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 28th day
of August, 1996, by and among FLEET NATIONAL BANK, a national
banking association with its principal office at 111 Westminster
Street, Providence, Rhode Island 02903, in its capacity as agent
and as a lender ("Fleet"), BANK OF AMERICA ILLINOIS, an Illinois
banking company, as a lender ("Bank of America"; and together
with Fleet, collectively, the "Lenders") and FRENCH FRAGRANCES,
INC., a Florida corporation with its principal place of business
at 14100 N.W. 60th Avenue, Miami Lakes, Florida 33014
("Borrower").
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions of that
certain Credit Agreement dated March 14, 1996 among Borrower and
Lenders, as amended by a First Amendment to Credit Agreement and
Other Transaction Documents dated as of May 10, 1996 (as amended,
the "Credit Agreement"), Lenders agreed to make term loans and
revolving credit loans available to Borrower, subject to the
terms and conditions of the Credit Agreement; and
WHEREAS, the parties have agreed to certain modifications to
the Credit Agreement which will allow for an increase in
availability under the Revolving Credit Facility; and
WHEREAS, pursuant to the terms of that certain Security
Agreement dated March 14, 1996 between Borrower and Fleet, as
agent for the ratable benefit of the Lenders (the "Security
Agreement"), Borrower granted to Fleet, as agent for the ratable
benefit of the Lenders a security interest in all fixtures and
tangible and intangible assets of Borrower whether now owned or
hereafter acquired; and
WHEREAS, Lenders are willing to amend the Credit Agreement
and the Security 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 Lenders and each
of them 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 Security Documents, as applicable, and the execution,
delivery and performance by Borrower of this Agreement and the
Security Documents, as applicable have been duly authorized by
all requisite action. This Agreement and the Security Documents,
as applicable have been duly executed and delivered by Borrower,
and are valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms.
(c) The execution, delivery and performance by Borrower of
this Agreement and the Security Documents, as applicable, 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 Lenders have 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 Lenders 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" and "Funded Debt" set
forth in Section 1.01 of the Credit Agreement are hereby amended
to read in their entireties 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) the lesser of
sixty percent (60%) of Eligible In-House Inventory (for the
period from May 10, 1996 through October 31, 1996 and for each
fiscal year thereafter for the period from July 1 through October
31) or fifty percent (50%) of Eligible In-House Inventory
(for the period from November 1, 1996 through June 30, 1997 and
for each fiscal year thereafter for the period from November 1
through June 30); provided that the portion of the Borrowing Base
derived from clause (iv) shall be capped at the lesser of (A) for
the period from December 1 through June 30 at Fifteen Million
Dollars ($15,000,000); for the period from July 1 through October
31 at Thirty Million Dollars ($30,000,000) and for the
period November 1 through November 30 at Twenty Million Dollars
($20,000,000) or (B) one hundred sixty percent (160%) of
Accounts Receivable Availability from January 1 through June 30
of each year; two hundred twenty percent (220%) of Accounts
Receivable Availability for the period from July 1, 1996 through
August 31, 1996 and for each fiscal year thereafter for the
period from July 1 through August 31; one hundred sixty percent
(160%) of Accounts Receivable Availability for the period from
September 1, 1996 through September 30, 1996 and for each fiscal
year thereafter for the period from September 1 through September
30 and one hundred twenty percent (120%) of Accounts Receivable
Availability for the period from October 1, 1996 through December
31, 1996 and for each fiscal year thereafter, 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. For purposes of the Borrowing Base "Accounts
Receivable Availability" shall mean the sum of subsections (i),
(ii) and (iii) above.
"Funded Debt" shall mean, as of the date of any
determination thereof, the total of all Indebtedness of Borrower
including, without limitation, the Subordinated Debentures, the
Loans and the Mortgage Indebtedness, but excluding the Halston
Royalty Note. For the purpose of determining Funded Debt, the
Revolving Credit Commitment shall be deemed to be the annual
maximum availability during any fiscal year.
Section 3.03. Amendment to Section 2.03(a).
Section 2.03(a) 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 or the Net Borrowing Base (as
applicable) as in effect from time to time, or
(ii) Forty Million Dollars ($40,000,000); provided,
however, that the maximum Revolving Credit Commitment
contemplated by this clause (ii) shall be adjusted in accordance
with the following schedule:
Revolving Credit
Commitment
After Giving
Date of Amount of Effect to
Adjustment Adjustment Adjustment
January 1, 1996
through May 10, 1996 $10,000,000 $30,000,000
May 11, 1996
through May 31, 1996 $5,000,000 $35,000,000
August 28, 1996
through December 31, 1996 $15,000,000 $55,000,000
January 1 , 1997 through
June 30, 1997 and each
January 1 through June 30
of each year thereafter $10,000,000 $30,000,000".
Section 3.04. Amendment to Section 4.11. Section 4.11(b)
of the Credit Agreement is hereby amended to read in its entirety
as follows:
"(b) the aggregate outstanding amount of all Letters
of Credit issued pursuant hereto shall at no time exceed a face
amount equal to Three Million Dollars ($3,000,000)."
Section 3.05. Security Documents.
(a) Borrower and Lenders 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 Lenders,
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 upo aalll collateral covered by any
of the Security Documents. Nothing herein shall be deemed to
contravene the release by the Lenders of the Assignment of Life
Insurance as Collateral as a Security Document or the release of
any claim or right by the Lenders to shares of Data Technology,
Inc. held by Borrower.
(c) Borrower and Lenders 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
Lenders 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 4. 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 Lenders, and consented to and confirmed by the
parties to the Subordination Agreement and the Subordination
Agreement II.
(b) Lenders shall have received payment of the fees
described in Section 9 hereof in immediately available funds.
(c) The fees and disbursements of Lenders' counsel shall be
paid in full on the Effective Date.
(d) 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 corporate charter and
by-laws and 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. Lenders 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.
(e) All legal matters relating to this Agreement shall be
satisfactory to Lenders and their counsel.
Section 5. 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 6. 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 7. 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 8. Consent of Subordinated Lenders.
By their signature hereon, each of the parties to the
Subordination Agreement (other than Fleet), and the Subordination
Agreement II hereby (a) consent to the amendments of the Credit
Agreement and other Transaction Documents pursuant to this
Agreement, (b) confirm that the term "Senior Indebtedness" under
the Subordination Agreement and the Subordination Agreement II
shall include all amounts outstanding under the Credit Agreement,
as amended by this Agreement, including all amounts outstanding
under the Notes, and (c) ratify and confirm their respective
agreements in all respects.
Section 9. Facility Fee.
In consideration of Lenders' commitment to enter into this
Agreement, Borrower hereby agrees to pay to Agent, for the
ratable benefit of the Lenders a facility fee equal to Eighty
Thousand Dollars ($80,000) (the "Facility Fee"), payable in full
on the date hereof.
Section 10. 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.
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.
LENDERS:
FLEET NATIONAL BANK
By: /s/ Robert T.P. Storer
----------------------
Robert T.P. Storer
Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Randolph T. Kohler
----------------------
Randolph T. Kohler
Vice President
AGENT:
FLEET NATIONAL BANK
By: /s/ Robert T.P. Storer
----------------------
Robert T.P. Storer
Vice President
BORROWER:
FRENCH FRAGRANCES, INC.
By: /s/ E. Scott Beattie
------------------------
E. Scott Beatie
Vice Chairman
(SIGNATURES CONTINUED ON NEXT PAGE)
CONSENTED AND AGREED:
NATIONAL TRADING MANUFACTURING, INC.
By: /s/ Rafael Kravec
----------------------
Rafael Kravec
President
BEDFORD CAPITAL CORPORATION
By: /s/ E. Scott Beattie
----------------------
E. Scott Beattie
Executive Vice President
By: /s/ Fred Berens
----------------------
Fred Berens
By: /s/ Rafael Kravec
----------------------
Rafael Kravec