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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
(Amendment No._____)
FRENCH FRAGRANCES, INC.
(Name of Issuer)
FRENCH FRAGRANCES, INC.
(Name of Person(s) Filing Statement)
SERIES A PREFERRED STOCK, $.01 PAR VALUE
(Title of Class of Securities)
NOT APPLICABLE
(CUSIP Number of Class of Securities)
OSCAR E. MARINA
14100 N.W. 60TH STREET
MIAMI LAKES, FL 33014
(305) 620-9090
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person(s) Filing Statement)
JUNE 10, 1996
(Date Tender Offer First Published, Sent or Given to Security Holders)
Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee
$2,000,000 $400
*The transaction value has been calculated by multiplying the 2,000 shares of
Series A Preferred Stock to which the tender offer relates by the $100
liquidation value of each share of Series A Preferred Stock
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
Amount Previously Paid:
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Form or Registration No.:
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Filing Party:
-------------------------------------------
Date Filed:
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ITEM 1. SECURITY AND ISSUER.
(a) The issuer's name is French Fragrances, Inc. (the "Company"), and
its principal executive offices are currently located at 15595 N.W. 15th Avenue,
Miami, Florida 33169.
(b) The title and amount of securities being sought by the Company is
the Series A Preferred Stock, $.01 par value per share ("Series A Preferred"),
of which 20,000 shares are outstanding. The Company is offering to exchange (the
"Exchange Offer") the 20,000 shares of Series A Preferred which are outstanding
along with $3,460,000 aggregate principal amount of 12.5% Secured Subordinated
Debentures Due 2002 (the "12.5% Debentures") for $5,460,000 aggregate principal
amount of newly-issued 7.5% Subordinated Convertible Debentures Due 2006 (the
"7.5% Convertible Debentures"). For purposes of the Exchange Offer, each share
of Series A Preferred is being valued at its liquidation preference of $100.
Accordingly, each share of Series A Preferred will be exchanged for $100
principal amount of 7.5% Convertible Debentures. In addition, each outstanding
12.5% Debenture will be exchanged for the equivalent principal amount of a 7.5%
Convertible Debenture. The Exchange Offer will terminate at 11:59 p.m., Miami
time, on July 8, 1996, unless the Exchange Offer is extended by the Company (as
extended, the "Expiration Date").
The 7.5% Convertible Debentures are anticipated to be issued and the
Exchange Offer consummated on or about the date of with the closing of the
proposed public offering (the "Offering") by the Company of 3,250,000 shares of
Common Stock $.01 par value per share ("Common Stock"), (3,625,000 shares if the
underwriter's over-allotment option is exercised), and by certain shareholders
of the Company of 1,750,000 shares of Common Stock (2,125,000 shares if the
underwriter's over-allotment option is exercised). Rafael Kravec, the President
and Chief Executive Officer of the Company, plans to sell 475,000 shares of
Common Stock in the Offering. No other director, officer or affiliate is
expected to sell shares of Common Stock in the Offering. The Company has filed a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission (Registration No. 333-4588) in connection
with the shares of Common Stock to be issued by the Company and by certain
shareholders of the Company in connection with the Offering. The 7.5%
Convertible Debentures will be convertible at any time into shares of Common
Stock based on a conversion price of 120% of the price to the public of the
Common Stock in the Offering (the "Conversion Price").
All of the 20,000 shares of Series A Preferred which are outstanding
are to be solicited in the Exchange Offer from officers, directors and
affiliates of the Company, including (i) 10,000 which are being solicited from
Bedford Capital Corporation ("Bedford") (which beneficially owns over 50% of the
Common Stock) or its assigns, (ii) 4,950 shares which are being solicited from
Mr. Kravec, (iii) 3,050 shares which are being solicited from National Trading
Manufacturing, Inc. ("National Trading"), a company which is wholly-owned by Mr.
Kravec, and (iv) 2,000 shares which are being solicited from Fred Berens, a
director of the Company. The officers, directors and affiliates of the Company
have advised the Company that they intend to tender their shares of Series A
Preferred pursuant to the Exchange Offer.
All of the $3,460,000 principal amount of 12.5% Debentures which are
outstanding are to be solicited from officers, directors and affiliates of the
Company, including (i) $1,730,000 which are being solicited from Bedford, (ii)
$1,384,000 principal amount which are being solicited from National Trading, and
(iii) $346,000 principal amount which are being solicted from Mr. Berens. The
officers, directors and affiliates of the Company have advised the Company that
they intend to tender their 12.5% Debentures pursuant to the Exchange Offer.
(c) There is currently no established trading market for the Series A
Preferred or 12.5% Debentures, and there will not be an established trading
market for the 7.5% Convertible Debentures.
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(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The source and total amount of funds for the purchase of the
20,000 outstanding shares of Series A Preferred is $2,000,000 aggregate
principal amount of newly-issued 7.5% Convertible Debentures. The source and
total amount of funds for the purchase of the $3,460,000 principal amount of
12.5% Debentures is the equivalent principal amount of newly-issued 7.5%
Convertible Debentures.
(b) The 7.5% Convertible Debentures will (i) be unsecured, (ii)
require interest only payments at 7.5% per annum, payable semi-annually until
maturity ten years from the date of issue, at which time the entire unpaid
principal amount and any unpaid accrued interest is to be due and payable, (iii)
be convertible at any time at the option of the holder at the Conversion Price,
and (iv) be redeemable, at the option of the Company, at their principal amount
commencing three years from the date of issue, but only in the event the Common
Stock, at the time the redemption notice is delivered by the Company, has been
trading at not less than 200% of the Conversion Price for 20 consecutive trading
days.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE
ISSUER OR AFFILIATE.
The purposes of the Exchange Offer are to simplify the capital
structure of the Company in connection with the Offering and to reduce interest
expense. The shares of Series A Preferred will be retired.
(a) Except with respect to the securities involved in the Exchange
Offer and the shares of Common Stock to be sold in connection with the Offering,
the Company is not aware of any other plans or proposals by any person to
acquire or dispose of additional securities of the Company.
(b) - (j) None.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
(a) None.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER'S SECURITIES.
In connection with the Exchange Offer and the Offering, the Company
is proposing to enter into an Agreement and Power of Attorney (the "Agreement")
with (i) certain shareholders (the "Eligible Shareholders") who either own or
have dispositional authority over shares of Series A Preferred, 12.5% Debentures
and/or shares of Common Stock and have been afforded rights to participate in
the Offering (ii) two officers of Bedford, as Attorneys-in-Fact for the Eligible
Shareholders, and (iii) Bedford, as custodian for the securities of the Eligible
Shareholders which are involved in the Exchange Offer and the Offering, pursuant
to which the Eligible Shareholders after reviewing the Preliminary Prospectus
relating to the Offering and this Information Statement will represent and
covenant, among other things, (a) whether they elect to accept the Exchange
Offer, acknowledging that they have the right to withdraw their tender of shares
of Series A Preferred and 12.5% Debentures until the Expiration Date even if
they agree to accept, (b) if they desire to sell shares of Common Stock, and the
amount of such shares they desire to sell, in the Offering, (c) that they will
not, without the prior written consent of the representatives to the
underwriters in the Offering, offer or sell any shares of Common Stock or
security convertible into Common Stock for 180 days after the closing of the
Offering (the "Lock-up Covenant"), and
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(d) that they waive any first refusal rights they have to shares of
Common Stock owned by other Eligible Shareholders. The Company's officers,
directors and certain owners of the Common Stock will also execute separate
agreements containing the Lock-Up Covenant. A copy of the Agreement is being
provided with this Statement.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
None.
ITEM 7. FINANCIAL INFORMATION.
(a)(1) Reference is made to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended January 31, 1996 (the "Form 10-K").
The information required herein is incorporated by reference
from Item 8 of the Form 10-K.
(2) Not applicable.
(3) Attached as Exhibit A to this Statement are the ratio of
earnings to fixed charges of the Company for the fiscal year
ended January 31, 1996, the seven months ended January 31,
1995 and the fiscal year ended June 30, 1994.
(4) Attached as Exhibit B to this Statement is the computation of
book value per share of the Company as of January 31, 1996.
(b)(1) - (3) Pro forma data disclosing the effect of the Exchange Offer is
not material to the Company's balance sheet, statement of
income, earnings per share amounts, ratio of earnings to fixed
charges and book value per share.
ITEM 8. ADDITIONAL INFORMATION.
(a) - (e) Not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Information Statement Relating to the Exchange Offer.
(2) Form of Agreement and Power of Attorney between the Company,
Bedford, J.W. Nevil Thomas, E. Scott Beattie and an Eligible
Shareholder.
(b) Form of 7.5% Convertible Debenture.
(c) See (a)(2).
(d) None.
(e) - (f) Not applicable.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
FRENCH FRAGRANCES, INC.
JUNE 7, 1996 /s/ OSCAR E. MARINA
- ------------ ---------------------------
(Date) (Signature)
VICE PRESIDENT
--------------------------
(Title)
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<TABLE>
FRENCH FRAGRANCES, INC.
EXHIBIT A
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Seven Months
Years Ended Ended Year Ended
January 31, January 31, January 31,
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<S> <C> <C> <C>
Earnings, as defined:
Net income $3,007,118 $2,491,895 $1,011,367
Income taxes 1,930,691 1,490,119 530,510
Fixed charges, as below 4,157,576 1,413,636 1,546,240
--------- --------- ---------
Total earnings, as defined $9,095,385 $5,395,650 $3,088,117
========= ========= =========
Fixed charges, as defined:
Interest expense $4,157,576 $1,413,636 $1,546,240
--------- --------- ---------
Total fixed charges, as defined $4,157,576 $1,413,636 $1,546,240
========= ========= =========
Ratio of earnings to fixed charges 2.19 3.82 2.00
</TABLE>
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FRENCH FRAGRANCES, INC.
EXHIBIT B
COMPUTATION OF BOOK VALUE PER SHARE
Total shareholders' equity $17,539,310
Total shares issued: 9,641,290 9,641,290
Book value per share 1.82
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Item 9(a)(1)
INFORMATION STATEMENT RELATING TO TENDER OFFER
BY
FRENCH FRAGRANCES, INC.
FOR ITS OUTSTANDING SHARES OF SERIES A PREFERRED STOCK
AND OUTSTANDING 12.5% SECURED SUBORDINATED DEBENTURES
French Fragrances, Inc. (the "Company"), is conducting a tender offer
for all of its Series A Preferred Stock, $.01 par value per share ("Series A
Preferred"), and all of its 12.5% Secured Subordinated Debentures Due 2002
("12.5% Debentures"). The Company is offering to exchange (the "Exchange Offer")
the 20,000 shares of Series A Preferred which are outstanding along with the
$3,146,000 aggregate principal amount of 12.5% Debentures which are outstanding,
for $5,146,000 aggregate principal amount of newly-issued 7.5% Subordinated
Convertible Debentures Due 2006 ("7.5% Convertible Debentures"). For purposes of
the Exchange Offer, each share of Series A Preferred is being valued at its
liquidation preference of $100. There is currently no established trading market
for the Series A Preferred or 12.5% Debentures, and there will not be an
established trading market for the 7.5% Convertible Debentures.
THE EXCHANGE OFFER WILL TERMINATE AT 11:59 P.M., MIAMI TIME, ON JUly
8, 1996, UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY (AS EXTENDED, THE
"EXPIRATION DATE"). PERSONS TENDERING SHARES OF SERIES A PREFERRED AND 12.5%
DEBENTURES WILL HAVE THE RIGHT TO WITHDRAW THEIR TENDER UNTIL THE EXPIRATION
DATE. ACCEPTANCE OF THE EXCHANGE OFFERS BY THE HOLDERS OF SERIES A PREFERRED AND
12.5% DEBENTURES IS VOLUNTARY AND THE HOLDERS SHOULD CAREFULLY CONSIDER THE
INFORMATION SET FORTH HEREIN AND IN THE PRELIMINARY PROSPECTUS CONTAINED IN THE
REGISTRATION STATEMENT (AS DEFINED BELOW) BEFORE MAKING A DECISION WHETHER TO
TENDER PURSUANT TO THE EXCHANGE OFFER. HOLDERS OF SERIES A PREFERRED AND 12.5%
DEBENTURES WHO DO NOT ACCEPT THE EXCHANGE OFFER WILL RETAIN SUCH SECURITIES
AND WILL NOT BE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE EXCHANGE
OFFER.
The 7.5% Convertible Debentures are anticipated to be issued and the
Exchange Offer consummated on or about the date of with the closing of the
proposed public offering (the "Offering") by the Company of 3,250,000 shares of
Common Stock $.01 par value per share ("Common Stock"), (3,625,000 shares if the
underwriter's over-allotment option is exercised), and by certain shareholders
of the Company of 1,750,000 shares of Common Stock (2,125,000 shares if the
underwriter's over-allotment option is exercised). Rafael Kravec, the President
and Chief Executive Officer of the Company, plans to sell 475,000 shares of
Common Stock in the Offering. No other director, officer or affiliate is
expected to sell shares of Common Stock in the Offering. The Company has filed a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission (Registration No. 333-4588) in connection
with the shares of Common Stock to be issued by the Company and by certain
shareholders of the Company in connection with the Offering. Except with respect
to the securities involved in the Exchange Offer and the shares of Common Stock
to be sold in connection with the Offering, the Company is not aware of any
other plans or proposals by any
<PAGE>
person to acquire or dispose of additional securities of the Company.
The 7.5% Convertible Debentures will (i) be unsecured, (ii) require
interest only payments at 7.5% per annum, payable semi-annually until maturity
ten years from the date of issue, at which time the entire unpaid principal
amount and any accrued unpaid interest is to be due and payable, (iii) be
convertible at any time at the option of the holder at 120% of the price of the
Common Stock in the Offering (the "Conversion Price"), and (iv) be redeemable at
their principal amount after three years from the date of issue, but only in the
event the Common Stock, at the time the redemption notice is delivered by the
Company, has been trading at not less than 200% of the Conversion Price for 20
consecutive trading days.
The purposes of the Exchange Offer are to simplify the capital
structure of the Company in connection with the Offering and to reduce interest
expense.
All of the 20,000 shares of Series A Preferred which are outstanding
are to be solicited in the Exchange Offer from officers, directors and
affiliates of the Company, including (i) 10,000 which are being solicited from
Bedford Capital Corporation ("Bedford") (which beneficially owns over 50% of the
Common Stock) or its assigns; (ii) 4,950 shares which are being solicited from
Mr. Kravec, (iii) 3,050 shares which are being solicited from National Trading
Manufacturing, Inc. ("National Trading"), a company which is wholly-owned by Mr.
Kravec, and (iv) 2,000 shares which are being solicited from Fred Berens, a
director of the Company. The officers, directors and affiliates of the Company
have advised the Company that they intend to tender their shares of Series A
Preferred pursuant to the Exchange Offer.
All of the $3,460,000 principal amount of 12.5% Debentures which are
outstanding are to be solicited from officers, directors and affiliates of the
Company, including (i) $1,730,000 which are being solicited from Bedford, (ii)
$1,384,000 principal amount which are being solicited from National Trading, and
(iii) $346,000 principal amount which are being solicted from Mr. Berens. The
officers, directors and affiliates of the Company have advised the Company that
they intend to tender their 12.5% Debentures pursuant to the Exchange Offer.
In connection with the Exchange Offer and the Offering, the Company
is proposing to enter into an Agreement and Power of Attorney (the "Agreement")
with (i) certain shareholders (the "Eligible Shareholders") who either own or
have dispositional authority over shares of Series A Preferred, 12.5% Debentures
and/or shares of Common Stock and have been afforded rights to participate in
the Offering (ii) two officers of Bedford, as Attorneys-in-Fact for the Eligible
Shareholders, and (iii) Bedford, as custodian for the securities of the Eligible
Shareholders which are involved in the Exchange Offer and the Offering, pursuant
to which the Eligible Shareholders after reviewing the Preliminary Prospectus
relating to the Offering and this Information Statement will represent and
covenant, among other things, (a) whether they elect to accept the Exchange
Offer, acknowledging that they have the right to withdraw their tender of shares
of Series A Preferred and 12.5% Debentures until the
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Expiration Date even if they agree to accept, (b) if they desire to sell shares
of Common Stock, and the amount of such shares they desire to sell, in the
Offering, (c) that they will not, without the prior written consent of the
representatives to the underwriters in the Offering, offer or sell any shares of
Common Stock or security convertible into Common Stock for 180 days after the
closing of the Offering (the "Lock-up Covenant"), and (d) that they waive any
first refusal rights they have to shares of Common Stock owned by other Eligible
Shareholders. The Company's officers, directors and certain owners of the Common
Stock will also execute separate agreements containing the Lock-Up Covenant.
EACH HOLDER OF SERIES A PREFERRED AND 12.5% DEBENTURES WHO ELECTS TO
ACCEPT THE EXCHANGE OFFER MUST NOTE ITS ACCEPTANCE IN THE AGREEMENT AND EXECUTE
AND DELIVER THE AGREEMENT TO THE COMPANY, THE ATTORNEYS-IN-FACT OR BEDFORD PRIOR
TO THE EXPIRATION DATE.
Attached as Exhibit A to this Information Statement are the audited
financial statements of the Company as filed with the Commission in the
Company's Annual Report on Form 10-K for the Fiscal Year Ended January 31, 1996.
The Company's principal executive offices are currently located at
15595 N.W. 15th Avenue, Miami, Florida 33169, and its telephone number is (305)
620-9090. Questions and requests for assistance should be directed to Oscar
Marina, Secretary of the Company, or to Bedford Capital Corporation, as
custodian for the shares of Series A Preferred and 12.5% Debentures tendered in
the Exchange Offer, at 40 King Street West, Suite 4712, Toronto, Ontario M5H
3Y2, Canada, Attention: J.W. Nevil Thomas (Tel. No. (406) 366-6130).
No person is being paid a commission or compensation in connection
with the Exchange Offer, provided that the Attorneys in fact and Bedford will be
entitled to reimbursement for reasonable out-of-pocket expenses incurred in
performing their duties under the Agreement.
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Item 9(a)(2) May 27, 1996
AGREEMENT AND POWER OF ATTORNEY
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami, Florida 33014
E. Scott Beattie
J.W. Neville Thomas
as Attorneys-in-Fact
Bedford Capital Corporation
as Custodian
40 King Street West, Suite 4712
Toronto, Ontario
Canada M5H3Y2
Gentlemen:
The undersigned acknowledges and understands that:
1) French Fragrances, Inc. (the "Company") is planning to conduct a
public offering of its Common Stock (the "Offering"), pursuant to which the
Company plans to sell up to 3,250,000 shares of Common Stock of the Company, and
certain shareholders of the Company (the "Selling Shareholders") plan to sell up
to 1,750,000 shares of Common Stock. The Offering may be increased or decreased
in size and will be underwritten by certain underwriters (the "Underwriters")
represented by Rodman & Renshaw, Inc. and Sanders Morris Mundy Inc.
(collectively, the "Representatives"), which will purchase the shares of Common
Stock to be sold by the Company and the Selling Shareholders at a discount of
7.5% from the initial public offering price (the "Offering Price"). In addition
to the 5,000,000 shares to be sold by the Company and the Selling Shareholders
in the Offering (the "Firm Shares"), the Underwriters have an option to purchase
up to 750,000 additional shares of Common Stock (the "Option Shares") solely to
cover over-allotments (the "Over-allotment Option"), if any, as part of the
Offering and on the same terms and conditions as the Firm Shares, with one half
of such Option Shares to be sold by the Company and one half by the Selling
Shareholders (pro rata in proportion to the numbers of Firm Shares sold by each
Selling Shareholder). The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (as the same
may be amended from time to time, the "Registration Statement") to register
under the Securities Act of 1933, as amended, the offering and sale of the
shares of Common Stock to be offered in connection with the Offering, and the
undersigned has received and reviewed the Registration Statement, including the
Preliminary Prospectus forming a part of the Registration Statement. As a
condition to the Offering, sales of Common Stock within six months following the
Offering by the Company and by officers, directors and certain other
shareholders, including the undersigned, will be restricted unless otherwise
consented to by the Representatives.
<PAGE>
2) To the extent the undersigned has registration rights with respect
to shares of Common Stock, including shares of Common Stock issuable upon
conversion of the Company's Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock, pursuant to a registration rights agreement with
the Company, this Agreement and Power of Attorney (the "Agreement") constitutes
the requisite notice from the Company to the undersigned of a proposed public
offering of Common Stock, and the undersigned acknowledges that it has been
afforded the right to participate in the Offering in accordance with the terms
of such registration rights agreement.
3) In addition to with the Offering, the Company is proposing to all
shareholders holding the Company's Series A Preferred Stock ("Series A Preferred
Stock") and 12.5% Secured Subordinated Debentures ("12.5% Debentures") to
exchange (the "Exchange Offer") their shares of Series A Preferred Stock (each
share valued at its liquidation preference of $100) and their 12.5% Debentures
(valued in accordance with the outstanding principal amount of the debenture)
for an equivalent dollar amount of newly-issued 7.5% Convertible Debentures due
10 years from their issue date ("7.5% Debentures"). The 7.5% Debentures will (a)
be unsecured, (b) require interest only payments payable semi-annually until
maturity at which time the entire unpaid principal amount and any unpaid
accrual interest is to be due and payable, (c) be convertible at any time at the
option of the holder at 120% of the Offering Price (the "Conversion Price"), and
(d) be redeemable at their principal amount after three years from the date of
issue, but only in the event the Company's Common Stock, at the time the
redemption notice is delivered by the Company, has been trading at not less than
200% of the Conversion Price for 20 consecutive trading days. The undersigned,
to the extent it is the owner or Series A Preferred Stock or 12.5% Debentures,
has received and reviewed the Company's Information Statement relating to the
Exchange Offer which was filed by the Company with the Commission and
understands the undersigned's rights with respect thereto, including, without
limitation, the withdrawal rights.
In consideration of and based on the foregoing, the undersigned
represents, warrants, covenants and agrees with the Company, the
Attorneys-in-Fact and the Custodian and for the express benefit of the
Representatives and the Underwriters, as follows:
A) Exhibit A which is attached hereto and made a part hereof sets forth
the types and amounts of the capital stock of the Company and 12.5% Debentures
owned by the undersigned including the shares of Common Stock issued upon
conversion of the Series B Convertible Preferred and Series C Convertible
Preferred. Exhibit B which is attached hereto and made a part hereof sets forth
the maximum aggregate number of shares of Common Stock of the Company, if any,
which the undersigned desires to sell as part of the Offering (the "Shareholder
Shares"), and, to the extent that such shares result from the conversion of
Series B Convertible Preferred Stock or Series C Convertible Preferred Stock of
the Company owned by the undersigned, Exhibit B also sets forth the number of
shares of Series B Convertible Preferred Stock and/or Series C Convertible
Preferred Stock which the undersigned desires to convert into Common Stock for
purposes of selling as part of the Shareholder Shares and the manner of payment
of the applicable conversion price.
B) To the extent that the undersigned has specified any
Shareholder Shares which it
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desires to sell in the Offering, the undersigned hereby irrevocably appoints E.
Scott Beattie and J.W. Nevil Thomas (the "Attorneys-in-Fact"), and each of them
severally, with full power of substitution, to act in all respects in his or
their sole discretion, as the lawful attorneys-in-fact of the undersigned, with
full power and authority in the name of and for and on behalf of the undersigned
with respect to all matters arising in connection with the Offering and the
sale, assignment and delivery of the Shareholder Shares, including, without
limitation, the authority: (i) to execute and deliver to the Company, if
required, (a) the appropriate Notice of Conversion of Series B Preferred Stock
or Series C Preferred Stock in accordance with the instructions contained in
Exhibit B (but only with respect to the shares of Common Stock to be sold in the
Offering), (b) stock certificates and stock powers for the Series B Convertible
Preferred Stock or the Series C Convertible Preferred Stock, as the case may be,
in transferable form, and (c) 8% Secured Subordinated Debentures of the Company
("8% Debentures") or a check made payable to the Company for the applicable
conversion price which the undersigned shall provide to the Attorneys-in-Fact,
and to deliver to Bedford Capital Corporation, which is hereby irrevocably
appointed and empowered to serve as Custodian hereunder (the "Custodian") for
the benefit of the undersigned, new stock certificates for the Series B
Convertible Preferred Stock or the Series C Convertible Preferred Stock, as the
case may be, and 8% Debentures for any portion of such preferred stock and
debentures remaining after the conversion; (ii) to negotiate with, sell, assign
and transfer to the Underwriters, the Shareholder Shares (either as Firm Shares
or Option Shares) or any portion thereof determined by the Attorneys-in-Fact, in
their sole discretion, after giving consideration to the other Selling
Shareholders and the number of shares of Common Stock desired to be sold by all
Selling Shareholders, at a purchase price per share to be paid by the
Underwriters as determined by the Attorneys-in-Fact after agreement with the
Representatives, but in no event less than 92.5% of the Offering Price; (iii) to
negotiate, execute, deliver and perform an underwriting agreement for the sale
of all or a portion of the Shareholder Shares containing such terms as the
Attorneys-in-Fact may approve and to take on behalf of the undersigned all
actions required to be taken by the Selling Shareholders in connection
therewith; (iv) to deliver the certificates for the Shareholder Shares to the
Custodian in transferable form, to endorse or execute any and all stock powers
or documents necessary for the ultimate sale and assignment of the Shareholder
Shares to the Underwriters and to instruct the Custodian with respect to the
delivery and surrender of the certificates and to acknowledge or authorize the
Custodian to acknowledge the receipt of payment therefor from the Underwriters;
(v) to instruct the Company's transfer agent with respect to the issuance and
registry of the certificates to the order of the Underwriters; (vi) to cooperate
with the Company with respect to the preparation and request for acceleration of
effectiveness of the Registration Statement; and (vii) otherwise to do all
things deemed necessary or appropriate by the Attorneys-in-Fact or the
Custodian, and generally to act in all particulars for and in the name of the
undersigned, relating to the sale, assignment and delivery of the Shareholder
Shares in the Offering. Until payment of the purchase price for the Shareholder
Shares has been made to the Custodian by or for the account of the Underwriters,
the undersigned shall remain the owner of the Shareholder Shares and have all
rights thereto which are not inconsistent with this Agreement or any prior
agreement of the undersigned.
3
<PAGE>
C) To the extent the undersigned owns any shares of Series A Preferred
Stock or 12.5% Debentures as set forth in Exhibit A, the undersigned hereby
agrees to the terms of the Exchange Offer and irrevocably appoints the
Attorneys-in-Fact and each of them severally, with full power of substitution,
to act in all respects in his or their sole discretion, as the lawful
attorneys-in-fact of the undersigned, with full power and authority in the name
of and for and on behalf of the undersigned with respect to all matters arising
in connection with the Exchange Offer, including, without limitation, the
authority: (i) to deliver the certificates representing the undersigned's Series
A Preferred Shares and 12.5% Debentures to the Custodian in transferable form,
to endorse or execute any and all documents necessary for the ultimate
assignment and delivery thereof to the Company and to instruct the Custodian
with respect to the delivery and surrender of the stock certificates for Series
A Preferred Stock and 12.5% Debentures and the receipt of 7.5% Debentures; and
(ii) otherwise to do all things, deemed necessary or appropriate by the
Attorneys-in-Fact or the Custodian, and generally to act for in all particulars
and in the name of the undersigned, relating to the Exchange Offer. The Company
reserves the right to terminate the Exchange Offer at any time prior to its
consummation.
D) To the extent the undersigned has any such rights, the undersigned
hereby waives all first refusal rights to, or rights to restrict the transfer
of, shares of Common Stock, Series A Preferred or 12.5% Debentures; provided
that nothing herein is intended to shorten the withdrawal rights which the
undersigned has with respect to the Series A Preferred and the 12.5% Debentures
pursuant to the Exchange Offer.
E) The Attorneys-in-Fact and the Custodian will serve without
compensation but will be entitled to reimbursement by the undersigned, from the
proceeds of sale of the Shareholder Shares or otherwise, for all reasonable
out-of-pocket expenses incurred in the performance of their duties hereunder,
including expenses of counsel when deemed necessary by such persons.
F) For a period of 180 days after the closing of the Offering, the
undersigned will not, without the prior written consent of the Representatives,
offer, pledge, sell, transfer, assign, contract to sell, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, any shares of the
Common Stock or any other security of the Company which is convertible into or
exercisable for shares of Common Stock beneficially owned by the undersigned
except: (i) the sale in the Offering of the Shareholder Shares (or conversion
of shares of Series B Convertible Preferred Stock or Series C Convertible
Preferred Stock into shares of Common Stock which become Shareholder Shares) ;
(ii) the delivery to the Company of Series A Preferred and 12.5% Debentures in
connection with the Exchange Offer; and (iii) a transfer of such securities of
the Company made by the undersigned for estate planning purposes to or for the
benefit of a member of the undersigned's immediate family who agrees to be bound
by the terms of this Agreement. The undersigned consents to the placing of
legends upon, and stop-transfer orders with the Company's transfer agent with
respect to certificates representing shares of Common Stock registered in the
undersigned's name or beneficially owned by the undersigned relating to the 180
day lock-up described above, or in the alternative, authorizes Bedford to hold
the certificates of the Common Stock for the 180 day lock-up period.
4
<PAGE>
G) The undersigned hereby represents and warrants to the
Attorneys-in-Fact, the Custodian and the Company, and authorizes the
Attorneys-in-Fact to represent and warrant on behalf of the undersigned to the
Underwriters and their counsel and counsel to the Company that:
(i) the undersigned has obtained all authorizations and
consents necessary for the execution, delivery and performance of this
Agreement, and this Agreement is binding and enforceable against the
undersigned.
(ii) the undersigned has full right, power and authority to
execute, deliver and perform this Agreement and has duly executed and
delivered this Agreement.
(iii) the undersigned has, and on the closing date for the
Offering and the Exchange Offer, will have, good and marketable title
to the Shareholder Shares sold in the Offering and good and marketable
title to the Series A Preferred Shares and 12.5% Debentures exchanged
in the Exchange Offer, free and clear of any mortgage, pledge, lien,
encumbrance, claim or equity other than that created hereunder
(collectively, "Liens"); and upon delivery of (a) any of the
Shareholder Shares to the Underwriters against payment therefor, the
Underwriters will receive good and marketable title to the such
shares, free and clear of Liens, (b) the Series A Preferred Shares and
12.5% Debentures to the Company in connection with the Exchange Offer,
the Company will receive good and marketable title to such shares and
debentures, free and clear of Liens.
(iv) the consummation of the sale to the Underwriters of any
Shareholder Shares and the consummation of the Exchange Offer will
not result in a breach or violation by the undersigned, or constitute
a default by the undersigned, under any agreement, instrument,
statute, regulation or order to which the undersigned is a party or
by which the undersigned is bound.
(v) the undersigned has not taken and will not take, until
distribution of the shares of Common Stock in the Offering has been
completed, any action designed to constitute or which may result in,
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the shares to be sold in the
Offering, including, without limitation, making bids or causing bids
to be made for the shares of Common Stock to be sold in the Offering.
(vi) except as set forth in Exhibit C which is attached hereto
and made a part hereof, there is no position, office or other material
relationship between the undersigned and the Company, nor have any
such material relationships existed within the past three years.
(vii) except as set forth in Exhibit D which is attached
hereto and made a part hereof, the undersigned has not sold shares of
Common Stock within the past six months.
5
<PAGE>
H) This Agreement and the grants of authority hereunder to the
Attorneys-in-Fact and the Custodian are and shall be irrevocable and deemed to
be coupled with an interest and shall not be terminated by any act of the
undersigned or by operation of law (provided that the undersigned's agreement to
participate in the Exchange Offer shall be revocable until July 8, 1996).
Notwithstanding the foregoing, if the Offering does not close prior to October
31, 1996, then from and after such date, the undersigned shall have the power,
by giving written notice to the Attorneys-in-Fact to terminate this Agreement.
I) The undersigned agrees to indemnify and hold harmless each and all
of the Attorneys-in-Fact, the Custodian, the Company and the Underwriters
against any and all losses, claims, damages and liabilities incurred as a result
of a breach of any representation, warranty, covenant or agreement of the
undersigned set forth in, or entered into by any Attorney-in-Fact or by the
Custodian pursuant to, this Agreement.
J) This agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of laws
principles thereunder, and shall inure to the benefit of, and shall be binding
upon, the undersigned and the undersigned's respective heirs, executors,
successors and assigns. This Agreement is not assignable without the prior
written consent of the Attorneys-in-Fact, the Custodian and the Company (which
consent shall not be unreasonably withheld in respect of any transfer pursuant
to clause (iii) of Paragraph F) above). This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which together shall be deemed to be one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
executed as of this 27th day of May, 1996.
[NAME]
By:
--------------------------
Name:
--------------------------
Its:
--------------------------
SIGNATURE GUARANTEED BY:
- -----------------------------------
(Name of commercial bank/trust
company)
By:
--------------------------------
(Authorized signature and title)
AGREED TO AND ACCEPTED BY:
- -----------------------------
E. Scott Beattie
- -----------------------------
J.W. Nevil Thomas
BEDFORD CAPITAL CORPORATION
By:
--------------------------
Name:
--------------------------
Its:
--------------------------
FRENCH FRAGRANCES, INC.
By:
--------------------------
Name:
--------------------------
Its: ___________________________
7
<PAGE>
<TABLE>
EXHIBIT A
CAPITAL STOCK
<CAPTION>
SHARES OF
COMMON STOCK
ISSUABLE
UPON CONVERSION
REGISTERED IN OF CONVERTIBLE
TYPE OF STOCK NO. OF SHARES CERTIFICATE NO. NAME OF PREFERRED
- ------------- ------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
12.5% DEBENTURES
REGISTERED IN
PRINCIPAL AMOUNT DEBENTURE NO. NAME OF
- ---------------- ------------- -------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT B
SHAREHOLDER SHARES
<S> <C> <C>
Number of Shares of Common Stock Desired to be Sold -- _______________
A) Number of Shares Represented by Common Stock
Presently Owned -- _______________
B) Number of Shares to be Derived from Conversion
of Series B Convertible Preferred Stock Presently
Owned (Conversion Price per Share is U.S.$3.30) -- _______________
C) Number of Shares to be Derived from Conversion
of Series C Convertible Preferred Stock Presently
Owned (Conversion Price per Share is U.S.$5.25) -- _______________
If B) is designated check method of payment
of the Conversion Price (CHOOSE ONE ONLY)
Redemption of 8% Debentures -- _______
Check made payable to
French Fragrances, Inc. -- _______
If C) is designated check method of payment
of the Conversion Price (CHOOSE ONE ONLY)
Redemption of 8% Debentures -- _______
Check made payable to
French Fragrances, Inc. -- _______
</TABLE>
9
<PAGE>
EXHIBIT C
MATERIAL RELATIONSHIPS WITH THE COMPANY
None:
------------
Or Explain:
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
10
<PAGE>
EXHIBIT D
SALES OF COMMON STOCK WITHIN PAST SIX MONTHS
None:
------------
Or Explain:
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
11
<PAGE>
Item 9(b)
THIS SUBORDINATED CONVERTIBLE DEBENTURE IS SUBJECT TO A
SUBORDINATION AGREEMENT, DATED AS OF JUNE , 1996 BY AND AMONG FRENCH
FRAGRANCES, INC., , FLEET NATIONAL BANK, AS
----------------------
AGENT, FLEET NATIONAL BANK, AS LENDER AND BANK OF AMERICA ILLINOIS, AS LENDER.
THIS SUBORDINATED CONVERTIBLE DEBENTURE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE NEGOTIATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND EXCEPT
IN COMPLIANCE WITH ANY APPLICABLE
7.5% SUBORDINATED CONVERTIBLE DEBENTURE DUE 2006
$ June , 1996
-----------------
French Fragrances, Inc., a Florida corporation (the "Company"), for
value received, hereby promises to pay to [ ] (the
----------------------
"Holder"), the principal amount of [ ] and No/100 Dollars
----------------------
(US$ ) on May 31, 2006, or on such earlier date on which such
------------------
amount is required to be paid as set forth herein, with interest on the unpaid
balance of such principal amount at the rate of seven and one-half of one
percent (7.5%) per annum from the date hereof, payable on May 31 and November
30 of each year, commencing November 30, 1996, or on any accelerated maturity
date hereof, until the principal hereof shall have been paid. Interest on this
Debenture shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
Unless sooner paid, the outstanding principal balance of this
Debenture, together with all accrued and unpaid interest hereon, shall be due
and payable in full on May 31, 2006.
This Debenture is redeemable at the option of the Company at par in
whole at any time from and after June , 1999 and in part at any time
---------
and from time to time at any time from and after June , 1999, upon notice
------
to the Holder, provided that in each such case the closing bid quotation of the
Common Stock on all twenty (20) trading days ending on the third day prior to
the day on which the Company gives notice has been at least $ [200%
-----------
of the Conversion Price (as defined below)].
For the purposes hereof, "Common Stock" means the Company's Common
Stock, $.01 par value per share.
The Holder shall have the option at any time and from time to time to
convert the accrued and unpaid interest on and the outstanding principal balance
of this Debenture into Common Stock at a conversion price equal to $
----------
[120% of the offering price] per share (the "Conversion Price"). To effect a
conversion pursuant to the preceding sentence, the Holder shall provide written
notice of conversion to the Company and shall surrender the original Debenture
to the Company at its principal office, accompanied by proper endorsement to the
Company. The date any such notice is received by the Company shall be deemed the
"Conversion Date." After the Conversion Date, the Company will issue to the
Holder, or its registered nominee or its assign(s), certificate(s) for the
number of shares of Common Stock into which this Debenture, or portion hereof,
is to be converted, rounded upward or downward to the nearest whole share. The
conversion of this Debenture shall be deemed to have been effected prior to the
close of business on the Conversion Date, and at such time the rights of the
Holder shall terminate as to the converted portion of the principal and interest
<PAGE>
on this Debenture, expressly conditioned on the surrender and cancellation of
this Debenture. The Company shall as promptly thereafter as possible issue a new
Debenture, for any portion of the outstanding principal balance and accrued and
unpaid interest evidenced by this Debenture which remains outstanding after
giving effect to any such conversion.
This Debenture is not negotiable, and is transferable only on the books
of the Company by the registered Holder hereof or his duly authorized agent or
attorney.
ARTICLE ONE
PRIORITIES
Section 1.1 SUBORDINATION TO OTHER INDEBTEDNESS OF THE COMPANY.
The payment of the principal of, and interest on, this Debenture is
subordinated, to the extent and in the manner provided in this Debenture, to the
prior payment in full of all Senior Indebtedness.
"Senior Indebtedness" means (a) any indebtedness of the Company for
money borrowed, whether outstanding on the date of execution of this Debenture
or thereafter created, assumed, or incurred (except the Parity Obligations and
obligations evidenced by the Subordinated Debentures (as such terms are
hereinafter defined)), and (b) any deferrals, renewals or extensions of any such
Senior Indebtedness. Without limiting the generality of the foregoing, "Senior
Indebtedness" shall include any and all obligations and indebtedness of the
Company under:
(i) any bank credit agreement whether outstanding at the date of
original execution of this Debenture or thereafter incurred, created
or assumed,
(ii) the Lease between National Trading Manufacturing, Inc., and the
Company dated July 2, 1992, and
(iii) the Company's Promissory Note, dated June , 1996, made by the
Company payable to the order of [ ]in the original
------------------
principal amount of $[ ][FIRST MORTGAGE].
-------------
This Article One shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders or each of them may enforce such
provisions.
Section 1.2 COMPANY NOT TO MAKE PAYMENTS WITH RESPECT TO THIS DEBENTURE
IN CERTAIN CIRCUMSTANCES.
(a) Upon the maturity of the principal of the Senior Indebtedness, or
any portion thereof, by acceleration or otherwise, all principal thereof and
interest thereon shall first be paid in full, or such payment duly provided for
in cash in a manner satisfactory to the holders of such Senior Indebtedness
before any payment is made on account of the principal or interest on this
Debenture or to acquire this Debenture.
2
<PAGE>
(b) Upon the occurrence of an event of default (or if an event of
default would result upon any payment with respect to this Debenture) with
respect to any portion of the Senior Indebtedness, as such event of default is
defined in the instrument under which any such Senior Indebtedness is
outstanding, permitting the holders to accelerate the maturity thereof, and, if
the default is other than a default in payment of any principal or interest due
on such Senior Indebtedness, upon written notice thereof given to the Company by
the holders of such Senior Indebtedness or their representative, unless and
until such event of default shall have been cured or waived or shall have ceased
to exist, no payment shall be made by the Company with respect to the principal
or interest on this Debenture or to acquire this Debenture.
(c) If, notwithstanding the provisions of this Section 1.2, the Company
shall make any payment to the Holder on account of the principal or interest on
this Debenture after the occurrence of a default in payment of any principal or
interest due on any Senior Indebtedness or after receipt by the Company of
written notice as provided in this Section 1.2 of an event of default with
respect to any Senior Indebtedness, then, unless and until such default or event
of default shall have been cured or waived or shall have ceased to exist, such
payment shall be held by the Holder in trust for the benefit of, and shall be
paid over and delivered to, the holders of the Senior Indebtedness or their
representative for application to the payment of the Senior Indebtedness
remaining unpaid to the extent necessary to pay the Senior Indebtedness in full
in accordance with its terms, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of the Senior Indebtedness.
The Company shall give prompt written notice to the Holder as soon as it
receives written notice of any default under any of the Senior Indebtedness.
Section 1.3 THIS DEBENTURE SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSLOUTION, LIQUIDATION OR REORGANIZATION OF
COMPANY.
Upon any distribution of assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company:
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all principal and interest due thereunder before the
Holder is entitled to receive any payment of principal or interest on this
Debenture;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holder would be
entitled but for the provisions of this Article One, shall be paid by the
liquidating trustee or agent or other person making such payment or distribution
directly to the holders of Senior Indebtedness or their representative to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Indebtedness; and
(c) if, notwithstanding the foregoing provisions of this Section 1.3,
the Holder shall receive any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, on account of
principal or interest on this Debenture before all Senior Indebtedness is paid
in full, or effective provision made for its payment, then such payment or
distribution shall be received and held in trust for and shall be paid over to
the holders of the Senior Indebtedness remaining unpaid or unprovided for or
their representative, or to the trustee under any indenture under which such
Senior Indebtedness may have been issued, for application to the
3
<PAGE>
payment of such Senior Indebtedness until all such Senior Indebtedness shall
have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness.
The Company shall give prompt written notice to the Holder of any
dissolution, winding up, liquidation or reorganization of the Company.
Section 1.4 THE HOLDER TO BE SUBROGATED TO RIGHTS OF HOLDERS OF THE
SENIOR INDEBTEDNESS.
Subject to the payment in full of the Senior Indebtedness, the Holder
shall be subrogated (on a parity basis with the holders of the other Parity
Obligations) to the rights of the holders of the Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness until all amounts owing on this Debenture shall be paid in full,
and for the purpose of such subrogation no payments or distributions to the
holders of the Senior Indebtedness by or on behalf of the Company or by or on
behalf of the Holder by virtue of this Article One which otherwise would have
been made to the Holder shall, as between the Company and the Holder, be deemed
to be payment by the Company to or on account of the Debenture, it being
understood that the provisions of this Article One are intended solely for the
purpose of defining the relative rights of the Holder, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
Section 1.5 OBLIGATION OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article One or elsewhere in this Debenture is
intended to or shall impair, as between the Company and the Holder, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holder the principal and interest on this Debenture as and when the same shall
become due and payable in accordance with its terms, or is intended to or shall
affect the relative rights of the Holder and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Debenture, subject to the rights, if any,
under this Article One of the holders of the Senior Indebtedness in respect of
property, cash or securities of the Company received upon the exercise of any
such remedy.
Section 1.6 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
COMPANY OR HOLDERS OF THE SENIOR INDEBTEDNESS.
No right of any present or future holders of any of the Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Debenture
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with.
Section 1.7 ARTICLE ONE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal or interest by
reason of any provision of this Article One shall not be construed as preventing
the occurrence of an Event of Default under
Section 2.1.
Section 1.8 OBLIGATIONS UNDER THIS DEBENTURE RANK PARI PASSU WITH THE
PARITY OBLIGATIONS.
4
<PAGE>
The payment of the principal of, and interest on, this Debenture is,
and shall be, pari passu to the obligations and indebtedness of the
Company under:
(i) the Company's 8.0% Secured Subordinated Debentures due 2005, Series I,
(ii) the Company's 8.0% Secured Subordinated Debentures due 2005, Series
II, and
(iii) the Company's Promissory Note, dated March 20, 1996, made by the
Company payable to the order of Halston Borghese, Inc. in the original
principal amount of $2,000,000.00
(the foregoing obligations and indebtedness being referred to herein as the
"Parity Obligations").
Section 1.9 OBLIGATIONS UNDER THIS DEBENTURE RANK SENIOR TO THE
SUBORDINATED DEBENTURES.
The payment of the principal of, and interest on, this Debenture is,
and shall be, superior to the obligations and indebtedness of the Company under
the Company's 8.5% Junior Subordinated Debenture, Due 2001, dated as of May 10,
1996, made by the Company payable to the order of Fragrance Marketing Group,
Inc., a Florida corporation ("FMG") in the original principal amount of
$4,000,000.00, the Company's 8.5% Junior Subordinated Debenture, Due 2004, dated
as of May 10, 1996, made by the Company payable to the order of FMG in the
original principal amount of $7,000,000.00, and the Company's 8.5% Junior
Subordinated Debenture, Due 2004, dated as of May 10, 1996, made by the Company
payable to the order of FMG in the original principal amount of $100,034.00
(collectively, the "Subordinated Debentures").
ARTICLE TWO
DEFAULT AND REMEDY
Section 2.1 EVENTS OR DEFAULT.
An "Event of Default" shall be deemed to have occurred if:
(1) the Company fails to pay any interest on this Debenture when
the same becomes due and payable and such failure continues for a period of 120
days;
(2) the Company fails to pay any installment of principal of this
Debenture when the same becomes due and payable, whether at maturity or
otherwise;
(3) the Company fails to observe or perform any of its covenants
and agreements under this Debenture other than as set forth in clauses (1) and
(2) above, and such failure continues for a period of 30 days;
(4) there occurs an event of default under any Senior Indebtedness
or under the terms of any of the Parity Obligations of the Company;
(5) the Company shall (a) make an assignment for the benefit of
creditors, file a petition in bankruptcy, petition or apply to any tribunal for
the appointment of a custodian, receiver or trustee, or commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, or any such petition or application shall have been filed,
or (b) any such proceeding shall have been
5
<PAGE>
commenced against the Company in which an order for relief is entered or which
remains undismissed for a period of thirty (30) days or more;
(6) the Company shall generally not pay its debts as such debts
become due or admit in writing its inability to pay its debts as they become
due; or
(7) any substantial property of the Company is taken possession
of or seized at the instance of any governmental authority.
Section 2.2 ACCELERATION.
If an Event of Default under Section 2.1 occurs, the entire outstanding
principal balance of, and all accrued and unpaid interest on, this Debenture
shall immediately become due and payable.
Section 2.3 NOTICE.
The Company shall promptly give notice to the Holder of the occurrence
of an Event of Default.
ARTICLE THREE
Miscellaneous
Section 3.1 LIMITATION ON OBLIGATION OF COMPANY.
Anything herein to the contrary notwithstanding, the obligations of the
Company under this Debenture shall be subject to the limitation that payments of
interest to the Holder shall not be required to the extent that receipt of any
such payment by such Holder would be contrary to provisions of law applicable to
such Holder (if any) which limit the maximum rate of interest which may be
charged or collected by such Holder. In the event that the Company makes any
payment of interest, fees, or other charges, however denominated, which payment
results in interest paid by the Company exceeding the maximum rate of interest
permitted by applicable law, any excess over such maximum shall be applied in
reduction of the principal balance owed to the Holder as of the date of such
payment, or if such excess exceeds the amount of principal owed to the Holder as
of the date of such payment, the difference shall be paid by the Holder to the
Company.
Section 3.2 COST OF ENFORCEMENT.
The Company shall pay all costs incurred by any holder of this
Debenture, including reasonable attorney's fees (including those for appellate
proceedings), in connection with the collection or attempted collection or
enforcement of this Debenture, whether or not legal proceedings may have been
instituted.
Section 3.3 WAIVER BY COMPANY.
The Company waives presentment for payment, demand, protest, notice of
dishonor, notice of acceleration of maturity, and all defenses on the ground of
extension of time for payment hereof, and agrees to continue and remain bound
for the payment of principal, interest, and all other sums payable hereunder,
notwithstanding any change or changes by way of release, surrender, exchange, or
substitution of any security for this Debenture or by way of any extension or
extensions of time for
6
<PAGE>
payment of principal and interest; and the Company waives all and every kind
of notice of such change or changes and agrees that the same may be made
without notice to or consent of the Company.
Section 3.4 NO WAIVER BY HOLDER.
No course of dealing between the Company and the Holder and no delay or
omission on the part of such Holder in exercising any rights under this
Debenture shall operate as a waiver of the rights of the Holder. No failure to
insist upon the strict provisions of any covenant, term, condition or other
provision of this Debenture or to exercise any right or remedy thereunder shall
constitute a waiver by the Holder of any such covenant, term, condition or other
provision or of any default or Event of Default in connection therewith. The
waiver of any covenant, term, condition or other provision hereof or default or
Event of Default hereunder on one occasion shall not be construed as a bar to or
a waiver of any right or remedy on any future occasion and shall not affect or
alter this Debenture except to the extent specifically provided in the
instruments setting forth such waiver, and every covenant, term, condition and
other provision of this Debenture shall, in such event, continue in full force
and effect.
Section 3.5 CUMULATIVE REMEDIES.
The rights and remedies of the Holder as provided herein shall be
cumulative and concurrent and may be pursued singularly, successively or
together at the sole discretion of the Holder, and may be exercised as often as
occasion therefor shall occur, and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or release of the same.
Section 3.6 GOVERNING LAW.
This Debenture shall be governed by the laws of the State of Florida,
without regard to its conflict of law doctrine.
FRENCH FRAGRANCES, INC., a
Florida corporation
By:
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Rafael Kravec
President
STATE of )
)
COUNTY of )
The foregoing instrument was acknowledged before me this
-------
day of , 1996 by , the
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of FRENCH
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FRAGRANCES, INC., a Florida corporation, on behalf of the corporation. He/she is
personally known to me or has produced _________________________as
identification.
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Notary Public
My Commission Expires:
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