8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 21, 2009

Perfumania Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

Florida	0-19714	65-0977964
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

35 Sawgrass Drive, Suite 2

Bellport, NY 11713

(Address of Principal Executive Offices)(Zip Code)

(631) 866-4100

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Perfumania Holdings, Inc. (the “Company”) entered into Waiver and Amendment No.1, dated as of May 26, 2009, to its senior, secured credit facility, the Credit Agreement dated as of August 11, 2008 (the “Senior Credit Facility”). The other parties to the Credit Agreement are the Company’s subsidiaries, Quality King Fragrance, Inc., Scents Of Worth, Inc., Five Star Fragrance Company, Inc., Distribution Concepts, LLC, Northern Group, Inc., Perfumania, Inc., Magnifique Parfumes And Cosmetics, Inc., Ten Kesef II, Inc. and Perfumania Puerto Rico, Inc., as Borrowers, certain other subsidiaries of the Company signatory thereto, as Credit Parties, the bank lenders signatory thereto from time to time, as Lenders, General Electric Capital Corporation (“GECC”), as Agent, Collateral Agent and Lender, GE Capital Markets, Inc., as Joint Lead Arranger and Book Runner, Wachovia Capital Markets LLC, as Joint Lead Arranger, and Wachovia Bank, National Association, as Syndication Agent.

In Waiver and Amendment No.1, the Lenders waived the Company’s default of the maximum leverage ratio covenant as of October 31, 2008 and January 31, 2009, as well as the Company’s defaults of the minimum fixed charge coverage ratio and inventory turnover ratio covenants as of January 31, 2009, and certain other breaches. In addition, the following material changes were made to the Credit Agreement:

Interest under the Senior Credit Facility was amended to be, at the Company's election unless an event of default exists, either (i) the highest of (A) The Wall Street Journal “prime rate,” (B) the federal funds rate plus .50% or (C) the sum of the applicable 3-month London interbank offered rate (“LIBOR”) plus 1.00% (the “Index Rate”), plus 3.50% or (ii) LIBOR (but not less than 2.00%) plus 4.50%. Waiver and Amendment No.1 sets forth maximum levels of eligible inventory that may be included in the Borrowing Base from time to time, sets forth certain additional reporting requirements, requires appraisals of inventory no less frequently than each fiscal quarter and desktop appraisals of inventory no less frequently than monthly, provides for no testing of the minimum fixed charge coverage ratio, the inventory turnover ratio or the maximum leverage ratio covenants for the fiscal quarter ended May 2, 2009, deletes the inventory turnover ratio covenant and the maximum leverage ratio covenant thereafter, suspends the minimum fixed charge coverage ratio covenant until the fiscal quarter ending January 30, 2010, and provides for reserves against borrowing availability increasing from $9,000,000 to $15,000,000 at August 4, 2009 and thereafter, in addition to any reserves that may be imposed from time to time in GECC’s reasonable credit judgment. In addition, the Company will be required to pay fees equal to 1.00% of the unused amount of the Senior Credit Facility and 4.50% of the outstanding amount of letters of credit under that facility.

Waiver and Amendment No.1 is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference.

In addition, effective May 26, 2009, the Company and its subsidiary, Model Reorg Acquisition LLC, respectively, entered into Note and Subordination Amendment Agreements amending the following subordinated debt obligations as a condition to the banks’ entry into Waiver and Amendment No.1: (i) Subordinated Secured Convertible Note, as amended January 24, 2006, held by Stephen Nussdorf, the Chairman of the Company’s Board of Directors and a principal shareholder of the Company, and his brother, Glenn Nussdorf, a principal shareholder of the Company (the “Convertible Note”), (ii) Subordinated Promissory Note, dated as of August 11, 2008, held by Quality King Distributors, Inc., a corporation owned by Stephen Nussdorf, Glenn Nussdorf, and their sister, Arlene Nussdorf, who is also a principal shareholder of the Company, and (iii) Subordinated Promissory Notes, dated as of August 11, 2008, held by Glenn Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Glenn Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Stephen Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Stephen Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Arlene Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, and Arlene Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98 (collectively, the “Subordinated Notes”).

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The Note and Subordination Amendment Agreements provide that no interest or principal under any of the Subordinated Notes may be paid until the commitment under the Senior Credit Facility terminates. In addition, in the case of the Convertible Note (the convertibility of which expired in January 2009), the Note and Subordination Amendment Agreement provides for conversion of principal and interest at the election of the holders at a conversion price of $7.00 per share until August 11, 2011.

The Note and Subordination Amendment Agreements are filed as Exhibits 4.1, 4.2 and 4.3 to this Form 8-K and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above in Item 1.01 is incorporated herein by reference.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On May 21, 2009, the Company received a notice from The NASDAQ Stock Market (“NASDAQ”) advising that, because we did not file our Form 10-K for the fiscal year ended January 31, 2009 by the due date, we are not in compliance with Listing Rule 5250(c)(1), which requires timely filing of all required periodic financial reports with the Securities and Exchange Commission. The NASDAQ notice provided us 60 calendar days to submit a plan to regain compliance.

The reasons that we have not filed the 10-K are described in Item 7.01 below. We are working to file the Form 10-K as soon as possible, and will submit a plan to regain compliance to NASDAQ if necessary. If we submit such a plan, NASDAQ may allow us up to 180 days from the due date for the 10-K to regain compliance.

The NASDAQ notice has no effect on the listing of our common stock at this time.

Item 7.01 Regulation FD Disclosure

The Company is unable to file its Annual Report on Form 10-K for the year ended January 31, 2009 (“fiscal 2008”) within the prescribed time period because we have not finalized the calculations required to determine whether a valuation reserve against deferred tax assets is required and, if so, the amount, and have not resolved the accounting recognition required under Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”) for certain other matters, so as to enable us to close our books and records and prepare our consolidated financial statements. We are providing the following information regarding the Company’s results of operations for fiscal 2008 and financial condition as of January 31, 2009. We are working to finalize the consolidated financial statements in order to file the fiscal 2008 Form 10-K as soon as possible.

Business of the Company

The Company is an independent, national, vertically integrated company that operates in two industry segments, wholesale distribution and specialty retail sales of designer fragrance and related products. Our wholesale division distributes designer fragrances to mass market retailers, drug and other chain stores, retail wholesale clubs, traditional wholesalers, and other distributors

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throughout the United States. At January 31, 2009, our Perfumania, Inc. (“Perfumania”) subsidiary operated a chain of 355 “full service” retail stores specializing in the sale of fragrances and related products at discounted prices. Our retail division also sells fragrances over the Internet and in retail stores on a consignment basis. During fiscal 2008, approximately 47.8% of our net sales and 33.2% of our gross profit were provided by our wholesale division, and approximately 52.2% and 66.8%, respectively, by our retail division.

The Company’s business is highly seasonal, with the most significant activity occurring from September through December each year. Wholesale sales are stronger during the months of September through November, since retailers need to receive merchandise well before the holiday season begins, with approximately 34.6% of total revenues being generated during these three months. Retail revenues are the greatest in December, with approximately 36.4% of retail revenues being generated this month, as is typical for a retail operation.

We have not declared or paid any dividends on our common stock and do not currently intend to declare or pay cash dividends in the foreseeable future. Payment of dividends, if any, will be at the discretion of the Board of Directors after taking into account various factors, including our financial condition, results of operations, current and anticipated cash needs and plans for expansion. Our bank credit facility limits our ability to pay dividends and make other distributions to shareholders.

The Company’s principal executive offices and distribution center are located in Bellport, New York, where we have subleased 280,000 square feet of a new, 560,000 square foot facility since December 2007. The space is leased through December 2027. We also have leased (through December 2017) an additional 179,000 square foot facility in Sunrise, Florida that is currently used for administrative offices. All of Perfumania's retail stores are located in leased premises. As of January 31, 2009, we had a total of approximately 516,000 leased store square feet with an average store size of 1,455 square feet.

At January 31, 2009, the Company had 2,123 employees, of whom 278 were involved in warehousing, 1,654 were employed in Perfumania’s retail stores, 137 in marketing, sales and operations, and 54 in finance and administration. Temporary and part-time employees are added between Thanksgiving and Christmas.

Results of Operations

On August 11, 2008, Model Reorg, Inc. (“Model Reorg”) was merged into a wholly owned subsidiary of Perfumania Holdings, Inc. (“the Merger”). Perfumania Holdings, Inc. had been named E Com Ventures, Inc. (“E Com”) before the Merger. Before the Merger, Model Reorg was a diversified wholesale and retail fragrance company and E Com was a specialty retailer and wholesale distributor of fragrances, doing business primarily through the Perfumania retail store chain and over the Internet.

For accounting purposes, Model Reorg was considered to be the acquirer in the Merger. Accordingly, the Company’s historical financial statements reflect the results of Model Reorg for periods before the Merger and those of the combined companies beginning August 11, 2008. Therefore, the results of Perfumania’s retail operations are included in our financial statements only for the period August 11, 2008 through January 31, 2009. In addition, wholesale transactions between E Com and Model Reorg that were recorded before the Merger as affiliate transactions became intercompany transactions that are eliminated in consolidation.

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We elected to continue to use the same fiscal year end, the Saturday closest to January 31, as E Com had used before the Merger. Since Model Reorg’s fiscal year end before the Merger was October 31, its last full fiscal year before the Merger ended October 31, 2007 (“fiscal 2007”), and its fiscal quarter that began November 1, 2007 and ended immediately before the beginning of E Com’s next fiscal year on February 3, 2008 is a separately audited “transition period.” In order to provide a meaningful period-to-period comparison, the following discussion compares fiscal 2008 with the year ended February 2, 2008. We are also providing information about Perfumania’s business before August 11, 2008 to assist in understanding the trends in our current business. All amounts included in this discussion are unaudited.

Net Sales. We expect to recognize net sales of $425.6 million in fiscal 2008, an increase of 24.9% from the $340.7 million recorded in the twelve months ended February 2, 2008. We expect the breakdown of sales between wholesale and retail to be as follows:

	For the year ended
	($ in thousands)
	January 31, 2009		Percentage of Sales		February 2, 2008		Percentage of Sales		Percentage Increase (Decrease)
Retail	$	222,168	52.2	%	$	76,267	22.4	%	191.3	%
Wholesale		203,427	47.8	%		264,434	77.6	%	(23.1	)%
Total net sales	$	425,595	100.0	%	$	340,701	100.0	%	24.9	%

Excluding $144.4 million in retail sales by Perfumania that are included in fiscal 2008 sales only for the period from August 11, 2008 through January 31, 2009, net sales decreased by $59.5 million, or 17.5%. Included in wholesale sales are $15.4 million and $32.3 million of pre-Merger sales to E Com in fiscal 2008 and the year ended February 2, 2008, respectively, which are not recognized following the Merger. The remaining decrease in wholesale sales of $44.1 million is the result of the continuing tightening of credit resources generally, which decreases customers’ ability to purchase. Also, the reduction in consumer spending and the weak global economy caused wholesale customers to reduce their demand for fragrance for the 2008 holiday season.

Retail sales by Perfumania for fiscal 2008 increased by 4.0% to $253.9 million compared to the prior year. The average number of stores operated was 329 in fiscal 2008, versus 283 in the prior year, which contributed to the increase in retail sales. However, Perfumania’s comparable store sales decreased by 4.4% during fiscal 2008. The average retail price per unit sold during fiscal 2008 increased 8.0% from the prior year and the total number of units sold decreased by 3.6%. We attribute the increase in the average retail price per unit sold to changes in our product mix and promotions resulting in more sales of higher priced merchandise. The number of units sold was affected by softness in the United States economy, declining consumer confidence and the resulting weak mall traffic.

We expect the softness in wholesale and retail sales to continue for the foreseeable future until consumer confidence and the global economy improve.

Cost of Goods Sold. Cost of goods sold includes the cost of merchandise sold, inventory valuation adjustments, inventory shortages, damages and freight-out charges. Cost of goods sold increased 17.1% from $243.7 million in the year ended February 2, 2008 to $285.3 million in fiscal 2008. Excluding $80.7 million in cost of goods sold for Perfumania, which is included in the above cost of goods sold for the period from August 11, 2008 through January 31, 2009, cost of goods sold decreased by $39.1 million or 16.0 %. Excluding Perfumania’s results, the decrease in cost of goods sold was due principally to a decrease in wholesale sales.

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Gross Profit. Gross profit increased 44.6% from $97.0 million in the year ended February 2, 2008 to $140.3 million in fiscal 2008. Excluding $63.7 million in gross profit from Perfumania, which is included in the above gross profit for the period from August 11, 2008 through January 31, 2009, gross profit decreased by $20.4 million or 21.0%. Excluding Perfumania’s results, the decrease in gross profit was due principally to a decrease in wholesale sales.

Perfumania’s gross profit for fiscal 2008 increased by 3.7% to $112.7 million versus $108.6 million in the prior year, due to an increase in the number of open stores. For these same periods, Perfumania’s gross margins were 44.4% and 44.5%, respectively.

Operating Expenses. Principally because of the addition of Perfumania’s operating expenses for the period from August 11, 2008 through January 31, 2009, we expect operating expenses for fiscal 2008, exclusive of the $68.3 million impairment charges described below, to be approximately $129.0 million, or 109.6% higher than those for the year ended February 2, 2008. Excluding expenses of Perfumania and the impairment charge, operating expenses were approximately equal to those for the year ended February 2, 2008.

	For the year ended
	($ in thousands)
	January 31, 2009			February 2, 2008			Percentage Increase (Decrease)
Selling, general and administrative	$	121,532		$	62,561		94.3	%
Asset impairment		68,280			—		100.0	%
Depreciation and amortization		7,423			1,335		456.0	%
Recovery of vendor advances		—			(2,367	)	(100.0	)%
Total operating expenses	$	197,235		$	61,529		220.6	%
(Loss) income from operations	$	(56,938	)	$	35,447		(260.6	)%

Selling, general and administrative expenses include payroll and related benefits for our distribution centers, sales, store operations, field management, purchasing and other corporate office and administrative personnel; rent, common area maintenance, real estate taxes and utilities for our stores, distribution centers and corporate office; advertising, consignment fees, sales promotion, insurance, supplies, freight out, and other administrative expenses.

Selling, general and administrative expenses increased 94.3% from $62.6 million in the year ended February 2, 2008 to $121.5 million in fiscal 2008 due to the addition of Perfumania’s expenses from August 11, 2008 to January 31, 2009. Excluding Perfumania’s selling, general and administrative expenses of $65.5 million, which are included for the period from August 11, 2008 through January 31, 2009, selling, general and administrative expenses decreased by $6.6 million or 10.5%. Included in selling, general and administrative expenses are expenses in connection with service agreements with Quality King Distributors, Inc. (“Quality King”), which were $1.0 million for fiscal 2008, compared with $3.7 million for the year ended February 2, 2008.

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Perfumania’s selling, general and administrative expenses for fiscal 2008 increased by 14.6% to $114.6 million compared to $100.0 million in the prior year. The increase was largely attributable to the additional payroll, occupancy and store opening expenses needed to operate the 52 net new stores opened over the past year.

Depreciation and amortization was approximately $7.4 million in fiscal 2008, compared to $1.3 million for the year ended February 2, 2008. Approximately $4.7 million of the total increase is attributable to Perfumania. Of the remaining $1.4 million increase, $0.8 million relates to amortization of deferred financing costs and $0.1 million relates to depreciation of asset purchases for the new executive office and distribution center in Bellport, New York.

As a result of the foregoing, we expect to recognize a net loss from operations in fiscal 2008 of approximately $56.9 million, compared to net income from operations in the previous year of $35.4 million.

Impairment Charges. Since the third quarter of fiscal 2008, the capital markets have experienced substantial volatility, the Company’s market capitalization has decreased below book value, and our operating results have not met previous projections. At January 31, 2009, when management performed the annual impairment testing of goodwill and intangible assets with indefinite lives, we determined the fair values of the Company’s reporting units and concluded that $4.5 million of trademarks, all of which related to trademarks recorded as a result of the Merger, was impaired, and that the Company’s remaining goodwill of $60.5 million, including $40.1 of goodwill recorded as a result of the Merger, was fully impaired. At the same time, we also conducted an internal review of the Company’s long-lived assets at the store level and determined that the carrying value of certain long-lived assets exceeded their fair value, which resulted in an impairment charge with respect to such assets of approximately $ 3.3 million. We do not anticipate any future cash expenditures in connection with these impairment charges.

Income Taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Valuation allowances are recognized to reduce deferred tax assets to the amount that they are more likely than not to be realized. In assessing the likelihood of realization, we consider past taxable income, estimates of future taxable income and tax planning strategies. The Company is in the process of completing a comprehensive review of the likely realization of these net assets considering the current broad economic environment and the challenges facing retailers for the foreseeable future. If we conclude it is appropriate to record a partial or a full valuation allowance to the deferred tax assets, it would be reflected as a charge in the tax provision for fiscal 2008.

The Company’s operations extend to multiple states. This involves dealing with uncertainties and judgments in the application of tax regulations in these states. The final resolution of any tax liabilities are dependent upon multiple factors, including negotiations with taxing authorities in these states. The Company is presently still evaluating any potential liabilities associated with anticipated state tax issues and the appropriate accounting recognition in fiscal 2008 required by FIN48.

Net Loss. The Company expects to record a net loss for fiscal 2008, compared with net income of $13.6 million for the year ended February 2, 2008. However, because we have not yet determined whether a valuation reserve against deferred tax assets is required and, if so, the amount, we are not able to estimate the final amount of the net loss.

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Liquidity and Capital Resources

Our principal funding requirements are for inventory purchases, financing extended terms on accounts receivable, paying down accounts payable and debt, opening new stores and renovation of existing stores. Prior to the Merger, Model Reorg also financed extended terms on accounts receivable from E Com. These capital requirements have historically been satisfied through cash from operations and borrowings under the respective revolving credit facilities and notes payable to affiliates.

On August 11, 2008, in conjunction with the Merger, the Company and certain of its subsidiaries entered into a new $250 million revolving credit facility with a syndicate of banks for which General Electric Capital Corporation (“GECC”) serves as Agent (the “Senior Credit Facility”). The Senior Credit Facility is used for the Company’s general corporate purposes and those of its subsidiaries, including working capital. The Company and certain of its subsidiaries are co-borrowers under the Senior Credit Facility, and the Company’s other subsidiaries have guaranteed all of their obligations thereunder.

The Senior Credit Facility is scheduled to expire on August 11, 2011, when all amounts will be due and payable in full. Revolving loans under the Senior Credit Facility may be drawn, repaid and reborrowed up to the amount available under a borrowing base calculated with reference to a specified percentage of the borrowers’ eligible accounts and a specified percentage of the borrowers’ eligible inventory from time to time. GECC has the right to impose reserves in its reasonable credit judgment, whether or not there is an Event of Default, which would effectively reduce the borrowing base and thereby the amount that the borrowers may borrow under the Senior Credit Facility. As of January 31, 2009, GECC had established a $15 million reserve against availability, reducing the amount the borrowers may borrow by $15 million.

Under the Senior Credit Facility, the Company and its subsidiaries have been required to maintain certain financial ratios. Since November 1, 2008, the Company has not been in compliance with the maximum leverage ratio under the terms of the Senior Credit Facility and, since January 31, 2009, the Company has also not been in compliance with the minimum fixed charge coverage and the inventory turnover ratios. As a result of such noncompliance, effective January 23, 2009, GECC elected to impose the Default Rate of interest on outstanding borrowings as permitted by the Senior Credit Facility. The Default Rate is 2% higher than the interest rate otherwise applicable to outstanding borrowings under the Senior Credit Facility, which has been, until the effectiveness of Waiver and Amendment No.1, the higher of (i) The Wall Street Journal corporate “base rate” or (ii) the federal funds rate plus 0.50%, plus in either case a margin of 1.25%. The Default Rate applied until May 26, 2009, when Waiver and Amendment No.1 waived the existing defaults. Going forward, the interest rate on the Senior Credit Facility will be, at the Company's election unless an event of default exists, either (i) the highest of (A) The Wall Street Journal “prime rate,” (B) the federal funds rate plus .50% or (C) the sum of the applicable 3-month London interbank offered rate (“LIBOR”) plus 1.00% (the “Index Rate”), plus 3.50% or (ii) LIBOR (but not less than 2.00%) plus 4.50%. The Company will also be required to pay fees equal to 1.00% of the unused amount of the Senior Credit Facility and 4.50% of the outstanding amount of letters of credit under that facility.

Waiver and Amendment No.1 also made a number of additional changes to the Senior Credit Facility, as described in Item 1.01 above, to better align its provisions to the Company’s current business situation. Any future defaults, if not waived, would permit the lenders to accelerate the indebtedness and terminate the Senior Credit Facility, which would cause all amounts outstanding, including all accrued interest and unpaid fees, to become immediately due and payable. Any such action could result in the Company’s having to refinance the Senior Credit Facility and obtain an alternative source of financing. Due to the current weakness in the credit markets, there is no assurance that such financing would be obtained, or if such refinancing is obtained, that the terms of a new facility would be on terms comparable to the current

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Senior Credit Facility. If the Company were unable to obtain such financing, its operations and financial condition would be materially adversely affected and it would be forced to seek an alternative source of liquidity, such as by selling additional securities, to continue operations, or to limit its operations.

The Company also has outstanding obligations aggregating $55 million to certain trusts established by, and $35 million to a corporation owned by, members of the Nussdorf family, who are principal shareholders of the Company, as well as a $5 million convertible note held by Stephen and Glenn Nussdorf. The trust notes bear interest at a rate equal to 2%, and the corporate note 1%, over the rate in effect from time to time on the revolving loans under the Senior Credit Facility. The convertible note bears interest at the prime rate plus 3%. However, all these obligations are subordinated to the Senior Credit Facility, and no payments may be made on any of these obligations while the Senior Credit Facility is outstanding.

Forward Looking Statements

The foregoing is only an overview and will be supplemented and qualified by the presentation of the Company’s complete financial results for fiscal 2008 and discussion thereof included in the Form 10-K when filed. The amounts given are only estimates and are subject to change following the completion of management’s review of the financial statements. The foregoing statements about the anticipated timing of the Form 10-K and the Company’s anticipated results of operations, including the amount of the possible valuation reserve against deferred tax assets, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based upon information presently available to the Company and assumptions that we believe to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including the risks that additional resources and time may be needed to complete and file the Form 10-K and that the Company’s actual operating results may differ materially from these estimates upon completion of the financial statements.

Additional Risk Factors

In addition to the important factors stated above regarding our access to credit, our business is sensitive to a number of factors that influence the levels of consumer spending, including political and economic conditions such as recessionary environments, the levels of disposable consumer income, consumer debt, interest rates and consumer confidence. The recent disruptions in the national and international economies and financial markets and the related increases in unemployment are depressing consumer confidence and spending. If such conditions persist, consumer spending will likely decline further, which would have a material adverse effect on our business and our results of operations.

Furthermore, those economic and commercial disruptions have reduced the availability of credit for businesses. Some of our customers have also experienced declining financial performance. These conditions affect their ability to pay amounts owed to us on a timely basis or at all. There can be no assurance that government responses to the economic disruptions will increase liquidity and the availability of credit, and our wholesale customers may be unable to borrow funds on acceptable terms. Continued economic decline affecting our wholesale customers would also materially adversely affect our business and results of operations.

The Company’s May 27, 2009 press release regarding the execution of Waiver and Amendment No. 1 and the NASDAQ notice is furnished as Exhibit 99.1 to this Form 8-K.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit No.	Exhibit Index
4.1	Note and Subordination Amendment Agreement dated as of May 26, 2009, among Model Reorg Acquisition LLC, Glenn Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Glenn Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Stephen Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Stephen Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Arlene Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, and Arlene Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, and General Electric Capital Corporation, as Agent and Collateral Agent for the Lenders under the Credit Agreement.
4.2	Note and Subordination Amendment Agreement dated as of May 26, 2009, among Model Reorg Acquisition LLC, Quality King Distributors, Inc., and General Electric Capital Corporation, as Agent and Collateral Agent for the Lenders under the Credit Agreement.
4.3	Note and Subordination Amendment Agreement dated as of May 26, 2009, among the Company, Stephen Nussdorf, Glenn Nussdorf, and General Electric Capital Corporation, as Agent and Collateral Agent for the Lenders under the Credit Agreement.
10.1	Waiver and Amendment No.1, dated as of May 26, 2009, to Credit Agreement dated as of August 11, 2008, among the Company and the other Borrowers named therein, the Credit Parties named therein, the Lenders named therein, General Electric Capital Corporation, as Agent, Collateral Agent and Lender, GE Capital Markets, Inc., as Joint Lead Arranger and Book Runner, Wachovia Capital Markets LLC, as Joint Lead Arranger, and Wachovia Bank, National Association, as Syndication Agent.
99.1	Press Release issued by the Company on May 27, 2009.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Perfumania Holdings, Inc.
Date: May 27, 2009	By:	/s/ Donna Dellomo
		Donna Dellomo Chief Financial Officer

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Exhibit Index

Exhibit No.	Description
4.1	Note and Subordination Amendment Agreement dated as of May 26, 2009, among Model Reorg Acquisition LLC, Glenn Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Glenn Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Stephen Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, Stephen Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, Arlene Nussdorf 10 Year Grantor Retained Annuity Trust dated 11/1/98, and Arlene Nussdorf 15 Year Grantor Retained Annuity Trust dated 11/2/98, and General Electric Capital Corporation, as Agent and Collateral Agent for the Lenders under the Credit Agreement.
4.2	Note and Subordination Amendment Agreement dated as of May 26, 2009, among Model Reorg Acquisition LLC, Quality King Distributors, Inc., and General Electric Capital Corporation, as Agent and Collateral Agent for the Lenders under the Credit Agreement.
4.3	Note and Subordination Amendment Agreement dated as of May 26, 2009, among the Company, Stephen Nussdorf, Glenn Nussdorf, and General Electric Capital Corporation, as Agent and Collateral Agent for the Lenders under the Credit Agreement.
10.1	Waiver and Amendment No.1, dated as of May 26, 2009, to Credit Agreement dated as of August 11, 2008, among the Company and the other Borrowers named therein, the Credit Parties named therein, the Lenders named therein, General Electric Capital Corporation, as Agent, Collateral Agent and Lender, GE Capital Markets, Inc., as Joint Lead Arranger and Book Runner, Wachovia Capital Markets LLC, as Joint Lead Arranger, and Wachovia Bank, National Association, as Syndication Agent.
99.1	Press Release issued by the Company on May 27, 2009.

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EX-4.1

Exhibit 4.1

NOTE AND SUBORDINATION AMENDMENT AGREEMENT

Agreement dated as of this 26th day of May, 2009 among Model Reorg Acquisition LLC, a Delaware limited liability company (the “Company”), the noteholders listed on the signature page hereof (the “Noteholders”) and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as Agent and Collateral Agent for Lenders under the Credit Agreement (as defined below) (in such capacity and together with its successors and assigns, the “Senior Lender”).

WHEREAS, each of the Noteholders holds a Subordinated Promissory Note of the Company, as more particularly described on Exhibit A attached hereto (the “Subordinated Notes”);

WHEREAS, the Company is a party to Credit Agreement, dated as of August 11, 2008, with certain of its affiliates, General Electric Capital Corporation, for itself, as lender, and as agent, and the other lenders signatory thereto (as amended from time to time, the “Credit Agreement”);

WHEREAS, the Noteholders, the Company and the Senior Lender are parties to an Intercreditor and Subordination Agreement, dated as of August 11, 2008 (as amended from time to time, the “Subordination Agreement”); and

WHEREAS, the Company desires to obtain certain amendments to the Credit Agreement and waivers of certain defaults thereunder pursuant to a Waiver and Amendment No. 1 to Credit Agreement to be entered into by the parties to the Credit Agreement (the “Waiver and Amendment”) and the Agent (as defined in the Credit Agreement) and the Lenders are willing to execute and deliver the Waiver and Amendment if, among other matters, the Noteholders execute and deliver this Agreement;

NOW THEREFORE the Company and the Noteholders agree as follows:

1. Payments under Subordinated Notes. Notwithstanding anything to the contrary contained in the Subordinated Notes, no principal or interest shall be paid under the Subordinated Notes prior to the Commitment Termination Date (as defined in the Credit Agreement).

2. Amendments to Subordination Agreement.

(a) Section 2(b) of the Subordination Agreement shall be amended by deleting therefrom the provisos in subsection (2)(A) thereof.

(b). Section 2(c) of the Subordination Agreement shall be amended in its entirety to read as follows:

“(c) [Intentionally Deleted].”

(c) Section 3(c) of the Subordination Agreement shall be amended by deleting therefrom the clause: “except payments permitted to be made at the time of payment as provided in paragraph 2(b), ”.

3. Counterparts. This Agreement may be executed by one or more of the parties on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the counterparts of this Agreement signed by all the parties shall be lodged with the Senior Lender.

4. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

5. Section Headings. The section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

6. Successors and Assigns. This Agreement shall be binding upon the successors, heirs, administrators, executors and assigns of the Company and the Noteholders and shall inure to the benefit of the Senior Lender and its successors and assigns.

7. GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH OF THE COMPANY, THE NOTEHOLDERS AND THE SENIOR LENDER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE COMPANY, THE NOTEHOLDERS AND THE SENIOR LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SENIOR LOAN DOCUMENTS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK AND, PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE SENIOR LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SENIOR OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE SENIOR LENDER. EACH OF THE COMPANY AND THE NOTEHOLDERS

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EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE COMPANY AND THE NOTEHOLDERS HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE COMPANY AND THE NOTEHOLDERS HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR BENEATH ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE, AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S OR THE NOTEHOLDERS’ ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

8. MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE SENIOR LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Lender
By:	/s/ Kristina M. Miller
Name:	Kristina M. Miller
Title:	Duly Authorized Signatory

[Signature Page – Nussdorf Trusts Note and Subordination Amendment]

MODEL REORG ACQUISITION, LLC,
By:	/s/ Michael W. Katz
Name:	Michael W. Katz
Title:	President and C.E.O.

[Signature Page – Nussdorf Trusts Note and Subordination Amendment]

NOTEHOLDERS:
GLENN NUSSDORF 10-YEAR GRANTOR RETAINED ANNUITY TRUST DATED 11/1/98
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	Trustee
By:	/s/ Stephen Nussdorf
Name:	Stephen Nussdorf
Title:	Trustee
GLENN NUSSDORF 15-YEAR GRANTOR RETAINED ANNUITY TRUST DATED 11/2/98
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	Trustee
By:	/s/ Stephen Nussdorf
Name:	Stephen Nussdorf
Title:	Trustee
STEPHEN NUSSDORF 10-YEAR GRANTOR RETAINED ANNUITY TRUST DATED 11/1/98
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	Trustee
By:	/s/ Stephen Nussdorf
Name:	Stephen Nussdorf
Title:	Trustee

[Signature Page – Nussdorf Trusts Note and Subordination Amendment]

STEPHEN NUSSDORF 15-YEAR GRANTOR RETAINED ANNUITY TRUST DATED 11/2/98
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	Trustee
By:	/s/ Stephen Nussdorf
Name:	Stephen Nussdorf
Title:	Trustee
ARLENE NUSSDORF 10-YEAR GRANTOR RETAINED ANNUITY TRUST DATED 11/1/98
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	Trustee
By:	/s/ Stephen Nussdorf
Name:	Stephen Nussdorf
Title:	Trustee
ARLENE NUSSDORF 15-YEAR GRANTOR RETAINED ANNUITY TRUST DATED 11/2/98
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	Trustee
By:	/s/ Stephen Nussdorf
Name:	Stephen Nussdorf
Title:	Trustee

[Signature Page – Nussdorf Trusts Note and Subordination Amendment]

EXHIBIT A

SUBORDINATED NOTES

Trust Name	Principal
Glenn Nussdorf 10 year Grantor Retained Annuity Trust dated 11/1/98	$	7,388,212.15
Glenn Nussdorf 15 year Grantor Retained Annuity Trust dated 11/2/98	$	11,067,018.85
Stephen Nussdorf 10 year Grantor Retained Annuity Trust dated 11/1/98	$	7,388,212.15
Stephen Nussdorf 15 year Grantor Retained Annuity Trust dated 11/2/98	$	11,067,018.85
Arlene Nussdorf 10 year Grantor Retained Annuity Trust dated 11/1/98	$	7,388,212.15
Arlene Nussdorf 15 year Grantor Retained Annuity Trust dated 11/2/98	$	11,067,018.85
Total Principal	$	55,365,693.00

EX-4.2

Exhibit 4.2

NOTE AND SUBORDINATION AMENDMENT AGREEMENT

Agreement dated as of this 26th day of May, 2009 among Model Reorg Acquisition LLC, a Delaware limited liability company (the “Company”), the noteholder listed on the signature page hereof (the “Noteholder”) and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as Agent and Collateral Agent for Lenders under the Credit Agreement (as defined below) (in such capacity and together with its successors and assigns, the “Senior Lender”).

WHEREAS, the Noteholder holds a Subordinated Promissory Note of the Company, dated as of August 8, 2008, in the original principal amount of $35,000,000 (the “Subordinated Note”);

WHEREAS, the Company is a party to Credit Agreement, dated as of August 11, 2008, with certain of its affiliates, General Electric Capital Corporation, for itself, as lender, and as agent, and the other lenders signatory thereto (as amended from time to time, the “Credit Agreement”);

WHEREAS, the Noteholder, the Company and the Senior Lender are parties to an Intercreditor and Subordination Agreement, dated as of August 11, 2008 (as amended from time to time, the “Subordination Agreement”); and

WHEREAS, the Company desires to obtain certain amendments to the Credit Agreement and waivers of certain defaults thereunder pursuant to a Waiver and Amendment No. 1 to Credit Agreement to be entered into by the parties to the Credit Agreement (the “Waiver and Amendment”) and the Agent (as defined in the Credit Agreement) and the Lenders are willing to execute and deliver the Waiver and Amendment if, among other matters, the Noteholder executes and delivers this Agreement;

NOW THEREFORE the Company and the Noteholder agree as follows:

1. Payments under Subordinated Note. Notwithstanding anything to the contrary contained in the Subordinated Note, no principal or interest shall be paid under the Subordinated Note prior to the Commitment Termination Date (as defined in the Credit Agreement).

2. Amendments to Subordination Agreement.

(a) Section 2(b) of the Subordination Agreement shall be amended by deleting therefrom the provisos in subsection (2)(A) thereof.

(b). Section 2(c) of the Subordination Agreement shall be amended in its entirety to read as follows:

“(c) [Intentionally Deleted].”

(c) Section 3(c) of the Subordination Agreement shall be amended by deleting therefrom the clause: “except payments permitted to be made at the time of payment as provided in paragraph 2(b), ”.

3. Counterparts. This Agreement may be executed by one or more of the parties on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the counterparts of this Agreement signed by all the parties shall be lodged with the Senior Lender.

4. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

5. Section Headings. The section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

6. Successors and Assigns. This Agreement shall be binding upon the successors, heirs, administrators, executors and assigns of the Company and the Noteholder and shall inure to the benefit of the Senior Lender and its successors and assigns.

7. GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH OF THE COMPANY, THE NOTEHOLDER AND THE SENIOR LENDER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE COMPANY, THE NOTEHOLDER AND THE SENIOR LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SENIOR LOAN DOCUMENTS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK AND, PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE SENIOR LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SENIOR OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE SENIOR LENDER. EACH OF THE COMPANY AND THE NOTEHOLDER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE COMPANY AND THE NOTEHOLDER HEREBY WAIVES

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ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE COMPANY AND THE NOTEHOLDER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR BENEATH ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE, AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S OR THE NOTEHOLDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

8. MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE SENIOR LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Lender
By:	/s/ Kristina M. Miller
Name:	Kristina M. Miller
Title:	Duly Authorized Signatory

[Signature Page – QKD Note and Subordination Amendment]

MODEL REORG ACQUISITION, LLC,
By:	/s/ Michael W. Katz
Name:	Michael W. Katz
Title:	President and C.E.O.
NOTEHOLDER:
QUALITY KING DISTRIBUTORS, INC.
By:	/s/ Glenn Nussdorf
Name:	Glenn Nussdorf
Title:	President

[Signature Page – QKD Note and Subordination Amendment]

EX-4.3

Exhibit 4.3

NOTE AND SUBORDINATION AMENDMENT AGREEMENT

Agreement dated as of this 26th day of May, 2009 among Perfumania Holdings, Inc. (f/k/a E Com Ventures, Inc.), a Florida corporation (the “Company”), the noteholders listed on the signature page hereof (the “Noteholders”) and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as Agent and Collateral Agent for Lenders under the Credit Agreement (as defined below) (in such capacity and together with its successors and assigns, the “Senior Lender”).

WHEREAS, the Company has issued to the Noteholders a Subordinated Secured Convertible Note dated as of December 9, 2004 in the original principal amount of $5,000,000 (the “Subordinated Note”);

WHEREAS, the Company is a party to Credit Agreement, dated as of August 11, 2008, with certain of its affiliates, General Electric Capital Corporation, for itself, as lender, and as agent, and the other lenders signatory thereto (as amended from time to time, the “Credit Agreement”);

WHEREAS, the Noteholders, the Company and the Senior Lender are parties to an Intercreditor and Subordination Agreement, dated as of August 11, 2008 (as amended from time to time, the “Subordination Agreement”); and

WHEREAS, the Company desires to obtain certain amendments to the Credit Agreement and waivers of certain defaults thereunder pursuant to a Waiver and Amendment No. 1 to Credit Agreement to be entered into by the parties to the Credit Agreement (the “Waiver and Amendment”) and the Agent (as defined in the Credit Agreement) and the Lenders are willing to execute and deliver the Waiver and Amendment if, among other matters, the Noteholders execute and deliver this Agreement;

NOW THEREFORE the Company and the Noteholders agree as follows:

1. Payments under and Amendment of the Subordinated Note.

(a) Notwithstanding anything to the contrary contained in the Subordinated Note, no principal or interest shall be paid under the Subordinated Note prior to the Commitment Termination Date (as defined in the Credit Agreement).

(b) As of the date hereof the Conversion Price, as defined in and under the Subordinated Note, shall be reduced to $7.00.

2. Amendments to Subordination Agreement.

(a) Section 2(b) of the Subordination Agreement shall be amended by deleting therefrom the provisos in subsection (2)(A) thereof.

(b). Section 2(c) of the Subordination Agreement shall be amended in its entirety to read as follows:

“(c) [Intentionally Deleted].”

(c) Section 3(c) of the Subordination Agreement shall be amended by deleting therefrom the clause: “except payments permitted to be made at the time of payment as provided in paragraph 2(b), ” .

3. Conversion of Subordinated Note. Notwithstanding anything to the contrary contained in the Subordination Agreement, the Noteholders shall be entitled to convert the Subordinated Note into shares of Common Stock of the Company in accordance with the terms and provisions of the Subordinated Note.

4. Counterparts. This Agreement may be executed by one or more of the parties on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the counterparts of this Agreement signed by all the parties shall be lodged with the Senior Lender.

5. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

6. Section Headings. The section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

7. Successors and Assigns. This Agreement shall be binding upon the successors, heirs, administrators, executors and assigns of the Company and the Noteholders and shall inure to the benefit of the Senior Lender and its successors and assigns.

8. GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH OF THE COMPANY, THE NOTEHOLDERS AND THE SENIOR LENDER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE COMPANY, THE NOTEHOLDERS AND THE SENIOR LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SENIOR LOAN DOCUMENTS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY

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APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK AND, PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE SENIOR LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SENIOR OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE SENIOR LENDER. EACH OF THE COMPANY AND THE NOTEHOLDERS EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE COMPANY AND THE NOTEHOLDERS HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE COMPANY AND THE NOTEHOLDERS HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR BENEATH ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE, AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S OR THE NOTEHOLDERS’ ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

9. MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE SENIOR LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

GENERAL ELECTRIC CAPITAL CORPORATION,
as Senior Lender
By:	/s/ Kristina M. Miller
Name:	Kristina M. Miller
Title:	Duly Authorized Signatory

[Signature Page – Nussdorf Convertible Note and Subordination Amendment]

PERFUMANIA HOLDINGS, INC.
By:	/s/ Michael W. Katz
Name:	Michael W. Katz
Title:	President and C.E.O.

[Signature Page – Nussdorf Convertible Note and Subordination Amendment]

NOTEHOLDERS:

/s/ Glenn Nussdorf

(Glenn Nussdorf)

/s/ Stephen Nussdorf

(Stephen Nussdorf)

[Signature Page – Nussdorf Convertible Note and Subordination Amendment]

EX-10.1

Exhibit 10.1

WAIVER AND AMENDMENT NO. 1 TO CREDIT AGREEMENT

This Waiver and Amendment No. 1 to Credit Agreement, dated as of May 26, 2009 (this “Amendment”), to Credit Agreement, dated as of August 11, 2008 (as hereafter amended, restated or otherwise modified, the “Credit Agreement”) is entered into by and among PERFUMANIA HOLDINGS, INC. (f/k/a E Com Ventures, Inc.), a Florida corporation (“Perfumania Holdings”), QUALITY KING FRAGRANCE, INC., a Delaware corporation (“QKF”), SCENTS OF WORTH, INC., a Florida corporation (“Scents of Worth”), FIVE STAR FRAGRANCE COMPANY, INC., a New York corporation (“Five Star Fragrance”), DISTRIBUTION CONCEPTS, LLC, a Florida limited liability company (“Distribution Concepts”), NORTHERN GROUP, INC., a New York corporation (“Northern Group”), PERFUMANIA, INC., a Florida corporation (“Perfumania”), MAGNIFIQUE PARFUMES AND COSMETICS, INC., a Florida corporation (“Magnifique Parfumes”), TEN KESEF II, INC., a Florida corporation (“Ten Kesef”) and PERFUMANIA PUERTO RICO, INC., a Puerto Rico corporation (“Perfumania PR”) (Perfumania Holdings, QKF, Scents of Worth, Five Star Fragrance, Distribution Concepts, Northern Group, Perfumania, Magnifique Parfumes, Ten Kesef and Perfumania PR are sometimes collectively referred to herein as the “Borrowers” and individually as a “Borrower”); the other Credit Parties signatory thereto (each a “Credit Party” and, collectively, the “Credit Parties”); and General Electric Capital Corporation, for itself, as Lender, and as Agent for Lenders (in such capacity, “Agent”), and the other Lenders signatory hereto.

RECITALS

A. Borrowers, Agent and Lenders are desirous of making specific amendments to the Credit Agreement, as and to the limited extent expressly set forth herein.

B. Events of Default have occurred and currently exist under the Credit Agreement as a result of (i) Borrowers’ breach of the financial covenant set forth in Section (d) of Annex G to the Credit Agreement, for the period ended on or about October 31, 2008, (ii) Borrowers’ breach of Section 6.1 of the Credit Agreement as a result of the purchase by Magnifique Parfumes and Cosmetics, Inc. of the inventory and fixtures of three (3) retail stores from The Fragrance Depot, Inc. (which after the purchase changed its name) in the Sawgrass and Dolphin Malls in Florida and the assumption of the related leases for a purchase price of $1,500,000 plus the value of the inventory (approximately $245,000) and the formation of a new wholly-owned subsidiary of Magnifique Parfumes and Cosmetics, Inc., The Fragrance Depot, Inc., a Florida corporation, which holds no assets and engages in no business, formed to reserve the corporate name “Fragrance Depot,” (iii) the existence of another subsidiary, E Com Ventures Company (f/k/a PerHold FL, Inc.), wholly-owned by Perfumania Holdings which has no assets or business and was formed to hold the E com name, but was not listed on Schedule 3.8 to the Credit Agreement, (iv) Borrowers’ breach of the financial covenants set forth in Sections (a), (b) and (d) of Annex G to the Credit Agreement, for the period ended January 31, 2009, (v) Borrowers’ breach of Section (a) of Annex E to the Credit Agreement based on failure to deliver the monthly financial information for the Fiscal Month of January 2009 and

(vi) Borrowers’ breach of Section (d) of Annex F to the Credit Agreement based on the failure to deliver the annual audited Financial Statements for the Fiscal Year ended on or about January 31, 2009 (the “Existing Events of Default”);

C. Agent and Lenders are willing to grant a waiver limited to the Existing Events of Default, as set forth in, and subject to the terms and conditions of, this Amendment;

D. This Amendment shall constitute a Loan Document and these Recitals shall be construed as part of this Amendment.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and of the Loans and other extensions of credit heretofore, now or hereafter made to, or for the benefit of, Borrowers by Lenders, Borrowers, Agent and Lenders hereby agree as follows:

1. Definitions. Except to the extent otherwise specified herein, capitalized terms used in this Amendment shall have the same meanings ascribed to them in the Credit Agreement.

2. Amendments.

2.1. Section 1.5(a) of the Credit Agreement is hereby amended by it in its entirety and replacing it with the following:

“(a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum; and (ii) with respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per annum.

The Applicable Margins shall be set in accordance with the following grid:

	Applicable Margins
Applicable Revolver Index Margin	3.500	%
Applicable Revolver LIBOR Margin	4.500	%
Applicable L/C Margin	4.500	%
Applicable Unused Line Fee Margin	1.000	%”

2.2. Section 1.14 of the Credit Agreement is hereby amended by deleting the first sentence thereof in its entirety and replacing it with the following:

“Each Credit Party that is a party hereto shall, during normal business hours, from time to time upon five (5) Business Days prior notice as frequently as Agent reasonably determines to be appropriate: (a) provide Agent and any of its officers, employees and agents access to its properties, facilities, advisors, officers and employees of each Credit Party and to the Collateral,

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(b) permit Agent, and any of its officers, employees and agents, to inspect, audit and make extracts from any Credit Party’s books and records, and (c) permit Agent, and its officers, employees and agents, to inspect, review, evaluate and make test verifications and counts of the Accounts, Inventory and other Collateral of any Credit Party (it being understood that at least three field examinations will be conducted per year).”

2.3. Section 6.13 of the Credit Agreement is hereby amended by deleting clauses (e), (f) and (g) thereof in their entirety.

2.4. Section 6 of the Credit Agreement is hereby amended by adding the following new Section 6.18:

“6.18 Subsidiary Restrictions. Neither The Fragrance Depot, Inc., a Florida corporation wholly-owned by Magnifique Parfumes nor E Com Ventures Company (f/k/a PerHold FL, Inc.), a Florida corporation wholly-owned by Perfumania Holdings shall engage in any trade or business, or own any assets or incur any liabilities, Indebtedness or Guaranteed Indebtedness.”

2.5. Annex A of the Credit Agreement is hereby amended by deleting clause (b) in the definition of “Borrowing Base” and replacing it with the following:

“(b) beginning with the first Borrowing Base Certificate delivered after the date of Waiver and Amendment No. 1 to this Agreement, up to 85% of the appraised net orderly liquidation value percentage (from the most recently completed and delivered appraisal of Borrowers’ Inventory pursuant to this Agreement; provided, that, during the period beginning December 16 and ending December 31 of each year, the net orderly liquidation value percentage for the immediately following month of January shall be used in this calculation) of Eligible Inventory, valued at the lower of cost (determined on a weighted average basis, which approximates a first-in, first-out basis) or market;

provided, further, that the maximum amount of Eligible Inventory used in determining the Borrowing Base (and to which the advance rate determined under clause (b) above shall be applied) shall not exceed the amount set forth below for each applicable month end set forth below:

Applicable Month End:	Maximum Amount of Eligible Inventory
May 30, 2009	$	233,783,000
July 4, 2009	$	226,251,000
August 1, 2009	$	225,421,000
August 29, 2009	$	225,840,000
October 3, 2009	$	229,586,000
October 31, 2009	$	238,848,000
November 28, 2009	$	244,335,000
January 2, 2009	$	218,122,000
January 30, 2010	$	217,050,000
February 28, 2010 and each month end thereafter thereafter	Amount specified for such month end in the One Year Operating Plan plus $2,500,000”

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2.6. Annex A of the Credit Agreement is hereby amended by deleting the definition of “Index Rate” in its entirety and replacing it with the following:

“‘Index Rate’ means, for any day, a floating rate equal to the highest of (i) the rate publicly quoted from time to time by The Wall Street Journal as the “prime rate” (or, if The Wall Street Journal ceases quoting a prime rate, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent), (ii) the Federal Funds Rate plus 50 basis points per annum, and (iii) the sum of (x) the LIBOR Rate for a LIBOR Period of three (3) months as it appears on Reuters Screen LIBOR01 Page as of 11:00 a.m (London, England time) two (2) Business Days prior to such day, plus (y) the excess of the Applicable Revolver LIBOR Margin over the Applicable Revolver Index Margin, in each instance, as of such day. Each change in any interest rate provided for in the Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate.”

2.7. Annex A of the Credit Agreement is hereby amended by adding the following sentence to the definition of “LIBOR Rate”:

“Notwithstanding the foregoing, the LIBOR Rate shall in no event be less than 2.00%.”

2.8. Annex A of the Credit Agreement is hereby amended by adding the following definition of “Short-Term Advances to Suppliers” in the appropriate alphabetical order:

“‘Short-Term Advances to Suppliers’ means Advances to Suppliers if, and only to the extent that, a Credit Party or Credit Parties shall receive Inventory shipments within five (5) Business Days from the applicable supplier to which such Advances have been paid.”

2.9. Annex E of the Credit Agreement is hereby amended by deleting clause (c) and replacing it with the following:

(c) Operating Plan. To Agent and Lenders, (i) as soon as available, but not later than the end of each Fiscal Year, an annual operating plan for Borrowers, on a combined and, commencing with the Projections for the Fiscal Year ending on or about month-end, January, 2010, combining basis consistent with the historical Financial Statements of Borrowers, approved by the Board of Directors of each of the Borrowers, for the following Fiscal Year, which (A) includes a statement of all of the material assumptions on which such plan is based, (B) includes monthly balance sheets, income statements and statements of cash flows for the following year and (C) integrates sales, gross profits, operating expenses, operating profit, cash flow projections and Borrowing Availability projections, all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing management’s good faith estimates of future financial performance based on historical performance), and including plans for personnel, Capital Expenditures and facilities; and (ii) thirty (30) days after the end of the Fiscal Years

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ended January 31, 2010 and January 31, 2011, a one-year operating plan for Borrowers, on a combined and combining basis consistent with the historical Financial Statements of Borrowers, approved by the Board of Directors of each of the Borrowers, for the Fiscal Year ended on or about month-end January, 2011 or January, 2012, as the case may be, which (A) includes a statement of all of the material assumptions on which such plan is based, (B) includes monthly balance sheets, income statements and statements of cash flows for the following two years, (C) includes monthly Borrowing Availability projections and (D) integrates sales, gross profits, operating expenses, operating profit and cash flow projections, all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing management’s good faith estimates of future financial performance based on historical performance), and including plans for personnel, Capital Expenditures and facilities. Such one-year operating plan shall be prepared using projections and assumptions consistent with historic performance, reasonably acceptable to Agent, including, by way of example but not of limitation, provisions reflecting trade and other payables being paid currently, and such plan shall demonstrate monthly Borrowing Availability throughout such one-year period of at least (i) $15,000,000 plus (ii) the $15,000,000 amount required to be maintained under paragraph (a) of Annex G, Minimum Borrowing Availability (such one year operating plan being defined as the “One Year Operating Plan”).

2.10. Annex E of the Credit Agreement is hereby amended by deleting the term “combined and combining” and the word “combined” as each appear in the first sentence of clause (d) and replacing them, in both instances, with the word, “consolidated.”

2.11. Annex E of the Credit Agreement is hereby amended by adding the following new Section (p):

“(p) Additional Reporting. To Agent and Lenders, (i) within twenty one (21) days after the end of each Fiscal Month, a profit and loss accounting of store performance by location (including net sales, gross margin and EBITDA), and (ii) on the first Business Day of each week, a cash flow projection (including projections of Borrowing Availability) for such week and each of the twelve (12) weeks following such week.

2.12. Annex F of the Credit Agreement is hereby amended by deleting paragraph (a) in its entirety and replacing it with the following:

“(a) To Agent, upon its request, and in any event no less frequently than (x) 12:00 p.m. (New York time) on each Business Day, a Combined Notice of Revolving Credit Advance and Collateral Activity Report, as referenced in clause (i) below with updated information as to the gross amounts of Accounts and Inventory as of the immediately preceding Business Day; and (y) 12:00 p.m. (New York time) on the third Business Day after the end of each week (together with a copy of all or any part of the following reports requested by any Lender in writing after the Closing Date), the reports referenced in clauses (ii) and (iii) below, each of which shall be prepared by the applicable Borrower as of the last day of the immediately preceding week or the date two (2) days prior to the date of any such request:

(i) a Combined Notice of Revolving Credit Advance and Collateral Activity Report with respect to each Borrower, in each case accompanied by such supporting detail and documentation as shall be requested by Agent in its reasonable discretion;

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(ii) a Borrowing Base Certificate and, with respect to each Borrower, a summary of Inventory by location and type with a supporting perpetual Inventory report, in each case accompanied by such supporting detail and documentation as shall be requested by Agent in its reasonable discretion; and

(iii) with respect to each Borrower, a weekly trial balance showing Accounts outstanding aged from due date as follows: current, 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or more, accompanied by such supporting detail and documentation as shall be requested by Agent in its reasonable discretion.”

2.13. Annex F of the Credit Agreement is hereby amended by deleting paragraph (i) in its entirety and replacing it with the following:

“(i) Borrowers, at their own expense, shall deliver to Agent (A) an appraisal of their Inventory no less frequently than each Fiscal Quarter and (B) to the extent requested by Agent a desktop appraisal of such Inventory no less frequently than once each month, or, in each case, or at such more frequent intervals as Agent may request at any time, such appraisals to be conducted by an appraiser engaged by Agent, and such appraisals to be in form and substance reasonably satisfactory to Agent; and”

2.14. Annex G of the Credit Agreement is hereby amended by deleting paragraph (a), “Minimum Fixed Charge Coverage Ratio,” in its entirety and replacing it with the following:

“(a) Minimum Fixed Charge Coverage Ratio. Beginning with the Fiscal Quarter ending January 30, 2010 and for each and every Fiscal Quarter ending thereafter, the Credit Parties on a consolidated basis shall have, at the end of each such Fiscal Quarter, a Fixed Charge Coverage Ratio for the trailing 12-month period then ended of not less than 1.10 to 1.00.

2.15. Annex G of the Credit Agreement is hereby amended by deleting all of paragraph (b), “Inventory Turnover Ratio,” in its entirety and replacing it with the following:

“[Intentionally Omitted]”

2.16. Annex G of the Credit Agreement is hereby amended by deleting paragraph (c), “Advances to Suppliers,” in its entirety and replacing it with the following:

“(c) Advances to Suppliers. For each and every Fiscal Quarter, beginning with the Fiscal Quarter ending May 2, 2009, Credit Parties (other than the Inactive Companies) on a combined basis shall not have, at any time, (i) aggregate outstanding Advances to Suppliers (other than Short-Term Advances to Suppliers) in excess of $4,000,000 with respect to all suppliers or in excess of $3,000,000 with respect to any one supplier (together with its Affiliates) or (ii) aggregate Short-Term Advances to Suppliers in excess of $8,000,000 with respect to all suppliers or in excess of $3,000,000 with respect to any one supplier (together with its Affiliates).”

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2.17. Annex G of the Credit Agreement is hereby amended by deleting paragraph (d), “Maximum Leverage Ratio,” in its entirety.

2.18. For the avoidance of doubt, none of the Minimum Fixed Charge Coverage Ratio, the Inventory Turnover Ratio or the Maximum Leverage Ratio shall be tested for the Fiscal Quarter ended on or about May 2, 2009.

2.19. In addition to any other Reserves which Agent may from time to time establish under the terms of this Agreement in its reasonable credit judgment, there shall be established and maintained at all times a Reserve against Borrowing Availability in the amounts set forth below, during the periods set forth below:

Period:	Reserve Against Borrowing Availability
May 22, 2009 – May 25, 2009	$	9,000,000
May 26, 2009 – June 1, 2009	$	10,000,000
June 2, 2009 – June 8, 2009	$	10,500,000
June 9, 2009 – June 15, 2009	$	11,000,000
June 16, 2009 – June 22, 2009	$	11,500,000
June 23, 2009 – June 29, 2009	$	12,000,000
June 30, 2009 – July 6, 2009	$	12,500,000
July 7, 2009 – July 13, 2009	$	13,000,000
.July 14, 2009 – July 20, 2009	$	13,500,000
July 21, 2009 – July 27, 2009	$	14,000,000
July 28, 2009 – August 3, 2009	$	14,500,000
August 4, 2009 and thereafter	$	15,000,000

3. Waiver. Subject to the satisfaction of the conditions set forth in Section 4 below, Agent and Lenders hereby waive the Existing Events of Default. This is a waiver limited to the Existing Events of Default and shall not be deemed to constitute a waiver of any other term or provision of the Credit Agreement or any of the other Loan Documents.

4. Conditions Precedent to Effectiveness. The effectiveness of the specific amendment set forth in Section 2 hereof and the specific waiver set forth in Section 3 hereof is subject to the satisfaction of each of the following conditions precedent:

4.1. Amendment. This Amendment shall have been duly executed and delivered by the Borrowers, each other Credit Party, Agent and Requisite Lenders.

4.2. Fee. Borrowers shall have paid to Agent, for the account of the Lenders, a fee equal to 0.75% of the Revolving Loan Commitment, payable to each Lender that timely delivers its signature page to this Amendment.

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4.3. No Default. Other than the Existing Events of Default, before and after giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing.

4.4. Certain Amendments. (i) The Existing Nussdorf Convertible Note, the Nussdorf Subordinated Debt and the QKD Subordinated Debt shall have been amended to provide that no principal or interest shall be paid thereon prior to the Commitment Termination Date; provided that, the Existing Convertible Note may be convertible into common equity in accordance with its terms and (ii) the intercreditor agreements with respect to the QKD Subordinated Debt, the Nussdorf Subordinated Debt and the Existing Nussdorf Convertible Note shall have been amended in form and substance satisfactory to the Agent.

4.5. Certain Deliveries. Receipt by Agent of (i) a profit and loss accounting of store performance by location (including net sales, gross margin and EBITDA) for the month ended February 28, 2009, (ii) a cash flow projection (including projections of Borrowing Availability) for each of the thirteen (13) weeks following the date of this Amendment, (iii) an oral report as to the results of the desktop Inventory appraisal currently being performed, (iv) the monthly financial information required to be delivered pursuant to Section (a) of Annex E to the Credit Agreement for the Fiscal Month of January 2009 and (v) the audited Financial Statements for Borrowers, on a consolidated basis, for the Fiscal Year ended January 31, 2009, in the case of each such delivery, in form and substance satisfactory to Agent.

5. Reference to and Effect Upon the Credit Agreement and other Loan Agreements.

5.1. Except for the specific amendments in Section 2 and the specific waiver set forth in Section 3, above, the Credit Agreement and each other Loan Document shall remain in full force and effect and each is hereby ratified and confirmed.

5.2. The execution, delivery and effect of this Amendment shall be limited precisely as written and shall not be deemed to (i) be a consent to any waiver of any term or condition or any amendment or modification of any term or condition of the Credit Agreement (except for the specific amendments set forth in Section 2 and the specific waiver set forth in Section 3 above) or any other Loan Document or (ii) prejudice any right, power or remedy which the Agent or Lenders now has or may have in the future under or in connection with the Credit Agreement or any other Loan Document.

6. Acknowledgment and Consent of Credit Parties. Each Credit Party hereby consents to this Amendment and hereby confirms and agrees that (a) each Loan Document to which it is a party is, and shall continue to be, in full force and effect and each is hereby ratified and confirmed in all respects, and (b) the Liens granted by such Credit Party on all Collateral of such Credit Party continue to secure the payment of all of the Obligations.

7. Release. Borrowers and the other Credit Parties hereby waive, release, remise and forever discharge Agent, Lenders and each other Indemnified Person from any and all actions, causes of action, suits or other claims of any kind or character, known or unknown, which any Borrower or Credit Party ever had, now has or might hereafter have against Agent, any Lender or any other

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Indemnified Person which relate, directly or indirectly, to any acts or omissions of Agent, any Lender or any other Indemnified Person on or prior to the date hereof arising out of, in connection with, or otherwise relating to, the Loan Documents or any matter in connection therewith.

8. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be as effective as delivery of a manually executed counterpart signature page to this Amendment.

9. Costs and Expenses. As provided in Section 11.3 of the Credit Agreement, Borrowers shall pay on demand the reasonable fees, costs and expenses incurred by Agent in connection with the preparation, execution and delivery of this Amendment.

10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK.

11. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

[Signature Pages Follow]

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first written above.

BORROWERS:
PERFUMANIA HOLDINGS, INC. (f/k/a E Com Ventures, Inc.)
QUALITY KING FRAGRANCE, INC.
SCENTS OF WORTH, INC.
FIVE STAR FRAGRANCE COMPANY, INC.
DISTRIBUTION CONCEPTS, LLC
NORTHERN GROUP, INC.
PERFUMANIA, INC.
MAGNIFIQUE PARFUMES AND COSMETICS, INC.
TEN KESEF II, INC.
PERFUMANIA PUERTO RICO, INC.
By:	/s/ Donna Dellomo
Name:	Donna Dellomo
Title:	CFO

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

The following Persons are signatories to this Amendment in their capacity as Credit Parties.

FLOWING VELVET, INC.
ALADDIN FRAGRANCES, INC.
NICHE MARKETING GROUP, INC.
MODEL REORG ACQUISITION LLC
JACAVI, LLC
NORTHERN AMENITIES, LTD.
NORTHERN BRANDS, INC.
PERFUMANIA.COM, INC.
By:	/s/ Donna Dellomo
Name:	Donna Dellomo
Title:	CFO

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and a Lender
By:	/s/ Kristina M. Miller
	Duly Authorized Signatory

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

WACHOVIA BANK NATIONAL ASSOCIATION
By:	/s/ Robert H. Waters, Jr.
Name:	Robert H. Waters, Jr.
Title:	Director

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

BANK OF AMERICA, N.A.
By:	/s/ Edgar Ezerins
Name:	Edgar Ezerins
Title:	Senior Vice President

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

TD BANK, N.A.
By:	/s/ Stephen A. Caffrey
Name:	Stephen A. Caffrey
Title:	Vice President

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

UNION BANK OF CALIFORNIA

By:

Name:

Title:

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

RBS BUSINESS CAPITAL, a division of RBS Asset Finance, Inc.

By:

Name:

Title:

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

BANK LEUMI USA
By:	/s/ John Grieco
Name:	John Grieco
Title:	First Vice President

By:	/s/ Nancy Pulla
Name:	Nancy Pulla
Title:	Assistant Treasurer

[Signature Page – Waiver and Amendment No. 1 to Perfumania Credit Agreement]

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Company Contact:

Michael W. Katz

President and CEO

Perfumania Holdings, Inc.

(631) 866-4156

Perfumania Holdings, Inc. Receives Bank Waivers, NASDAQ Notice

Bellport, NY May 27, 2009 — Perfumania Holdings, Inc. (NASDAQ: PERF) announced that its bank lenders have waived the financial covenant defaults under its senior credit facility. In addition, certain amendments were made to the credit facility to better align its provisions to the Company’s current business situation. The Company is filing the waiver and amendment agreement on Form 8-K with the Securities and Exchange Commission and encourages investors to read the complete terms of that agreement.

Separately, the Company announced that it had received a notice from The NASDAQ Stock Market (“NASDAQ”) advising that, because the Company did not file its Form 10-K for the fiscal year ended January 31, 2009 (“fiscal 2008”) by the due date, it is not in compliance with NASDAQ Listing Rule 5250(c)(1), which requires timely filing of all required periodic financial reports with the Securities and Exchange Commission (“SEC”). NASDAQ has provided the Company 60 calendar days to submit a plan to regain compliance.

The Company did not file the Form 10-K by the due date because it has not finalized the calculations required to determine whether a valuation reserve against deferred tax assets is required and, if so, the amount, and has not resolved the accounting recognition required for certain other matters, so as to enable the Company to finalize its consolidated financial statements for fiscal 2008. The Company is filing a Form 8-K with the SEC providing substantial information about its results of operations for fiscal 2008. The Company is working to file the Form 10-K as soon as possible, and will submit a plan to regain compliance to NASDAQ if necessary. If the Company submits such a plan, NASDAQ may allow up to 180 days from the due date for the Form 10-K to regain compliance.

The NASDAQ notice has no effect on the listing of the Company’s common stock at this time.

Forward Looking Statements

This press release includes statements regarding the Company’s filing of its Form 10-K for fiscal 2008 and the actions it will take to address the NASDAQ notice, which are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Among the factors that could cause our actual results performance to differ materially from those described or implied in the forward-looking statements is that we may not be able to resolve the remaining issues to prepare and audit our consolidated financial statements for fiscal 2008 in a timely manner so as to permit filing of the Form 10-K.