Exhibit 10.1
SECOND AMENDMENT AND WAIVER dated as of November 12, 1999 to the LOAN AGREEMENT
dated as of December 30, 1998 as amended by the First Amendment and Waiver dated
as of June 10, 1999 (as may be further amended, supplemented or modified from
time to time in accordance with its terms, the "Loan Agreement") by and among
DEL LABORATORIES, INC. a Delaware corporation (the "Borrower"), DEL
PHARMACEUTICALS, INC. a Delaware corporation (a "Guarantor") and THE CHASE
MANHATTAN BANK (the "Bank").
WHEREAS, by an Agreement dated as of the 8th day of July, 1999 among Parfums
Schiaparelli, Inc., a New York corporation ("Parfums"), Royce & Xxxxx, Inc., a
Delaware corporation ("Royce"), 565 Broad Hollow Realty Corp., a New York
corporation ("Broad Hollow") and the Bank, each of Parfums, Royce and Broad
Hollow agreed (i) to become a Guarantor and (ii) to become a party to, and be
bound by the provisions of, the Loan Agreement; and
WHEREAS, the Borrower and the Guarantors have requested and the Bank hereby
agrees, subject to the terms and conditions of this SECOND AMENDMENT AND WAIVER,
to waive compliance with and amend certain provisions of the Loan Agreement as
hereinafter set forth effective as of the date hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. WAIVER OF ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (a) MINIMUM CONSOLIDATED TANGIBLE
NET WORTH.
Compliance with Section 5.03 (a) of the Loan Agreement is hereby waived
for the fiscal nine month period ended September 30, 1999 to permit the
Consolidated Tangible Net Worth to fall below $35,000,000, provided,
however, Consolidated Tangible Net Worth was not less than $33,420,000
at any time during such fiscal period.
2. WAIVER OF ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (c) CONSOLIDATED LEVERAGE RATIO.
Compliance with Section 5.03 (c) of the Loan Agreement is hereby waived
for the fiscal nine month period ended September 30, 1999 to permit the
Consolidated Leverage Ratio to exceed 3.50 to 1.00, provided, however,
such ratio was not greater than 3.97 to 1.00 at any time during such
fiscal period.
3. WAIVER OF ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (d) CONSOLIDATED INTEREST
COVERAGE RATIO.
Compliance with Section 5.03 (d) of the Loan Agreement is hereby waived
for the fiscal nine month period ended September 30, 1999 to permit the
Consolidated Interest Coverage ratio to fall below 1.75 to 1.00,
provided, however, such ratio was not less than -0.27 to 1.00 at any
time during such fiscal period.
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4. WAIVER OF ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (e) CONSOLIDATED FIXED CHARGE
RATIO.
Compliance with Section 5.03 (e) of the Loan Agreement is hereby waived
for the fiscal nine month period ended September 30, 1999 to permit the
Consolidated Fixed Charge Ratio to fall below 0.20 to 1.00, provided,
however, such ratio was not less than -0.74 to 1.00 at any time during
such fiscal period.
5. WAIVER OF ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (f) DEBT TO EBITDA RATIO.
Compliance with Section 5.03 (f) of the Loan Agreement is hereby waived
for the fiscal nine month period ended September 30, 1999 to permit the
Debt to EBITDA Ratio to exceed 3.75 to 1.00, provided, however, such
ratio was not greater than 13.73 to 1.00 at any time during such fiscal
period.
6. AMENDMENT TO ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS. SECTION 1.01.
CERTAIN DEFINED TERMS.
(i) The definition of the term "Maturity Date" is hereby amended by
deleting the date "December 30, 2002" and by substituting
therefor the date "October 1, 2001".
(ii) Section 1.01 is hereby additionally amended by deleting the
following terms: "Applicable Margin", "Consolidated Funded Debt
(Applicable Margin)", and Debt to EBITDA Ratio (Applicable
Margin)".
7. AMENDMENT TO ARTICLE II. AMOUNT AND TERMS OF THE LOANS. SECTION 2.01.
THE REVOLVING CREDIT LOANS.
Section 2.01 (a) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(a) The Bank agrees, on the date of this Agreement, on the terms
and conditions of this Agreement and in reliance upon the
representations and warranties set forth in this Agreement,
to lend to the Borrower prior to the Maturity Date such
amounts as the Borrower may request from time to time
(individually, a Revolving Credit Loan" or collectively, the
"Revolving Credit Loans"), which amounts may be borrowed,
repaid and reborrowed, provided, however, that the aggregate
amount of such Revolving Credit Loans outstanding at any
time shall not exceed (i) from the date of this Agreement
through March 31, 2001, TWENTY MILLION ($20,000,000) DOLLARS
and (ii) from April 1, 2001 until the Maturity Date, TWELVE
MILLION ($12,000,000) DOLLARS (the "Commitment"), or such
lesser amount of the Commitment as may be reduced pursuant
to Section 2.08 hereof."
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8. AMENDMENT TO ARTICLE II. AMOUNT AND TERMS OF THE LOANS. SECTION 2.04.
PAYMENT OF INTEREST ON THE REVOLVING CREDIT NOTE.
(i) Section 2.04 (a) of the Loan Agreement is hereby amended by
deleting the first sentence thereof and by substituting
therefor the following:
"In the case of an Alternate Base Rate Loan, interest
shall be payable at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of
360 days) equal to the Alternate Base Rate PLUS 3/4 of
1%."
(ii) Section 2.04 (b) of the Loan Agreement is hereby amended by
deleting the first sentence thereof and by substituting
therefor the following:
"In the case of a Eurodollar Loan, interest shall be
payable at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days)
equal to the Adjusted LIBOR Rate PLUS 2.75%."
9. AMENDMENT TO ARTICLE II. AMOUNT AND TERMS OF THE LOANS. SECTION 2.05.
APPLICABLE MARGIN.
Section 2.05 of the Loan Agreement is hereby amended by deleting it in
its entirety and by substituting therefor, "Intentionally Omitted".
10. AMENDMENT TO ARTICLE II. AMOUNT AND TERMS OF THE LOANS. SECTION 2.07.
COMMITMENT FEE.
Section 2.07 of the Loan Agreement is hereby amended by deleting it in
its entirety and by substituting therefor the following:
"COMMITMENT FEE. The Borrower agrees to pay to the Bank from
the date hereof and for as long as the Commitment remains outstanding,
on the last Business Day of each calendar quarter, a commitment fee
equal to 1/2 of 1% per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) on the average daily
unused amount of the Commitment, such commitment fee being payable for
the calendar quarter, or part thereof, preceding the payment date.
11. AMENDMENT TO ARTICLE II. AMOUNT AND TERMS OF THE LOANS.
Article II of the Loan Agreement is hereby amended by the addition of a
new Section 2.22 as follows:
"Section 2.22. MANDATORY REPAYMENT OF REVOLVING CREDIT LOANS. At
any time that the aggregate amount of Revolving Credit Loans
outstanding exceeds the Commitment, the Borrower shall, subject to
the provisions of Section 2.10 of the Loan Agreement, immediately
repay so much of the Revolving Credit Loans as shall exceed the
Commitment."
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12. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.02. NEGATIVE COVENANTS. (l) LOSSES.
Section 5.02 (l) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"LOSSES. Incur a net loss for any fiscal year, provided,
however, the Borrower may incur a consolidated net
loss in an amount not to exceed $3,987,000 for its
fiscal year ending December 31, 1999."
13. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (a) MINIMUM CONSOLIDATED TANGIBLE
NET WORTH.
Section 5.03 (a) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(a) MINIMUM CONSOLIDATED TANGIBLE NET WORTH The Borrower will
maintain at all times Consolidated Net Worth (tested
quarterly) of not less than (i) from September 30, 1999
until December 30, 1999, $33,420,000 (ii) beginning on
December 31, 1999 through December 30, 2000, $33,684,000
and (iii) on December 31, 2000 and thereafter,
$38,909,000."
14. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (b) CONSOLIDATED CAPITAL
EXPENDITURES.
Section 5.03 (b) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(b) CONSOLIDATED CAPITAL EXPENDITURES The Borrower will not
make Consolidated Capital Expenditures, in the aggregate,
during any four (4) consecutive fiscal quarters of the
Borrower in excess of (i) $10,350,000 for the period of
four fiscal quarters ending December 31, 1999, (ii)
$12,300,000 during the period of four fiscal quarters
ending March 31, 2000, June 30, 2000 and September 30,
2000 and (iii) $8,000,000 during any period of four fiscal
quarters thereafter."
15. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (c) CONSOLIDATED LEVERAGE RATIO.
Section 5.03 (c) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(c) CONSOLIDATED LEVERAGE RATIO The Borrower will maintain at
all times a Consolidated Leverage Ratio (tested quarterly)
of not greater than (i) from September 30, 1999 through
September 29, 2000, 4.05 to 1.00, (ii) from September 30,
2000 through December 30, 2000, 3.70 to 1.00 and (ii) from
December 31, 2000 and thereafter, 3.49 to 1.00."
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16. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (d) CONSOLIDATED INTEREST
COVERAGE RATIO.
Section 5.03 (d) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(d) CONSOLIDATED INTEREST COVERAGE RATIO. The Borrower will
maintain at all times a Consolidated Interest Coverage
Ratio of not less than (i) from September 30, 1999 through
December 30, 1999, -0.27 to 1.00, (ii) from December 31,
1999 through March 30, 2000, -0.49 to 1.00, (iii) from
March 31, 2000 through June 29, 2000, -0.42 to 1.00, (iv)
from June 30, 2000 through September 29, 2000, -0.36 to
1.00, (v) from September 30, 2000 through December 30,
2000, 1.13 to 1.00 and (vi) from December 31, 2000 and
thereafter, 1.80 to 1.00."
17. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (e) CONSOLIDATED FIXED CHARGE
RATIO.
Section 5.03 (e) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(e) CONSOLIDATED FIXED CHARGE RATIO. The Borrower will
maintain at all times a Consolidated Fixed Charge Ratio of
not less than (i) from September 30, 1999 through December
30, 1999, -0.74 to 1.00, (ii) from December 31, 1999
through March 30, 2000, -0.44 to 1.00, (iii) from March
31, 2000 through June 29, 2000, -0.21 to 1.00, (iv) from
June 30, 2000 through September 29, 2000, -0.03 to 1.00,
(iv) from September 30, 2000 through December 30, 2000,
0.58 to 1.00, (v) from December 31, 2000 through March 30,
2001, 0.76 to 1.00 and (vi) from March 31, 2001 and
thereafter, 1.25 to 1.00."
18. AMENDMENT TO ARTICLE V. COVENANTS OF THE BORROWER AND THE GUARANTOR.
SECTION 5.03. FINANCIAL REQUIREMENTS. (f) DEBT TO EBITDA RATIO.
Section 5.03 (f) of the Loan Agreement is hereby amended by deleting it
in its entirety and by substituting therefor the following:
"(f) DEBT TO EBITDA RATIO. The Borrower will maintain at all
times a Debt to EBITDA Ratio of not greater than (i) from
September 30, 1999 through December 30, 1999, 13.73 to
1.00, (ii) from December 31, 1999 through March 30, 2000,
11.46 to 1.00, (iii) from March 31, 2000 through June 29,
2000, 9.73 to 1.00, (iv) from June 30, 2000 through
September 29, 2000, 9.39 to 1.00, (iv) from September 30,
2000 through December 30, 2000, 4.18 to 1.00, (v) from
December 31, 2000 through March 30, 2001, 3.78 to 1.00 and
(vii) from March 31, 2001 and thereafter, 3.25 to 1.00."
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19. ADDITIONAL AMENDMENTS AND COVENANTS BINDING ON THE BORROWER AND THE
GUARANTORS.
(a) Notwithstanding anything to the contrary contained in Section
5.02 (d) of the Loan Agreement, the Borrower and the Guarantors
each agree that during the period from the date of this SECOND
AMENDMENT AND WAIVER through the Maturity Date, none of them
shall, nor will any of them permit any Subsidiary to make, or
engage in, any Permitted Acquisition.
(b) Notwithstanding anything to the contrary contained in Section
5.02 (f) of the Loan Agreement, the Borrower and the Guarantors
each agree that during the period from the date of this SECOND
AMENDMENT AND WAIVER through the Maturity Date, none of them
shall, nor will any of them permit any Subsidiary to make any
loans or advances to employees of the Borrower, any Guarantor or
any Subsidiary in excess of the sum of (i) $100,000 at any time
outstanding plus (ii) the amount of such loans and advances in
existence as of the date of this SECOND AMENDMENT AND WAIVER and
any repayments of existing loans and advances subsequently
received by the Borrower, any Guarantor or any Subsidiary shall
not be re-advanced.
(c) Notwithstanding anything to the contrary contained in Section
5.02 (e) of the Loan Agreement, the Borrower and the Guarantors
each agree that during the period from the date of this SECOND
AMENDMENT AND WAIVER through the Maturity Date, any net cash
proceeds received pursuant to the sale of assets permitted
pursuant to Section 5.02 (e) (iv) shall be utilized by the
Borrower to repay Revolving Credit Loans.
(d) Notwithstanding anything to the contrary contained in Section
5.02 (n) of the Loan Agreement, the Borrower and the Guarantors
each agree that during the period from the date of this SECOND
AMENDMENT AND WAIVER through the Maturity Date, it shall not (i)
declare or pay any cash dividends on its capital stock
including, without limitation in the context of Permitted
Dividends and (ii) make any repurchase of its common stock
including, without limitation, in the context of Permitted Stock
Repurchases, provided, however, the Borrower may make Permitted
Stock Repurchases pursuant to Section 5.02 (n) (ii) and (iii) of
the Loan Agreement.
This SECOND AMENDMENT AND WAIVER shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said State.
All capitalized terms not otherwise defined herein are used with the respective
meanings given to such terms in the Loan Agreement.
Except as expressly amended and waived hereby, the Loan Agreement and all other
Loan Documents executed in connection therewith shall remain in full force and
effect. The Loan Agreement and all other Loan Documents executed in connection
therewith, as previously amended and as amended hereby, are in all respects
ratified and confirmed. Nothing herein shall be read or construed as an
amendment, modification or waiver of any provision of the Loan Agreement or any
other Loan Document, including, without limitation, any provision of Article
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VI of the Loan Agreement, except as expressly provided for herein and nothing
contained herein shall be read or construed as a waiver or estoppel (except for
the waivers contained herein) of any rights or remedies which the Bank may have
under the Loan Agreement or any other Loan Document, in law or in equity,
whether arising out of the transactions described herein or otherwise.
The Borrower and the Guarantor hereby represent and warrant that, after giving
effect to this SECOND AMENDMENT AND WAIVER, (i) all of the representations and
warranties made by the Borrower or the Guarantors in the Agreement and in the
other Loan Documents shall be deemed restated and are true and correct in all
material respects as if made on the date hereof, except for those made with
respect to a particular date, which such representations and warranties are
restated as of such date (ii) no Event of Default or event which with the giving
of notice or lapse of time or both would constitute an Event of Default exists
under the Loan Agreement or any documents relating thereto, (iii) there are no
defenses or offsets to the Borrower or any Guarantors' obligations under the
Loan Agreement, the Note or any other Loan Documents or any other agreements in
favor of the Bank referred to in the Loan Agreement, and if any such defenses or
offsets exist without the knowledge of the Borrower or any Guarantor, the same
are hereby waived and (iv) the outstanding aggregate principal of the Loans as
evidenced by the Note is $20,000,000.
This SECOND AMENDMENT AND WAIVER may be executed in any number of counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one SECOND AMENDMENT AND WAIVER. This SECOND
AMENDMENT AND WAIVER shall become effective when the Bank shall have (i)
received payment of a fee in the amount of $50,000 in consideration of its
granting of this SECOND AMENDMENT AND WAIVER, (ii) received for its satisfactory
review, a copy of the Borrower's compliance certificate for the fiscal quarter
ended September 30, 1999 to be submitted to the holders of the Senior Notes and
(iii) received counterparts of this SECOND AMENDMENT AND WAIVER duly executed by
an authorized signer of each of the parties hereto.
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IN WITNESS WHEREOF, the Company, the Guarantors and the Bank have caused this
SECOND AMENDMENT AND WAIVER to be duly executed by their duly authorized
officers, all as of the day and year first above written.
DEL LABORATORIES, INC. DEL PHARMACEUTICALS, INC.
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx
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Title: Executive Vice President and Title: Executive Vice President and
Chief Financial Officer Chief Financial Officer
ROYCE & XXXXX, INC. 565 BROAD HOLLOW REALTY CORP.
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx Name: Xxxx Xxxxxxxx
Title: Executive Vice President and Title: Executive Vice President and
Chief Financial Officer Chief Financial Officer
PARFUMS SCHIAPARELLI, INC.
By: /s/ Xxxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK
By: /s/ Xxxxxxxxxxx Xxxxxxxxx
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Title: Vice President
