SECOND AMENDMENT TO CREDIT AGREEMENT
AND OTHER TRANSACTION DOCUMENTS
This Second Amendment to Credit Agreement and Other
Transaction Documents (the "Agreement"), made as of the 13th day
of November, 1998, by and between FLEET NATIONAL BANK, a national
banking association with its principal office at 000 Xxxxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, in its capacity as agent
and as lender ("Lender") (sometimes hereinafter referred to as
"Agent" or "Lender", as appropriate depending on responsibility)
and FRENCH FRAGRANCES, INC., a Florida corporation with its
principal place of business at 00000 X.X. 00xx Xxxxxx, Xxxxx
Xxxxx, Xxxxxxx 00000 ("Borrower").
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions of that
certain Credit Agreement dated May 13, 1997 between Borrower and
Lender, as amended by a First Amendment to Credit Agreement and
Other Transaction Documents dated as of December 31, 1997 (as
amended, the "Credit Agreement"), Lender agreed to make a
revolving credit loan available to Borrower, subject to the terms
and conditions of the Credit Agreement; and
WHEREAS, Borrower has requested and Lender has agreed to
increase Borrower's availability under the revolving credit loan;
and
WHEREAS, Lender is willing to amend the Credit Agreement
subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants set forth herein, and for good and valuable
other consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Defined Terms.
All capitalized terms not defined herein shall have the same
meaning ascribed to such terms as provided in the Credit
Agreement.
Section 2. Representations and Warranties.
Borrower hereby represents and warrants to Lender that:
(a) Borrower is duly organized, validly existing and in
good standing as a corporation in the state of its incorporation,
and is in good standing and is qualified to do business as a
foreign corporation in all other jurisdictions where it is
required to be so qualified, except such jurisdictions, if any,
in which the failure to be so qualified will not have a material
adverse effect on the financial condition, business, assets,
operations or properties of Borrower. Borrower has all requisite
power and authority to own and lease its assets and properties
and to conduct its business in the manner presently conducted by
it.
(b) Borrower has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement
and the execution, delivery and performance by Borrower of this
Agreement has been duly authorized by all requisite action. This
Agreement has been duly executed and delivered by Borrower, and
is the valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its respective terms.
(c) The execution, delivery and performance by Borrower of
this Agreement will not violate or contravene (i) the articles of
incorporation or by-laws of Borrower, (ii) any provision of any
law, rule or regulation applicable to Borrower, (iii) any order,
writ, judgment, injunction, decree, determination or award of any
court or other agency of government to which Borrower is bound,
or (iv) any other agreement, lease, indenture or instrument to
which Borrower is a party or by which Borrower is bound, or be in
conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or result in
the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever, upon any properties or assets of Borrower
pursuant to any such other agreement, lease, indenture or
instrument.
(d) There is no action, suit or proceeding at law or in
equity or by or before any court, governmental instrumentality or
other agency pending, or to Borrower's knowledge, threatened
against, or in any way affecting Borrower which, if adversely
determined, would have a material adverse effect on the business,
operations, properties, assets or condition, financial or
otherwise, of Borrower.
(e) No consent, approval or authorization from, or filing
of any declaration or statement with, any court, governmental
instrumentality or other agency is required in connection with or
as a condition to the execution, delivery or performance of this
Agreement, by Borrower.
(f) Except as set forth in Schedule I attached hereto,
Borrower hereby reaffirms and restates, as of the date hereof,
all of the representations and warranties made by it in the
Credit Agreement, as amended by this Agreement, except to the
extent altered by actions permitted pursuant to the terms thereof
or expressly contemplated pursuant to the terms hereof, or to the
extent Lender has been advised in writing of any inaccuracy with
respect to such representations or warranties and have waived the
same in writing.
(g) No Event of Default exists under the Credit Agreement,
or any event which, with the giving of notice or passage of time
or both, would constitute such an Event of Default, has occurred
which has not been waived in writing by Lender or which will not
be cured upon the execution and delivery by Borrower of this
Agreement.
Section 3. Amendments to Credit Agreement.
The Credit Agreement is hereby amended, effective as of the
date hereof, as follows:
Section 3.01. Amendments to Definitions.
The definitions of "Borrowing Base", "Public Debt",
"Revolving Credit Facility", "Revolving Credit Note" and
"Subordinated Debentures" set forth in Section 1.01 of the Credit
Agreement are hereby amended to read in their entirety as
follows:
"Borrowing Base" shall mean, as of any date, the sum of,
without duplication, (i) eighty-five percent (85%) of Insured
Eligible Accounts Receivable determined as of such date, plus
(ii) eighty-five percent (85%) of Approved Eligible Accounts
Receivable determined as of such date, plus, (iii) eighty percent
(80%) of Eligible Accounts Receivable (other than Insured
Eligible Accounts Receivable or Approved Eligible Accounts
Receivable) determined as of such date, plus (iv) fifty percent
(50%) of Eligible In-House Inventory; provided that the portion
of the Borrowing Base derived from clause (iv) shall be capped at
Twenty-Five Million Dollars ($25,000,000), and provided further
there shall be a reserve against total Eligible In-House
Inventory of One Million Two Hundred Thousand Dollars
($1,200,000). The foregoing definition of "Borrowing Base",
including the respective percentages set forth therein, may be
amended from time to time by the execution and delivery of an
Amendment Letter or other written instrument executed by Borrower
and Lenders.
"Public Debt" shall mean those certain $115,000,000 10-3/8%
Senior Notes Due 2007 of the Borrower issued on May 13, 1997,
including any and all Subsidiary guarantees issued from time to
time and those certain $40,000,000 10-3/8% Senior Notes Due 2007
of the Borrower issued on April 27, 1998.
"Revolving Credit Facility" shall mean the Fifty Million
Dollar ($50,000,000) revolving credit facility available to the
Borrower pursuant to the provisions of Article II hereof and
subject to the other terms and conditions of this Agreement.
"Revolving Credit Note" or "Revolving Credit Notes" shall
mean the secured revolving credit notes of Borrower issued to
Lenders in the aggregate principal amount not to exceed Fifty
Million Dollars ($50,000,000) and substantially in the form
attached hereto as Exhibit D-Amended, which promissory notes
evidence the obligations of Borrower to repay Lenders the
Advances made by Lenders under the Revolving Credit Facility,
which notes are hereby incorporated herein by reference and made
a part hereof, as such Revolving Credit Notes may be amended,
extended or renewed from time to time by the execution and
delivery of an Amendment Letter or other written instrument
executed and delivered by Lenders hereunder.
"Subordinated Debentures" shall mean the FMG Subordinated
Debentures, the 7.5% Convertible Debentures and the JPF
Debentures.
Section 3.02. Additional Definitions.
The following new definition is hereby added to Section
1.01 of the Credit Agreement:
"JPF Debentures" shall mean the $3,000,000 Junior
Subordinated Debentures issued by Borrower to J.P. Fragrances,
Inc.
Section 3.03. Amendment to Section 2.02.
Section 2.02 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"The Advances made by Lender pursuant to Section 2.01 hereof
shall be evidenced by the Revolving Credit Note issued by
Borrower to the order of Lender in an original principal amount
of Fifty Million Dollars ($50,000,000)."
Section 3.04. Amendment to Section 2.03.
Section 2.03 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"Section 2.03. The Revolving Credit Commitment.
(a) The Revolving Credit Commitment shall be equal to the
lesser of:
(i) the Borrowing Base as in effect from time to time,
or
(ii) Fifty Million Dollars ($50,000,000).
Section 3.05. Amendment to Section 8.01.
Section 8.01(f) of the Credit Agreement is hereby amended to
read in its entirety as follows:
"(f) Indebtedness to Subordinated Creditors evidenced
by the Subordinated Debentures in an aggregate principal amount
not to exceed at any time outstanding $14,300,000 only so long as
such Indebtedness is subordinated to Indebtedness of Borrower to
Lenders;"
Section 3.06. Amended Exhibit.
Exhibit A attached hereto is hereby intended to replace
Exhibit D to the Credit Agreement and is hereby intended to read
as Exhibit D - Amended.
Section 4. Security Documents.
(a) Borrower and Lender each hereby confirm that all
references to the "Credit Agreement" or the "Agreement" in any of
the Security Documents shall be deemed to be references to the
Credit Agreement as amended hereby; that the obligations of
Borrower under the Credit Agreement, as amended hereby, and fees
and expenses in connection therewith constitute additional
indebtedness, liabilities and obligations of Borrower to Lender,
all of which are secured by the Security Documents, and that all
references to "indebtedness" and/or "obligations" secured by such
instruments shall be deemed amended to include all obligations of
Borrower in respect of the Credit Agreement as amended hereby.
(b) Borrower hereby ratifies and reaffirms its grant and
conveyance to Agent for the ratable benefit of the Lenders of a
security interest in and lien upon all collateral covered by any
of the Security Documents.
(c) Borrower and Lender each hereby confirm that nothing
contained herein or done pursuant hereto shall limit or be
construed to limit the security interest or lien previously
granted by Borrower to Agent for the ratable benefit of the
Lender under any of the Security Documents, or the priority
thereof over other liens, encumbrances and security interests.
Except as amended hereby, the Security Documents shall remain in
full force and effect and Borrower hereby ratifies and confirms
the Security Documents in all other respects, including, without
limitation, the continuing grant of a lien on and interest in the
collateral covered thereby.
Section 5. Conditions Precedent to Second Amendment.
The effectiveness of the transactions described herein shall
be subject to the following conditions:
(a) This Agreement shall have been executed and delivered
by Borrower and Lender.
(b) The fees and disbursements of Lender and Lender's
counsel shall be paid in full on the Effective Date.
(c) Borrower shall have executed and/or delivered to Agent
the following:
(i) Certificate of the Secretary or Assistant
Secretary of Borrower certifying as to the due authorization,
execution and delivery by Borrower of this Agreement; and
(ii) Certificate of the Secretary or Assistant
Secretary of Borrower certifying as to the names of the officers
of Borrower authorized to sign this Agreement, and any other
documents or certificates to be delivered pursuant to this
Agreement, together with the true signatures of such officers.
Lender may conclusively rely on such certificates until Agent
shall receive a further certificate of the Secretary or an
Assistant Secretary of Borrower canceling or amending the prior
certificate and submitting the signatures of the officers named
in such further certificate.
(d) All legal matters relating to this Agreement shall be
satisfactory to Lender and its counsel.
Section 6. Ratification.
Borrower hereby ratifies and confirms all of its
obligations, covenants, duties and agreements set forth in the
Credit Agreement, as amended by the terms hereof. All references
to the "Credit Agreement" or the "Agreement" contained in the
Credit Agreement, the Notes, the Security Documents and all other
documents and instruments evidencing obligations of Borrower
under or in connection with the Credit Agreement, the Notes or
the Security Documents, shall be deemed to be amended to refer to
the Credit Agreement, as amended by the terms hereof.
Section 7. Expenses.
All costs and expenses, including reasonable attorneys'
fees, relating to the negotiation, preparation, execution and
delivery of this Agreement and all instruments, agreements and
documents contemplated hereby shall be the responsibility of
Borrower.
Section 8. Miscellaneous.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island applicable
to contracts made and to be performed within such State. This
Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument. The headings of
the Articles and Sections of this Agreement are inserted for
convenience only and shall not constitute a part hereof.
Section 9. No Defenses.
Borrower hereby acknowledges and agrees that the Credit
Agreement, as amended by the terms hereof, and the other
Transaction Documents are not subject as of the date hereof to
any defenses, rights of setoff, claims or counterclaims that
might limit the enforceability thereof.
Section 10. Facility Fee.
In consideration of Lender's commitment to enter into this
Agreement, Borrower hereby agrees to pay to Lender a facility fee
equal to Twenty-Five Thousand Dollars ($25,000).
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first above written.
LENDER:
FLEET NATIONAL BANK
By /s/Xxxxxxx Xxxxx
------------------------------
Xxxxxxx Xxxxx
Senior Vice President
AGENT:
FLEET NATIONAL BANK
By /s/Xxxxxxx Xxxxx
------------------------------
Xxxxxxx Xxxxx
Senior Vice President
BORROWER:
FRENCH FRAGRANCES, INC.
By /s/Xxxx Xxxxxx
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Xxxx Xxxxxx
Vice President
