EXHIBIT 4.9
EXECUTION COPY
SECURITY AGREEMENT dated as of May 20, 2003,
among JAFRA COSMETICS INTERNATIONAL, INC., a Delaware
corporation ("JCI" or the "Grantor"), each subsidiary
of JCI listed on Schedule I hereto (each such
subsidiary individually a "Subsidiary Grantor" and
collectively, the "Subsidiary Grantors"; the
Subsidiary Grantors and JCI are referred to
collectively herein as the "Grantors") and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland, acting through its Cayman Islands
branch, as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined herein).
Reference is made to (a) the Credit Agreement dated as of May 20, 2003
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Jafra Worldwide Holdings (Lux) S.AR.L., a Luxembourg societe
a responsabilite limitee ("Parent"), Distribuidora Comercial Jafra, S.A. de
C.V., a sociedad anonima de capital variable organized under the laws of the
United Mexican States ("DCJ" and, together with JCI, the "Borrowers"), the
lenders from time to time party thereto (the "Lenders"), the Issuing Bank (as
defined therein) and Credit Suisse First Boston, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), as swingline lender and
as Collateral Agent and (b) the JCI Guarantee Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrowers
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. JCI has agreed to guarantee, among other things, all the
obligations of DCJ under the Credit Agreement. The Subsidiary Grantors will
agree to guarantee, among other things, all the obligations of JCI under the
Credit Agreement and the JCI Guarantee Agreement. The obligations of the Lenders
to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned
upon, among other things, the execution and delivery by the Grantors of an
agreement in the form hereof to secure their respective obligations under the
Credit Agreement, the JCI Subsidiary Guarantee Agreement and the other Loan
Documents, including (a) in the case of JCI, (i) the due and punctual payment by
JCI of (A) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans of JCI, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (B) each payment required to be made by JCI under the Credit
Agreement in respect of any Letter of Credit issued for its account, when and as
due, including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (C) all other monetary
obligations, including fees, costs, expenses and indemnities, whether direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
JCI to the Secured Parties under the Credit Agreement, the JCI Guarantee
Agreement and the other Loan Documents, (ii) the due and punctual performance of
all covenants, agreements, obligations and liabilities of JCI under or pursuant
to the Credit Agreement, the JCI Guarantee Agreement and the other Loan
Documents, (iii) unless otherwise agreed to in writing by the applicable
counterparty thereto, the due and punctual payment and performance of all
obligations of JCI under each Hedging Agreement entered into with any
counterparty (whether or not a Lender or an Affiliate thereof) and (iv) the due
and punctual payment and performance of all guarantee obligations of JCI
referred to in Section 6.01(d)(ii) of the Credit Agreement as to which any
Lender or any Affiliate thereof is originally a beneficiary (all the monetary
and other obligations described in the preceding clauses (i) through (iv) being
collectively called the "JCI Obligations") and (b) in the case of any Subsidiary
Grantor, its respective obligations under the JCI Subsidiary Guarantee Agreement
and the other Loan Documents to which such Subsidiary Grantor is a party (the
"Subsidiary Grantor Obligations" and, together with the JCI Obligations, the
"Obligations").
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Accordingly, each Grantor and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement and all references to the Uniform
Commercial Code shall mean the Uniform Commercial Code in effect in the State of
New York as of the date hereof.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall have the meaning set forth in the Uniform Commercial
Code.
"Chattel Paper" shall have the meaning set forth in the Uniform
Commercial Code.
"Collateral" shall mean, with respect to each Grantor, all (a)
Accounts, (b) Contracts, (c) Documents, (d) Equipment, (e) General Intangibles,
(f) Inventory, (g) cash and cash accounts, (h) Intellectual Property, (i)
Investment Property, (j) Instruments, (k) Chattel Paper and (l) Proceeds of the
foregoing, excluding the Specified Securities.
"Contracts" shall mean, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof, to
which such Grantor is a party or under which such Grantor has any right, title
or interest or to which such Grantor or any property of such Grantor is subject,
as the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (a) all rights of such Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of such Grantor to damages arising thereunder and (c)
all rights of such Grantor to perform and to exercise all remedies thereunder.
"Copyright Licenses" shall mean, with respect to any Grantor, all
United States written license agreements of such Grantor with any Person who is
not an Affiliate or a Subsidiary providing for the grant by such Grantor of any
right to use any Copyright of such Grantor, subject, in each case, to the terms
of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.
"Copyrights" shall mean, with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States copyrights,
whether or not the underlying works of authorship have been published or
registered, United States copyright registrations and copyright applications and
(a) all renewals thereof, (b) all income, royalties, damages and payments now
and hereafter due and/or payable with respect thereto, including payments under
all licenses entered into in connection therewith, and damages and payments for
past, present or future infringements thereof and (c) the right to xxx or
otherwise recover for past, present and future infringements thereof.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
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"Documents" shall have the meaning set forth in the Uniform Commercial
Code.
"Equipment" shall have the meaning set forth in the Uniform Commercial
Code (other than all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any state
and all liens and other appurtenances to any of the foregoing).
"General Intangibles" shall have the meaning specified in the Uniform
Commercial Code, excluding the Specified Securities.
"Instruments" shall have the meaning specified in the Uniform
Commercial Code, excluding the Specified Securities.
"Intellectual Property" shall mean, with respect to any Grantor, the
collective reference to such Grantor's Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trade Secrets, Trademarks and Trademark Licenses.
"Inventory" shall mean, with respect to any Grantor, all inventory (as
defined in the Uniform Commercial Code) of such Grantor.
"Investment Property" shall have the meaning specified in the Uniform
Commercial Code, excluding the Specified Securities.
"IP Collateral" shall mean, with respect to any Grantor, the collective
reference to such Grantor's Patents, Patent Licenses, Trademarks, Trademark
Licenses, General Intangibles connected with the use of or symbolized by the
Trademarks and Patents and, to the extent not otherwise included, all Proceeds
and products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
"License" shall mean any Patent License, Trademark License or Copyright
License to which any Grantor is a party, including those listed on Schedule II.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent Licenses" shall mean with respect to any Grantor, all United
States written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Patents of such Grantor
or such other Person's patents, whether such Grantor is a licensor or a licensee
under any such agreement, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all
Inventory now or hereafter covered by such licenses.
"Patents" shall mean with respect to any Grantor, all of such Grantor's
right, title and interest in and to all United States patents, patent
applications and patentable inventions, including all patents and patent
applications identified in Schedule III and including (a) all inventions and
improvements described and claimed therein, (b) the right to xxx or otherwise
recover for any and all past, present and future infringements thereof, (c) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including payments under all licenses entered into
in connection therewith, and damages and payments for past, present or future
infringements thereof) and (d) all other rights corresponding thereto in the
United States and all reissues, divisions, continuations, continuations-in-part,
substitutes, renewals, and extensions thereof, all improvements thereon and all
other rights of any kind whatsoever of such Grantor accruing thereunder or
pertaining thereto.
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"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 1 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of JCI.
"Proceeds" shall have the meaning set forth in the Uniform Commercial
Code.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) unless otherwise
agreed to in writing by the applicable counterparty thereto, each counterparty
to a Hedging Agreement entered into with JCI (whether or not a Lender or an
Affiliate of a Lender) at the time the Hedging Agreement was entered into, (f)
the beneficiaries of each indemnification obligation undertaken by any Grantor
under any Loan Document and (g) the successors and assigns of each of the
foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Specified Securities" shall mean, collectively, (a) all Pledged
Securities (as defined in the Pledge Agreement) constituting certificated
securities (as defined in the Uniform Commercial Code), the certificates for
which have been delivered to and are held by the Collateral Agent under the
Pledge Agreement, and (b) all properties and assets specifically excluded from
the definition of "Pledged Securities" in the Pledge Agreement (including
without limitation, any Capital Stock of any Foreign Subsidiary in excess of 65%
of any series of such stock and intercompany indebtedness).
"Trade Secrets" shall mean, with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States trade secrets,
including know-how, processes, formulae, compositions, designs and confidential
business and technical information, and all rights of any kind whatsoever
accruing thereunder or pertaining thereto, including (a) all income, royalties,
damages and payments now and hereafter due and/or payable with respect thereto,
including payments under all licenses, non-disclosure agreements and memoranda
of understanding entered into in connection therewith and damages and payments
for past or future misappropriations thereof and (b) the right to xxx or
otherwise recover for past, present or future misappropriations thereof.
"Trademark Licenses" shall mean, with respect to any Grantor, all
United States written license agreements of such Grantor with any Person who is
not an Affiliate or a Subsidiary in connection with any of the Trademarks of
such Grantor or such other Person's names or trademarks, whether such Grantor is
a licensor or a licensee under any such agreement, subject, in each case, to the
terms of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.
"Trademarks" shall mean with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States trademarks,
service marks, trade names, trade dress or other indicia of trade origin or
business identifiers, trademark and service xxxx registrations, and applications
for trademark or service xxxx registrations (except for "intent to use"
applications for trademark or service xxxx registrations filed pursuant to
Section 1(b) of the Xxxxxx Act, 15 U.S.C. ss. 1051, unless and until an
Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of
said Act has been filed), and any renewals thereof, including each registration
and application identified in Schedule IV, and including (a) the right to xxx or
otherwise recover for any and all past, present and future infringements or
dilutions thereof, (b) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including payments under all
licenses entered into in connection therewith, and damages and payments for
past, present or future infringements thereof) and (c) all other rights
corresponding thereto in the United States and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto in the
United States, together in each case with
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the goodwill of the business connected with the use of, and symbolized by, each
such trademark, service xxxx, trade name, trade dress or other indicia of trade
origin or business identifiers.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. Subject to Section 2.03, each Grantor,
as security for the payment or performance, as the case may be, in full of the
Obligations, hereby grants to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, a security interest in, all of
such Grantor's right, title and interest in, to and under its respective
Collateral (the "Security Interest"). Without limiting the foregoing, the
Collateral Agent is hereby authorized to file one or more financing statements,
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office) or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Grantor, without the signature
of such Grantor, and naming such Grantor as debtor and the Collateral Agent as
secured party (in each case, to the extent permitted by applicable law). The
Collateral Agent shall provide copies of each such filing to the Grantors
promptly upon the filing or recordation of any such filing.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
SECTION 2.03. Certain Exceptions. No Security Interest is or will be
granted pursuant hereto in (and the term "Collateral" shall not include) the
right, title and interest of any Grantor under or in:
(a) any Instruments, Contracts, Chattel Paper, Documents,
General Intangibles, Licenses or other contracts or agreements with or
issued by Persons other than Parent, the Subsidiaries or the Borrowers
(collectively, "Excluded Agreements") that would otherwise be included
in the Collateral (and such Excluded Agreements shall not be deemed to
constitute a part of the Collateral) for so long as, and to the extent
that, the granting of such a Security Interest pursuant hereto would
result in a breach, default or termination of such Excluded Agreements;
(b) any Equipment that would otherwise be included in the
Collateral (and such Equipment shall not be deemed to constitute a part
of the Collateral) if such Equipment is subject to a Lien permitted by
Section 6.02(g) of the Credit Agreement; or
(c) any Specified Securities.
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ARTICLE III
Representations and Warranties
Each Grantor represents and warrants to the Collateral Agent and the
Secured Parties that:
SECTION 3.01. Title and Authority. Such Grantor has good and valid
rights in and title to its Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Collateral Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other Person other
than any consent or approval which has been obtained.
SECTION 3.02. Perfected Liens. (a) This Agreement is effective to
create, as collateral security for the Obligations of such Grantor, valid and
enforceable Liens on such Grantor's Collateral in favor of the Collateral Agent,
for the benefit of the Secured Parties, except as enforceability may be affected
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(b) Except with regard to Liens (if any) on Specified Assets, upon the
completion of the Filings, and the delivery to and continuing possession by the
Collateral Agent of all Instruments, Chattel Paper and Documents, a security
interest in which is perfected by possession, and the assumption and retention
of control by the Collateral Agent of Electronic Chattel Paper, the Liens
created pursuant to this Agreement will constitute valid Liens on and (to the
extent provided herein) a perfected Security Interest in such Grantor's
Collateral in favor of the Collateral Agent for the benefit of the Secured
Parties, and will be prior to all other Liens of all other Persons other than
Permitted Liens, and which Liens are enforceable as such as against all other
Persons other than Ordinary Course Buyers, except to the extent that the
recording of an assignment or other transfer of title to the Collateral Agent or
the recording of other applicable documents in the United States Patent and
Trademark Office, the United States Copyright Office or the Commonwealth of
Puerto Rico may be necessary for perfection or enforceability, and except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) or by an implied
covenant of good faith and fair dealing. As used in this Section 3.02, the
following terms shall have the following meanings:
(i) "Filings" shall mean the filing or recording of the
Financing Statements, the Mortgages, and this Agreement as set forth in
Section 3.20 of the Credit Agreement, and any filings after the Closing
Date in any other jurisdiction as may be necessary under any
Requirement of Law.
(ii) "Financing Statements" shall mean the financing
statements delivered to the Collateral Agent by each Grantor on the
Closing Date for filing in the jurisdictions listed on Schedule 3.20 to
the Credit Agreement (which Financing Statements are in proper form for
filing in such jurisdictions).
(iii) "Ordinary Course Buyers" shall mean, with respect to
goods only, buyers in the ordinary course of business to the extent
provided in Section 9-320 of the Uniform Commercial Code as in effect
from time to time in the applicable jurisdiction and, with respect to
general intangibles only, licensees in the ordinary course of business
to the
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extent provided in Section 321 of the Uniform Commercial Code as in
effect from time to time in the applicable jurisdiction.
(iv) "Permitted Liens" shall mean Liens permitted pursuant to
the Loan Documents, including those permitted to exist pursuant to
Section 6.02 of the Credit Agreement.
(v) "Specified Assets" shall mean the following property and
assets of each Grantor:
(A) Equipment constituting Fixtures;
(B) Patents, Patent Licenses, Trademarks and Trademark
Licenses to the extent that (1) Liens thereon cannot be perfected by
the filing of financing statements under the Uniform Commercial Code or
by the filing and acceptance thereof in the United States Patent and
Trademark Office or (2) such Patents, Patent Licenses, Trademarks and
Trademarks Licenses as are not, individually or in the aggregate,
material to the business of the Parent, the Borrowers and the
Subsidiaries taken as a whole;
(C) Copyrights and Copyright Licenses and Accounts or
receivables arising therefrom only to the extent that the Uniform
Commercial Code as in effect from time to time in the relevant
jurisdiction is not applicable to the creation or perfection of Liens
thereon;
(D) uncertificated securities;
(E) Collateral for which the perfection of Liens thereon
requires filings in or other actions under the laws of jurisdictions
outside the United States of America, any State, territory or
dependency thereof or the District of Columbia;
(F) Contracts, Accounts or receivables on which the United
States of America or any department, agency or instrumentality thereof
is the obligor, and property or assets subject to any rights reserved
in favor of the United States government as required under law;
(G) goods included in Collateral received by any Person for
"sale or return" within the meaning of Section 2-326 of the Uniform
Commercial Code of the applicable jurisdiction, to the extent of claims
of creditors of such Person; and
(H) Proceeds of Accounts or Inventory which proceeds do not
themselves constitute Collateral or which have not been transferred to
the Collateral Agent.
SECTION 3.03. IP Collateral. Schedules II, III and IV together list all
material Trademarks and Patents in each case registered in the United States
Patent and Trademark Office and owned by such Grantor in its own name as of the
date hereof, and all material Trademark Licenses and Patent Licenses (including
material Trademark Licenses for registered Trademarks and Patent Licenses for
registered Patents) owned by such Grantor in its own name as of the date hereof.
SECTION 3.04. Farm Products. None of such Grantor's Collateral
constitutes, or is the Proceeds of, Farm Products.
SECTION 3.05. Accounts. The amount represented by such Grantor to the
Collateral Agent or the other Secured Parties from time to time as owing by each
account debtor or by all
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account debtors in respect of such Grantor's Accounts will at such time be the
correct amount, in all material respects, actually owing by such account debtor
or debtors thereunder, except to the extent that appropriate reserves therefor
have been established on the books of such Grantor in accordance with GAAP.
Unless otherwise indicated in writing to the Collateral Agent, each Account of
such Grantor arises out of a bona fide sale and delivery of goods or rendition
of services by such Grantor. Such Grantor has not given any account debtor any
deduction in respect of the amount due under any such Account, except in the
ordinary course of business or as such Grantor may otherwise advise the
Collateral Agent in writing.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its properties
to the extent that any financing statement filed in connection with this
Agreement would become seriously misleading, (ii) in the jurisdiction of its
incorporation or organization, (iii) in its identity or corporate structure to
the extent that any financing statement filed in connection with this Agreement
would become seriously misleading or (iv) in its Organizational Identification
Number, if any. Each Grantor agrees to make all filings (other than in the
Commonwealth of Puerto Rico) under the Uniform Commercial Code or otherwise that
are required in order for the Collateral Agent to continue at all times
following such change to have a perfected security interest in all the
Collateral (other than Specified Assets).
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged.
SECTION 4.02. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all reasonable actions necessary to defend title
to the Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral as a perfected security interest having at
least the priority described in Section 3.02 against any Lien not permitted
pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.03. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
SECTION 4.04. Inspection and Verification. At any time during the
occurrence and continuance of an Event of Default, the Collateral Agent and such
Persons as the Collateral Agent may reasonably designate shall have the right,
at each Grantor's own cost and expense, to inspect such Grantor's Collateral,
all records related thereto (and to make extracts and copies from such records)
and the premises upon which any of such Grantor's Collateral is located, to
discuss such Grantor's affairs with the officers of such Grantor and its
independent accountants and to verify
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under reasonable procedures the validity, amount, quality, quantity, value,
condition and status of, or any other matter relating to, such Grantor's
Collateral, excluding, however, in the case of Accounts or Collateral in the
possession of any third Person, by contacting Account Debtors or the third
Person possessing such Collateral for the purpose of making such a verification.
The Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any Lender (it being understood
that any such information shall be deemed to be "Confidential Information"
subject to the provisions of Section 9.17 of the Credit Agreement).
SECTION 4.05. Taxes; Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
that are not permitted pursuant to the Credit Agreement, and may pay for the
maintenance and preservation of any Grantor's Collateral to the extent such
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor severally agrees to reimburse the Collateral Agent on demand
for any reasonable payment made or any reasonable expense incurred by the
Collateral Agent pursuant to the foregoing authorization on such Grantor's
behalf; provided, however, that nothing in this Section 4.05 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.
SECTION 4.06. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral.
SECTION 4.07. Use and Disposition of Collateral. None of the Grantors
shall grant any Lien in respect of the Collateral, except as permitted by the
Credit Agreement. Each Grantor agrees that if any Inventory is in the possession
or control of any warehouseman, bailee, agent or processor and the Collateral
Agent reasonably requests, such Grantor shall inform such warehouseman, bailee,
agent or processor of the Security Interest and shall use good faith efforts to
obtain from such warehouseman, bailee, agent or processor its agreement to hold
the Inventory subject to the Security Interest and to waive and release any Lien
held by it with respect to such Inventory (unless such Lien is permitted by the
Credit Agreement or other Loan Document), whether arising by operation of law or
otherwise.
SECTION 4.08. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any Person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, releases,
discounts, compromises or settlements granted that would not reasonably be
expected to materially adversely affect the value of the Accounts constituting
Collateral taken as a whole.
SECTION 4.09. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage in
accordance with Section 5.06 of the Credit Agreement. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default specified in Section 7.01(a) or 7.02(a), of making,
settling and adjusting claims in respect of such Grantor's Collateral under
policies of insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that any Grantor at any time or times shall fail to obtain or
maintain any of the policies of
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insurance required hereby or to pay any premium in whole or part relating
thereto, the Collateral Agent may, without waiving or releasing any obligation
or liability of such Grantor hereunder, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Collateral Agent reasonably deems advisable.
All sums disbursed by the Collateral Agent in connection with this Section 4.09,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the respective Grantor to
the Collateral Agent and shall be additional Obligations secured hereby.
SECTION 4.10. Covenants Regarding Copyrights, Patents, and Trademarks.
(a) Within 90 days after the end of each calendar year, such Grantor will notify
the Collateral Agent of any acquisition by such Grantor of any registration of
any material Copyright, Patent or Trademark or any exclusive right under a
material License, in each case constituting Collateral and shall take such
actions as may be reasonably requested by the Collateral Agent (but only to the
extent such actions are within such Grantor's control) to perfect the Security
Interest granted to the Collateral Agent and the other Secured Parties therein
to the extent provided in respect of Copyrights, Patents or Trademarks
constituting Collateral on the date hereof (including without limitation by (x)
the execution and delivery of a Security Agreement (or amendments to any such
agreement previously executed or delivered by such Grantor) and/or (y) the
making of appropriate filings in the United States Patent and Trademark Office
or the United States Copyright Office and/or appropriate Uniform Commercial Code
filings).
(b) Except as permitted in the Loan Documents, such Grantor agrees to
take all reasonably necessary steps, including in the United States Patent and
Trademark Office or in any court, to (i) maintain each trademark registration
and each Trademark License identified on Schedule II or IV hereto, as the case
may be, and (ii) pursue each trademark application now or hereafter identified
in Schedule V hereto, including, without limitation, the filing of responses to
office actions issued by the United States Patent and Trademark Office, the
filing of applications for renewal, the filing of affidavits under Sections 8
and 15 of the United States Trademark Act, and the participation in opposition,
cancelation, infringement and dilution proceedings, except, in each case in
which such Grantor has reasonably determined that any of the foregoing is not of
material economic value to it. Such Grantor agrees to take corresponding steps
with respect to each new or acquired trademark or service xxxx registration, or
application for trademark or service xxxx registration, or any rights obtained
under any Trademark License, in each case, to which it is now or later becomes
entitled, except in each case in which such Grantor has reasonably determined
that any of the foregoing is not of material economic value to it. Any expenses
incurred in connection with such activities shall be borne by such Grantor.
(c) Except as permitted in the Loan Documents, such Grantor agrees to
take all necessary steps, including in the United States Patent and Trademark
Office or in any court, to (i) maintain each patent and each Patent License
identified on Schedule II or III, as applicable, and (ii) pursue each patent
application, now or hereafter identified in Schedule III including the filing of
divisional, continuation, continuation-in-part and substitute applications, the
filing of applications for reissue, renewal or extensions, the payment of
maintenance fees, and the participation in interference, reexamination,
opposition or infringement and misappropriation proceedings, except, in each
case in which such Grantor has reasonably determined that any of the foregoing
is not of material economic value to it. Such Grantor agrees to take
corresponding steps with respect to each new or acquired patent, patent
application, or any rights obtained under any Patent License, in each case,
which it is now or later becomes entitled, except in each case in which such
Grantor has reasonably determined that any of the foregoing is not of material
economic value to it. Any expenses incurred in connection with such activities
shall be borne by such Grantor.
(d) Except as provided in subsection (f) hereof, such Grantor shall
take all additional steps not set forth in subsections (b) and (c) hereof which
it or the Collateral Agent deems
11
reasonably appropriate under the circumstances to preserve and protect its
material Copyrights, Copyright Licenses, Trademarks, Trademark Licenses, Patents
and Patent Licenses.
(e) Such Grantor shall not abandon any trademark registration, patent
or any pending trademark or patent application, in each case listed on Schedule
III or IV, without the written consent of the Collateral Agent, unless such
Grantor shall have previously determined that such use or the pursuit or
maintenance of such trademark registration, patent or pending trademark or
patent application is not of material economic value to it, in which case, such
Grantor will, at least annually, give notice of any such abandonment to the
Collateral Agent in writing, in reasonable detail, at its address set forth in
the Credit Agreement.
(f) In the event that any Grantor becomes aware that any of such
Grantor's IP Collateral which such Grantor has reasonably determined to be
material to its business is infringed or misappropriated by a third party, which
infringement or misappropriation would reasonably be expected to have a Material
Adverse Effect, such Grantor shall notify the Collateral Agent promptly and in
writing, in reasonable detail, at its address set forth in the Credit Agreement,
and shall take such actions as such Grantor or the Collateral Agent deems
reasonably appropriate under the circumstances to protect such IP Collateral
including suing for damages and/or for an injunction against such infringement
or misappropriation. Any expense incurred in connection with such activities
shall be borne by such Grantor. Such Grantor will advise the Collateral Agent
promptly and in writing, in reasonable detail, at its address set forth in the
Credit Agreement, of any adverse determination or the institution of any
proceeding (including, without limitation, the institution of any proceeding in
the United States Patent and Trademark Office or any court) regarding any item
of such Grantor's IP Collateral which could reasonably result in a Material
Adverse Effect.
(g) Such Grantor shall xxxx its products with the trademark
registration symbol (R), the numbers of all appropriate patents, the common law
trademark symbol (TM), or the designation "patent pending", as the case may be,
to the extent that it is reasonably and commercially practicable.
(h) Such Grantor will not create, incur or permit to exist, will defend
such Grantor's IP Collateral against, and will take such other action as is
reasonably necessary to remove, any material Lien or material adverse claim on
or to any of such Grantor's IP Collateral other than Liens created hereby and
other than as permitted pursuant to the Loan Documents (including any Liens
permitted to exist on such Grantor's IP Collateral pursuant to Section 6.02 of
the Credit Agreement), and will defend the right, title and interest of the
Collateral Agent and the other Secured Parties in and to any of the IP
Collateral against the claims and demands of all Persons whomsoever, except
where failure to defend would not have a Material Adverse Effect.
(i) Without the prior written consent of the Collateral Agent, such
Grantor will not sell, assign, transfer, exchange or otherwise dispose of, or
grant any option with respect to, such Grantor's IP Collateral, or attempt,
offer or contract to do so, except with respect to licenses in the ordinary
course of business or as permitted by this Agreement or the Loan Documents.
(j) Such Grantor will advise the Collateral Agent promptly and in
writing, in reasonable detail, at its address set forth in the Credit Agreement,
(i) of any Lien (other than Liens created hereby or permitted under the Loan
Documents, including, without limitation, any Liens permitted to exist on such
Grantor's Patents or Trademarks pursuant to Section 6.02 of the Credit
Agreement) on any of such Grantor's IP Collateral and (ii) of the occurrence of
any other event which would reasonably be expected in the aggregate to have a
material adverse effect on the aggregate value of the IP Collateral as a whole
or the Liens created hereunder.
12
SECTION 4.11. Protection of Trade Secrets. Such Grantor shall take all
steps which it deems commercially reasonable to preserve and protect the secrecy
of all material Trade Secrets of such Grantor.
ARTICLE V
Collections
SECTION 5.01. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers and employees of
the Collateral Agent designated by the Collateral Agent) as such Grantor's true
and lawful agent and attorney-in-fact, and in such capacity the Collateral Agent
shall have the right, with power of substitution for each Grantor and in each
Grantor's name or otherwise, for the use and benefit of the Collateral Agent and
the Secured Parties, but only upon the occurrence and during the continuance of
an Event of Default (a) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to such Grantor's Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases
of all or any of such Grantor's Collateral; (c) to sign the name of such Grantor
on any invoice or xxxx of lading relating to any of such Grantor's Collateral;
(d) to send verifications of such Grantor's Accounts to any Account Debtor; (e)
to commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of such Grantor's Collateral or to enforce any rights in respect of
any such Collateral; (f) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of such Grantor's
Collateral; (g) to notify, or to require such Grantor to notify, Account Debtors
to make payment directly to the Collateral Agent; and (h) subject to any
existing reserved rights or licenses, to use, sell, assign, transfer, pledge,
make any agreement with respect to or otherwise deal with all or any of such
Grantor's Collateral, and to do all other acts and things necessary to carry out
the purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of such Grantor's Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or, except as otherwise provided
herein, to take any action with respect to the Collateral or any part thereof or
the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Grantor or to any claim or action against
the Collateral Agent. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of each Grantor for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document with respect to the such
Grantor's Collateral or any part thereof or, such Grantor's impose any
obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or, except
as otherwise provided herein, in any way limit the exercise by the Collateral
Agent or any Secured Party of any other or further right which it may have on
the date of this Agreement or hereafter, whether hereunder, under any other Loan
Document, by law or otherwise. Anything in this Section 5.01 to the contrary
notwithstanding, the Collateral Agent agrees that it will not exercise any
rights under the power of attorney provided for in this Section 5.01 unless an
Event of Default shall have occurred and be continuing.
13
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees that the Collateral
Agent shall have the right to take any of or all the following actions at the
same or different times: (a) in the case of any Copyright, Patent or Trademark
constituting Collateral of such Grantor, execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's and the other Secured
Parties' security interest in such Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby and, subject to any existing reserved rights or licenses, assign any
Copyright, Patent or Trademark constituting Collateral of such Grantor (along
with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine, and (b)
with or without legal process and with or without prior notice or demand for
performance, to take possession of such Grantor's Collateral and without
liability for trespass to enter any premises where such Grantor's Collateral may
be located for the purpose of taking possession of or removing such Grantor's
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of such
Grantor's Collateral, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall reasonably deem appropriate. The Collateral Agent shall
be authorized at any such sale of any Grantor's Collateral subject to
restrictions on sales under the Securities Act of 1933, as amended (if it
reasonably deems it advisable to do so), to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing such
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which such
Grantor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors at least 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Grantor's Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may in its sole and absolute
discretion determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall reasonably determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral 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 sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be
14
retained by the Collateral Agent until the sale price is paid by the purchaser
or purchasers thereof, but the Collateral Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent permitted by law,
private) sale made pursuant to this Section, any Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights being
also hereby waived and released to the extent permitted by law), such Grantor's
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to such Secured Party from such
Grantor as a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to such Grantor therefor. For purposes hereof, a
written agreement with any Person (other than a Secured Party or affiliate
thereof) to purchase the Collateral or any portion thereof shall be treated as a
sale thereof; the Collateral Agent shall be free to carry out such sale pursuant
to such agreement and no Grantor shall be entitled to the return of such
Grantor's Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in full.
As an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent may, in the
sole discretion of the Collateral Agent, apply the proceeds of any collection or
sale of the Collateral, as well as any Collateral consisting of cash against the
respective Obligations of the relevant Grantor then due and owing in the
following order of priority:
FIRST, to the payment of all reasonable costs and reasonable
expenses incurred by the Collateral Agent hereunder in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations of the relevant Grantor then due and owing,
including all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all reasonable advances made
by the Collateral Agent hereunder on behalf of such Grantor and any
other reasonable costs or expenses incurred in connection with the
exercise of any right or remedy hereunder;
SECOND, to the payment in full of the Obligations of the
relevant Grantor then due and owing (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the
amounts of such Obligations then due and owing to them on the date of
any such distribution); and
THIRD, to the relevant Grantor, its successors or assigns, or
to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
15
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.02 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Grantor shall be given to it in care of JCI.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants and agreements, made
by any Grantor herein shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein except with
the consent of the Collateral Agent or as contemplated by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement with
respect to each Grantor and may be amended, modified, supplemented, waived or
released with respect to any Grantor without the approval of any other Grantor
and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO
THE EXTENT THAT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
16
SECTION 7.07. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.01 of the Credit Agreement.
SECTION 7.08. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
SECTION 7.09. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 7.10. Counterparts. This Agreement may be executed by one or
more parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument and shall become effective as
provided in Section 7.04. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
SECTION 7.11. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.12. Jurisdiction; Consent to Service of Process. Each party
hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York, the courts
of the United States of America for the Southern District of New York,
and appellate courts of any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient forum and
agrees not to plead or claim the same;
17
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to applicable party at the address specified in Section 7.01
or at such other address of which the parties hereto shall have been
notified pursuant thereto.
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 7.12 any punitive damages.
SECTION 7.13. Termination. This Agreement shall terminate and the
Security Interest shall be automatically released, all without delivery of any
instrument or performance of any act by any party, (a) when all the Obligations
have been paid in full, the Lenders have no further commitment to lend, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further commitment
to issue Letters of Credit under the Credit Agreement, at which time the
Collateral Agent shall execute and deliver to the Grantors, at the Grantors'
expense, all Uniform Commercial Code termination statements and similar
documents which the Grantors shall reasonably request to evidence such
termination, (b) upon any sale or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement to any Person (unless
such sold Collateral is to a Person that is required to pledge such Collateral
to the Collateral Agent pursuant to Section 5.11 of the Credit Agreement) or (c)
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.01(d) of the
Credit Agreement. Any execution and delivery of termination statements or
documents pursuant to this Section 7.13 shall be without recourse to or warranty
by the Collateral Agent. A Subsidiary Grantor shall automatically be released
from its obligations hereunder and the Security Interest in the Collateral of
such Subsidiary Grantor shall be automatically released in the event that all
the capital stock of such Subsidiary Grantor shall be sold, transferred or
otherwise disposed of to a Person that is not an Affiliate of JCI in accordance
with the terms of the Credit Agreement.
SECTION 7.14. Additional Grantors. Pursuant to Section 5.11 of the
Credit Agreement, certain Domestic Subsidiaries of JCI are required to become
Subsidiary Grantors hereunder. Upon execution and delivery by the Collateral
Agent and such Domestic Subsidiary of an instrument in the form of Annex 2
hereto, such Domestic Subsidiary shall become a Subsidiary Grantor hereunder
with the same force and effect as if originally named as a Subsidiary Grantor
herein. The execution and delivery of any such instrument shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Subsidiary Grantor as a party to this Agreement.
18
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
JAFRA COSMETICS INTERNATIONAL, INC.,
By: /s/ Xxxxx X. Xxxxx, III
------------------------------
Name: Xxxxx X. Xxxxx, III
Title: Executive Vice President
CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands branch,
as Collateral Agent,
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Director
By: /s/ Xxx Xxxxx
------------------------------
Name: Xxx Xxxxx
Title: Director
SCHEDULE I
to the Security Agreement
SUBSIDIARY GRANTORS
None as of the Closing Date.
SCHEDULE II
to the Security Agreement
LICENSES
1. Letter Agreements, dated July 24, 2000, September 20, 2001 and February
22, 2002, between JCI, Xxxxx X. Xxxxx and XxXxxx LLC.
2. Software License, Services and Maintenance Agreement, dated November
29, 2001, between JCI and X.X. Xxxxxxx World Solutions Company, X.X.
Xxxxxxx Europe, Ltd. and X.X. Xxxxxxx (Asia Pacific) Pte. Ltd..
3. Software License and Services Agreement, dated September 29, 2000,
between Blue Martini Software, Inc. and JCI.
4. Form of License and Services Agreement, dated January 29, 2002, between
Oracle and JCI.
5. Software License and Services Agreement, undated, between eGain
Communications Corporation and JCI.
6. Software License Agreement, dated as of November 15, 1998 and
Amendment, dated as of December 23, 1998, between Hyperion Solutions
Corporation and JCI.
7. License Agreement, dated January 23, 2002, between Digisoft Computers,
Inc. and JCI.
8. Services and Software License Agreement, dated May 1, 1998, between
ProBusiness Services, Inc. and JCI.
9. Software License Agreement, dated March 27, 2002, between Vertex Inc.
and JCI.
10. CyberSource e-Commerce Solutions Agreement, dated February 7, 2001, and
First Amendment dated February 7, 2001, Second Amendment dated May 17,
2002, Transaction Services Addendums dated February 7, 2001, and
Enterprise Software License Addendum, dated May 17, 2002, between
CyberSource Corporation and JCI.
11. Sales Agreement, dated as of May 14, 1999, between JCI and Periphonics
Corporation.
12. License and Support Agreement and Service Agreement, dated as of March
7, 2000, by and between Witness System, Inc. and JCI.
13. Manufacturing Agreement, dated June 10, 1999, between JCI and Universal
Packaging Systems, Inc.
14. Engagement Letter, dated December 18, 2001, as amended by letter dated
May, 17, 2003, between JCI and Deloitte & Touche, regarding software
implementation.
15. JCI routinely uses patents and trademarks embedded in or otherwise a
part of software and other components of its business operations which
are subject to shrink-wrap, on-screen acceptance or other similar forms
of licensing.
SCHEDULE III
to the Security Agreement
PATENTS
Patents
STATUS: Granted
United States REGULAR
APPLN. DT/NO: 29MY1992 891293
PATENT NO./GRNT DT: 5234132 10AU1993
TITLE: ACTUATOR FOR DISPENSING CAP (COSMETIC DISPENSER)
EXPIRATION DATE: 29MY2012
NEXT TAX DUE: 10FE2005
OWNER: Jafra Cosmetics International, Inc.
STATUS: Granted
United States DESIGN
APPLN. DT/NO: 28MY1992 07/889745
PATENT NO./GRNT DT: DES347165 24MY1994
TITLE: COMBINED DISPENSER & CAP DESIGN
EXPIRATION DATE: 24MY2008
NEXT TAX DUE:
OWNER: Jafra Cosmetics International, Inc.
STATUS: Granted
United States REGULAR
APPLN. DT/NO: 29MY1992 891348
PATENT NO./GRNT DT: 5238131 24AU1993
TITLE: TWO-PART PLASTIC CAP FOR CONTAINER
EXPIRATION DATE: 29MY2012
NEXT TAX DUE: 24FE2005
OWNER: Jafra Cosmetics International, Inc.
STATUS: Granted
United States DESIGN
APPLN. DT/NO: 29MY1992 894798
PATENT NO./GRNT DT: DES351560 18OC1994
TITLE: SKIN PROGRAMMER DESIGN
EXPIRATION DATE: 18OC2008
NEXT TAX DUE:
OWNER: Jafra Cosmetics International, Inc.
SCHEDULE III
to the Security Agreement
STATUS: Granted
United States DESIGN
APPLN. DT/NO: 15MR1994 19925
PATENT NO./GRNT DT: DES358332 16MY1995
TITLE: PERFUME BOTTLE DESIGN (TRIANGULAR SHAPE)
EXPIRATION DATE: 16MY2009
NEXT TAX DUE:
OWNER: Jafra Cosmetics International, Inc.
STATUS: Granted
United States DESIGN
APPLN. DT/NO: 15MR1994 29/019957
PATENT NO./GRNT DT: DES361270 15AU1995
TITLE: V-SHAPE COSMETIC BOTTLE
EXPIRATION DATE: 15AU2009
NEXT TAX DUE:
OWNER: Jafra Cosmetics International, Inc.
STATUS: Granted
United States DESIGN
APPLN. DT/NO: 06FE1996 29/050058
PATENT NO./GRNT DT: DES379766 10JE1997
TITLE: PERFUME BOTTLE & CAP DESIGN (SQUARE SHAPE)
EXPIRATION DATE: 10JE2011
NEXT TAX DUE:
OWNER: Jafra Cosmetics International, Inc.
STATUS: Granted
United States DESIGN
APPLN. DT/NO: 25MR1997 29/068510
PATENT NO./GRNT DT: DES390783 17FE1998
TITLE: PERFUME BOTTLE & CAP DESIGN (OVAL SHAPE)
EXPIRATION DATE: 17FE2012
NEXT TAX DUE:
OWNER: Jafra Cosmetics International, Inc.
SCHEDULE IV
to the Security Agreement
TRADEMARKS
United States CHOSEN
Class: 3
Status: Registered Renewal Due: 28AU2011
Reg Date/No.: 28AU2001 2482445
Appln Date/No.: 22SE2000 76/133453
Owner: Jafra Cosmetics International, Inc.
United States I BREATH, I LOVE, I LIVE, I DREAM
Class: 03
Status: Allowed--statement of use registration review complete Renewal Due:
Reg Date/No.:
Appln Date/No.: 09JA2002 76/356781
Owner: Jafra Cosmetics International, Inc.
United States TENDER MOMENTS
Class: 3
Status: Allowed Renewal Due:
Reg Date/No.:
Appln Date/No.: 15JE2000 76/070940
Owner: Jafra Cosmetics International, Inc.
United States TENDER MOMENTS AND DESIGN
Class: 3
Status: Registered Renewal Due: 30AP2012
Reg Date/No.: 30AP2002 2565217
Appln Date/No.: 26FE2001 76/215851
Owner: Jafra Cosmetics International, Inc.
United States TODAY, I DECIDED, IS GOING TO BE DIFFERENT
Class: 03
Status: Registered Renewal Due: 13MAY2013
Reg Date/No.: 13MAY2003 2716506
Appln Date/No.: 09JA2002 76/356605
Owner: Jafra Cosmetics International, Inc.
United States ROYAL GINGER
Class: 03
Status: Allowed Renewal Due:
Reg Date/No.:
Appln Date/No.: 76/392,619 00XXX0000
Owner: Jafra Cosmetics International, Inc.
Annex 1
to the Security Agreement
FORM OF PERFECTION CERTIFICATE
Reference is made to the Credit Agreement dated as of May 20, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Jafra Worldwide Holdings (Lux) S.AR.L., a Luxembourg societe
a responsabilite limitee ("Parent"), Jafra Cosmetics International, Inc., a
Delaware corporation ("JCI"), Distribuidora Comercial Jafra, S.A. de C.V., a
sociedad anonima organized under the laws of the United Mexican States ("DCJ"
and, together with JCI, the "Borrowers"), the lenders from time to time party
thereto (the "Lenders"), the Issuing Bank (as defined therein), Credit Suisse
First Boston, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as swingline lender and Collateral Agent. Capitalized
terms used herein without definition shall have the respective meanings ascribed
thereto in the Credit Agreement and the Security Documents referred to therein,
as applicable.
The undersigned, a Financial Officer and [______________],
respectively, of each Grantor, hereby certify to the Administrative Agent and
each other Secured Party as of the date hereof as follows:
1. Names. (a) The exact legal name of each Grantor, as such name appears in its
respective certificate of formation, is as follows:
(b) Set forth below is each other legal name of each Grantor has had in the past
five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
organization. If any such change has occurred, include in Schedule 1 the
information required by Sections 1 and 2 of this certificate as to each acquiree
or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or similar
appellations) used by each Grantor or any of its divisions or other business
units in connection with the conduct of its business or the ownership of its
properties at any time during the past five years:
(e) Set forth below is the Organizational Identification Number, if any, issued
by the jurisdiction of formation of each Grantor that is a registered
organization:
(f) Set forth below is the Federal Taxpayer Identification Number of each
Grantor: [only necessary for filing in North Dakota and South Dakota.]
2. Current Locations. (a) The chief executive office of each Grantor is located
at the address set forth opposite its name below:
Grantor Mailing Address County State
(b) Set forth below opposite the name of each Grantor are all locations where
such Grantor maintains any books or records relating to any accounts receivable
(with each location at which chattel paper, if any, is kept being indicated by
an "*"):
Grantor Mailing Address County State
2
(c) The jurisdiction of formation of each Grantor that is a registered
organization is set forth opposite its name below:
Grantor: Jurisdiction:
(d) Set forth below opposite the name of each Grantor are all the locations
where such Grantor maintains any Equipment or other Collateral not identified
above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are all the places of
business of such Grantor not identified in paragraph (a), (b), (c) or (d) above:
Grantor Mailing Address County State
(f) Set forth below opposite the name of each Grantor are the names and
addresses of all Persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts have been originated by the Grantors and
all Inventory has been acquired by the Grantors in the ordinary course of
business.
4. UCC Filings. Financing statements in substantially the form of Schedule 5
hereto have been prepared for filing in the proper Uniform Commercial Code
filing office in the jurisdiction in which each Grantor is located.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule setting
forth, with respect to the filings described in Section 5 above, each filing and
the filing office in which such filing is to be made.
7. Stock Ownership and other Equity Interests. Attached hereto as Schedule 7 is
a true and correct list of all the issued and outstanding stock, partnership
interests, limited liability company membership interests or other equity
interest of the Borrowers and each Subsidiary and the record and beneficial
owners of such stock, partnership interests, membership interests or other
equity interests. Also set forth on Schedule 7 is each equity investment of
Parent, the Borrowers or any Subsidiary that represents 50% or less of the
equity of the entity in which such investment was made.
3
IN WITNESS WHEREOF, the undersigned have duly executed this certificate on this
_____ day of May 2003.
JAFRA COSMETICS INTERNATIONAL, INC.,
by
_________________________
Name:
Title:
by
_________________________
Name:
Title:
Annex 2
to the Security Agreement
SUPPLEMENT NO. ____ dated as of , to the
Security Agreement dated as of May 20, 2003 (as the
same may be amended, supplemented or otherwise
modified from time to time, the "Security Agreement")
among JAFRA COSMETICS INTERNATIONAL, INC., a Delaware
corporation ("JCI"), each subsidiary of JCI listed on
Schedule I thereto and each Domestic Subsidiary
acquired or organized after the date thereof that has
become a party to the Security Agreement as a Grantor
(each such subsidiary individually a "Subsidiary
Grantor" and collectively, the "Subsidiary Grantors";
the Subsidiary Grantors and JCI are referred to
collectively herein as the "Grantors"), and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland, acting through its Cayman Islands
branch, as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined herein).
A. Reference is made to the Credit Agreement dated as of May 20, 2003
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Jafra Worldwide Holdings (Lux) S.AR.L. a Luxembourg societe a
responsabilite limitee ("Parent"), JCI, Distribuidora Comercial Jafra, S.A. de
C.V., a sociedad anonima de capital variable organized under the laws of the
United Mexican States ("DCJ" and, together with JCI, the "Borrowers"), the
lenders from time to time party thereto (the "Lenders"), the Issuing Bank (as
defined therein) and Credit Suisse First Boston, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), as swingline lender and
as Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.15 of the Security Agreement provides that additional Domestic
Subsidiaries of JCI may become Grantors under the Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Domestic Subsidiary (the "New Grantor") is executing this Supplement
in accordance with the requirements of the Credit Agreement to become a Grantor
under the Security Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of its respective Obligations (as defined in the Security
Agreement), does hereby grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in all of the New Grantor's right, title and interest in and
to the Collateral (as defined in the Security Agreement) of the New Grantor.
Each reference to a "Grantor" in the Security Agreement shall be deemed to
include the New Grantor. The Security Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it
2
and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor, (b) set forth under its
signature hereto, is (i) the true and correct location of the chief executive
office and (ii) the jurisdiction of organization of the New Grantor. Such
information, to the extent applicable, shall be added to the Schedules to the
Security Agreement.
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME ARE NOT
MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 7. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it
care of JCI.
3
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name of New Grantor],
by_______________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands branch,
as Collateral Agent,
by_______________________________
Name:
Title:
by_______________________________
Name:
Title:
SCHEDULE I
to Supplement No. ____
to the Security Agreement
Description Location
