EXHIBIT 4.25
SECOND MODIFICATION OF CREDIT AGREEMENT AND WAIVER
THIS MODIFICATION is made as of this 14th day of July, 1999,
by and among PARLUX, LTD., a New York corporation ("Borrower"), XXXXXX
XXXXXXXXXX, INC., a Delaware corporation ("Parent") and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation as agent (the "Agent") and the lender
signatory to this Modification (the "Lender").
Statement of Facts
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Agent, Lender, Borrower and Parent are parties to that certain
Credit Agreement, dated as of May 23, 1997, as modified and amended by that
certain First Modification of Credit Agreement and Waiver dated as of July 9,
1998 (as may be further modified and amended from time to time, the "Credit
Agreement"), pursuant to which Lender has agreed to make one or more loans from
time to time to the Borrower in accordance with the terms and conditions
thereof. Lender and Borrower desire to modify the Credit Agreement in certain
respects in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Borrower, Parent, the Agent and Lender do hereby agree that all capitalized
terms used herein shall have the meanings ascribed thereto in the Credit
Agreement (except as otherwise expressly defined or limited herein) and do
hereby further agree as follows:
Statement of Terms
------------------
1. Waiver. Each of the Agent and the Lender hereby waives any
Default or Event of Default under the Credit Agreement which may have resulted
from any failure on the Borrower's part to comply with the following covenants
for the dates and time periods described below: (a) the Restricted Payment
covenant set forth in Section 6.15 of the Credit Agreement during the Fiscal
Months ending during the period from February 28, 1999 and March 31, 1999,
through and including June 30, 1999; (b) the employee and officer loan covenant
set forth in Section 6.2 (iii) of the Credit Agreement during the Fiscal Months
ending August 31, 1998, September 30, 1998 October 31, 1998, November 30, 1998,
December 31, 1998 and March 31, 1999, through and including June 30, 1999; (c)
the minimum EBITDA covenant set forth in clause (a) of Schedule 6.11 to the
Credit Agreement for each Fiscal Month ending September 30, 1998 through and
including June 30, 1999, (d) the minimum Tangible Net Worth covenant set forth
in clause (b) of Schedule 6.11 to the Credit Agreement for the fiscal Quarter
ending June 30, 1999, (e) the minimum Fixed Charge Coverage Ratio covenant set
forth in clause (c) of Schedule 6.11 to the Credit Agreement for the Fiscal
Quarter ending June 30, 1999, (f) the minimum Current Ratio covenant set forth
in clause (d) of Schedule 6.11 to the Credit Agreement for the Fiscal Quarter
ending June 30, 1999, (g) the Maximum Perfumania Accounts covenant set forth in
clause (e) of Schedule 6.11 to the Credit Agreement for each Fiscal Month ending
during the period from August 31, 1998 through and including June 30, 1999, and
(h) the Minimum Non-Perfumania/Non-Affiliates Sales covenant set forth in clause
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(g) of Schedule 6.11 to the Credit Agreement for each Fiscal Month ending during
the period from November 30, 1998 through and including June 30, 1999. The
aforesaid waivers relate solely to the specific covenants, dates and time
periods described above and nothing in this Section 1 is intended (or shall be
construed) to constitute a waiver by the Agent or the Lender of any other
Default or Event of Default which may now or hereafter exist under the Credit
Agreement (including, without limitation, any future failure on Borrower's part
to comply with Section 6.15, Section 6.02 or clauses (a), (b), (c), (d), (e) (g)
of Schedule 6.11 to the Credit Agreement, as amended by this Modification).
2. Amendment of Credit Agreement. Subject to the fulfillment
of the conditions precedent to the effectiveness of this Modification which are
set forth below, the Credit Agreement shall be amended as follows:
A. Clauses (a), (b), (c), (e), (f) and (g) of Schedule 6.11 to
the Credit Agreement shall be deleted in their entireties and the following new
clauses (a), (b), (c), (e), (f) and (g) shall be substituted in lieu thereof:
(a) Minimum EBITDA. Parent's EBITDA for each Fiscal Month
(measured in each case, based on the consecutive 12-month period ending
at the end of such Fiscal Month), shall not be less than the amount set
forth below:
Period Minimum EBITDA
------ --------------
Fiscal Month ending July 31, 1999 $5,335,000
Fiscal Month ending August 31, 1999 5,290,000
Fiscal Month ending September 30, 1999 5,990,000
Fiscal Month ending October 31, 1999 6,940,000
Fiscal Month ending November 30, 1999 8,030,000
Fiscal Month ending December 31, 1999 6,695,000
Fiscal Month ending January 31, 2000 5,325,000
Fiscal Month ending February 29, 2000 5,690,000
Fiscal Month ending March 31, 2000 6,230,000
(b) Minimum Tangible Net Worth. Parent's Tangible Net Worth as
of the end of each Fiscal Quarter ending on or after September 30, 1999
shall not be less than the amount shown below for such period:
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Fiscal Quarter Ending Minimum Tangible Net Worth
--------------------- --------------------------
September 30, 1999 $35,500,000
December 31, 1999 36,000,000
March 31, 2000 36,000,000
(c) Minimum Fixed Charge Coverage Ratio. Parent shall have, at
the end of each Fiscal Month set forth below (measured in each case,
based on the consecutive 12-month period ending at the end of such
Fiscal Month), a Fixed Charge Coverage Ratio of not less than the ratio
set forth below for each such Fiscal Month:
Minimum Fixed Charge
Period Coverage Ratio
------ --------------
Fiscal Month ending July 31, 1999 0.9: 1.0
Fiscal Month ending August 31, 1999 0.9: 1.0
Fiscal Month ending September 30, 1999 and thereafter 1.0: 1.0
(e) Maximum Perfumania Accounts. The aggregate outstanding
balance of the Perfumania Accounts as of the end of each Fiscal Month set forth
below shall not exceed the amount shown below for such Fiscal Month:
Fiscal Month Ending Minimum Perfumania Accounts
------------------- ---------------------------
July 31, 1999 $24,600,000
August 31, 1999 24,600,000
September 30, 1999 25,300,000
October 31, 1999 25,300,000
November 30, 1999 23,600,000
December 31, 1999 16,500,000
January 31, 2000 16,000,000
February 28, 2000 16,000,000
March 31, 2000 15,500,000
(f) Maximum Capital Expenditures. Parent shall not make
Capital Expenditures, as determined on a consolidated basis, that exceed
$1,100,000 in aggregate amount in each of the Fiscal Years ending on or after
March 31, 2000.
(g) Non-Perfumania/Non-Affiliate Sales. Borrower's sales of
Inventory to Persons other than Perfumania and Affiliates of Borrower (measured
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in each case, based on the consecutive 12-month period ending at the end of such
Fiscal Month), shall not be less than the amount set forth below:
Minimum Sales to Persons Other than
Period Perfumania and Affiliates
------ -------------------------
Fiscal Month ending July 31, 1999 $26,150,000
Fiscal Month ending August 31, 1999 26,850,000
Fiscal Month ending September 30, 1999 26,500,000
Fiscal Month ending October 31, 1999 27,350,000
Fiscal Month ending November 30, 1999 28,650,000
Fiscal Month ending December 31, 1999 27,970,000
Fiscal Month ending January 31, 2000 27,375,000
Fiscal Month ending February 29, 2000 27,795,000
Fiscal Month ending March 31, 2000 28,265,000
3. No Other Amendment or Waiver. Except for the amendments and
waivers expressly set forth and referred to in Section 1 and Section 2 above,
the Credit Agreement shall remain unchanged and in full force and effect.
Nothing in this Modification is intended, or shall be construed, to constitute a
novation or an accord and satisfaction of any of the Borrower's or Guarantor's
indebtedness or other indebtedness to the Agent or any Lender under or in
connection with the Credit Agreement (collectively, the "Obligations") or to
modify, affect or impair the perfection or continuity of Agent's security
interests in, security titles to or other liens on any collateral for the
Obligations.
4. Representations and Warranties. To induce the Agent and the
Lender to enter into this Modification, each Credit Party does hereby warrant,
represent and covenant to the Agent and the Lender that: (a) each representation
or warranty of such Credit Party set forth in the Credit Agreement is hereby
restated and reaffirmed as true and correct on and as of the date hereof as if
such representation or warranty were made on and as of the date hereof (except
to the extent that any such representation or warranty expressly relates to a
prior specific date or period), and no Default or Event of Default has occurred
and is continuing as of this date under the Credit Agreement as amended by this
Modification; and (b) each Credit Party has the power and is duly authorized to
enter into, deliver and perform this Modification and this Modification is the
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legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms.
5. Conditions Precedent to Effectiveness of this Modification.
The effectiveness of this Modification and the amendment and waiver provided in
Section 1 and Section 2 above are subject to (i) the truth and accuracy in all
material respects of the representations and warranties of each Credit Party
contained in Section 4 above, (ii) the Agent's and Lender's receipt of one or
more counterparts of this Modification duly executed and delivered by the Credit
Parties, and (iii) Borrower's payment of the fees and expenses set forth in the
letter agreement dated as of June 26, 1998 between Borrower and Lender.
6. Counterparts. This Modification may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
7. Lender Expenses. Without limiting its obligations under the
Credit Agreement, the Borrower agrees to pay on demand all of the Agent's and
the Lender's reasonable attorneys' fees and expenses and all other reasonable
out-of-pocket costs incurred by the Agent and the Lender in connection with its
evaluation, negotiation, documentation or consummation of this Modification and
the transactions contemplated hereby or thereby.
8. GOVERNING LAW. THIS MODIFICATION SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.
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IN WITNESS WHEREOF, the parties hereto have caused this
Modification to be duly executed and delivered as of the day and year specified
at the beginning hereof.
BORROWER:
(CORPORATE SEAL) PARLUX, LTD.
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Executive Vice President, CFO
GUARANTOR:
(CORPORATE SEAL) XXXXXX XXXXXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
-----------------------------------------
Executive Vice President, CFO
LENDER:
GENERAL ELECTRIC CAPITAL CORPORATION,
in its capacity as Agent
and a Lender
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Senior VP, Manager Commercial Finance
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