Exhibit 10.1
FIFTH AMENDMENT TO CREDIT
AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT (this
“ Amendment ”), dated as of July 29, 2009, is
entered into among (1) PHYSICIANS FORMULA, INC., a New York
corporation (the “ Borrower ”), (2) the several
banks and other lenders from time to time parties to this Amendment
(the “ Lenders ”) and (3) UNION BANK, N.A., as
administrative agent for the Lenders (in such capacity, the “
Agent ”).
RECITALS
A. The
Borrower, the Lenders and the Agent have entered into that certain
Credit Agreement dated as of November 14, 2006, as amended by that
certain First Amendment to Credit Agreement dated as of July 8,
2008, that certain Second Amendment to Credit Agreement dated as of
September 9, 2008, that certain Third Amendment to Credit Agreement
dated as of December 5, 2008 and that certain Fourth Amendment to
Credit Agreement dated as of March 30, 2009 (as so amended, the
“ Credit Agreement ”). Capitalized
terms used herein and not defined shall have the meanings ascribed
to them in the Credit Agreement.
B. Pursuant
to the Credit Agreement, the Lenders have made available to the
Borrower a revolving loan facility in the aggregate maximum
principal amount of $25,000,000.
C. The
Borrower has requested that the Agent make certain modifications to
the Credit Agreement and the Agent has agreed, subject to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants contained herein, the parties hereto
hereby agree as follows:
SECTION 1. Amendments to
Credit Agreement . The Credit Agreement is hereby
amended as follows, effective as of the Fifth Amendment Effective
Date:
(a) The following new
definitions are added to Section 1.1 of the Credit Agreement, in
each case in appropriate alphabetical order:
““ Fifth Amendment ”:
the Fifth Amendment to Credit Agreement dated as of July 29, 2009
among the Borrower, the Lenders and the Agent.”
““ Fifth Amendment Effective
Date ”: the date on which the Fifth Amendment becomes
effective in accordance with its terms.”
(b) In clause (j) of
the definition of “Eligible Account” contained in
Section 1.1 of the Credit Agreement, the reference to
“25%” is changed to “35%”.
(c) In Section 2.1(a)
of the Credit Agreement, the third paragraph is deleted.
(d) A new section 2.18
is added to the end of Section 2 of the Credit Agreement as
follows:
“2.18
Amendment Fee . The Borrower agrees to pay to the
Agent, for the account of the Agent on the Fifth Amendment
Effective Date, an amendment fee in the amount of $50,000 for the
Agent’s execution of the Fifth Amendment. Such fee
shall be deemed fully earned by the Agent on such date,
notwithstanding any subsequent early termination of the Revolving
Loan Commitment or the acceleration of the
Obligations. At the request of the Borrower, the Agent
will credit such fee towards the costs of the Borrower in retaining
the management consultant referred to in Section
5.16.”
(e) A new Section 5.16
is added to the end of Section 5 of the Credit Agreement as
follows:
“5.16
Management Consultant . The Borrower shall, on or
before July 31, 2009, hire a management consultant mutually
acceptable to the Agent and the Borrower to advise the Borrower on
such matters regarding the company’s financial performance as
the Agent shall request, including an assessment of the
Borrower’s business plan, cost structure and
liquidity.”
(f) Section 7(c) of
the Credit Agreement is hereby amended in its entirety as
follows:
“(c) The
Borrower shall default in the observance or performance of any
agreement contained in Section 5.2(e), 5.4, 5.5, 5.6, 5.7, 5.13,
5.14, 5.15 or 5.16, or any provision of Section 6;
or”
(g) The Revolving Loan
Commitment amount of Union Bank, N.A. listed on the signature pages
to the Credit Agreement is hereby decreased to
“$20,000,000”.
SECTION 2. Waiver
. The Agent is in receipt of the Borrower’s
Borrowing Base Certificate for the month ended May 30,
2009. Such Borrowing Base Certificate revealed an
overadvance of $1,754,000. Section 2.5(a) of the Credit
Agreement required the Borrower to repay such overadvance within
five Business Days thereof. The Borrower has not repaid
such overadvance, resulting in an Event of Default. The
Borrower has requested that the Lenders and the Agent waive such
Event of Default. The Lenders and the Agent hereby waive
the foregoing Event of Default subject to the terms and conditions
set forth herein.
The foregoing
waiver is given in this instance only. The foregoing
waiver shall not be construed as a waiver of or consent to any
violation of, or deviation from, any other term or condition of the
Credit Agreement or any other Loan Document, nor shall such waiver
be construed to evidence the willingness of the Agent or the
Lenders to give any other or additional waiver, whether in similar
or different circumstances.
SECTION 3. Conditions
Precedent . This Amendment shall become effective as
of the date first set forth above upon receipt by the Agent of the
following, in each case in
