Exhibit 10.80
WAIVER, AMENDMENT AND CONSENT
WAIVER, AMENDMENT AND CONSENT, dated as of February 17, 1998, among
Xxxx Perfumes Corp. ("BORROWER"), the other Credit Parties party to the
Credit Agreement referred to below, General Electric Capital Corporation, for
itself, as Lender, and as Agent for Lenders, and the other Lenders party to
the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Borrower, the other Credit Parties, Agent and Lenders are
parties to that certain Credit Agreement dated as of March 12, 1997 (as from
time to time amended, restated, supplemented or otherwise modified, the
"CREDIT AGREEMENT", and unless the context otherwise requires or unless
otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to them in the Credit Agreement); and
WHEREAS, by letters dated February 2, 10 and 12, 1998, Borrower
notified Agent and Lenders that the Events of Default specified on SCHEDULE A
attached hereto have occurred, and such Events of Default are continuing on
the date hereof (the "EXISTING EVENTS OF DEFAULT"); and
WHEREAS, Borrower has requested that Agent and Lenders waive the
Existing Events of Default and amend the Loan Documents as hereinafter set
forth; and
WHEREAS, Agent and Lenders have agreed to waive the Existing Events
of Default and amend the Loan Documents on the terms and subject to the
conditions as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto hereby agree as follows:
SECTION 1. WAIVER. Agent and Lenders hereby waive the Existing
Events of Default effective as of the Effective Date (as defined herein),
except that such waiver shall not constitute a waiver of the Existing Events
of Default for purposes of Section 6.14 of the Credit Agreement (Restricted
Payments) until July 31, 1998,
whether or not Borrower is in compliance with any of the financial covenants
set forth the Credit Agreement that are tested after the date hereof.
SECTION 2. CONSENT. Effective as of the Effective Date, and
notwithstanding Section 6.1 of the Credit Agreement, Agent and Lenders hereby
consent to the amalgamation of MEM Company (Canada) Limited and Houbigant
(1995) Limited to continue as Houbigant (1995) Limited. The Credit Parties
hereby represent and warrant to Agent and Lenders that as a result of such
amalgamation there has been no impairment to the terms or priority of the
security in the Collateral held by Agent and Lenders. The Credit Parties
agree that not later than March 3, 1998, they shall comply with the terms of
the third proviso of Section 6.1 of the Credit Agreement (I.E., clauses (A),
(B) and (C) thereof).
SECTION 3. RESTRICTED PAYMENTS. Notwithstanding anything set
forth to the contrary in Section 6.14 to the Credit Agreement, from and after
the date hereof no Credit Party shall make a Restricted Payment specified in
Sections 6.14(e) and 6.14(n) with respect to Xxxx Xxxx Fees. It is
understood that certain other Restricted Payments are expressly prohibited by
Section 6.14 of the Credit Agreement as a result of the Existing Events of
Default, which have not been waived pursuant to Section 1 of this Waiver,
Amendment and Consent with respect to Section 6.14 of the Credit Agreement.
It is also understood that those payments by Parent of $12,500 per month to
Xxxxx Xxxxxxxx for rendering services to Parent as Chairman of its Board of
Directors (and those dividends to Parent in an amount to pay such monthly fee
when due and payable) which reduce the Xxxx Xxxx Fees accrual shall not be
treated as "Xxxx Xxxx Fees" for this purpose.
SECTION 4. AMENDMENTS TO FINANCIAL COVENANTS. The Credit
Agreement is hereby amended effective on the Effective Date, as follows:
(a) MINIMUM EBITDA. Paragraph (b) of ANNEX G to the Credit
Agreement is amended by deleting "$26,000,000" as the amount of minimum
EBITDA for the 12-month period ended on the Fiscal Quarter ending March 31,
1998, and substituting therefor the amount of "$4,400,000".
(b) MAXIMUM LEVERAGE RATIO. Paragraph (c) of ANNEX G to the Credit
is amended by adding the following phrase to the end thereof: ", except for
the Fiscal Quarter ending March 31, 1998, in which case the Leverage Ratio
shall not be in excess of 12.50 to 1.0".
(c) MINIMUM INTEREST COVERAGE RATIO. Paragraph (d) of ANNEX G to
the Credit Agreement is amended by deleting "1.50" as the minimum Interest
Coverage
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Ratio for the 12-month period ended on the Fiscal Quarter ending March 31,
1998, and substituting therefor the ratio of "0.23".
(d) EBITDA AND RESTRUCTURING CHARGES. Solely for the purpose of
testing minimum EBITDA, maximum Leverage Ratio and minimum Interest Coverage
Ratio Financial Covenants at March 31, 1998, there shall be added to the
items listed in clause (c) of the definition of "EBITDA" in ANNEX A to the
Credit Agreement the following item: "restructuring charges for such period
in an aggregate amount not to exceed $11,600,000".
SECTION 5. FINANCIAL INFORMATION AND COMPLIANCE CERTIFICATE FOR
FISCAL QUARTER ENDING JUNE 30, 1998. Notwithstanding anything set forth to
the contrary in paragraph (b) of ANNEX E to the Credit Agreement, Borrower
shall deliver or cause to be delivered to Agent and Lenders by July 27, 1998,
the preliminary financial information as available to Borrower as of such
date, Compliance Certificate and other certificates and information required
to be delivered with respect to the Fiscal Quarter ending June 30, 1998. It
is expressly agreed that for purposes of the preceding sentence, Borrower's
failure to deliver such information and certificates by July 27, 1998 shall
constitute an immediate Event of Default, and the cure period specified in
Section 8.1(c) of the Credit Agreement shall be disregarded.
SECTION 6. OVERADVANCES; INTEREST RATE; CONVERSION TO INDEX RATE
LOANS. Notwithstanding anything set forth to the contrary in the Credit
Agreement (particularly Sections 1.1(a)(iii) and 1.4 thereof), from and after
the Effective Date and until July 31, 1998 (the "OVERADVANCE PERIOD"):
(a) Lenders consent to Agent making Overadvances in its sole
discretion to Borrower on behalf of Revolving Lenders in an aggregate amount
not to exceed $6,000,000 at any time, and Lenders agree that they shall not
have the right to revoke prospectively the authority of the Agent to make
such Overadvances during the Overadvance Period.
(b) All Overadvances shall constitute Index Rate Loans, shall bear
interest at the Index Rate plus 4.00% per annum and shall be payable on
demand.
(c) Borrower shall pay interest with respect to Revolving Credit
Advances (other than Overadvances) at the Index Rate plus 2.00% per annum.
(d) Each LIBOR Loan outstanding on the Effective Date shall be
converted on such date to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.12(b) of the Credit Agreement if
such conversion is
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made prior to the expiration of the LIBOR Period applicable thereto, and all
Loans outstanding during the Overadvance Period shall be Index Rate Loans.
SECTION 7. PLEDGE OF STOCK OF DOMESTIC AND CANADIAN SUBSIDIARIES.
(a) SCHEDULE B hereto sets forth a list of each domestic Subsidiary
and each Canadian Subsidiary of each Credit Party. Part A of SCHEDULE I to
the Pledge Agreement is hereby amended to add thereto SCHEDULE B hereto.
Each such domestic Subsidiary and Canadian Subsidiary shall constitute a
Pledged Entity (as defined in the Pledge Agreement) for purposes of the
Pledge Agreement, and 100% of the issued and outstanding Stock of each
domestic Pledged Entity and 66% of the issued and outstanding Stock of each
Canadian Pledged Entity shall constitute Pledged Shares (as defined in the
Pledge Agreement). If a Canadian Pledged Entity's constanting documents
contain a restriction on the right to transfer its shares then, in order to
better perfect Agent's and Lenders' security in the Pledged Shares of such
Pledged Entity, the certificates delivered to Agent shall be registered in
Agent's name and the Credit Parties shall deliver to Agent a copy of the
share register of such Canadian Pledged Entity showing Agent as the
registered owner of the Pledged Shares of such Pledged Entity certified by
the corporate secretary of such Pledged Entity as being true and complete,
all in form and substance satisfactory to Agent.
(b) Notwithstanding anything set forth to the contrary in the
Pledge Agreement, each reference to 66% of the issued and outstanding shares
of Stock of a Pledged Entity in the Pledge Agreement shall mean, with respect
to a domestic Pledged Entity, 100% of the issued and outstanding Stock of
such domestic Pledged Entity.
(c) Any Credit Party forming or acquiring any domestic or Canadian
Subsidiary pursuant to the Credit Agreement shall immediately execute and
deliver to Agent a Pledge Amendment with respect to such Subsidiary, and
deliver to Agent all certificates representing or evidencing the Pledged
Shares (as defined in the Pledge Agreement) accompanied by duly executed
instruments of transfer or assignment in blank, all in a form and substance
satisfactory to Agent; PROVIDED that, if such Subsidiary is subject to
private company restrictions of Canada then, in order to better perfect
Agent's and Lenders' security in the Pledged Shares of such Canadian
Subsidiary, the certificates delivered to Agent shall be registered in
Agent's name and the Credit Parties shall deliver to Agent a copy of the
share register of such Canadian Subsidiary showing Agent as the registered
owner of the Pledged Shares of such Canadian Subsidiary certified by the
corporate secretary of such Canadian Subsidiary as being true and complete,
all in form and substance satisfactory to Agent and its counsel.
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SECTION 8. NORTHVALE MORTGAGE AND BOUCHERVILLE HYPOTHEC.
Notwithstanding Section 5.9(b) of the Credit Agreement, Borrower and/or the
applicable Credit Parties shall deliver to Agent the Northvale Mortgages
covering the unsold Northvale Properties by March 12, 1998, together with the
other documents, instruments and legal opinions contemplated by Section
5.9(b) of the Credit Agreement. Notwithstanding Section 5.9(c) of the Credit
Agreement, Borrower and/or the applicable Credit Parties shall deliver to
Agent the Boucherville Hypothec covering the Boucherville Property by March
12, 1998, together with the other documents, instruments and legal opinions
contemplated by Section 5.9(c) of the Credit Agreement.
SECTION 9. APPRAISALS OF BUILDINGS LOCATED IN MOUNTAINTOP,
PENNSYLVANIA. Borrower shall deliver to Agent by March 13, 1998, appraisals
as to each building on Real Estate owned by each Credit Party located in
Mountaintop, Pennsylvania, each of which shall be in form and substance
satisfactory to Agent.
SECTION 10. BUSINESS PLAN. Borrower shall deliver or cause to be
delivered to Agent and Lenders, as soon as available, but no later than April
30, 1998, an action oriented business plan and financial forecast for the
Credit Parties developed by Borrower and Xxxxxx Xxxxxxxx LLP for the fiscal
year ending March 31, 1999.
SECTION 11. UNDERSTANDING REGARDING FINANCIAL COVENANT DEFAULTS.
Borrower has advised Agent and Lenders that Borrower may not be able to
comply with the minimum EBITDA, maximum Leverage Ratio and minimum Interest
Coverage Ratio Financial Covenants to be tested on June 30, 1998 and
thereafter. It is understood among the parties hereto that a Default or
Event of Default resulting solely from the failure to comply with such
Financial Covenants shall not be deemed to have occurred prior to June 30,
1998 (I.E., the date on which such covenants are tested).
SECTION 12. FEES. In consideration of the waivers, amendments and
consent herein, Borrower shall pay on the Effective Date to Agent a fee of
$450,000, to be divided among the Lenders executing this Waiver, Amendment
and Consent based on their Pro Rata Share (the "Amendment Fee").
SECTION 13. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.
The Credit Parties represent and warrant to Agent and each Lender as follows:
(a) The execution, delivery and performance by each Credit Party of
this Waiver, Amendment and Consent (and each of the other documents to be
executed by such Person pursuant hereto) and the creation of all Liens
provided for herein: (1) are within such Person's corporate power; (2) have
been duly authorized by all necessary or proper corporate and shareholder
action; (3) do not contravene any provision of such Person's charter or
bylaws; (4) do not violate any law or regulation,
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or any order or decree of any Governmental Authority; (5) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property
is bound; (6) do not result in the creation or imposition of any Lien upon
any of the property of such Person other than those in favor of Agent, on
behalf of itself and Lenders, pursuant to the Loan Documents; and (7) do not
require the consent or approval of any Governmental Authority or any other
Person.
(b) This Waiver, Amendment and Consent and the other documents to
be executed and delivered by the Credit Parties have been duly executed and
delivered by each Credit Party and this Waiver, Amendment and Consent and the
Loan Documents as amended hereby constitute the legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with
their terms.
(c) After giving effect to the waivers, amendments and consents
contained in this Waiver, Amendment and Consent, each of the representations
and warranties of the Credit Parties contained in the Credit Agreement and
each of the other Loan Documents shall be true and correct on and as of the
Effective Date as if made on such date, except to the extent any such
representation or warranty expressly relates to an earlier date and except
for changes therein expressly permitted or expressly contemplated by such
agreements.
(d) After giving effect to the waivers, amendments and consents
contained in this Waiver, Amendment and Consent, no Default or Event of
Default shall be continuing except with regard to Section 6.14 of the Credit
Agreement as contemplated by Section 1 of this Waiver, Amendment and Consent.
SECTION 14. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
WAIVER, AMENDMENT AND CONSENT. This Waiver, Amendment and Consent shall
become effective as of the first date on which each of the following
conditions shall have been satisfied or provided for in a manner satisfactory
to Agent, or waived by Agent and Requisite Lenders (such date is referred to
herein as the "Effective Date"):
(a) Agent shall have executed this Waiver, Amendment and Consent.
(b) Agent shall have received, in form and substance satisfactory
to Agent, this Waiver, Amendment and Consent, duly executed and delivered by
Borrower, the other Credit Parties and Requisite Lenders.
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(c) Agent on behalf of Lenders executing this Waiver, Amendment and
Consent shall have received the Amendment Fee.
(d) Agent shall have received, in form and substance satisfactory
to Agent, Pledge Amendments, duly executed and delivered by each Credit
Party, pledging 100% of the issued and outstanding Stock of each domestic
Subsidiary and 66% of the issued and outstanding Stock of each Canadian
Subsidiary, share certificates (registered in Agent's name in the case of
Stock of a Canadian Subsidiary) representing all of the outstanding Stock
being pledged pursuant to the Pledge Amendments and, except in the case of
share certificates representing Stock of a Canadian Subsidiary, stock powers
for such shares certificates executed in blank in form and substance
satisfactory to Agent.
(e) Agent shall have received a copy of the share register of each
Canadian Pledged Entity showing Agent as the registered owner of the Pledged
Shares of such Pledged Entity certified by the corporate secretary of such
Pledged Entity as being true and complete, all in form and substance
satisfactory to Agent.
(f) Agent shall have received duly executed originals of an opinion
of Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C., special counsel to the Credit
Parties, and an opinion of McCarthy, Tetrault, special counsel to the Credit
Parties, in form and substance satisfactory to Agent and its counsel, dated
the Effective Date.
SECTION 15. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) On
and after the Effective Date, each reference in the Loan Documents to "this
Agreement", "herein", "hereof", "hereunder" or words of similar import, shall
mean and be a reference to such Loan Document as amended hereby.
(b) Except as specifically amended above, the Credit Agreement, the
Notes and all other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Waiver,
Amendment and Consent shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of Lenders under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 16. FEES AND EXPENSES. Borrower agrees to reimburse Agent
for all reasonable out-of-pocket fees, costs and expenses, including the
reasonable fees, costs and expenses of counsel or other advisors in
connection with the preparation, execution, and delivery of this Waiver,
Amendment and Consent.
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SECTION 17. GOVERNING LAW. THIS WAIVER, AMENDMENT AND CONSENT AND
THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
SECTION 18. SECTION TITLES. Section titles contained in this
Waiver, Amendment and Consent are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between
the parties hereto.
SECTION 19. COUNTERPARTS. This Waiver, Amendment and Consent may
be executed in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Waiver, Amendment and Consent has been
duly executed as of the date first written above.
XXXX PERFUMES CORP.
By:
---------------------------------
Name:
Title:
Other Credit Parties:
RENAISSANCE COSMETICS, INC.
COSMAR CORPORATION
RCI CHINA, INC.
GREAT AMERICAN COSMETICS, INC.
HOUBIGANT (1995) LIMITED
MEM COMPANY, INC.
TINKERBELL, INC.
(F/K/A XXXXXX XXXXXX, INC.)
RENAISSANCE INTERNATIONAL
EXPORT, INC.
By:
---------------------------------
Name:
Title:
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GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By:
---------------------------------
Name:
Title: Duly Authorized Signatory
NATIONAL CITY COMMERCIAL FINANCE, INC.,
as Lender
By:
---------------------------------
Name:
Title:
PNC BANK, N.A.,
as Lender
By:
---------------------------------
Name:
Title:
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SCHEDULE A
EXISTING EVENTS OF DEFAULT
1. Events of Default under Section 8.1(b) of the Credit Agreement arising as a
result of Borrower's failure to comply with (i) the Minimum EBITDA
Financial Covenant for the 12-month period ended on the Fiscal Quarter
ending December 31, 1997, (ii) the Maximum Leverage Ratio Financial
Covenant at the end of the Fiscal Quarter ending December 31, 1997, and
(iii) the Minimum Interest Coverage Ratio Financial Covenant for the 12-
month period ended on the Fiscal Quarter ending December 31, 1997, as set
forth in paragraphs (b), (c) and (d) of ANNEX G to the Credit Agreement,
respectively.
2. Event of Default under Section 8.1(b) of the Credit Agreement arising as a
result of the Credit Parties' failure to deliver the documentation required
by the provisions of Section 6.1 of the Credit Agreement in connection with
the amalgamation of MEM Company (Canada) Limited and Houbigant (1995)
Limited.
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SCHEDULE B
PLEDGED SHARES
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Stock Percentage of
Class of Certificate Number of Outstanding
Pledgor Pledged Entity Stock Nos. Shares* Shares
--------------------------------------------------------------------------------------
Renaissance Cosmar Common 1, 1M 200 100%
Cosmetics, Inc. Corporation
--------------------------------------------------------------------------------------
Renaissance RCI China, Inc. Common 1 100 100%
Cosmetics, Inc.
--------------------------------------------------------------------------------------
Xxxxxx Xxxx Perfumes Common 1M, 1H, 2 310 100%
Corporation Corp.
--------------------------------------------------------------------------------------
Cosmar Great American Common 3, 4 200 100%
Corporation Cosmetics, Inc.
--------------------------------------------------------------------------------------
Xxxx Perfumes MEM Company, Common 1D 1,000 100%
Corp. Inc.
--------------------------------------------------------------------------------------
Xxxx Perfumes Houbigant Common 2, 3 200 66%
Corp. (1995) Limited
--------------------------------------------------------------------------------------
Xxxx Perfumes Renaissance Common 1 100 100%
Corp. International
Export, Inc.
--------------------------------------------------------------------------------------
MEM Company, Tinkerbell, Inc. Common 1 25 100%
Inc.
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* Amount shown is 100% of stock owned by Pledgor.
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