1
EXHIBIT 10.9
LASALLE NATIONAL BANK
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[LASALLE BANKS LETTERHEAD]
April 16, 1997
Perfumania, Inc.
11701 N.W. 101st Road
Miami, Florida 33178
Gentlemen:
PERFUMANIA, INC., a Florida corporation ("Borrower") and LaSalle National
Bank, a national banking association ("Bank") have entered into that certain
Loan and Security Agreement dated June 25, 1992 (the "Security Agreement").
From time to time thereafter, Borrower and Bank may have executed various
amendments (each an "Amendment" and collectively the "Amendments") to the
Security Agreement (the Security Agreement and the Amendments hereinafter are
referred to, collectively, as the "Agreement"). Borrower and Bank now desire
to further amend the Agreement as provided herein, subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. The Agreement hereby is amended as follows:
(a) Paragraph 11.(o) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(o) Borrower and Magnifique shall at all times maintain an
aggregate net worth of not less than the Minimum Tangible Net
Worth, as hereinafter defined. At all times during Borrower and
Magnifique's fiscal years, with the exception of the last day of each
fiscal year, "Minimum Tangible Net Worth" shall equal $29,000,000.00.
On the last day of each of Borrower and Magnifique's fiscal years,
beginning
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LASALLE
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LASALLE NATIONAL BANK
Perfumania, Inc.
April 16, 1997
Page 2
with fiscal 1998, Minimum Tangible Net Worth shall
equal $34,000,000.00; "Tangible Net Worth" being
defined for purposes of this paragraph as Borrower's
and Magnifique's shareholders' equity (including
retained earnings) less the book value of all
intangible assets, as determined solely by Bank on a
consistent basis, plus the amount of any LIFO reserve
plus the amount any debt subordinated to Bank, all as
determined under generally accepted accounting
principles applied on a basis consistent with the
consolidated financial statement dated February 1, 1997
except as set forth herein; and
(b) Paragraph (1) of Exhibit A of the Agreement is deleted
in its entirety and the following is substituted in its place:
(1) LOAN LIMIT: Bank may, in its sole discretion, advance
an amount up to the sum of the following sublimits
(the "Loan Limit"):
(a) Up to sixty-five percent (65%) of the face amount
(less maximum discounts, credits and allowances
which may be taken by or granted to Account Debtors
in connection therewith) of Borrower's Eligible
Accounts, or Four Million and No/100 Dollars
($4,000,000.00), whichever is less; plus
(b) Subject to subparagraph (3)(a) of Exhibit A of the
Agreement, up to forty percent (40%) of the
lower of the cost or market value of Borrower's
Eligible Inventory (excluding the Inventory
described in subparagraph (1)(c) of Exhibit A of
the Agreement); plus
(c) Subject to subparagraph (3)(c) of Exhibit A of the
Agreement, up to forty percent (40%) of the
lower of the cost or market value of Borrower's
Eligible Inventory (excluding the
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LASALLE
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LASALLE NATIONAL BANK
Perfumania, Inc.
April 16, 1997
page 3
Inventory described in subparagraph (1)(b) of Exhibit
A of the Agreement); plus
(d) Subject to Paragraph (2) of Exhibit A of the Agreement,
up to forty percent (40%) against the face amount of
Commercial Letters of Credit issued by Bank
for the purpose of purchasing Inventory, provided that
such Commercial Letters of Credit are in form and
substance satisfactory to Bank; minus
(e) Such reserves as Bank elects, in its sole discretion,
to establish from time to time;
provided, that the advances made pursuant to
subparapgraphs (1)(b), (1)(c) and (1)(d) above
shall in no event exceed Six Million and No/100 Dollars
($6,000,000.00); further provided that, subject to
subparagraph (13)(e) below, the aggregate Loan Limit
shall in no event exceed Thirty-Five Million and
No/100 Dollars ($35,000,000.00) during the time period
of February 6th through December 19th of each year,
which shall decrease to Thirty-Two Million and No/100
Dollars ($32,000,000.00) during the time period of
December 20th of each year through February 5th of the
following year, minus the then outstanding amount of
all loans and advances to Magnifique Parfumes and
Cosmetics, Inc. ("Magnifique") under that certain Loan
and Security Agreement dated June 25, 1992 by and
between Bank and Magnifique, except as such amount may
be increased by Bank, in its sole discretion, from
time to time.
(c) Subparagraphs (3)(a) and (3)(c) of Exhibit A of the Agreement are
deleted in their entirety and the following is substituted in their place:
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LASALLE
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LASALLE NATIONAL BANK
Perfumania, Inc.
April 16, 1997
Page 4
(a) With respect to the advance described in subparagraph
(1)(b) of Exhibit A of the Agreement, such Inventory
shall consist solely of wholesale Inventory stored in the
Miami warehouse.
(c) With respect to the advance described in subparagraph
(1)(c) of Exhibit A of the Agreement, such Inventory
shall consist solely of wholesale Inventory stored in a
bonded warehouse on which a duty has not been paid and
which is stored in a duty free warehouse.
(d) Subparagraph (5)(c) of Exhibit A of the Agreement is deleted in
its entirety and the following is substituted in its place:
(c) ONE-TIME FEE: In consideration of Bank increasing the Loan
Limit, Borrower and Magnifique shall jointly pay to
Bank a fee in the amount of $5,208.00, which fee shall be
fully earned by Bank and payable at the time of execution
of this Amendment.
(e) Paragraph (7) and subparagraphs (7).(1), (7).(2), (7).(3) and
(7).(5) (but not subparagraph (7).(4)) of Exhibit A of the Agreement are
deleted in their entirety and the following is substituted in their place:
(7) STORE OPENINGS: Borrower, together with Magnifique
shall have no store openings between November
20 and January 31 of each fiscal year during the
Original Term or any Renewal Term. In addition,
Borrower, together with Magnifique shall open no more
than 50 new retail stores during fiscal year ending
1998.
5
LASALLE
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LASALLE NATIONAL BANK
Perfumania, Inc.
April 16, 1997
Page 5
(7).(1) CAP ON CAPITAL EXPENDITURES: Notwithstanding the
provisions of subparagraph 11(k) of the
Agreement, Borrower and Magnifique may make capital
expenditures during any fiscal year in an amount not to
exceed $8,500,000.00 in the aggregate. For purposes of
this subparagraph, capital expenditures shall include,
but is not limited to, new store asset acquisitions,
pre opening store costs, and capitalized construction
costs and are net of capital expenditures financed
with indebtedness.
(7).(2) PROFIT/LOSS COVENANTS: Borrower and Magnifique's
profit/loss on a consolidated basis shall be in
accordance with the following schedule commencing with
the year beginning February 1997 (1998 fiscal year) and
for each fiscal year thereafter:
2/1 through 4/30 net loss of not more than
$3,500,000.00;
2/1 through 10/31 net loss of not more than
$4,000,000.00;
2/1 through 12/31 net loss of not more
than $2,000,000.00; and
2/1 through 1/31 net profit of at least
$1,275,000.00.
(7).(3) MINIMUM CASH FLOW: Borrower and Magnifique's Minimum
Cash Flow in the aggregate shall be in accordance with
the following schedule commencing with the year
beginning February 1997 (1998 fiscal year) and for
each fiscal year thereafter:
2/1 through 4/30 not less than a negative
$2,500,000.00;
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LASALLE
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LASALLE NATIONAL BANK
Perfumania, Inc.
April 16, 1997
Page 6
2/1 through 7/31 not less than a negative
$3,500,000.00;
2/1 through 10/31 not less than a negative
$4,000,000.00; and
2/1 through 1/31 not less than zero.
(7).(5) Intentionally Omitted.
(f) Paragraph (13) of Exhibit A of the Agreement is amended to add
the following subparagraph:
(13)(e) PARTICIPATION AGREEMENT: Borrower shall cause
CoreStates Bank, N.A. as Assignee of Meridian
Commercial Finance Corporation to execute a
Participation Agreement on terms acceptable to Bank,
which Agreement shall supercede the Participation
Agreement dated as of April 1, 1996.
2. This Amendment shall not become effective until fully executed by
all parties hereto.
3. Except as expressly amended hereby and by any other supplemental
documents or instruments executed by either party hereto in order to effectuate
the transactions contemplated hereby, the Agreement and Exhibit A thereto
hereby are ratified and confirmed by the parties hereto and remain in full
force and effect in accordance with the terms thereof.
LASALLE NATIONAL BANK, A NATIONAL
BANKING ASSOCIATION
By: /S/
------------------------------
Title: Senior Vice President
---------------------------
7
LASALLE
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LaSalle National Bank
Perfumania, Inc.
April 16, 1997
Page 7
Accepted and agreed to this
16 day of April, 1997.
PERFUMANIA, INC.
By: /s/ Simon Falic
--------------------------
Simon Falic
Title: President and CEO
Consented and agreed to by the
following guarantors of the
obligations of Perfumania, Inc.
to LaSalle National Bank.
Ilia Lekach
Dated:
-----------------------------
/s/ Simon Falic
- -----------------------------------
Simon Falic
Date: 4/16/97
------------------------------
Magnifique Parfumes and Cosmetics,
Inc.
By: /s/ Simon Falic
--------------------------------
Simon Falic
Title: Vice Presidenet
Date: 4/16/97
Ten Kesef II, Inc.
By: /s/ Simon Falic
-------------------------------
Simon Falic
Title: President
Date: 4/16/97
------------------------------
8
FIFTH AMENDMENT AND ALLONGE TO THAT CERTAIN
DEMAND NOTE DATED JUNE 25, 1992
EXECUTED BY PERFUMANIA, INC. ("UNDERSIGNED") IN FAVOR OF
LASALLE NATIONAL BANK ("BANK") IN THE ORIGINAL
PRINCIPAL AMOUNT OF $15,000,000.00 ("NOTE")
This Fifth Amendment and Allonge to the Note is made and accepted by
the Undersigned as of this 16 day of April, 1997. All capitalized terms used
herein but not otherwise defined will have the same meanings herein as in the
Note.
Bank and the Undersigned have agreed to amend the Note as herein
provided. Accordingly the Note is hereby amended as follows:
1. The face amount of the Note is hereby amended to read Thirty-Five
million and no/100 dollars ($35,000,000.00) from Thirty Million and No/100
Dollars ($30,000,000.00).
Except as specifically amended hereby, the Note shall remain in full
force and effect as issued. An executed original of this Fifth Amendment and
Allonge shall be attached to the original Note and will constitute an integral
part thereof.
PERFUMANIA, INC.
By: /s/ Simon Falic
--------------------------
Simon Falic
Accepted and Agreed to this
18th day of April, 1997.
LaSalle National Bank
By: /s/
--------------------
Title: Sr. Vice President
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FOR BANK USE ONLY
Officer Initial: /s/
---------
Approval: /s/
---------
9
LaSalle National Bank
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LASALLE BANKS
135 South LaSalle Street
Chicago, Illinoise 60603
(312) 904-2500
April 16, 1997
Magnifique Perfumes and
Cosmetics, Inc.
11701 N.W. 101st Road
Miami, Florida 33178
Gentlemen:
Magnifique Parfumes and Cosmetics, Inc., a Florida corporation
("Borrower") and LaSalle National Bank, a national banking association ("Bank")
have entered into that certain Loan and Security Agreement dated June 25, 1992
(the "Security Agreement"). From time to time thereafter, Borrower and Bank may
have executed various amendments (each an "Amendment" and collectively the
"Amendments") to the Security Agreement (the Security Agreement and the
Amendments hereinafter are referred to, collectively, as the "Agreement").
Borrower and Bank and now desire to further amend the Agreement as provided
herein, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receiipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. The Agreement hereby is amended as follows:
(a) Paragraph 11.(o) of the Agreement is deleted in its entirety
and the following is substituted in its place:
(o) Borrower and Perfumania shall at all times maintain an
aggregate tangible net worth of not less than the
Minimum Tangible Net Worth, as hereinafter defined. At all
times during Borrower and Perfumania's fiscal years, with
the exception of the last day of each fiscal year,
"Minimum Tangible Net Worth" shall equal $29,000,000.00.
On the last day of each of Borrower and Perfumania's
fiscal years, beginning the fiscal 1998, Minimum Tangible
Net Work shall equal $34,000,000.00; "Tangible Net Worth"
being defined for purposes of
10
LaSalle
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LASALLE National Bank
Magnifique Parfumes
and Cosmetics, Inc.
April 16, 1997
Page
this paragraph as Borrower's and Perfumania's
shareholder's equity (including retained earnings) less
the book value of all intangible assets, as determined
solely by Bank on a consistenet basis, plus the amount
of any LIFO reserve plus the amount of any LIFO reserve
plus the amount any debt subordinated to Bank, all
as determined under generally accepted accounting
principles applied on a basis consistent with the
consolidated financial statements dated February 1,
1997 except as set forth herein; and
(b) Paragraph (1) of Exhibit A of the Agreement is deleted
in its entirety and the following is substituted in its place:
(1) LOAN LIMIT: Bank may, in its sole discretion, advance
an amount up to the sum of the following sublimits
(the "Loan Limit");
(a) Up to fifty percent (50%) of the lower of the cost
or market value of Borrower's Eligible Inventory,
or Sixty-Five Thousand and No/100 Dollars
($65,000.00) per store, whichever is less; plus
(b) Subject to subparagraph (2)(b) of Exhibit A of
the Agreement, up to fifty percent (50%) of the
lower of the cost or market value of Borrower's
Eligible Inventory, (excluding the Inventory
described in subparagraph (1)(a) or Thirty-Seven
Thousand Five Hundred and No/100 Dollars
($37,500.00) per store, whichever is less; minus
(c) Such reserves as Bank elects, in its sole
discretion, to establish from time to time;
11
LaSalle
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LASALLE National Bank
Magnifique Parfumes
and Cosmetics, Inc.
April 16, 1997
Page 3
provided, that the aggregate Loan Limit shall in no event exceed Thirty-Five
Million and No/100 Dollars ($35,000,000.00) during the time period of February
6th through December 19th of each year, which shall decrease to Thirty-Two
Million and No/100 Dollars (32,000,000.00) during the time period of December
20th of each year through February 5th of the following year, minus the then
outstanding amount of all loans and advances to Perfumania, Inc. ("Perfumania")
under that certain Loan and Security Agreement dated June 25, 1992 by and
between Bank and Perfumania, except as such amount may be increased by Bank, in
its sole discretion, from time to time.
(c) Paragraph (2) of Exhibit A of the Agreement is amended to add the
following subparagraph:
(b) With respect to the advance described in subParagraph (1)(b)
of Exhibit A of the Agreement, such Inventory shall consist
solely of retail Inventory stored in the Miami warehouse.
(d) Subparagraph (4)(c) of Exhibit A of the Agreement is deleted
in its entirety and the following is substituted in its place:
(c) ONE-TIME FEE: In consideration of Bank increasing the
Loan Limit, Borrower and Perfumania shall jointly pay to
Bank a fee in the amount of $5,208.00, which shall be
fully earned by Bank and payable at the time of execution
of this Amendment.
12
LASALLE
- --------------------------------------------------------------------------------
LASALLE NATIONAL BANK
Magnifique Parfumes
and Cosmetics, Inc.
April 16, 1997
Page 4
(e) Paragraph (6) and subparagraphs (6).(1), (6).(2) and (6).(3)
(but not subparagraph (6).(4)) of Exhibit A of the Agreement are deleted in
their entirety and the following is substituted in their place:
(6) STORE OPENINGS: Borrower, together with Perfumania
shall have no store openings between November 20 and
January 31 of each fiscal year during the Original
Term or any Renewal Term. In addition, Borrower,
together with Perfumania shall open no more than 50
new retail stores during fiscal year ending 1998.
(6).(1) CAP ON CAPITAL EXPENDITURES: Notwithstanding the
provisions of subparagraph 11(k) of the Agreement,
Borrower and Perfumania may make capital expenditures
during any fiscal year in an amount not to exceed
$8,500,000.00 in the aggregate. For purposes of this
subparagraph, capital expenditures shall include, but
is not limited to, new store asset acquisitions, pre
opening store costs, and capitalized construction
costs and are net of capital expenditures financed
with indebtedness.
(6).(2) PROFIT/LOSS COVENANTS: Borrower and Perfumania's
profit/loss on a consolidated basis shall be in
accordance with the following schedule commencing
with the year beginning February 1997 (1998 fiscal
year) and for each fiscal year thereafter:
2/1 through 4/30 net loss of not more than
$3,500,000.00;
2/1 through 10/30 net loss of not more than
$4,000,000.00;
13
LASALLE
- --------------------------------------------------------------------------------
LASALLE NATIONAL BANK
Magnifique Parfumes
and Cosmetics, Inc.
April 16, 1997
Page 5
2/5 through 12/31 net loss of not more
than $2,000,000.00; and
2/1 through 1/31 net profit of at least
$1,275,000.00.
(6).(3) MINIMUM CASH FLOW: Borrower and Perfumania's
Minimum Cash Flow in the aggregate shall be in
accordance with the following schedule
commencing with the year beginning February,
1997 (1998 fiscal year) and for each fiscal
year thereafter:
2/1 through 4/30 not less than a negative
$2,500,000.00;
2/1 through 7/31 not less than a negative
$3,500,000.00;
2/1 through 10/31 not less than a negative
$4,000,000.00; and
2/1 through 1/31 not less than zero.
(f) Paragraph (11) of Exhibit A of the Agreement is amended to add
the following subparagraph:
(11)(e) PARTICIPATION AGREEMENT: Borrower shall cause
CoreStates Bank, N.A. as Assignee of Meridian
Commercial Finance Corporation to execute a
Participation Agreement on terms acceptable to
Bank, which Agreement shall supercede the
Participation Agreement dated as of April 1, 1996.
2. This Amendment shall not become effective until fully executed
by all parties hereto.
14
LASALLE
- --------------------------------------------------------------------------------
LASALLE NATIONAL BANK
Magnifique Parfumes
and Cosmetics, Inc.
April 16, 1997
Page 6
3. Except as expressly amended hereby and by any other
supplemental documents or instruments executed by either party hereto in order
to effectuate the transactions contemplated hereby, the Agreement and Exhibit A
thereto hereby are ratified and confirmed by the parties hereto and remain in
full force and effect in accordance with the terms thereof.
LASALLE NATIONAL BANK, a national
banking association
By: /s/
------------------------------------
Title: Sr. Vice President
Accepted and agreed to this
16th day of April, 1997.
MAGNIFIQUE PARFUMES AND
COSMETICS, INC.
By: /s/
-------------------------------
Title: Vice President
Consented and agreed to by the
following guarantors of the
obligations of Magnifique Parfumes
and Cosmetics, Inc. to LaSalle
National Bank
- -----------------------------------
Ilia Lekach
Date:
------------------------------
15
LASALLE
- --------------------------------------------------------------------------------
LaSalle National Bank
Magnifique Parfumes
and Cosmetics, Inc.
April 16, 1997
Page 7
/s/ Simon Falic
- -------------------
Simon Falic
Date: 4/16/97
--------------
Perfumania, Inc.
By: /s/ Simon Falic
------------------
Simon Falic
Title: President and CEO
Date: 4/16/97
--------------
Ten Kesef II, Inc.
By: /s/ Simon Falic
----------------
Simon Falic
Title: President
Date: 4/16/97
--------------
16
THIRD AMENDMENT AND ALLONGE TO THAT CERTAIN
DEMAND NOTE DATED JUNE 25, 1992 EXECUTED BY
MAGNIFIQUE PARFUMES AND COSMETICS, INC.
("UNDERSIGNED") IN FAVOR OF LASALLE NATIONAL
BANK ("BANK") IN THE ORIGINAL PRINCIPAL
AMOUNT OF $15,000,000.00 ("NOTE")
This Third Amendment and Allonge to the Note is made and accepted by
the Undersigned as of this 16 day of April, 1997. All capitalized terms used
herein but not otherwise defined will have the same meanings herein as in the
Note.
Bank and the Undersigned have agreed to amend the Note as herein
provided. Accordingly the Note is hereby amended as follows:
1. The face amount of the Note is hereby amended to read Thirty-Five
Million and No/100 dollars ($35,000,000.00) from Twenty Million and No/100
Dollars ($20,000,000.00).
Except as specifically amended hereby, the Note shall remain in full
force and effect as issued. An executed original of this Third Amendment and
allonge shall be attached to the original Note and will constitute an integral
part thereof.
MAGNIFIQUE PARFUMES AND
COSMETICS, INC.
By:/s/ Simon Falic
--------------------
Simon Falic
Title: Vice President
Accepted and Agreed to this
18th day of April, 1997.
LaSalle National Bank
By: /s/ Bruce A. Denby
-----------------------
Bruce A. Denby
Title: Sr. Vice President
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FOR BANK USE ONLY
Officer Initial: /s/
------
Approval: /s/
-----