
Licensee or its designee. Notwithstanding the foregoing, the parties hereto
agree that during an Enforcement Period:
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(a) Licensee shall not take any action to foreclose or realize
upon or to enforce any rights it may have with respect to the Trademarks for the
Products in the Territories without the Banks' or Bank Agent's prior written
consent thereto, unless the Bank Debt shall have been first paid and satisfied
in full; and
(b) Subject to any applicable restrictions in the Bank Loan
Documents, the Banks or the Bank Agent, as the case may be, may, at their/its
option and without the prior written consent of Licensee, take any action to
accelerate payment of the Bank Debt and/or to foreclose or realize upon or
enforce any of its rights with respect to the Trademarks.
5. Power of Attorney. Concurrently with the execution and delivery
hereof, Grantor is executing and delivering to Licensee in the form of Exhibit 1
hereto, ten originals of a Power of Attorney for the implementation of the
assignment, sale or other disposal of the Collateral pursuant to paragraph 4
hereof.
6. Notices of Default. From and after the date of this Agreement,
Licensee agrees to use reasonable efforts to give the Banks, or the Bank Agent,
copies of any notice sent to Grantor with respect to the occurrence or existence
of a Rejection Event, default or other breach under the License Agreement or
this Agreement. From and after the date of this Agreement, the Banks agree to
use reasonable efforts to give Licensee, or its authorized agent or designee,
copies of any notice sent to Grantor with respect to the occurrence or existence
of a default or other breach under the Bank Loan Documents or any anticipated
plan of reorganization of Grantor, in each case simultaneously with the sending
of any such notice to Grantor.
7. Modification. No provision hereof shall be modified, altered or
limited except by a written instrument expressly referring to this Agreement and
executed by the party to be charged. The execution and delivery of this
Agreement has been authorized by the Board of Directors of Grantor and by the
Bankruptcy Court in the Bankruptcy Case.
8. Successors and Assigns. This Agreement shall be binding upon the
successors, assigns or other legal representatives of Grantor, and shall,
together with the rights and remedies of Licensee hereunder, inure to the
benefit of Licensee, its successors, assigns or other legal representatives.
9. Governing Law. This Agreement, the Obligations and the Trademarks
for the Products in the Territories shall be governed in all respects by the
laws of the United States and the laws of the State of New Jersey.
10. Severability. If any term of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby.
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11. Counterparts. This Agreement may be executed in one or more
counterparts which when taken together shall constitute one and the same
Security Agreement.
12. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
telecommunications and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
above or at such other address as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall be
effective upon receipt, or, in the case of notice by mail, five (5) days after
being deposited in the mails, postage prepaid, or in the case of notice by
telex, when telexed against receipt of the answer back, or in the case of notice
by facsimile copy, when verbal confirmation of receipt is obtained, in each case
addressed as aforesaid.
13. Third-Party Beneficiaries. The terms and provisions of this
Agreement shall be for the sole benefit of the Grantor, Licensee and the Banks
for their respective successors and assigns and no other Person shall have any
right, benefit, or priority by reason of this Agreement.
14. Section Titles. The article and section headings contained in this
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.
IN WITNESS WHEREOF, Grantor and Licensee have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
HOUBIGANT, INC.
By: /s/ Xxxxx Xxxxxxxxx Pres.
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(Title)
NEW FRAGRANCE LICENSE CORP.
By: /s/
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GROUP (Title)
VICE
PRESIDENT
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CHEMICAL BANK NEW JERSEY, N.A.
as agent for CHEMICAL BANK NEW
JERSEY, N.A. and NATIONAL
WESTMINSTER BANK, USA
By: /s/
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VICE PRESIDENT (Title)
CHEMICAL BANK NEW JERSEY, N.A.
By: /s/
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VICE PRESIDENT (Title)
NATIONAL WESTMINSTER BANK, USA
By: /s/ Xxxx XxXxxxxxxx
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VICE PRESIDENT
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