THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED, HYPOTHECATED,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION THEREUNDER UNLESS THE
COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT THAT SUCH SALE, ASSIGNMENT, OR TRANSFER DOES NOT INVOLVE A TRANSACTION
REQUIRING REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
E COM VENTURES, INC.
Subordinated Secured Convertible Note
$5,000,000 December 9, 2004
FOR VALUE RECEIVED, E Com Ventures, Inc., a Florida corporation (the
"Company"), hereby unconditionally promises to pay to the order of Stephen
Nussdorf and Glenn Nussdorf (collectively, the "Holder"), on January 29, 2007
(the "Maturity Date"), in immediately available funds, the principal amount of
Five Million Dollars ($5,000,000), and to pay interest on the unpaid principal
amount hereof at the rate set forth in Section 4. All amounts owed hereunder
shall be paid in lawful money of the United States of America. This Note is
being issued in exchange for that certain Subordinated Secured Promissory Note
issued as of March 9, 2004, by the Company's wholly-owned subsidiary,
Perfumania, Inc., a Florida corporation, to the Holder, in the principal
aggregate amount of $5,000,000.
This Note is subject to the following terms and conditions:
1. SECURITY. This Note and the amounts payable hereunder, including
principal and accrued interest, is secured by that Security Agreement between
the Holder and the Company dated as of the date hereof ("Security Agreement").
2. SUBORDINATION. This Note and the amounts payable hereunder, including
principal and accrued interest shall be subordinate and junior to the Senior
Bank Loans. For the purpose of this Note, "Senior Bank Loans" shall mean any and
all obligations, liabilities and indebtedness of the Company to GMAC Commercial
Credit LLC (the "Senior Lender"), and all obligations, liabilities and
indebtedness in connection with any such refinancing of the indebtedness to the
Senior Lender.
3. PREPAYMENT. The outstanding principal balance of this Note may be
prepaid by the Company at any time and from time to time, without premium or
penalty of any kind or nature whatsoever.
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4. PAYMENTS OF INTEREST. The Company shall pay or cause to be paid to
Holder interest on the unpaid principal amount hereof from time to time
outstanding at a rate per annum equal to the then current Prime Rate plus one
percent quarterly in arrears on the last day of each calendar quarter commencing
on December 31, 2004 until this Note shall be paid in full. As used herein, the
term "Prime Rate" shall mean for each calendar month the prime rate listed in
the Wall Street Journal in the "Money Rates" column published on the date which
is one Business Day (as defined below) prior to the beginning of such calendar
month for such calendar month. If the Prime Rate cannot be determined in
accordance with the preceding sentence, then the Company will notify Holder and
instead determine the Prime Rate by using the rates offered to prime banks by
Citibank, N.A. (but in all other respects in accordance with the preceding
sentence). Interest shall be calculated on the basis a 360 day year based on the
actual number of days elapsed.
5. CONVERSION.
(a) The Holder may convert all or any part of the then outstanding
principal amount of this Note, plus accrued interest, into shares of the Common
Stock, $.01 par value, (the "Common Stock"), of the Company at any time after
issuance and prior to 5:00 pm (EST) on the Maturity Date, at an initial
conversion price per share of $11.25 (the "Conversion Price"), the closing price
of the Company's Common Stock on the date of this Note. No fractional shares of
the Company's Common Stock will be issuable upon conversion of any part of this
Note. In lieu of any fractional share, the Company will deliver the cash
equivalent of such fractional share to the Holder, based upon the then current
Market Price, as defined below, of such shares of Common Stock as of the date of
any such conversion. Notwithstanding anything in this Note to the contrary, the
per share Conversion Price and the number of shares of the Company's Common
Stock purchasable and issuable upon conversion shall be adjusted from time to
time as follows:
(i) In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as, or
substantially as, an entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective provision to be made
so that the Holder shall have the right thereafter, by converting this Note, to
purchase the kind and number of shares of stock or other securities or property
(including cash) received upon such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been acquired upon conversion
of this Note immediately prior to such reclassification, capital reorganization
or other change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
2
(ii) If and whenever the Company shall grant to all of the holders of its
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company shall concurrently therewith grant to the Holder of this Note
all of such rights, warrants or options to which each such Holder would have
been entitled if, on the date of determination of shareholders entitled to the
rights, warrants or options being granted by the Company, such Holder were the
holder of record of the number of whole shares of Common Stock then issuable
upon conversion.
(iii) In the event the Company shall issue additional shares of its Common
Stock in a stock dividend, stock distribution or subdivision, the Conversion
Price in effect immediately prior to such stock dividend, stock distribution or
subdivision shall, concurrently with the effectiveness of such stock dividend,
stock distribution or subdivision, be proportionately decreased. In the event
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(b) The term "Market Price" as used herein with respect to a share of
Common Stock shall mean the reported closing sales price, or, if there was no
closing sales price on such day, then the average of the reported closing bid
and asked prices, in either case, on the principal securities exchange on which
the Common Stock is then listed or admitted to trading, or, if not listed or
admitted to trading on any national securities exchange, on the Nasdaq National
Market System or, if the Common Stock is not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq National Market System,
the average of the closing bid and asked prices in the over-the-counter market,
as reported by Nasdaq or any other inter-dealer quotation system or exchange, or
as furnished by any New York Stock Exchange member firm selected from time to
time by the Company for such purpose, or, if such prices are not available, the
fair market value set by, or in a manner established by, the Board of Directors
of the Company in good faith.
(c) The Company shall deliver a certificate or certificates for that
number of shares of the Company's Common Stock issuable on conversion as soon as
practicable after surrender of this Note for conversion, but the person or
persons to whom such certificates are issuable shall be considered the holder of
record of such shares from the time this Note is surrendered. Except as
described above, this Note is not otherwise convertible into any other shares of
the Company's Common Stock. The Company has not and shall not be required to
establish any sinking fund for the repayment of this Note. Prior to the issuance
of any shares of Common Stock upon conversion hereof, the holder of this Note
hereby agrees to provide the Company with any and all documentation requested by
the Company, including any representations, regarding the issuance of said
shares of Common Stock with respect to any conversion.
6. PAYMENTS. Any payment hereunder which is stated to be due on a day
which is not a Business Day shall be made on the next succeeding Business Day
(and interest shall accrue for such extension of time). "Business Day" shall
mean any day other than a Saturday or Sunday or a day on which banks in New York
are authorized or required by law to be closed.
3
7. DEFAULT. The occurrence of any one or more of the following events
shall constitute an event of default (each an "Event of Default") hereunder:
(i) if the Company becomes insolvent or makes an assignment for the
benefit of creditors;
(ii) if there shall be filed by or against the Company any petition for
any relief under the bankruptcy laws of the United States now or hereafter in
effect or any proceeding shall be commenced with respect to the Company under
any insolvency, readjustment of debt, reorganization, dissolution, liquidation
or similar law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity), provided that in the case of any involuntary
filing or the commencement of any involuntary proceeding against the Company
such proceeding or petition shall have continued undismissed and unvacated for
30 days; or
(iii) if any petition or application to any court or tribunal, at law or
in equity, shall be filed by or against the Company for the appointment of any
receiver or Company for the Company or any material part of the property of the
Company, provided that in the case of any involuntary filing against the
Company, such proceeding or appointment shall have continued undismissed and
unvacated for 30 days; or
(iv) if the Company shall fail for any reason to make any payment of
principal and/or interest hereunder within 10 business days after such payment
is due; or
(v) if the Company shall fail for any reason to make any payment of
principal and interest under any Senior Bank Loan, within 30 days after such
payment is due.
8. REMEDIES UPON DEFAULT; DEFAULT INTEREST.
(i) If any Event of Default shall occur for any reason, then and in any
such event, in addition to all rights and remedies of the Holder under
applicable law or otherwise, all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently, the
Holder may, at its option, declare any or all amounts owing under this Note to
be due and payable, whereupon the then unpaid balance hereof, together with all
accrued and unpaid interest thereon, shall forthwith become due and payable.
(ii) Upon the occurrence of an Event of Default, or upon the maturity
hereof (by demand, acceleration or otherwise), the principal and any accrued but
unpaid interest owing on said principal sum (the "Obligations") shall bear
interest from the date of occurrence of such Event of Default or such maturity
until collection (including any period of time occurring after judgment), at the
"Default Rate," being the lower of (A) the highest rate allowed by applicable
law, or (B) a simple interest rate per annum equal to 3% above the Prime Rate in
effect on the date of maturity (acceleration or otherwise). All default interest
charges (X) shall be in addition to, and not in lieu of, any other remedy
available to Holder; (Y) shall be added to the Obligations and secured by the
Security Agreement, and (Z) shall not be construed as an agreement or privilege
to extend the date of the payment of the Obligations, nor as a waiver of any
other right or remedy accruing to Holder by reason of the occurrence of any
Event of Default.
4
9. LOST, STOLEN, MUTILATED OR DESTROYED NOTE. If this Note shall be
mutilated, lost, stolen, or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in
lieu of or in substitution for a lost, stolen, or destroyed Note, a new Note for
the principal amount of this Note so mutilated, lost, stolen, or destroyed but
only upon receipt of evidence (which may consist of a signed affidavit of the
Holder) of such loss, theft, or destruction of such Note, and of the ownership
thereof, and indemnity all reasonably satisfactory to the Company.
10. OTHER MATTERS
(a) SALE OF NOTE; ASSIGNMENT. This Note is negotiable, and this Note may
be sold, assigned, transferred or conveyed, by pledge or otherwise, without the
prior written consent of the Company.
(b) MODIFICATION; WAIVER. This Note may be amended, modified, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Company and the Holder. Any waiver by the
Company or the Holder of a breach of any provision of this Note shall not
operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof or hereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
preclude any other or further exercise hereof or the exercise of any other
right, power or privilege hereunder. Any waiver must be in writing. The rights
and remedies provided herein are cumulative and are not exclusive of any rights
or remedies which any party may otherwise have at law or in equity.
(c) NOTICES. Any notice required or permitted to be given hereunder
("Notices") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested, or by fax, as
follows: (i) if to the Company: 251 International Parkway, Sunrise, Florida
33325, Attn: A Mark Young, fax no. (954) 335-9179, with a copy to: Akerman
Senterfitt, One Southeast Third Avenue, 28th Floor, Miami, Florida 33131-1714.
Attn: Alan Aronson, fax no. 305 374 5095 ; and (ii) if to the Holder: 2090 Ninth
Avenue, Ronkonkoma, New York 11779, Attn: Fred Paliani, fax no. 631-396 2440,
with copy to Edwards & Angell, LLP, 750 Lexington Avenue, New York, New York,
10022 Attn: Patricia Kantor, fax no. (212) 408-4844, or such other address as
the either party hereto may designate by Notice to the other.
(d) SEVERABILITY. If any provision of this Note is invalid, illegal, or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. The rate of interest
on this Note is subject to any limitations imposed by applicable usury laws.
5
(e) HEADINGS. The headings in this Note are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Note.
(f) GOVERNING LAW. This Note shall be governed by and construed in all
respects under the laws of the State of Florida, without reference to its
conflict of laws, rules or principles.
(g) SAVING CLAUSE. This Note is subject to the express condition that at
no time shall the Company be obligated or required to pay interest on the
principal balance due hereunder at a rate which could subject Holder to either
civil or criminal liability as a result of being in excess of the maximum
interest rate which the Company is permitted by law to contract or agree to pay.
If by the terms of this Note, the Company is at any time required or obligated
to pay interest on the principal balance due hereunder, at a rate in excess of
such maximum rate, the interest rate shall be deemed to be immediately reduced
to such maximum rate and all previous payments in excess of the maximum rate
shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder notwithstanding the other provisions
hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be executed on its
behalf by the undersigned officer thereunto duly authorized.
E COM VENTURES, INC.
By:/s/ Michael W. Katz
-------------------
Michael W. Katz
Chief Executive Officer
6
SECURITY AGREEMENT
SECURITY AGREEMENT (the "AGREEMENT") made and entered into as of December
9, 2004, by and between E Com Ventures, Inc., a Florida corporation ("DEBTOR"),
and Stephen Nussdorf and Glenn Nussdorf (collectively "SECURED PARTY").
R E C I T A L S
A. Debtor has executed a Subordinated Secured Convertible Note of
even date herewith, payable to the order of the Secured Party.
B. As a condition precedent to Secured Party's acceptance of the
Note, Grantor grants the security interests and undertakes the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce Secured
Party to accept the Note in exchange for that certain Subordinated Secured
Demand Note, dated as of March 9, 2004, issued by the Debtor's wholly-owned
subsidiary, Perfumania, Inc., a Florida corporation, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
1. GRANT OF SECURITY INTEREST. As security for the payment and performance
when due of the Obligations, Debtor does hereby assign and transfer unto Secured
Party, and does hereby grant to Secured Party a continuing security interest in,
all of Debtor's right, title and interest in, to and under all of the following,
whether now existing or hereafter acquired: all of Debtor's assets and
properties, whether tangible or intangible, including without limitation,
Debtor's Accounts, Inventory, Goods, General Intangibles, Chattel Paper,
Documents and Instruments, and all Proceeds and products of any and all of the
foregoing (collectively, the "COLLATERAL").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR. Debtor represents,
warrants and covenants as follows:
(a) No Liens. Debtor is, and as to Collateral acquired by it after the
date hereof will be, the owner of such Collateral free from any Liens, other
than Permitted Liens, and Debtor shall defend the Collateral against all claims
and demands of all persons at any time claiming the same of any interest therein
adverse to Secured Party. Debtor will, at its own expense, take such action as
may be necessary duly to discharge any such Lien if the same shall arise at any
time.
(b) Chief Executive Office; Records. The chief executive office of Debtor
is located at 251 International Parkway, Sunrise, Florida. The originals or
copies of all documents evidencing the Collateral and the account and records of
Debtor relating thereto are, and will continue to be, maintained at, and
controlled and directed from, such chief executive office or at such new
locations as Debtor may establish in accordance with this Section 2(b). Debtor
shall not establish a new location for such chief executive office until it has
given to Secured Party not less than thirty (30) days' prior written notice of
its intention so to do, describing such new location and providing such other
information in connection therewith as Secured Party may reasonably request.
(c) Further Actions. Upon written request from Secured Party, Debtor will
provide Secured Party with copies of such lists of and reports with respect to
the Collateral as Debtor furnishes from time to time to the holder(s) of any
Senior Lien. In addition, Debtor will, upon the request of Secured Party,
execute and/or deliver to Secured Party from time to time such instruments, and
take such further steps relating to the Collateral and the property or rights
covered by the security interest hereby granted, which Secured Party may
reasonable request to establish and maintain a valid, enforceable security
interest in the Collateral as provided herein or to perfect, preserve or protect
its security interest in the Collateral, all in accordance with the Uniform
Commercial Code or any other relevant law. Debtor authorizes Secured Party to
file any such financing statements without the signature of Debtor.
3. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.
(a) Remedies: Obtaining the Collateral Upon Default. Subject to the rights
of the holder(s) of any Senior Lien, Debtor agrees that, if any Event of Default
shall have occurred and be continuing, then and in every such case, subject to
any mandatory requirements of applicable law then in effect, Secured Party, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured creditor under the Uniform Commercial Code and may:
(i) personally, or by agents or attorneys, take possession of the Collateral or
any part thereof, from Debtor or any other person who then has possession of any
part thereof with or without notice or process of law, and for that purpose may
enter upon Debtor's premises where any of the Collateral is located and remove
the same; and (ii) instruct the obligor or obligors on any instrument or other
obligation constituting the Collateral to make any payment required by the terms
of such instrument directly to Secured Party; and (iii) sell, assign or
otherwise liquidate, or direct Debtor to sell, assign or otherwise liquidate,
any or all of the Collateral or any part thereof, and take possession of the
proceeds of any such sale or liquidation.
(b) Remedies; Disposition of Collateral. Subject to the rights of the
holder(s) of any Senior Lien, any Collateral repossessed by Secured Party
pursuant to Section 3(a), and any other Collateral whether or not so repossessed
by Secured Party, may be sold, assigned, leased or otherwise disposed of under
one or more contracts or as an entirety, and without the necessity of gathering
at the place of sale the property to be sold, and in general in such manner, at
such time or times, at such place or places and on such terms as Secured Party
may, in compliance with any mandatory requirements of applicable law, determine
to be commercially reasonable. Any such disposition which shall be a private
sale or other private proceeding permitted by such requirements shall be made
upon not less than 10 days' written notice to Debtor specifying the time at
which such disposition is to be made. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than 10
days' written notice to Debtor specifying the time and place of such sale and,
in the absence of applicable requirements of law, shall be by public auction
after publication of notice of such action not less than 10 days prior thereto
in accordance with applicable law.
-2-
(c) Application of Proceeds. Subject to the rights of the holder(s) of any
Senior Lien, the proceeds of any Collateral disposed of by Secured Party
pursuant to Section 3(b) shall be applied as follows: first, to the payment of
any and all expenses and fees (including reasonable attorneys' fees) incurred by
Secured Party in obtaining, taking possession of, removing, insuring, repairing,
storing and disposing of Collateral; next, to the payment of the Obligations in
the following order of priority: (i) all interest accrued and unpaid; (ii) the
principal amount owing on the Note; and (iii) all other Obligations then owing;
and any surplus then remaining shall be paid to Debtor, subject, however, to the
rights of the holder of any then existing Lien of which Secured Party has actual
notice.
(d) Remedies Cumulative. No failure or delay on the part of Secured Party
in exercising any right, power or privilege hereunder and no course of dealing
between Debtor and Secured Party or the holder of the Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights, powers and remedies herein expressly provided are cumulative and not
exclusive of any rights, powers or remedies which Secured Party would otherwise
have.
(e) Power of Attorney. Debtor hereby constitutes and appoints Secured
Party its true and lawful attorney, with full power after the occurrence of an
Event of Default and for so long as the same shall be continuing (in the name of
Debtor or otherwise), to act, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies due or to become due to
Debtor under or arising out of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings which Secured Party may deem to be necessary
or advisable in the premises, which appointment as attorney is coupled with an
interest.
4. INDEMNITY. Debtor agrees to indemnify, reimburse and hold Secured Party
harmless from any and all losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements (including reasonable
attorneys' fees and expenses) which may be imposed on, asserted against or
incurred by Secured Party in connection with the creation, preservation or
protection of Secured Party's Liens on, and security interest in, the
Collateral, including, without limitation, in connection with the recording or
filing of instruments and documents in public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral, premiums for insurance
with respect to the Collateral and all other fees, costs and expenses in
connection with protecting, maintaining or preserving the Collateral and Secured
Party's interest therein, whether through judicial proceedings or otherwise. The
indemnity obligations of Debtor contained in this Section 4 shall constitute
Obligations secured by the Collateral and shall continue in full force and
effect notwithstanding the full payment of the Note and all of the other
Obligations.
-3-
5. DEFINITIONS. The following terms shall have the meaning herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
"ACCOUNTS," "CHATTEL PAPER," "DOCUMENTS," "GOODS," "GENERAL INTANGIBLES,"
"INSTRUMENTS," "INVENTORY" and "PROCEEDS" shall have the meanings assigned to
such terms in the Uniform Commercial Code.
"EVENT OF DEFAULT" shall mean the occurrence of any of the following
events: (a) a "Default" (as such term is defined in the Note) shall have
occurred and be continuing, (b) any representation or warranty made by Debtor
herein shall prove to have been false or incorrect in any material respect at
the time made; or (c) Debtor shall fail to perform or observe any other covenant
or agreement to be performed or observed by it hereunder and such failure shall
continue unremedied for a period of thirty (30) days after written notice
thereof from Secured Party to Debtor.
"LIEN" shall mean any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or claim of any nature whatsoever.
"NOTE" shall mean the Subordinated Secured Convertible Note of Debtor to
Secured Party dated the date hereof, in the original principal amount of Five
Million Dollars ($5,000,000).
"OBLIGATIONS" shall mean: (a) the indebtedness of Debtor to Secured Party
pursuant to the Note; (b) all sums advanced by Secured Party to preserve the
Collateral or its security interest in the Collateral; and (c) in the event of
any proceeding for the collection or enforcement of the Note or this Agreement
after an Event of Default shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or otherwise
disposing or realizing on the Collateral, or of any exercise by Secured Party of
its rights hereunder.
"PERMITTED LIENS" shall mean (i) the Lien created hereby in favor of
Secured Party, (ii) the first priority security interest in favor of any Senior
Lender and a second priority security interest in favor of Parlux Fragrances,
Inc. (collectively, "SENIOR LIENS"), (iii) Liens for taxes either not yet due or
being contested in good faith (and for the payment of which adequate reserves
have been provided) by appropriate proceedings diligently pursued and (iv)
materialmen's, mechanics', workmen's, landlord's, employees' or other like Liens
arising in the ordinary course of business for amounts the payment of which is
either not yet delinquent or is being contested in good faith (and for the
payment of which adequate reserves have been provided) by appropriate
proceedings diligently pursued.
"SENIOR LENDER" shall mean GMAC Commercial Finance LLC and any other bank
or lending institution that extends credit to Debtor on or after the date hereof
in connection with the refinancing of Debtor's indebtedness to GMAC Commercial
Finance LLC or any other Senior Lender.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of Florida and in any other applicable
jurisdiction.
-4-
6. MISCELLANEOUS.
(a) Governing Law. This Agreement and its validity, construction and
performance shall be governed in all respects by the internal laws of the State
of Florida (without reference to the conflict of laws provisions or principles
thereof).
(b) Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; but neither this Agreement nor any of the rights, benefits or
obligations hereunder shall be assigned, by operation of law or otherwise, by
either party hereto without the prior written consent of the other party.
Nothing in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
(c) Amendment; Waiver. This Agreement shall not be changed, modified or
amended in any respect except by the mutual written agreement of the parties
hereto. Any provision of this Agreement may be waived in writing by the party
which is entitled to the benefits thereof. No waiver of any provision of this
Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any such waiver constitute a
continuing waiver.
(d) Notices. Any notice required or permitted to be given hereunder
("Notices") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested, or by fax, as
follows: (i) if to the Company: 251 International Parkway, Sunrise, Florida
33325, Attn: A. Mark Young, fax no. (954) 335-9179, with a copy to: Akerman
Senterfitt, One Southeast Third Avenue, 28th Floor, Miami, Florida 33131-1714.
Attn: Alan Aronson, fax no. 305 374 5095; and (ii) if to the Secured Party: 2090
Ninth Avenue, Ronkonkoma, New York 11779, Attn: Fred Paliani, fax no.
631-396-2440, with copy to Edwards & Angell, LLP, 750 Lexington Avenue, New
York, New York, 10022 Attn: Patricia Kantor, fax no. (212) 408-4844, or such
other address as the either party hereto may designate by Notice to the other.
(e) Obligations Absolute. The obligations of Debtor hereunder shall be
absolute and unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from, the Note, or any assignment or
transfer thereof; any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Note or this Agreement or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect hereof
or the Note; the furnishing of additional security to Secured Party or any
acceptance thereof or the sale, exchange, release, surrender or realization of
or upon any security by Secured Party; or any invalidity, irregularity or
unenforceability of all or part of the Obligations or of any security therefor.
(f) Debtor's Duties. It is expressly agreed, anything herein contained to
the contrary notwithstanding, that Debtor shall remain liable to perform all of
the obligations assumed by it with respect to the Collateral and Secured Party
shall not have any obligations or liabilities with respect to any Collateral by
reason of or arising out of this Agreement, nor shall Secured Party be required
or obligated in any manner to perform or fulfill any of the obligations of
Debtor under or with respect to any Collateral.
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(g) Severability. Any term or provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
(h) Headings. The captions, headings and titles herein are for convenience
of reference only and shall not effect the construction, meaning or
interpretation of this Agreement or any term or provision hereof.
(i) Counterparts. This Agreement may be executed through the use of one or
more counterparts, each of which shall be deemed an original and all of which
shall be considered one and the same agreement, notwithstanding that all parties
are not signatories to the same counterpart.
(j) Entire Agreement. This Agreement merges and supersedes any and all
prior agreements, understandings, discussions, assurances, promises,
representations or warranties among the parties with respect to the subject
matter hereof, and contains the entire agreement among the parties with respect
to the subject matter hereof.
(k) Termination; Release. When all Obligations have been paid in full,
this Agreement shall terminate, and Secured Party, at the request and expense of
Debtor, will execute and deliver to Debtor the proper instruments (including
Uniform Commercial Code termination statements on form UCC-3) acknowledging the
termination of this Agreement, and will duly assign, transfer and deliver to
Debtor (without recourse and without any representation or warranty) such of the
Collateral as may be in possession of Secured Party and has not theretofore been
sold or otherwise applied or released pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the day and year first
written above.
E COM VENTURES, INC.
By: /s/ Michael W. Katz
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Name: Michael W. Katz
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Title: Chief Executive Officer
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Stephen Nussdorf
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Glenn Nussdorf
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