EXHIBIT 10.4
SECOND LIEN DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
FROM
DEL LABORATORIES, INC.
To
Biberstein & Nunalee, LLP
as Trustee for the benefit of
JPMORGAN CHASE BANK, N.A.
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Dated: December ___, 2005
Premises: Carver Road
Rocky Point, North Carolina 28457
County of Pender
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COLLATERAL IS OR INCLUDES FIXTURES
(THIS DOCUMENTS SERVES AS A FIXTURE FILING UNDER SECTION 25-9-502
OF THE NORTH
CAROLINA UNIFORM COMMERCIAL CODE.) THIS DEED OF TRUST IS GIVEN
PARTLY TO SECURE
FUTURE OBLIGATIONS WHICH MAY BE INCURRED HEREUNDER.
Prepared by and after recordation return to:
Latham & Watkins LLP
885 Third Avenue, Suite 1000
New York, New York 10022
Attn: Stephanie
Quaranta, Esq.
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TABLE OF CONTENTS
1.DEFINITIONS..................................................................1
2.GRANT........................................................................3
3.WARRANTIES, REPRESENTATIONS AND
COVENANTS....................................3
3.1 Title to
Mortgaged Property and Lien of this Instrument......3
3.2 Second
Lien Status...........................................3
3.3 Payment
and Performance......................................3
3.4
Replacement of Fixtures and Personalty.......................3
3.5
Maintenance of Rights of Way, Easements and Licenses.........4
3.6
Inspection...................................................4
3.7 Other
Covenants..............................................4
4.DEFAULT AND
FORECLOSURE......................................................4
4.1
Remedies.....................................................4
4.2 Separate
Sales...............................................6
4.3 Remedies
Cumulative, Concurrent and Nonexclusive.............6
4.4 Release of and Resort
to Collateral..........................6
4.5 Waiver of
Redemption, Notice and Marshalling of Assets.......6
4.6
Discontinuance of Proceedings................................6
4.7
Application of Proceeds......................................7
4.8 Occupancy
After Foreclosure..................................7
4.9 Protective
Advances and Disbursements; Costs of
Enforcement............................................7
4.10
No Beneficiary in Possession.................................8
5.ASSIGNMENT OF RENTS AND
LEASES...............................................8
5.1
Assignment...................................................8
5.2 No
Obligation................................................8
5.3 Right to
Apply Rents.........................................8
6.SECURITY
AGREEMENT...........................................................9
6.1 Security
Interest............................................9
6.2 Financing
Statements.........................................9
6.3 Fixture
Filing...............................................9
7.CONCERNING THE
TRUSTEE.......................................................9
7.1 Certain
Rights...............................................9
7.2 Retention
of Money..........................................10
7.3 Successor
or Trustee........................................10
7.4 Perfection
of Appointment...................................10
7.5 Trustee
Liability...........................................10
8.MISCELLANEOUS...............................................................10
8.1
Notices.....................................................10
8.2 Covenants
Running with the Land.............................11
8.3
Attorney-in-Fact............................................12
8.4 Successors
and Assigns......................................12
8.5 No
Waiver...................................................12
8.6
Subrogation.................................................12
8.7 Credit
Agreement............................................12
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8.8
Release.....................................................12
8.9 Waiver of
Stay, Moratorium and Similar Rights...............13
8.10
Obligations of Grantor, Joint and Several...................13
8.11
Governing Law...............................................13
8.12
Headings....................................................13
8.13
Entire Agreement............................................13
8.14
Future Advances.............................................13
8.15
Intercreditor Agreement.....................................14
Exhibit A: legal
description
INDEX OF DEFINED TERMS
Administrative Agent................................1
Beneficiary.........................................1
Covenants...........................................1
Credit Agreement....................................1
Deed of Trust.......................................1
Fixtures............................................2
Grantor.............................................1
Improvements........................................2
Intercreditor Agreement.............................1
Land................................................1
Leases..............................................2
Lenders.............................................1
Loan Documents......................................1
Mortgaged Property..................................1
Obligations.........................................3
Permitted Encumbrances..............................3
Personalty..........................................2
Plans...............................................2
Property Agreements.................................2
Rents...............................................2
Trustee.............................................1
UCC.................................................3
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SECOND LIEN DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
This Second Lien Deed of Trust, Assignment of Leases and Rents,
Security
Agreement, Financing Statement and Fixture Filing (this "DEED OF
TRUST") is
executed as of December ___, 2005, by DEL LABORATORIES, INC., a
Delaware
corporation ("GRANTOR"), having an address at 178 EAB Plaza,
Uniondale, New York
11556, in favor of Biberstein & Nunalee, LLP ("TRUSTEE"),
having an address at
P.O. Box 428, Burgaw, North Carolina 28425, for the benefit of JP
MORGAN CHASE
BANK, N.A., a New York banking corporation ("BENEFICIARY"), having
an address at
270 Park Avenue, 4th Floor, New York, New York 10017, in its
capacity as
administrative agent ("ADMINISTRATIVE AGENT") for the Lenders under
the Credit
Agreement more fully described below.
1. DEFINITIONS
As used herein, the following terms shall have the following
meanings:
"COVENANTS": All of the agreements, covenants, conditions and other
obligations
made or undertaken by Grantor or any other person or entity to
Beneficiary or to
any other Secured Party (as defined in the Guarantee and Collateral
Agreement)
as set forth in the Loan Documents.
"INTERCREDITOR AGREEMENT": The Intercreditor Agreement dated as of
October 28,
2005 by and among Borrower, Beneficiary, in its capacity as
Administrative Agent
under the Credit Agreement and Wells Fargo Bank, N.A., in its
capacity as
Collateral Agent under the Collateral Agency Agreement dated as of
October 28,
2005 between it, as Collateral Agent, and Wells Fargo Bank, N.A.,
as trustee
under the Senior Secured Note Indenture (as defined in the Credit
Agreement).
"LOAN DOCUMENTS": The (1) Credit Agreement dated as of December
___, 2005 by and
among DLI Holding II Corp., a Delaware corporation, Del
Laboratories, Inc., a
Delaware corporation, as borrower, the several banks and other
financial
institutions or entities from time to time parties to the Credit
Agreement
("LENDERS"), J.P. Morgan Securities, Inc., as sole lead arranger
and sole
bookrunner, and Beneficiary, as Administrative Agent (the "CREDIT
AGREEMENT"),
(2) the Security Documents (including this Deed of Trust) and the
Notes, each as
defined in the Credit Agreement and (3) each other agreement,
certificate or
document executed by any Group Member (as defined in the Credit
Agreement) and
delivered to any Agent (as defined in the Credit Agreement) or any
Lender
pursuant to the Credit Agreement or any Security Document.
"MORTGAGED PROPERTY": All of Grantor's right, title and interest in
or to (1)
the real property described in EXHIBIT A, together with any greater
estate
therein as hereafter may be acquired by Grantor (the "LAND"), (2)
buildings,
structures and other improvements, now or at any time situated,
placed or
constructed upon the Land (the "IMPROVEMENTS"), (3) fixtures,
materials,
supplies, equipment, apparatus and other items of personal property
now owned or
hereafter acquired by Grantor and now or hereafter attached to,
installed in or
used primarily in connection with any of the Improvements or the
Land, and all
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water, gas, electrical, storm and sanitary sewer facilities and all
other
utilities whether or not situated in easements (the "FIXTURES"),
(4) all goods,
accounts, general intangibles, instruments, documents, chattel
paper and all
other personal property of any kind or character, including such
items of
personal property as defined in the UCC, now owned or hereafter
acquired by
Grantor and now or hereafter affixed to, placed upon, used
primarily in
connection with, or arising from or otherwise related to the Land
and
Improvements or that may be used in or relating to the planning,
development,
financing or operation of the Mortgaged Property, including,
without limitation,
furniture, furnishings, equipment, machinery, money, insurance
proceeds,
accounts, contract rights, goodwill, chattel paper, documents,
property licenses
and/or franchise agreements, rights of Grantor under leases of
Fixtures or other
personal property or equipment, inventory, all refundable,
returnable or
reimbursable fees, deposits or other funds or evidences of credit
or
indebtedness deposited by or on behalf of Grantor with any
governmental
authorities, boards, corporations, providers of utility services,
public or
private, including specifically, but without limitation, all
refundable,
returnable or reimbursable tap fees, utility deposits, commitment
fees and
development costs but only to the extent assignable (the
"PERSONALTY"), (5)
reserves, escrows or impounds required under the Credit Agreement
and all
deposit accounts maintained by Grantor with respect solely to the
Mortgaged
Property, (6) plans, specifications, shop drawings and other
technical
descriptions prepared for construction, repair or alteration of
the
Improvements, and all amendments and modifications thereof (the
"Plans"), (7)
all leases, subleases, licenses, concessions, occupancy agreements
or other
agreements (written or oral, now or at any time in effect) which
grant a
possessory interest in, or the right to use, all or any part of the
Mortgaged
Property (the "LEASES"), together with all related security and
other deposits,
(8) all of the rents, revenues, income, proceeds, profits, security
and other
types of deposits, and other benefits paid or payable by parties to
the Leases
other than Grantor for using, leasing, licensing, possessing,
operating from,
residing in, selling or otherwise enjoying the Mortgaged Property
(the "RENTS"),
(9) to the extent assignable, all other agreements, such as
construction
contracts, architects' agreements, engineers' contracts, utility
contracts,
maintenance agreements, management agreements, service contracts,
permits,
licenses, certificates and entitlements in any way relating to the
development,
construction, use, occupancy, operation, maintenance, enjoyment,
acquisition or
ownership of the Mortgaged Property (the "PROPERTY AGREEMENTS"),
(10) all
rights, privileges, tenements, hereditaments, rights-of-way,
easements,
appendages and appurtenances appertaining to the foregoing, and all
right, title
and interest, if any, of Grantor in and to any streets, ways,
alleys, strips or
gores of land adjoining the Land or any part thereof, (11)
accessions,
replacements and substitutions for any of the foregoing and all
proceeds
thereof, (12) all proceeds of and any unearned premiums on any
insurance
policies covering any of the above property now or hereafter
acquired by
Grantor, (13) all mineral, water, oil and gas rights now or
hereafter acquired
and relating to all or any part of the Mortgaged Property and (14)
any awards,
remunerations, reimbursements, settlements or compensation
heretofore made or
hereafter to be made by any governmental authority pertaining to
the Land,
Improvements, Fixtures or Personalty. As used in this Deed of
Trust, the term
"MORTGAGED PROPERTY" shall mean all or, where the context permits
or requires,
any portion of the above or any interest therein.
"OBLIGATIONS": As defined in the Credit Agreement, as well as all
obligations
arising under the Guarantee and Collateral Agreement and including,
without
limitation, all other indebtedness, obligations and liabilities now
or hereafter
existing of any kind of Grantor to Beneficiary or the Lenders under
documents
that recite that they are intended to be secured by this Deed of
Trust.
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"PERMITTED ENCUMBRANCES": The outstanding liens, easements,
restrictions,
security interests and other exceptions to title set forth in the
policy of
title insurance insuring the lien of this Deed of Trust issued on
the date
hereof, together with the liens and security interests in favor of
Beneficiary
created or permitted by the Loan Documents and Section 7.3 of the
Credit
Agreement.
"UCC": The Uniform Commercial Code of the State of North Carolina
or the Uniform
Commercial Code in effect in any other state if applicable.
All terms used but not otherwise defined herein shall have the
meanings ascribed
to them in the Credit Agreement.
2. GRANT. To secure the full and timely payment and performance of
the
Obligations, Grantor MORTGAGES, GRANTS, BARGAINS, SELLS, TRANSFERS,
ASSIGNS and
HYPOTHECATES and CONVEYS the Mortgaged Property to Trustee, IN
TRUST, WITH POWER
OF SALE, subject, however, to the Permitted Encumbrances. The
latest scheduled
maturity date of the secured debt is December ___, 2010.
3. WARRANTIES, REPRESENTATIONS AND COVENANTS. Grantor warrants,
represents
and covenants to Trustee and Beneficiary as follows:
3.1. TITLE TO MORTGAGED PROPERTY AND LIEN OF THIS INSTRUMENT.
Grantor owns
the Mortgaged Property free and clear of any liens, claims or
interests, except
the Permitted Encumbrances. This Deed of Trust creates a valid,
enforceable
second priority lien and security interest against the Mortgaged
Property
subject only to the Permitted Encumbrances.
3.2. SECOND LIEN STATUS. Grantor shall preserve and protect the
second lien
and security interest status of this Deed of Trust and the other
Loan Documents.
If any lien or security interest other than a Permitted Encumbrance
is asserted
against the Mortgaged Property, Grantor shall promptly, and at its
expense, (a)
give Beneficiary a detailed written notice of such lien or security
interest
(including origin, amount and other terms), and (b) pay the
underlying claim in
full or take such other action so as to cause it to be released or
contest the
same in compliance with the requirements of the Credit Agreement
(including the
requirement of providing a bond or other security satisfactory to
Beneficiary to
the extent required by the Credit Agreement).
3.3. PAYMENT AND PERFORMANCE. Grantor shall pay and perform the
Obligations
when due under the Loan Documents to which it is a party and shall
perform the
Covenants under the Loan Documents to which it is a party in full
when they are
required to be performed.
3.4. REPLACEMENT OF FIXTURES AND PERSONALTY. Except as permitted by
the
Credit Agreement, Grantor shall not, without the prior written
consent of
Beneficiary, not to be unreasonably withheld, permit any of the
Fixtures or
Personalty to be removed at any time from the Land or Improvements,
unless the
removed item is removed temporarily for maintenance and repair or,
if removed
permanently, is immaterial or is obsolete and in either case, is
replaced by an
article of equal or better suitability and value, owned by Grantor
subject to
the liens and security interests of this Deed of Trust and the
other Loan
Documents, and free and clear of any other lien or security
interest except such
as may be first approved in writing by Beneficiary.
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3.5. MAINTENANCE OF RIGHTS OF WAY, EASEMENTS AND LICENSES. Grantor
shall
maintain, in the ordinary course of business, all rights of way,
easements,
grants, privileges, licenses, certificates, permits, entitlements
and franchises
necessary for the use of the Mortgaged Property and will not,
without the prior
consent of Beneficiary, not to be unreasonably withheld or delayed,
consent to
any public restriction (including any zoning ordinance) or private
restriction
as to the use of the Mortgaged Property which restriction is
reasonably likely
to materially and adversely affect the current use of the Mortgaged
Property.
Grantor shall comply in all material respects with all restrictive
covenants
affecting the Mortgaged Property, and all zoning ordinances and
other public or
private restrictions as to the use of the Mortgaged Property.
3.6. INSPECTION. Grantor shall permit Beneficiary and its
agents,
representatives and employees, upon reasonable prior notice to
Grantor and
during normal business hours (except in the case of an emergency,
in which case
no notice shall be necessary), to inspect the Mortgaged Property
and conduct
such environmental, to the extent Beneficiary believes that there
is a
reasonable possibility that a release of Materials of Environmental
Concern in
violation of Environmental Laws may have occurred or is occurring,
engineering
and other studies as Beneficiary may reasonably require, provided
that such
inspections and studies shall not materially interfere with the use
and
operation of the Mortgaged Property. Beneficiary shall indemnify
Grantor for all
losses relating to its or its agent's gross negligence and willful
misconduct in
connection with such inspection and studies.
3.7. OTHER COVENANTS.
All of the covenants in the Credit Agreement are
incorporated herein by reference.
4. DEFAULT AND FORECLOSURE
4.1 REMEDIES. During the occurrence and continuance of an Event of
Default,
Beneficiary may, at Beneficiary's election and by or through
Trustee or
otherwise, exercise any or all of the following rights, remedies
and recourses:
4.1.1. Acceleration. To the extent permitted by the Credit
Agreement, declare
the Obligations to be immediately due and payable, without further
notice,
presentment, protest, notice of intent to accelerate, notice of
acceleration,
demand or action of any nature whatsoever (each of which hereby is
expressly
waived by Grantor), whereupon the same shall become immediately due
and payable.
4.1.2. Entry on Mortgaged Property. Enter the Mortgaged Property
and take
exclusive possession thereof and of all books, records and accounts
relating
thereto. If Grantor remains in possession of the Mortgaged Property
after an
Event of Default and without Beneficiary's prior written consent,
Beneficiary
may invoke any legal remedies to dispossess Grantor.
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4.1.3. Operation of Mortgaged Property. Hold, lease, develop,
manage, operate
or otherwise use the Mortgaged Property upon such terms and
conditions as
Beneficiary may deem reasonable under the circumstances (making
such repairs,
alterations, additions and improvements and taking other actions,
from time to
time, as Beneficiary deems necessary or desirable), and apply all
Rents and
other amounts collected by Trustee in connection therewith in
accordance with
the provisions of SECTION 4.7 hereof.
4.1.4. Remedies of Beneficiary upon Default. Upon the occurrence of
any Event
of Default, Beneficiary may, at its option, without prior notice to
Grantor,
declare the Obligations to be immediately due and payable in full;
and, on
application of Beneficiary, Trustee shall foreclose this Deed of
Trust in any
manner permitted by North Carolina law, including selling the
Mortgaged Property
or any part thereof at public sale to the last and highest bidder
for cash, free
of any equity of rede
