Exhibit 10.16
GMAC COMMERCIAL FINANCE LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As of April 29, 2004
PERFUMANIA, INC.
MAGNIFIQUE PARFUMES AND COSMETICS, INC.
PERFUMANIA PUERTO RICO, INC.
TEN KESEF II, INC.
00000 X.X. 000xx Xxxx
Xxxxx, Xxxxxxx 00000
Re: Waiver and Amendment
Gentlemen:
Reference is made to the Revolving Credit and Security Agreement dated as
of May 12, 2000 by and among PERFUMANIA, INC., MAGNIFIQUE PARFUMES AND
COSMETICS, INC., PERFUMANIA PUERTO RICO, INC. and TEN KESEF II, INC., (each
individually, a "Borrower" and collectively, the "Borrowers") and GMAC
COMMERCIAL FINANCE LLC, as successor by merger with GMAC Commercial Credit LLC
("Lender") (as so amended and as the same now exists or may hereafter be
amended, restated, renewed, replaced, substituted, supplemented, extended, or
otherwise modified, the "Credit Agreement") and all of the notes, guarantees,
mortgages, instruments, agreements and other documents executed and/or delivered
in connection therewith (all of the foregoing, together with the Credit
Agreement, as the same may now exist, or may hereafter be amended, restated,
renewed, extended, supplemented, substituted, or otherwise modified, the "Loan
Agreements"). All capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Credit Agreement.
Borrowers have requested that Lender amend certain provisions of the Loan
Agreements and waive certain Events of Default which have occurred and are
continuing under the Loan Agreements. Subject to the terms and conditions set
forth herein, Lender has agreed to make such amendments and to grant such
waivers.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. Capitalized terms used in this agreement and not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement.
2. Waivers. Borrowers hereby acknowledge, confirm and agree that Borrowers
have failed to comply with certain terms and provisions of the Credit Agreement
for the quarterly period ending on January 31, 2004, including, without
limitation, (a) Borrowers' failure to comply with Section 6.5 of the Credit
Agreement (Tangible Net Worth), (b) Borrowers' failure to comply with Section
6.6 of the Credit Agreement (Fixed Charge Ratio), (c) Borrowers' failure to
comply with Section 6.7 of the Credit Agreement (Leverage Ratio) and (d)
Borrowers' failure to comply with Section 7.6. of the Credit Agreement (Capital
Expenditures). As a result of such noncompliance, Events of Default have
occurred and are continuing under Article X (Events of Default) of the Credit
Agreement (the "Subject Events of Default"). Borrowers have requested Lender to
irrevocably waive the Subject Events of Default, and Lender has agreed to, and
hereby does, irrevocably waive such Subject Events of Default subject to the
terms and conditions set forth herein; provided, that, Lender hereby reserves
all rights and remedies granted to Lender under the Credit Agreement, the Loan
Agreements, applicable law or otherwise, and nothing contained herein shall be
construed to limit, impair or otherwise affect the right of Lender to declare a
default or an Event of Default with respect to any future non-compliance with
any covenant, term of provision of the Credit Agreement, the Loan Agreements or
any other document now or hereafter executed and delivered in connection
therewith. Without limiting the foregoing, nothing herein contained shall, or
shall be deemed to waive any default or Event of Default that Borrowers have
failed to disclose to Lender as of the date hereof.
3. Amendments to the Credit Agreement. The Credit Agreement is hereby
amended as follows:
(a) As used herein, the following term shall have the meaning given
to it below and the Credit Agreement and the Loan Agreements are hereby amended
to include, in addition and not in limitation, the following definition:
""Borrowers on a Consolidated Basis" except to the extent
limited in this definition, shall mean the consolidation in
accordance with GAAP of the accounts or other items of
Borrowers. Presentations of financial information for the
Borrowers on a Consolidated Basis shall be consolidated
from the applicable audited or unaudited consolidating
financial statements of E-Com Ventures, Inc. Financial
information shall not include footnote disclosure required
by GAAP with respect to the Borrowers on a Consolidated
Basis, but shall be deemed to include the footnote
disclosure contained in E-Com Ventures, Inc.'s related
audited or unaudited financial statements as it relates to
such disclosure related to Borrowers on a Consolidated
Basis."
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(b) The definition of "Fixed Charge Coverage Ratio" set forth in
Section 1.2 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
""Fixed Charge Coverage Ratio" shall mean as at the end of
each fiscal quarter, determined with respect to the
Borrowers on a Consolidated Basis, the ratio for any given
computation period of (a) EBITDA minus unfinanced capital
expenditures to (b) the sum of (i) the interest expense
(including all imputed interest on capital lease
obligations of Borrowers) plus (ii) the aggregate amount of
all scheduled debt repayments (including all imputed
principal payments on capital lease obligations of
Borrowers but excluding all Revolving Advances) plus (iii)
cash taxes paid by the Borrowers, in all cases for such
quarter."
(c) Section 6.5 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"6.5 Fixed Charge Coverage Ratio. Borrowers shall maintain,
on a consolidated basis, as at the end of each fiscal
quarter (July 31, October 31, January 31 and April 30 in
any given year), a Fixed Charge Coverage Ratio not less
than the amounts set forth below for each computation
period as set forth below:
------------------------------------- -------------------------
FIXED CHARGE
COMPUTATION PERIOD COVERAGE RATIO
------------------------------------- -------------------------
------------------------------------- -------------------------
3 months ending April 30, 2004 (2.5) : 1.0
------------------------------------- -------------------------
6 months ending July 31, 2004 (0.9) : 1.0
------------------------------------- -------------------------
9 months ending October 31, 2004 (1.7) : 1.0
------------------------------------- -------------------------
12 months ending January 31, 2005 1.3 : 1.0
------------------------------------- -------------------------
the 12 consecutive month period To be determined based
ending as of the end fiscal quarter on 85% of the projections
commencing with the fiscal quarter as set forth in Borrower's
ending April 30, 2005 yearly business plan, which
shall be acceptable to
Lender, in its sole
discretion"
(d) Section 6.6 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"6.6 Minimum EBITDA. Borrowers shall maintain, on a
consolidated basis, as at the end of each fiscal quarter
(July 31, October 31, January 31 and April 30 in any given
year), EBITDA in an amount not less than the amounts set
forth below for each computation period as set forth below:
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---------------------------------------- ------------------------------
COMPUTATION PERIOD EBITDA
---------------------------------------- ------------------------------
3 months ending April 30, 2004 ($775,000)
---------------------------------------- ------------------------------
6 months ending July 31, 2004 $805,000
---------------------------------------- ------------------------------
9 months ending October 31, 2004 ($340,000)
---------------------------------------- ------------------------------
12 months ending January 31, 2005 $7,730,000
---------------------------------------- ------------------------------
the 12 consecutive month period To be determined based
ending as of the end fiscal quarter on 85% of the projections
commencing with the fiscal quarter as set forth in Borrower's
ending April 30, 2005 yearly business plan, which
shall be acceptable to
Lender, in its sole
discretion"
(e) Section 6.7 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"6.7 [INTENTIONALLY DELETED]"
(f) Section 7.6 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"7.6 Capital Expenditures. Contract for, purchase or
make any expenditure or commitments for fixed or capital
assets (including capitalized leases) in any fiscal year
in an amount in excess of $4,500,000."
4. Release. In consideration of the modifications to the Credit
Agreement made by Lender in this agreement and the performance thereof and other
good and valuable consideration, each of the Borrowers (the "Releasors") forever
releases and discharges Lender, its affiliates, members, officers, directors,
consultants, agents, attorneys, representatives and employees, and their
respective successors and assigns (collectively, the "Released Parties") from
any and all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, controversies, variances,
trespasses, damages, judgments, extent, executions, claims and demands
whatsoever, in law, admiralty or equity, without defense, offset or
counterclaim, which any of the Releasors, directly or indirectly, ever had or
now or can, shall or may, have against any of the Released Parties for, upon, or
by reason of any matter, cause or thing arising under or relating to the Credit
Agreement or any other Loan Agreement and the transactions contemplated therein.
In addition to the foregoing, each of the Releasors agrees to forever refrain
and forbear from commencing, assisting, instituting, prosecuting or encouraging
others to institute or prosecute any litigation, action, arbitration,
administrative or other proceeding of any kind against any of the Released
Parties directly or indirectly arising out of, resulting from or relating in any
way to the subject matter of or the fact and course of conduct underlying the
releases granted herein.
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5. Acknowledgement. Each of the Borrowers hereby acknowledges,
confirms and agrees that all amounts charged or credited to the loan account as
of March 31, 2004 are correct and binding upon each of the Borrowers and that
all Obligations reflected to be due and owing in the loan account as of March
31, 2004 are due and owing without defense, offset or counterclaim.
6. Waiver and Amendment Fee. In consideration of the waivers and
amendments set forth herein, Borrowers unconditionally agree to pay a waiver and
amendment fee in the amount of Twenty Five Thousand ($25,000) Dollars (the
"Waiver and Amendment Fee"), which Waiver and Amendment Fee shall be fully
earned as of the date hereof, shall not be subject to refund, rebate or
proration for any reason. The Waiver and Amendment Fee shall be payable on May
14, 2004; except, that, as a one time accommodation to Borrowers, Lender agrees
to waive the Waiver and Amendment Fee if, on or prior to May 14, 2004, (a)
Lender has received the fully executed, original Amended and Restated Revolving
Credit and Security Agreement among Borrowers, Lender, as Documentation Agent,
Agent and a Lender, and the other lenders from time to time parties thereto (the
"Amended Credit Agreement") and each of the other agreements to be executed and
delivered in connection therewith, including the Fee Letter; and (b) the
transactions contemplated thereunder have closed.
7. No Other Modifications. Except as specifically set forth herein,
no other changes or modifications to the Credit Agreement or other Loan
Agreements are intended or implied, and, in all other respects, the Credit
Agreement and the other Loan Agreements shall continue to remain in full force
and effect in accordance with their respective terms as of the date hereof.
Except as specifically set forth herein, nothing contained herein shall evidence
a waiver or amendment by Lender of any other provision of the Credit Agreement
or any other Loan Agreement nor shall anything contained herein be construed as
a consent by Lender to any transaction other than those specifically consented
to herein. Without limiting the foregoing, nothing herein contained shall, or
shall be deemed to, waive any Event of Default of which Lender does not have
actual knowledge as of the date hereof, or any event or circumstance which with
notice or passage of time, or both, would constitute an Event of Default. Lender
may waive any of such Events of Default, but only in a specific writing signed
by Lender.
8. Binding Effect. The terms and provisions of this agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; no other person, firm, entity or corporation
shall have any right, benefit or interest under this agreement.
9. Governing Law. The rights and obligations hereunder of each of
the parties hereto shall be governed by and interpreted and determined in
accordance with the internal laws of the State of New York (without giving
effect to principles of conflict of laws).
10. Counterparts. This agreement may be signed in counterparts, each
of which shall be an original and all of which taken together constitute one
amendment. In making proof of this agreement, it shall not be necessary to
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produce or account for more than one counterpart signed by the party to be
charged.
11. Entire Agreement. This agreement sets forth the entire agreement and
understanding of the parties with respect to the matters set forth herein. This
agreement cannot be changed, modified, amended or terminated except in a writing
executed by the party to be charged.
Very truly yours,
GMAC COMMERCIAL FINANCE LLC
By:
-----------------------------
Title:
--------------------------
ACKNOWLEDGED AND AGREED:
PERFUMANIA, INC.
MAGNIFIQUE PARFUMES AND COSMETICS, INC.
PERFUMANIA PUERTO RICO, INC.
TEN KESEF II, INC.
By:
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Title: of each
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