Exhibit 10.4
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CREDIT AGREEMENT
DATED AS OF MARCH 19, 1999
BY AND BETWEEN
1-800-FLOWERS, INC.
AND
THE CHASE MANHATTAN BANK
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TABLE OF CONTENTS
ARTICLE I ................................................................. 1
SECTION 1.01. DEFINITIONS ................................................. 1
SECTION 1.02. TERMS GENERALLY ............................................. 19
ARTICLE II ................................................................ 20
SECTION 2.01. REVOLVING CREDIT LOANS ...................................... 20
SECTION 2.02. REVOLVING CREDIT NOTE ....................................... 21
SECTION 2.03. TERM LOANS .................................................. 21
SECTION 2.04. TERM NOTE ................................................... 21
SECTION 2.05. LETTERS OF CREDIT............................................ 22
ARTICLE III ............................................................... 24
SECTION 3.01. INTEREST RATE; CONTINUATION AND CONVERSION OF LOANS ......... 24
SECTION 3.02. USE OF PROCEEDS ............................................. 26
SECTION 3.03. PREPAYMENTS ................................................. 26
SECTION 3.04. FEES ........................................................ 27
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE......................... 27
SECTION 3.06. ILLEGALITY .................................................. 28
SECTION 3.07. INCREASED COSTS ............................................. 28
SECTION 3.08. INDEMNITY ................................................... 29
SECTION 3.09. CHANGE OF LENDING OFFICE .................................... 30
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SECTION 3.10. TAXES ....................................................... 30
SECTION 3.11. PAYMENTS .................................................... 30
SECTION 3.12. DISBURSEMENT OF LOANS ....................................... 31
ARTICLE IV ................................................................ 31
SECTION 4.01. ORGANIZATION, POWERS ........................................ 31
SECTION 4.02. AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS ......... 32
SECTION 4.03. FINANCIAL CONDITION ......................................... 32
SECTION 4.04. TAXES ....................................................... 33
SECTION 4.05. TITLE TO PROPERTIES ......................................... 33
SECTION 4.06. LITIGATION .................................................. 33
SECTION 4.07. AGREEMENTS .................................................. 33
SECTION 4.08. COMPLIANCE WITH ERISA ....................................... 34
SECTION 4.09. FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS ................ 34
SECTION 4.10. APPROVAL .................................................... 34
SECTION 4.11. SUBSIDIARIES ................................................ 35
SECTION 4.12. HAZARDOUS MATERIALS ......................................... 35
SECTION 4.13. INVESTMENT COMPANY ACT ...................................... 35
SECTION 4.14. PLEDGE AGREEMENTS ........................................... 35
SECTION 4.15. NO DEFAULT .................................................. 35
SECTION 4.16. MATERIAL CONTRACTS .......................................... 35
SECTION 4.17. PERMITS AND LICENSES ........................................ 36
SECTION 4.18. COMPLIANCE WITH LAW ......................................... 36
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SECTION 4.19. Y2K ......................................................... 36
SECTION 4.20. REPURCHASE OBLIGATIONS ...................................... 37
SECTION 4.21. FISCAL YEAR END ............................................. 37
SECTION 4.22. DISCLOSURE .................................................. 37
ARTICLE V ................................................................. 37
SECTION 5.01. CONDITIONS TO INITIAL EXTENSION OF CREDIT ................... 37
SECTION 5.02. CONDITIONS TO ALL EXTENSIONS OF CREDIT ...................... 39
ARTICLE VI ................................................................ 40
SECTION 6.01. EXISTENCE, PROPERTIES, INSURANCE ............................ 40
SECTION 6.02. PAYMENT OF INDEBTEDNESS AND TAXES ........................... 41
SECTION 6.03. FINANCIAL STATEMENTS, REPORTS, ETC .......................... 41
SECTION 6.04. BOOKS AND RECORDS; ACCESS TO PREMISES ....................... 43
SECTION 6.05. NOTICE OF ADVERSE CHANGE .................................... 43
SECTION 6.06. NOTICE OF DEFAULT ........................................... 44
SECTION 6.07. NOTICE OF LITIGATION ........................................ 44
SECTION 6.08. NOTICE OF DEFAULT IN OTHER AGREEMENTS ....................... 44
SECTION 6.09. NOTICE OF ERISA EVENT ....................................... 44
SECTION 6.10. NOTICE OF ENVIRONMENTAL LAW VIOLATIONS ...................... 45
SECTION 6.11. NOTICE REGARDING MATERIAL CONTRACTS ......................... 45
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAWS ............................. 45
SECTION 6.13. SUBSIDIARIES ................................................ 45
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SECTION 6.14. ENVIRONMENTAL LAWS .......................................... 46
ARTICLE VII ............................................................... 46
SECTION 7.01. LIENS ....................................................... 46
SECTION 7.02. INDEBTEDNESS ................................................ 48
SECTION 7.03. GUARANTIES .................................................. 49
SECTION 7.04. SALE OF ASSETS .............................................. 50
SECTION 7.05. SALES OF RECEIVABLES ........................................ 50
SECTION 7.06. LOANS AND INVESTMENTS ....................................... 50
SECTION 7.07. NATURE OF BUSINESS .......................................... 51
SECTION 7.08. SALE AND LEASEBACK .......................................... 51
SECTION 7.09. FEDERAL RESERVE REGULATIONS ................................ 51
SECTION 7.10. ACCOUNTING POLICIES AND PROCEDURES .......................... 51
SECTION 7.11. HAZARDOUS MATERIALS ......................................... 52
SECTION 7.12. LIMITATIONS ON FUNDAMENTAL CHANGES .......................... 52
SECTION 7.13. FINANCIAL CONDITION COVENANTS ............................... 52
SECTION 7.14. SUBORDINATED DEBT ........................................... 54
SECTION 7.15. DIVIDENDS ................................................... 54
SECTION 7.16. TRANSACTIONS WITH AFFILIATES ................................ 54
SECTION 7.17. IMPAIRMENT OF SECURITY INTEREST ............................. 55
SECTION 7.18. NO AMENDMENTS ............................................... 55
ARTICLE VIII .............................................................. 55
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SECTION 8.01. EVENTS OF DEFAULT ........................................... 55
ARTICLE IX ................................................................ 58
SECTION 9.01. NOTICES ..................................................... 58
SECTION 9.02. EFFECTIVENESS; SURVIVAL ..................................... 59
SECTION 9.03. EXPENSES .................................................... 59
SECTION 9.04. SUCCESSORS AND ASSIGNS; PARTICIPATIONS ...................... 60
SECTION 9.05. NO WAIVER; CUMULATIVE REMEDIES .............................. 60
SECTION 9.06. APPLICABLE LAW .............................................. 60
SECTION 9.07. SUBMISSION TO JURISDICTION .................................. 61
SECTION 9.08. SEVERABILITY ................................................ 61
SECTION 9.09. RIGHT OF SETOFF ............................................. 61
SECTION 9.10. CONFIDENTIALITY ............................................. 62
SECTION 9.11. HEADINGS .................................................... 62
SECTION 9.12. CONSTRUCTION ................................................ 62
SECTION 9.13. COUNTERPARTS ................................................ 63
SCHEDULES
Schedule I - Subsidiaries
Schedule II - Existing Liens
Schedule III - Existing Indebtedness
Schedule IV - Existing Guarantees
Schedule V - Financial Condition Changes
Schedule VI - Existing Letters of Credit
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Schedule VII - Litigation
Schedule VIII - Hazardous Materials
Schedule IX - Material Contracts
Schedule X - Existing Investments
Schedule XI - Changes in Business
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Note
Exhibit C-1 - Form of Company Pledge Agreement
Exhibit C-2 - Form of Subsidiary Pledge Agreement
Exhibit D - Form of Guaranty
Exhibit E - Form of Opinion of Counsel
Exhibit F - Form of Permitted Acquisition Summary
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CREDIT AGREEMENT dated as of March 19, 1999, by and among 1-800-FLOWERS,
INC., a Delaware corporation (the "Company") and THE CHASE MANHATTAN BANK, a New
York banking corporation, (the "Lender").
RECITALS
The Company has requested the Lender to extend credit from time to time
and the Lender is willing to extend such credit to the Company, subject to the
terms and conditions hereinafter set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINITIONS. As used herein, the following words and terms
shall have the following meanings:
"Ace" shall mean Amalgamated Consolidated Enterprises, Inc.
"Ace Notes" shall mean, collectively, the obligations of Ace to Xxxxxxx X.
Xxxxxxxx, Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxx pursuant to Promissory Notes in
the original aggregate principal amount of $3,225,000 each dated October 10,
1994.
"Adjusted Libor Loans" shall mean Loans at such time as they are made
and/or being maintained at a rate of interest based upon Reserve Adjusted Libor.
"Affiliate" shall mean with respect to a specified Person, another Person
which, directly or indirectly, controls or is controlled by or is under common
control with such specified Person. For the purpose of this definition,
"control" of a Person shall mean the power, direct or indirect, to direct or
cause the direction of the management or policies of such Person whether through
the ownership of voting securities, by contract or otherwise; provided that, in
any event, any Person who owns directly or indirectly 20% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 20% or more of the partnership or other
ownership interest of any Person (other than as a limited partner of such other
Person) will be deemed to control such corporation or other Person.
"Aggregate Letters of Credit Outstandings" shall mean, at a particular
time, the sum of (a) the aggregate maximum stated amount at such time which is
available or available in the future to be drawn under all outstanding Letters
of Credit and Other Letters of Credit and (b) the aggregate amount of all
payments made by the Lender under any Letter of Credit that has
not been reimbursed by the Company at such time.
"Aggregate Outstandings" shall mean, at a particular time, the sum of (a)
the Aggregate Letters of Credit Outstandings at such time and (b) the aggregate
outstanding principal amount of all Revolving Credit Loans at such time.
"Agreement" shall mean this Credit Agreement dated as of March 19, 1999,
as it may hereafter be amended, restated, supplemented or otherwise modified
from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate as in effect on such day, and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Lender shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate, for any reason,
including the inability or failure of the Lender to obtain sufficient quotations
in accordance with the terms thereof, the Alternate Base Rate shall be
determined without regard to clause (b) of the first sentence of this
definition, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loans" shall mean Loans at such times as they are
being made and/or maintained at a rate of interest based on the Alternate Base
Rate.
"Borrowing Date" shall mean, with respect to any Loan, the date on which
such Loan is disbursed to the Company.
"Business Day" shall mean (a) any day not a Saturday, Sunday or legal
holiday, on which banks in New York City are open for business and (b) as it
relates to any payment, determination, funding or notice to be made or given in
connection with any Adjusted Libor Loan, any day specified in clause (a) on
which trading is carried on by and between banks in Dollar deposits in the
London interbank eurodollar market.
"Capital Expenditures" shall mean additions to property and equipment of
the Company and its Subsidiaries which, in conformity with Generally Accepted
Accounting Principles, are included as "additions to property, plant or
equipment" or similar items which would be reflected in the consolidated
statement of cash flow of the Company and its Subsidiaries, including without
limitation, property and equipment which are the subject of Capital Leases.
"Capital Lease" shall mean any lease the obligations of which are required
to be
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capitalized on the balance sheet of a Person in accordance with Generally
Accepted Accounting Principles.
"Cash Collateral" shall mean a deposit by the Company made in immediately
available funds to a cash collateral account at the Lender and the taking of all
action required to provide the Lender, a first priority perfected security
interest in such deposit.
"Change of Control" shall mean the failure of Xx. Xxxxx X. XxXxxx, any
trust of which members of his family are sole beneficiaries and of which Xx.
XxXxxx is the sole trustee with the sole right to vote all securities held by
it, and/or a limited partnership or limited liability company of which members
of his family (including siblings) are the sole limited partners or members,
respectively, and of which he is the sole general partner or manager,
respectively, in each case with the sole right to vote all securities held by
it, to own beneficially and of record a majority of the outstanding capital
stock of the Company or the failure of Xx. Xxxxx X. XxXxxx or such trusts,
limited partnership or limited liability company to have, collectively, the
right to vote a majority of the outstanding capital stock of the Company.
"Chief Financial Officer" shall mean either the Senior Vice President of
Finance or the Vice President of Finance of the Company.
"Closing Date" shall mean March 19, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Commitments" shall mean, collectively, the Revolving Credit Commitment
and the Term Loan Commitment.
"Company" shall have the meaning set forth in the preamble hereto.
"Consideration" shall mean with respect to any proposed acquisition all
cash, stock, transaction costs, guarantees and other contingent obligations,
liabilities and Indebtedness in the event of an acquisition of assets, assumed
(to the extent such assumed Indebtedness is permitted pursuant to Section 7.02;
provided assumed Indebtedness shall exclude obligations to pay rent or its
equivalent under operating leases for real property), compensation to be paid to
former shareholders of the seller pursuant to employment agreements, consulting
agreements or non-compete agreements, (other than salaries paid to former
shareholders of such seller who will be employed by the acquired Person, on a
full-time basis and who will be involved in the day-to-day operations of the
acquired Person upon the consummation of such proposed acquisition fees) earn
out provisions, any deferred portions of the purchase price or any other costs
paid in connection with such proposed acquisition.
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"Consolidated Debt Service Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated Net Income after taxes plus, to the extent deducted in
determining Consolidated Net Income, the sum of (i) all cash interest expense,
and (ii) all depreciation and amortization expenses or charges, less
extraordinary or unusual gains (determined net of taxes) determined in
accordance with Generally Accepted Accounting Principles, applied on a
consistent basis, plus any non-cash expenses (calculated on an "after-tax"
basis) attributable to options outstanding to third parties to purchase shares
of P&H, minus all non-cash income or gain (calculated on an "after-tax" basis)
attributable to options outstanding to third parties to purchase shares of P&H,
minus the cash portion of the purchase price paid to holders of shares of the
Company or any of its Subsidiaries in connection with the repurchase of all or a
portion of such shares to (b) the sum of (i) cash interest expense plus (ii) the
scheduled installments of principal on all Indebtedness. All the foregoing
categories shall be calculated with respect to the Company and its Subsidiaries
and shall be calculated (without duplication) over the four fiscal quarters next
preceding the date of calculation thereof with the exception of the scheduled
installments of principal on all Indebtedness of the Company and its
Subsidiaries with an original maturity of 365 days or more, which shall each be
calculated based upon the next succeeding four fiscal quarters.
"Consolidated EBITDA" shall mean for the Company and its Subsidiaries for
any period, the Consolidated Net Income (or consolidated net loss) of the
Company and its Subsidiaries for such period, plus the sum, without duplication,
of (a) gross interest expense, (b) depreciation and amortization expenses or
charges, (c) all income taxes to any government or governmental instrumentality
expensed on the Company's or its Subsidiaries' books (whether paid or accrued)
and (d) any non-cash expenses attributable to options outstanding to third
parties to purchase shares of P&H, minus the sum of (a) all extraordinary or
unusual gains, (b) all interest income and (c) all non-cash income or gain,
including any gain attributable to options outstanding to third parties to
purchase shares of P&H, in each case, determined on a consolidated basis for the
Company and its Subsidiaries in accordance with Generally Accepted Accounting
Principles applied on a consistent basis. All of the foregoing categories shall
be calculated with respect to the Company and its Subsidiaries and shall be
calculated (without duplication) over the four fiscal quarters next preceding
the date of calculation thereof. Consolidated EBITDA of any Person acquired by
the Company or its Subsidiaries during such period shall be included on a PRO
FORMA basis for such period (treating the consummation of each such acquisition
and the incurrence or assumption of any Indebtedness in connection therewith as
if they occurred on the first day of such period) if the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the period preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for the period
in respect of which Consolidated EBITDA is to be calculated (i) have been
previously provided to the Lender and (ii) either (A) have been reported on
without qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized
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standing or (B) have been found acceptable by the Lender.
"Consolidated Funded Debt" shall mean the sum of all Indebtedness of the
Company and its Subsidiaries for borrowed money having an original maturity of
one year or more, including the current portion thereof and including, without
limitation, Subordinated Indebtedness.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA less consolidated Unfunded Capital Expenditures
during the four fiscal quarters next preceding the date of calculation thereof
to (b) Consolidated Interest Expense; provided, however, Unfunded Capital
Expenditures shall be included in such calculation only to the extent incurred
after June 28, 1998.
"Consolidated Interest Expense" shall mean the consolidated gross interest
expense of the Company and its Subsidiaries determined in accordance with
Generally Accepted Accounting Principles applied on a consistent basis and
calculated over the four fiscal quarters next preceding the date of calculation
thereof.
"Consolidated Net Income" shall mean, for any period, the net income (or
net loss) of the Company and its Subsidiaries on a consolidated basis for such
period determined in accordance with Generally Accepted Accounting Principles
applied on a consistent basis.
"Consolidated Net Worth" shall mean (a) total consolidated assets of the
Company and its Subsidiaries less (b) total consolidated liabilities of the
Company and its Subsidiaries, in each case, determined in accordance with
Generally Accepted Accounting Principles applied on a consistent basis.
"Consolidated Total Unsubordinated Liabilities" shall mean all items
which, in accordance with Generally Accepted Accounting Principles applied on a
consistent basis, would properly be included on the liability side of the
balance sheet (other than Subordinated Debt, capital stock, capital surplus,
treasury stock and retained earnings), as of the date on which the amount of
Consolidated Total Unsubordinated Liabilities is to be determined, of the
Company and its Subsidiaries, computed and consolidated in accordance with
Generally Accepted Accounting Principles applied on a consistent basis.
"Default" shall mean any condition or event which upon notice, lapse of
time or both would constitute an Event of Default.
"Dollar" and the symbol "$" shall mean lawful money of the United States
of America.
"Eligible Investments" shall mean (a) direct obligations of the United
States of America
5
or any governmental agency thereof which are fully guaranteed by the United
States of America, provided that such obligations mature within one year from
the date of acquisition thereof; or (b) dollar denominated certificates of time
deposit maturing within one year issued by any bank organized and existing under
the laws of the United States or any state thereof and having aggregate capital
and surplus in excess of $1,000,000,000; or (c) money market mutual funds having
assets in excess of $2,500,000,000; or (d) commercial paper rated not less than
P-1 or A-1 or their equivalent by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Ratings Group, respectively; or (e) tax exempt securities of a U.S.
issuer rated A or better by Standard and Poor's Ratings Group or Xxxxx'x
Investors Service, Inc.
"Eligible Offering Proceeds" shall mean the Net Proceeds received by the
Company or any of its Subsidiaries from the offering or placement by the Company
or any Subsidiary of any of its equity securities; provided such equity
securities, if other than the Company's class A or class B common stock as in
effect on the date hereof, including the rights and preferences with respect
thereto, are acceptable to the Lender.
"Environmental Law" shall mean any law, ordinance, rule, regulation, or
policy having the force of law of any Governmental Authority relating to
pollution or protection of the environment or to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.) the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901, et seq.) and the rules and regulations
promulgated pursuant thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Company or any Affiliate of the Company would be
deemed to be a member of the same "controlled group" within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Eurocurrency Reserve Requirement" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves, under any regulations of the Board of Governors of the Federal Reserve
System or any other governmental authority having jurisdiction with respect
thereto) as from time to time in effect, dealing with reserve requirements
prescribed for eurocurrency funding
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(currently referred to as "eurocurrency liabilities" in Regulation D) maintained
by the Lender. For purposes hereof each Adjusted Libor Loan shall be deemed to
constitute a "eurocurrency liability" as defined in Regulation D, and subject to
the reserve requirements of "Regulation D," without benefit of credit or
proration, exemptions or offsets which might otherwise be available to the
Lenders from time to time under Regulation D.
"Event of Default" shall have the meaning set forth in Article VIII.
"Executive Officer" shall mean any of the President, any Senior Vice
President, the Chief Executive Officer, the Treasurer, Chief Financial Officer
or the Secretary of the Company or any of its Subsidiaries, as applicable, and
their respective successors, if any, designated by the board of directors
thereof.
"Existing Indebtedness" shall mean, collectively, the aggregate
Indebtedness of the Company to The Chase Manhattan Bank on the Closing Date
under the Credit Agreement dated as of April 3, 1998, by and between the Company
and The Chase Manhattan Bank.
"Existing Letters of Credit" shall mean the letters of credit issued by
The Chase Manhattan Bank for the account of the Company or a Guarantor prior to
the date hereof as set forth on Schedule VI.
"Existing P&H Indebtedness" shall mean the revolving credit facility in a
principal amount not to exceed $4,500,000 owing by P&H to Wachovia Bank pursuant
to a Commitment Letter dated September 22, 1998 and a Commercial Note executed
September 28, 1998.
"Existing P&H Mortgage" shall mean the mortgage granted by the P&H
Partnership to Wachovia Bank to secure a mortgage note dated June 13, 1997 of
which approximately $3,600,000 is outstanding on the date hereof.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal fund brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Lender from
three Federal fund brokers of recognized standing selected by the Lender.
"Franchise Agreement" shall mean a written agreement between the Company
or any of its Subsidiaries and any other Person pursuant to which such other
Person is entitled to use the name "1-800-Flowers", "Conroys" or any other
tradename of the Company or any of its Subsidiaries in the sale of flowers and
related goods and products as a franchisee.
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"Franchise Store" shall mean any Store operated by a Franchisee.
"Franchisee" shall mean any Person with whom the Company or any of its
Subsidiaries has a Franchise Agreement.
"Generally Accepted Accounting Principles" shall mean those generally
accepted accounting principles in the United States of America, as in effect
from time to time.
"Governmental Authority" shall mean any nation or government, any state,
province, city or municipal entity or other political subdivision thereof, and
any governmental, executive, legislative, judicial, administrative or regulatory
agency, department, authority, instrumentality, commission, board or similar
body, whether federal, state, provincial, territorial, local or foreign.
"Guarantors" shall mean, collectively, 800-Flowers, Inc., a New York
corporation, 1-800 Flowers Retail Inc., a Delaware corporation, Fresh
Intellectual Properties, Inc., a Delaware corporation, 800-Gifthouse, Inc., a
New York corporation, 1-800-Flowers Team Services, Inc., a Delaware corporation,
Teleway Inc., a New York corporation, Bloomlink Systems, Inc., a New York
corporation, 1-800-Flowers Acquisition Corp., a Delaware corporation, St. Claire
Floral Co., Inc., a New York corporation, Floral Works, Inc., a Delaware
corporation, Amalgamated Consolidated Enterprises, Inc., a Nevada corporation,
P&H, X.X. Xxxxxx Company, Inc., a California corporation, Xxxxxx'x Acquisition
Corporation, a California corporation, Xxxxxx'x Inc., a California corporation,
and Florists' Capital Corporation, Inc., a California corporation, and each
other Subsidiary (excluding Gerber Gardens/1-800 Flowers LLC, Xxxxxx de Excito,
Inc. and P&H Partnership) of the Company on the Closing Date, and each Person
who, from time to time, is required to execute a Corporate Guaranty in
accordance with Section 5.01 or Section 6.13; provided such Person's status as a
Guarantor shall be effective as of the date of such execution.
"Guaranty" shall mean the Corporate Guaranty in the form attached hereto
as Exhibit D to be executed and delivered by each Guarantor on the Closing Date
and thereafter by Subsidiaries of the Company pursuant to Section 6.13, as the
same may hereafter be amended, restated, supplemented or otherwise modified from
time to time.
"Hazardous Materials" shall mean any explosives, radioactive materials, or
other materials, wastes, substances, or chemicals regulated as toxic hazardous
or as a pollutant, contaminant or waste under any applicable Environmental Law.
"Hedging Agreement" shall mean any interest rate swap, collar, cap, floor
or forward rate agreement or other agreement regarding the hedging of interest
rate risk exposure executed
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in connection with hedging the interest rate exposure of the Company or any of
its Subsidiaries and any confirming letter executed pursuant to such agreement,
all as amended, supplemented, restated or otherwise modified from time to time.
"Indebtedness" shall mean, without duplication, as to any Person or
Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred
purchase price of property or services; (c) indebtedness evidenced by bonds,
debentures, term notes or other similar instruments; (d) obligations and
liabilities secured by a Lien upon property owned by such Person, whether or not
owing by such Person and even though such Person has not assumed or become
liable for the payment thereof; (e) obligations and liabilities directly or
indirectly guaranteed by such Person; (f) obligations or liabilities created or
arising under any conditional sales contract or other title retention agreement
with respect to property used and/or acquired by such Person; (g) obligations of
such Person as lessee under Capital Leases; (h) net liabilities of such Person
under Hedging Agreements and foreign currency exchange agreements, as calculated
in accordance with accepted practice; (i) all obligations of such Person in
respect of bankers' acceptance; (j) all obligations, contingent or otherwise of
such Person as an account party or applicant in respect of letters of credit;
and (k) with respect to the Company and its Subsidiaries, the Option Liability.
"Interest Payment Date" shall mean (a) as to any Loan, the first day of
each calendar month during the term hereof; (b) as to any Adjusted Libor Loan,
the last day of the Interest Period for such Adjusted Libor Loan; and (c) as to
any Loan, the date such Loan is paid in full or in part.
"Interest Period" shall mean with respect to any Adjusted Libor Loan:
(a) initially, the period commencing on the date such Adjusted Libor Loan
is made and ending one, three or six months thereafter, as selected by the
Company in its notice of borrowing or in its notice of conversion from an
Alternate Base Rate Loan provided, in each case, in accordance with the terms of
Articles II and III hereof; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Adjusted Libor Loan and ending one,
three or six months thereafter, as selected by the Company by irrevocable
written notice to the Lender not later than 11:00 a.m. New York, New York time
three Business Days prior to the last day of the then current Interest Period
with respect to such Adjusted Libor Loan; provided, however, that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
would be to carry such Interest
9
Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) if the Company shall fail to give notice as provided in
clause (b) above, the Company shall be deemed to have requested
conversion of the affected Adjusted Libor Loan to an Alternate Base
Rate Loan on the last day of the then current Interest Period with
respect thereto;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iv) no more than eight (8) Interest Periods may exist at any
one time; and
(v) the Company shall select Interest Periods so as not to
require a payment or prepayment of any Adjusted Libor Loan during an
Interest Period for such Adjusted Libor Loan.
"Interest Rate Margin" shall mean (a) with respect to each Adjusted Libor
Loan, the percentage set forth below under the heading "LIBOR Margin" opposite
the applicable ratio and (b) with respect to each Alternate Base Rate Loan, the
percentage set forth below under the heading "ABR Margin" opposite the
applicable ratio.
Consolidated Funded Debt LIBOR Margin ABR Margin
to Consolidated EBITDA (360 day basis) (360 day basis)
---------------------- --------------- ---------------
Less than 1.50:1.00 1.50% .25%
Greater than or equal to 1.75% .50%
1.50:1.00 but less than
2.00:1.00
Greater than or equal to 2.00% .75%
2.00:100 but less than
2.50:1:00
10
Greater than or equal to 2.25% 1.00%
2.50:1.00 but less than
3.00:1.00
11
Greater than or equal to 2.50% 1.25%
3.00:1.00 but less than
3.50:1.00
Greater than or equal to
3.50:1.00 2.75% 1.50%
Notwithstanding the foregoing, during the period commencing the Closing Date and
ending on the fifth Business Day following the date of delivery of the financial
statements to the Lender for the third fiscal quarter ending March 28, 1999 (a)
the Interest Rate Margin with respect to each Adjusted Libor Loan shall be 2.25%
per annum, and (b) the Interest Rate Margin with respect to each Alternate Base
Rate Loan shall be 1.0% per annum. The Interest Rate Margin will be set or reset
quarterly with respect to each Loan on the date which is five Business Days
following the date of receipt by the Lender of the financial statements referred
to in Section 6.03(a) or Section 6.03(b), as applicable, together with a
certificate of the Chief Financial Officer of the Company certifying the ratio
of Consolidated Funded Debt to Consolidated EBITDA and setting forth the
calculation thereof in detail; provided, however, if any such financial
statement and certificate are not received by the Lender within the time period
required pursuant to Section 6.03(a) or Section 6.03(b), as the case may be, the
Interest Rate Margin will be set or reset, unless the rate of interest specified
in Section 3.01(c) is in effect, based on a ratio of Consolidated Funded Debt to
Consolidated EBITDA of greater than 3.50:1.00 from the date such financial
statement and certificate were due until the date which is five Business Days
following the receipt by the Lender of such financial statements and
certificate, and provided, further, that the Lender shall not in any way be
deemed to have waived any Default or Event of Default, including, without
limitation, an Event of Default resulting from the failure of the Company to
comply with Section 7.13 of this Agreement, or any rights or remedies hereunder
or under any other Loan Document in connection with the foregoing proviso.
During the occurrence and continuance of a Default or Event of Default, no
downward adjustment, and only upward adjustments, shall be made to the Interest
Rate Margin.
"LC Disbursement" shall mean a payment made by the Lender pursuant to a
Letter of Credit.
"LC Exposure" shall mean, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time, plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Company at such time.
"LC Margin" shall mean the percentage set forth below under the heading
"LC Margin" opposite the applicable ratio.
12
Consolidated Funded Debt
to Consolidated EBITDA LC Margin
---------------------- ---------
Less than 1.50:1.00 1.50%
Greater than or equal to 1.50:1.00 but 1.75%
less than 2.00:1.00
Greater than or equal to 2.00:1.00 but 2.00%
less than 2.50:1.00
Greater than or equal to 2.50:1.00 but 2.25%
less than 3.00:1.00
Greater than or equal to 3.00:1.00 but 2.50%
less than 3.50:1.00
Greater than or equal to 3.50:1.00 2.75%
Notwithstanding the foregoing, during the period commencing the Closing Date and
ending on the fifth Business Day following the date of the delivery of the
financial statements for the third fiscal quarter ending March 28, 1999, the LC
Margin shall be 2.25%. The LC Margin will be set or reset quarterly on the date
which is five Business Days following the date of receipt by the Lender of the
financial statements referred to in Section 6.03(a) or Section 6.03(b), as
applicable, together with a certificate of the Chief Financial Officer of the
Company certifying the ratio of Consolidated Funded Debt to Consolidated EBITDA
and setting forth the calculation thereof in detail; provided, however, if any
such financial statement and certificate are not received by the Lender within
the time period required pursuant to Section 6.03(a) or Section 6.03(b), as the
case may be, the LC Margin will be set or reset based on a ratio of Consolidated
Funded Debt to Consolidated EBITDA of greater than 3.50:1:00 and subject to
increase as provided in Section 3.01(c) from the date such financial statement
and certificate were due until the date which is five Business Days following
the receipt by the Lender of such financial statements and certificate, and
provided, further, that the Lender shall not in any way be deemed to have waived
any Default or Event of Default, including without limitation, a Default or
Event of Default resulting from the failure of the Company to comply with
Section 7.13 of this Agreement, or any rights or remedies hereunder or under any
other Loan Document in connection with the foregoing proviso. During the
occurrence and continuance of a Default or Event of Default, no downward
adjustments, and only upward adjustments, shall be made to the
13
LC Margin.
"Lender" shall have the meaning set forth in the preamble hereto.
"Letter of Credit" shall mean any Standby Letter of Credit issued by the
Lender for the account of the Company or any Guarantor pursuant to the terms of
this Agreement or deemed a Letter of Credit hereunder pursuant to Section
2.05(d) of this Agreement .
"Lien" shall mean any lien (statutory or otherwise), security interest,
mortgage, deed of trust, pledge, charge, conditional sale, title retention
agreement, Capital Lease or other encumbrance or similar right of others, or any
agreement to give any of the foregoing.
"Loans" shall mean, collectively, the Revolving Credit Loans and the Term
Loans.
"Loan Documents" shall mean, collectively, this Agreement, the Notes, the
Security Documents, the Guaranties, any Hedging Agreement entered into with the
Lender and each other agreement executed in connection with the transactions
contemplated hereby or thereby, as each of the same may hereafter be amended,
restated, supplemented or otherwise modified from time to time.
"Material Adverse Effect" shall mean a material adverse effect upon (a)
the business, operations, property, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Company or any of its Material Subsidiaries to perform in any
material respect any material obligations under any Loan Document to which it is
a party.
"Material Contract" shall mean each contract, instrument or agreement (a)
to which the Company or any of its Subsidiaries is a party which is material to
the business, operations or condition (financial or otherwise), prospects, or
properties of the Company or of the Company and its Subsidiaries taken as a
whole, or (b) which requires the payment during the term thereof in excess of
$1,000,000.
"Material Subsidiary" shall mean each Subsidiary of the Company which (a)
owns or holds the rights to any trademark, tradename or other intellectual
property used by or useful in the Company's or any Subsidiary's business, or (b)
has during any Relevant Fiscal Period (i) earnings before taxes as determined
from the consolidating statements of such Subsidiary for such Relevant Fiscal
Period in excess of 10% of the consolidated earnings before taxes of the Company
and its Subsidiaries for such Relevant Fiscal Period or (ii) assets as
determined from the consolidating statements of such Subsidiary for any Relevant
Fiscal Period in excess of 10% of the consolidated assets of the Company and its
Subsidiaries for such Relevant Fiscal Period; provided, however, neither ACE,
X.X. Xxxxxx Inc. nor Xxxxxx'x Inc. shall be a Material
14
Subsidiary pursuant to (x) clause (a) as a result of owning or holding the
trademark "Conroys" or (y) clause (b) unless the consolidated assets of
Amalgamated Consolidated Enterprises, Inc. determined from the consolidated
statements of Amalgamated Consolidated Enterprises, Inc. exceeds 35% of the
consolidated assets of the Company and its Subsidiaries for any Relevant Fiscal
Period. Any Subsidiary of the Company which is a Material Subsidiary on the date
hereof or which at any time thereafter becomes a Material Subsidiary shall
continue to be a Material Subsidiary regardless of its financial performance
after the date it becomes a Material Subsidiary.
"Net Proceeds" shall mean the gross proceeds from the sale or placement of
equity securities net of attorneys' fees, accountants' fees, underwriting or
placement agent commissions and other customary and usual fees actually incurred
in connection with such sales.
"Nonconforming Letters of Credit" shall mean letters of credit, if any,
issued by the Lender after the date hereof, at the request of the Company and in
the Lender's sole and absolute discretion which cannot be issued as Letters of
Credit pursuant to this Agreement due to a requirement by the beneficiary of
such letter of credit that the expiry date be a date later than three Business
Days preceding the Revolving Credit Commitment Termination Date.
"Notes" shall mean, collectively, the Revolving Credit Note and the Term
Note.
"Obligations" shall mean all obligations, liabilities and indebtedness of
the Company to the Lender, whether now existing or hereafter created, absolute
or contingent, direct or indirect, due or not, whether created directly or
acquired by assignment or otherwise, arising under or relating to this
Agreement, the Notes or any other Loan Document or any Other Letter of Credit
including, without limitation, all obligations, liabilities and indebtedness of
the Company with respect to the principal of and interest on the Loans,
reimbursement of Letters of Credit and the Other Letters of Credit, obligations
arising under Hedging Agreements with the Lender and all fees, costs, expenses
and indemnity obligations of the Company hereunder, under any other Loan
Document or any Hedging Agreement.
"Option Liability" shall mean the aggregate consideration payable by P&H
and its Affiliates to holders of capital stock of P&H and to holders of options
to purchase shares of capital stock of P&H arising from the obligation or right
to purchase such shares or options, pursuant to the Stock Option Plan, the P&H
Acquisition Agreement and the Stockholders Agreement. The Option Liability shall
be determined on the assumption that all such shareholders and option holders
have exercised the right to sell the shares or options at the Put Price (as that
term is defined in the Stockholders Agreement) pursuant to the Stock Option
Plan, the P&H Acquisition Agreement and/or the Stockholders Agreement, as of the
date of calculation of the Option Liability, regardless if such shareholders or
option holders do not have a right to sell such shares or options on such date.
15
"Other Letters of Credit" shall mean, collectively, the Existing Letters
of Credit and the Nonconforming Letters of Credit.
"P&H" shall mean The Plow & Hearth, Inc., a Virginia corporation.
"P&H Acquisition" shall mean the purchase of at least 80% of the
outstanding capital stock or 70% of the fully diluted capital stock after giving
effect to dilution resulting from the rollover of existing stock options of P&H
and of all of the limited partnership interests of P&H Partnership as
contemplated by, and in accordance with, the P&H Acquisition Agreement.
"P&H Acquisition Agreement" shall mean, collectively, the Stock Purchase
Agreement dated March 9, 1998, by and among the Company, P&H and the
shareholders of P&H identified therein, and the Purchase Agreement dated March
9, 1998, by and among the limited partners of the P&H Partnership, the Company,
P&H Partnership, 1-800-Flowers Acquisition Corp. and Xxxxx X. Xxxx.
"P&H Partnership" shall mean P&H, L.P. a Virginia limited partnership.
"Participant" shall have the meaning set forth in Section 10.05.
"Payment Office" shall mean the Lender's office located at 000 Xxxxx
Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 or such other office as the Lender may
designate from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition by the Company or a
Guarantor of more than 50% of the outstanding capital stock, membership
interest, partnership interest or other similar ownership interest of a Person
organized under the laws of the United States or any state thereof which is
engaged in a line of business similar to the business of the Company or any of
its Subsidiaries or the purchase of all or substantially all of the assets used
by such Person excluding the purchase of a Store from a Franchisee; provided (a)
an Executive Officer of the Company shall have delivered to the Lender a duly
completed and executed Permitted Acquisition Summary with respect to the
proposed acquisition not less than ten (10) Business Days prior to the proposed
Borrowing Date; (b) the Lender shall have received, to the extent not previously
received, a duly executed Pledge Agreement and Guaranty, to the extent required
to be delivered pursuant to Section 6.13 hereof; (c) the Lender shall have been
satisfied that all third party and governmental consents and approvals
(including, without limitation, waivers or approvals under any Material
Contracts), necessary in connection with the consummation of the Permitted
Acquisition, shall have been obtained; (d) the Lender shall receive evidence
satisfactory to it that the shares or other interests in the Person, or the
assets of the Person,
16
which is the subject of the Permitted Acquisition are free and clear of all
Liens, except Permitted Liens, including, without limitation, with respect to
the acquisition of shares or other equity interests, free of any restrictions on
transfer other than restrictions applicable to the sale of securities under the
federal and state securities laws and regulations generally; (e) the Lender
shall have received the documentation governing the proposed acquisition,
including, without limitation, the purchase agreement with respect thereto,
which documentation shall be in form and substance reasonably satisfactory to
the Lender, together with such other additional documentation or information
with respect to the proposed acquisition as the Lender may reasonably require;
(f) no Default or Event of Default shall have occurred and be continuing
immediately prior to or would occur after giving effect to the acquisition; (g)
the acquisition has either (i) been approved by the Board of Directors or other
governing body of the Person which is the subject of the acquisition or (ii)
been recommended for approval by the Board of Directors or other governing body
of such Person to the shareholders or other members of such Person and
subsequently approved by all of the shareholders or all of such members if
shareholder or such member approval is required under applicable law or the
by-laws, certificate of incorporation or other governing instruments of such
Person; (h) the purchase price is paid to the seller(s) in full on the closing
date of the Permitted Acquisition solely from Eligible Offering Proceeds;
provided, however, the Company shall be permitted to acquire the assets of a
Person solely for cash (but not from proceeds of Loans) provided the aggregate
cash consideration paid with respect to all such acquisitions during the term of
this Agreement shall not exceed $1,000,000 and provided such acquisition
complies with the requirements of clauses (a) through (g) and, to the extent the
documents identified therein are available, clauses (i), (j) and (k) of this
definition; (i) the Lender shall have received the financial statements of the
Person which is the subject of the Permitted Acquisition for each of the
immediately prior two fiscal years ended; (j) the Lender shall have received
copies of due diligence reports, if any, prepared by the Company, its
accountants, attorneys or other consultants in connection with the proposed
acquisition, and the Lender shall be satisfied with the results thereof, and (k)
the Lender shall have received pro forma financial statements of the Company and
its consolidated Subsidiaries including the Person who is the subject of the
acquisition prepared as of the last day of the immediately preceding fiscal
quarter and including the consolidating pro forma financial statement at such
date of the Person which is the subject of the acquisition.
"Permitted Acquisition Summary" shall mean the Permitted Acquisition
Summary attached hereto as Exhibit F, as the same may hereafter be amended,
supplemented or otherwise modified from time to time.
"Permitted Liens" shall mean the Liens specified in clauses (a) through
(l) of Section 7.01.
"Person" shall mean any natural person, corporation, limited liability
company, limited liability partnership, business trust, joint venture,
association, company, partnership or
17
Governmental Authority.
"Plan" shall mean any multi-employer or single-employer plan defined in
Section 4001 of ERISA, which covers, or at any time during the five calendar
years preceding the date of this Agreement covered, employees of the Company,
any Subsidiary of the Company or an ERISA Affiliate on account of such
employees' employment by the Company, any Subsidiary of the Company or an ERISA
Affiliate.
"Pledge Agreement" shall mean, with respect to the Company, the Pledge
Agreement, substantially in the form attached hereto as Exhibit C 1, and, with
respect to each Subsidiary, the Pledge Agreement, substantially in the form
attached hereto as Exhibit C 2 to be executed and delivered on the Closing Date
by the Company and each Subsidiary of the Company, respectively, pursuant to
Section 5.01 and, thereafter, by any Subsidiary of the Company who may be
required to execute the same pursuant to Section 6.13, as each of the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time.
"Prime Rate" shall mean the rate per annum announced by the Lender from
time to time as its prime rate in effect at its principal office, each change in
the Prime Rate shall be effective on the date such change is announced to become
effective.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Relevant Fiscal Period" shall mean any period consisting of the four
consecutive fiscal quarters of the Company immediately preceding such date of
calculation.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30 day notice requirement has not
been waived by the PBGC.
"Reserve Adjusted Libor" shall mean with respect to the Interest Period
pertaining to an Adjusted Libor Loan, the rate per annum equal to the product
(rounded upwards to the next higher 1/16 of one percent) of (a) the annual rate
of the interest at which Dollar deposits of an amount comparable to the amount
of such Loan and for a period equal to the Interest Period applicable thereto
are offered to the Lender in immediately available funds in the London interbank
market for eurodollars at approximately 11:00 A.M. (London time) on the second
Business Day prior to the commencement of such Interest Period, multiplied by
(b) the Eurocurrency Reserve Requirement.
"Retail Store" shall mean any Store which is not a Franchise Store.
"Revolving Credit Commitment" shall mean the Lender's obligation to make
Revolving
18
Credit Loans to the Company in an aggregate amount not to exceed $12,000,000, as
such amount may be adjusted in accordance with the terms of this Agreement.
"Revolving Credit Commitment Period" shall mean the period from and
including the Closing Date to, but not including, the Revolving Credit
Commitment Termination Date or such earlier date as the Revolving Credit
Commitment to extend Revolving Credit Loans shall terminate as provided herein.
"Revolving Credit Commitment Termination Date" shall mean September 19,
2000.
"Revolving Credit Loans" shall have the meaning set forth in Section
2.01(a).
"Revolving Credit Notes" shall have the meaning set forth in Section 2.02.
"Security Documents" shall mean the Pledge Agreements and each other
collateral security document delivered to the Lender hereunder.
"Solvent" shall mean with respect to any Person as of the date of
determination thereof that (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required on its debts as such debts become absolute
and matured, (c) such Person will not have as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such Person
will be able to pay its debts as they mature.
"Standby Letter of Credit" shall mean any letter of credit issued to
support an obligation of a Person and which may be drawn on only upon the
failure of such Person to perform such obligation or other contingency.
"Stock Option Plan" shall mean the P&H Non-Qualified Stock Option
Agreement dated as of February 28, 1998 between P&H and the option holders named
therein.
"Stockholders Agreement" shall mean the Stockholders Agreement dated April
3, 1998 by and among P&H, the Company, Xxxxx X. Xxxx and the other individuals
set forth on Schedule A thereto.
"Store" shall mean any store established and operated by the Company, any
of its Subsidiaries or any Franchisee at which flowers and related goods and
products are sold.
19
"Subordinated Debt" or "Subordinated Indebtedness" shall mean all debt
which is subordinated in right of payment to the prior final and indefeasible
payment in full of the obligations of the Company and/or of its Subsidiaries to
the Lender hereunder and under any other Loan Document on terms satisfactory to
and approved in writing by the Lender.
"Subsidiaries" shall mean with respect to any Person any corporation,
association or other business entity more than 50% of the voting stock or other
ownership interests (including, without limitation, membership interests in a
limited liability company) of which is at the time owned or controlled, directly
or indirectly, by such Person or one or more of its Subsidiaries or a
combination thereof.
"Taxes" shall have the meaning set forth in Section 3.10.
"Term Loan" shall have the meaning set forth in Section 2.03.
"Term Loan Commitment" shall mean the Lender's obligation to make the Term
Loan on the Closing Date to the Company in an amount equal to $18,000,000.
"Term Loan Maturity Date" shall mean March 31, 2004.
"Term Note" shall have the meaning set forth in Section 2.04.
"Total Commitment" shall mean, at any time, the aggregate of the
Commitments in effect at such time which, initially, shall be $30,000,000.
"Type" shall mean as to any Loan its status as an Alternate Base Rate Loan
or an Adjusted Libor Loan.
"Unfunded Capital Expenditures" shall mean Capital Expenditures which are
not financed with the proceeds from any Indebtedness.
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by
which the present value of the accrued benefits under the Plan as of the close
of its most recent plan year exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"Unused Fee Rate" shall mean the percentage set forth below opposite the
applicable ratio.
20
Consolidated Funded Debt Unused Fee Rate
to Consolidated EBITDA (360 day basis)
---------------------- ---------------
Less than 2.00:1.00 .375%
Greater than or equal to 2.00:1.00 .50%
Notwithstanding the foregoing, during the period commencing the Closing Date and
ending on the fifth Business Day following the date of the delivery of the
financial statements for the third fiscal quarter ending March 28, 1999, the
Unused Fee Rate shall be .50%. The Unused Fee Rate will be set or reset
quarterly on the date which is five Business Days following the date of receipt
by the Lender of the financial statements referred to in Section 6.03(a) or
Section 6.03(b), as applicable, together with a certificate of the Chief
Financial Officer of the Company certifying the ratio of Consolidated Funded
Debt to Consolidated EBITDA and setting forth the calculation thereof in detail;
provided, however, if any such financial statement and certificate are not
received by the Lender within the time period required pursuant to Section
6.03(a) or Section 6.03(b), as the case may be, the Unused Fee Rate will be set
or reset, based on a ratio of Consolidated Funded Debt to Consolidated EBITDA of
greater than 2.00:1.00 from the date such financial statement and certificate
were due until the date which is five Business Days following the receipt by the
Lender of such financial statements and certificate, and provided, further, that
the Lender shall not in any way be deemed to have waived any Default or Event of
Default, including without limitation, an Event of Default resulting from the
failure of the Company to comply with Section 7.13 of this Agreement, or any
rights or remedies hereunder or under any other Loan Document in connection with
the foregoing proviso. During the occurrence and continuance of a Default or
Event of Default, no downward adjustment, and only upward adjustments, shall be
made to the Unused Fee Rate.
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and the neuter. Except as otherwise herein
specifically provided, each accounting term used herein shall have the meaning
given to it under Generally Accepted Accounting Principles. The term "including"
shall not be limited or exclusive, unless specifically indicated to the
contrary. The word "will" shall be construed to have the same meaning in effect
as the word "shall". The words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole, including the
exhibits and schedules hereto, all of which are by this reference incorporated
into this Agreement.
21
ARTICLE II
LOANS
SECTION 2.01. REVOLVING CREDIT LOANS. (a) Subject to the terms and
conditions, and relying upon the representations and warranties, set forth
herein, the Lender severally agrees to make loans (individually a "Revolving
Credit Loan" and, collectively, the "Revolving Credit Loans") to the Company
from time to time during the Revolving Credit Commitment Period up to but not
exceeding at any one time outstanding the amount of its Revolving Credit
Commitment; PROVIDED, HOWEVER, that no Revolving Credit Loan shall be made if,
after giving effect to such Revolving Credit Loan, the Aggregate Outstandings
would exceed the Revolving Credit Commitment in effect at such time. During the
Revolving Credit Commitment Period, the Company may from time to time borrow,
repay and reborrow hereunder on or after the date hereof and prior to the
Revolving Credit Commitment Termination Date, subject to the terms, provisions
and limitations set forth herein. The Revolving Credit Loans may be (i) Adjusted
Libor Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof.
(b) The Company shall give the Lender irrevocable written notice (or
telephonic notice promptly confirmed in writing) not later than 11:00 a.m., New
York, New York time, three Business Days prior to the date of each proposed
Adjusted Libor Loan under this Section 2.01 or prior to 11:00 a.m. New York, New
York time on the date of each proposed Alternate Base Rate Loan under this
Section 2.01. Such notice shall be irrevocable and shall specify (i) the amount
and Type of the proposed borrowing, (ii) the proposed use of the loan proceeds,
(iii) the initial Interest Period if an Adjusted Libor Loan, and (iv) the
proposed Borrowing Date. Except for borrowings which utilize the full remaining
amount of the Revolving Credit Commitment, each borrowing of an Alternate Base
Rate Loan shall be in an amount not less than $500,000 or, if greater, whole
multiples of $100,000 in excess thereof. Each borrowing of an Adjusted Libor
Loan shall be an amount not less than $500,000 or whole multiples of $100,000 in
excess thereof. Funding of all Loans shall be made in accordance with Section
3.12 of this Agreement.
(c) The Company shall have the right, upon not less than three Business
Days' prior written notice to the Lender to terminate the Revolving Credit
Commitment or from time to time to permanently reduce the amount of the
Revolving Credit Commitment; provided, however, that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans made on the effective date thereof,
the Aggregate Outstandings would exceed the Revolving Credit Commitment as then
reduced; provided, further, that any such termination or reduction requiring
prepayment of any Adjusted Libor Loan shall be made only on the last day of the
Interest Period with respect thereto or on the date of payment in full of all
amounts owing pursuant to Section 3.08 as a result of such termination or
reduction. Any such reduction shall be in the amount of $500,000 or whole
multiples of $100,000 in excess thereof, and shall reduce permanently the amount
of the Revolving Credit
22
Commitment then in effect.
(d) The agreement of the Lender to make Revolving Credit Loans pursuant to
this Section 2.01 shall automatically terminate on the Revolving Credit
Commitment Termination Date. Upon such termination, the Company shall
immediately repay in full the principal amount of the Revolving Credit Loans
then outstanding, together with all accrued interest thereon and all other
amounts due and payable hereunder.
SECTION 2.02. REVOLVING CREDIT NOTE. The Revolving Credit Loans made by
the Lender shall be evidenced by a promissory note of the Company (the
"Revolving Credit Note"), substantially in the form attached hereto as Exhibit
A, appropriately completed, duly executed and delivered on behalf of the Company
and payable to the order of the Lender in a principal amount equal to the
Revolving Credit Commitment of the Lender. The Revolving Credit Note shall (a)
be dated the Closing Date, (b) be stated to mature on the Revolving Credit
Commitment Termination Date, and (c) bear interest from the date thereof until
paid in full on the unpaid principal amount thereof from time to time
outstanding as provided in Section 3.01. The Lender is authorized to record the
date, Type and amount of each Revolving Credit Loan and the date and amount of
each payment or prepayment of principal of each Revolving Credit Loan in the
Lender's records or on the grid schedule annexed to the Revolving Credit Note;
PROVIDED, HOWEVER, that the failure of the Lender to set forth each such
Revolving Credit Loan, payment and other information shall not in any manner
affect the obligation of the Company to repay each Revolving Credit Loan made by
the Lender in accordance with the terms of its Revolving Credit Note and this
Agreement. The Revolving Credit Note, the grid schedule and the books and
records of the Lender shall constitute presumptive evidence of the information
so recorded absent manifest error.
SECTION 2.03. TERM LOANS. (a) Subject to the terms and conditions hereof,
the Lender agrees to make a term loan (the "TERM LOAN") to the Company on the
Closing Date in an amount not to exceed the Term Loan Commitment. The Company
shall give the Lender irrevocable written notice (or telephonic notice promptly
confirmed in writing) not later than 11:00 a.m. New York, New York time three
Business Days prior to the Closing Date specifying (i) the amount to be
borrowed, which shall not exceed the Term Loan Commitment, (ii) the Type or
Types of such Term Loans and the related amounts for each, and (iii) if such
Term Loan is an Adjusted Libor Loan, the initial Interest Period selected for
such Term Loan. The Term Loan may, at the election of the Company, consist of
(i) Adjusted Libor Loans, (ii) Alternate Base Rate Loans or (iii) a combination
thereof. The Term Loan Commitment shall terminate upon funding of the Term Loan
on the Closing Date.
SECTION 2.04. TERM NOTE. The Term Loan made by the Lender shall be
evidenced by a promissory note of the Company, substantially in the form of
Exhibit B, with appropriate insertions (the "TERM NOTE") payable to the order of
the Lender and representing the
23
obligation of the Company to pay the unpaid principal amount of the Term Loan of
the Lender with interest thereon as prescribed in Section 3.01. The Lender is
authorized to record the Type and the date and amount of each payment or
prepayment of principal thereof in the Lender's records or on the grid schedule
annexed to the Term Note; PROVIDED, HOWEVER, that the failure of the Lender to
set forth each payment and other information shall not in any manner affect the
obligation of the Company to repay the Term Loan in accordance with the terms of
the Term Note and this Agreement. The Term Note, the grid schedule and the books
and records of the Lender shall constitute presumptive evidence of the
information so recorded absent manifest error. The Term Note shall (a) be dated
the Closing Date, (b) be stated to mature on the Term Loan Maturity Date and (c)
be payable as to principal in sixteen consecutive quarterly installments of
$1,125,000 commencing June 30, 2000; provided that the final installment on the
Term Loan Maturity Date shall be in an amount equal to the remaining principal
amount outstanding on the Term Loan Maturity Date. Repayments and prepayments of
the Term Loan may not be reborrowed. The Term Note shall bear interest from the
date thereof until paid in full on the unpaid principal amount thereof from time
to time outstanding at the applicable interest rate per annum determined as
provided in, and payable as specified in, Section 3.01.
SECTION 2.05. LETTERS OF CREDIT. (a) GENERALLY. Subject to the terms and
conditions set forth in this Agreement, upon the written request of the Company
in accordance herewith, the Lender shall issue Letters of Credit at any time
during the Revolving Credit Commitment Period. Notwithstanding the foregoing, at
no time shall the sum of Aggregate Letters of Credit Outstanding exceed
$3,000,000, and no Letter of Credit shall be issued if, after giving effect to
the same, the Aggregate Outstandings would exceed the Revolving Credit
Commitment. Each request for issuance of a Letter of Credit shall be in writing
and shall be received by the Lender by no later than 12:00 noon, New York, New
York time, on the day which is at least two Business Days prior to the proposed
date of issuance. Such issuance shall occur by no later than 5:00 p.m. on the
proposed date of issuance (assuming proper prior notice as aforesaid). Subject
to the terms and conditions contained herein, the expiry date, and the amount
and beneficiary of the Letters of Credit will be as designated by the Company.
Each Letter of Credit issued by the Lender hereunder shall identify: (i) the
dates of issuance and expiry of such Letter of Credit, (ii) the amount of such
Letter of Credit (which shall be a sum certain), (iii) the beneficiary of such
Letter of Credit, and (iv) the drafts and other documents necessary to be
presented to the Lender upon drawing thereunder. In no event shall any Letter of
Credit expire after the Business Day which is three Business Days immediately
prior to the Revolving Credit Commitment Termination Date. The Company agrees to
execute and deliver to the Lender such further documents and instruments in
connection with any Letter of Credit issued hereunder (including without
limitation, applications therefor) as the Lender in accordance with its
customary practices may request.
(b) DRAWINGS UNDER LETTERS OF CREDIT. The Company hereby absolutely and
unconditionally promises to pay the Lender not later than 3:00 p.m. (New York,
New York
24
time) the amount of each drawing under a Letter of Credit if the Company
receives notice of such drawing prior to 10:00 a.m., New York, New York time, on
the date of such drawing, or if such notice has not been received by the Company
prior to such time on such date, then not later than 12:00 noon, New York, New
York time, on the Business Day immediately following the day that the Company
receives such notice; provided, however, if any drawing was in an amount not
less than $500,000, the Company may, subject to the conditions to borrowing set
forth herein, request in accordance with Section 2.01 that such payment be
financed with a Revolving Credit Loan which is an Alternate Base Rate Loan in an
equivalent amount, and, to the extent so financed, the Company's obligation to
make such payment shall be discharged and replaced by such an Alternate Base
Rate Loan. Such request shall be made by the Company on the date of receipt of
notice from the Lender of a drawing under a Letter of Credit. Each drawing under
a Letter of Credit which is not paid on the date such drawing is made shall
accrue interest, for each day from and including the date of such drawing to but
excluding the date that the Company reimburses the Lender in full for such
drawing, at the rate per annum then applicable to Revolving Credit Loans which
are Alternate Base Rate Loans; provided, however, that if the Company fails to
reimburse such drawing when due pursuant to this paragraph (b), then the Company
shall pay to the Lender interest on the amount of such drawing at the rate per
annum set forth in Section 3.01(d).
(c) LETTER OF CREDIT OBLIGATIONS ABSOLUTE. (i) The obligation of the
Company to reimburse the Lender as provided hereunder in respect of drawings
under Letters of Credit shall rank PARI PASSU with the obligation of the Company
to repay the Revolving Credit Loans hereunder, and shall be absolute and
unconditional under any and all circumstances. Without limiting the generality
of the foregoing, the obligation of the Company to reimburse the Lender in
respect of drawings under Letters of Credit shall not be subject to any defense
based on the non-application or misapplication by the beneficiary of the
proceeds of any such drawing or the legality, validity, regularity or
enforceability of the Letters of Credit or any related document, even though
such document shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Company, the beneficiary of any Letter of Credit or
any financial institution or other party to which any Letter of Credit may be
transferred. The Lender may accept or pay any draft presented to it under any
Letter of Credit regardless of when drawn or made and whether or not negotiated,
if such draft, accompanying certificate or documents and any transmittal advice
are presented or negotiated on or before the expiry date of such Letter of
Credit or any renewal or extension thereof then in effect, and is in substantial
compliance with the terms and conditions of such Letter of Credit. Furthermore,
neither the Lender nor any of its correspondents shall be responsible, as to any
document presented under a Letter of Credit which appears to be regular on its
face, and appears on its face to be in substantial compliance with the terms of
the Letter of Credit, for the validity or sufficiency of any signature or
endorsement, for delay in giving any notice or failure of any instrument to bear
adequate reference to the Letter of Credit, or for failure of any Person to note
the amount of any draft on the reverse of the Letter of Credit.
25
(ii) Any action, inaction or omission on the part of the Lender or any of
its correspondents under or in connection with any Letter of Credit or the
related instruments, documents or property, if in good faith and in conformity
with such laws, regulations or customs as are applicable, shall be binding upon
the Company and shall not place the Lender or any of its correspondents under
any liability to the Company in the absence of (x) gross negligence or willful
misconduct by the Lender or its correspondents or (y) the failure by the Lender
to pay under a Letter of Credit after presentation of a draft and documents
strictly complying with such Letter of Credit unless the Lender is prohibited
from making such payment pursuant to a court order. The Lender's rights, powers,
privileges and immunities specified in or arising under this Agreement are in
addition to any heretofore or at any time hereafter otherwise created or
arising, whether by statute or rule of law or contract. All Letters of Credit
issued hereunder will, except to the extent otherwise expressly provided
hereunder, be governed by the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce, Publication No. 500,
and any subsequent revisions thereof.
(d) EXISTING LETTERS OF CREDIT. The Company and the Lender agree that from
and after the Closing Date, subject to the satisfaction of the conditions
precedent to the initial Loans hereunder as set forth in Article V, the Existing
Letters of Credit shall be Letters of Credit for all purposes of this Agreement,
including, without limitation, for purposes of Section 3.04(b).
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
SECTION 3.01. INTEREST RATE; CONTINUATION AND CONVERSION OF LOANS.
(a) Each Alternate Base Rate Loan shall bear interest for the period
from the date thereof on the unpaid principal amount thereof at a fluctuating
rate per annum equal to the Alternate Base Rate plus the applicable Interest
Rate Margin.
(b) Each Adjusted Libor Loan shall bear interest for the Interest
Period applicable thereto on the unpaid principal amount thereof at a rate per
annum equal to the Reserve Adjusted Libor determined for each Interest Period
thereof in accordance with the terms hereof plus the applicable Interest Rate
Margin.
(c) Upon the occurrence and during the continuance of an Event of
Default the outstanding principal amount of the Loans (excluding any defaulted
payment of principal
26
accruing interest in accordance with clause (d) below), shall, at the option of
the Lender, bear interest payable on demand at a rate of interest 2% per annum
in excess of the interest rate otherwise then in effect.
(d) If the Company shall default in the payment of the principal of
or interest on any portion of any Loan or any other amount becoming due
hereunder, whether with respect to reimbursement of drawings under Letters of
Credit, interest, fees, expenses or otherwise, the Company shall pay interest on
such defaulted amount accruing from the date of such default (without reference
to any period of grace) up to and including the date of actual payment (after as
well as before judgment) at a rate of 2% per annum in excess of the rate
otherwise in effect or, if no rate is in effect, 2% per annum in excess of the
Alternate Base Rate.
(e) The Company may elect from time to time to convert outstanding
Loans from Adjusted Libor Loans to Alternate Base Rate Loans by giving the
Lender at least three Business Day's prior irrevocable written notice of such
election, provided that any such conversion of Adjusted Libor Loans shall only
be made on the last day of an Interest Period with respect thereto or upon the
date of payment in full of any amounts owing pursuant to Section 3.08 as a
result of such conversion. The Company may elect from time to time to convert
outstanding Loans from Alternate Base Rate Loans to Adjusted Libor Loans by
giving the Lender irrevocable written notice of such election not later than
11:00 a.m. New York, New York time, three Business Days prior to the date of the
proposed conversion. All or any part of outstanding Alternate Base Rate Loans
may be converted as provided herein, provided that each conversion shall be in
the principal amount of $500,000 or whole multiples of $100,000 in excess
thereof, and further provided that no Default or Event of Default shall have
occurred and be continuing. Any conversion to or from Adjusted Libor Loans
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of all
Adjusted Libor Loans having the same Interest Period shall not be less than
$500,000.
(f) Any Adjusted Libor Loan in a minimum principal amount of
$500,000 may be continued as such upon the expiration of an Interest Period with
respect thereto by compliance by the Company with the notice provisions
contained in the definition of Interest Period; provided, that no Adjusted Libor
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, but shall be automatically converted to an Alternate Base
Rate Loan on the last day of the Interest Period in effect when the Lender is
notified, or otherwise has actual knowledge, of such Default or Event of
Default.
(g) If the Company shall fail to select the duration of any Interest
Period for any Adjusted Libor Loan in accordance with the definition of
"Interest Period" set forth in Section 1.01, the Company shall be deemed to have
selected an Interest Period of one month.
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(h) No Loan may be converted to or continued as an Adjusted Libor
Loan with an Interest Period that extends beyond (i) the Revolving Credit
Commitment Termination Date, with respect to Revolving Credit Loans, or (ii) the
Term Loan Maturity Date with respect to the Term Loan.
(i) Anything in this Agreement or in any Note to the contrary
notwithstanding, the obligation of the Company to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be paid to the Lender to the extent that the charging or receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting the rates of interest that may be charged or collected by the Lender.
In each such event payments of interest required to be paid to the Lender shall
be calculated at the highest rate permitted by applicable law until such time as
the rates of interest required hereunder may lawfully be charged and collected
by the Lender. If the provisions of this Agreement or any Note would at any time
otherwise require payment by the Company to the Lender of any amount of interest
in excess of the maximum amount then permitted by applicable law, the interest
payments to the Lender shall be reduced to the extent necessary so that the
Lender shall not receive interest in excess of such maximum amount. To the
extent that, pursuant to the foregoing sentence, the Lender shall receive
interest payments hereunder or under any Note in an amount less than the amount
otherwise provided herein or in any Note, such deficit (hereinafter called the
"Interest Deficit") will accumulate and will be carried forward (without
interest) until the termination of this Agreement. Interest otherwise payable to
the Lender hereunder and under such Note for any subsequent period shall be
increased by such maximum amount of the Interest Deficit that may be so added
without causing the Lender to receive interest in excess of the maximum amount
then permitted by applicable law. The amount of the Interest Deficit relating to
any Note at the time of complete payment of such Note and termination of the
Commitments shall be cancelled and not paid.
(j) Interest on each Loan shall be payable in arrears on each
Interest Payment Date and shall be calculated on the basis year of 360 days and
shall be payable for the actual days elapsed. Any rate of interest on the Loans
or other Obligations which is computed on the basis of the Alternate Base Rate
shall change when and as the Alternate Base Rate changes in accordance with the
definition thereof. Each determination by the Lender of an interest rate or fee
hereunder shall, absent manifest error, be conclusive and binding for all
purposes.
28
SECTION 3.02. USE OF PROCEEDS. The Term Loan shall be used to pay the
Existing Indebtedness in full on the Closing Date. The proceeds of the Revolving
Credit Loans shall be used solely for general corporate purposes, including,
without limitation, (a) the purchase and lease of real property and the
construction of and improvements to the Retail Stores, and (b) the purchase of a
Franchise Store from a Franchisee to the extent such purchase is permitted
pursuant to Section 7.12. Letters of Credit issued by the Lender hereunder shall
be for the account of the Company and shall be issued to support the obligations
of the Company and the Guarantors with respect to equipment and retail store
leases to which they are a party.
SECTION 3.03. PREPAYMENTS.
(a) The Company may on the last day of an Interest Period if the
Loans to be prepaid are Adjusted Libor Loans, or at any time and from time to
time if the Loans to be prepaid are Alternate Base Rate Loans, prepay the then
outstanding Loans, in whole or in part, without premium or penalty, except as
provided in Section 3.08, upon written notice to the Lender (or telephonic
notice promptly confirmed in writing) not later than 11:00 a.m. New York, New
York time, three Business Days before the date of prepayment with respect to
prepayments of Adjusted Libor Loans, or 11:00 a.m. New York, New York time one
Business Day before the date of prepayment with respect to Alternate Base Rate
Loans. Each notice shall be irrevocable and shall specify the date and amount of
prepayment and whether such prepayment is of Adjusted Libor Loans or Alternate
Base Rate Loans or a combination thereof, and if a combination thereof, the
amount of prepayment allocable to each. If such notice is given, the Company
shall make such prepayment, and the amount specified in such notice shall be due
and payable, on the date specified therein. Each partial prepayment pursuant to
this Section 3.03 shall be in a principal amount of $500,000 or whole multiples
of $100,000 in excess thereof.
(b) Each prepayment of principal of a Loan pursuant to this Section
3.03 shall be accompanied by accrued interest to the date prepaid on the amount
prepaid. All partial prepayments of the Term Loan, shall be applied to the
remaining installments of principal thereof in inverse order of maturity.
Prepayments of the Term Loan may not be reborrowed. Unless otherwise directed by
the Company pursuant to Section 3.03(a), partial prepayments of any Loan shall
be applied first to outstanding Alternate Base Rate Loans and then to Adjusted
Libor Loans having the shortest remaining Interest Periods.
SECTION 3.04. FEES.
(a) The Company agrees to pay to the Lender a commitment fee on the
average daily unused portion of the Revolving Credit Commitment from the date of
this Agreement until the Revolving Credit Commitment Termination Date at a rate
per annum equal to the Unused Fee Rate, based on a year of 360 days, payable in
arrears on the last day of
29
March, June, September, and December of each year commencing June 30, 1999, on
the Revolving Credit Commitment Termination Date and on each date the Revolving
Credit Commitment is permanently reduced in whole or in part.
(b) The Company shall pay to the Lender a fee equal to the LC Margin
multiplied by the stated amount of each Letter of Credit at the time of the
issuance thereof and payable on the date of such issuance and each anniversary
thereafter. Such fee shall be calculated on the basis of 360 days for the actual
number of days from the date of issuance of the Letter of Credit or anniversary,
as applicable, to the earlier of the next succeeding anniversary or the date on
which the Letter of Credit expires if there is no drawing thereunder. The
Company shall pay to the Lender the Lender's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder.
(c) The Company agrees to pay to the Lender a nonrefundable
structuring fee of $175,000 which shall be paid in full on the Closing Date.
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE. In the event that the
Lender shall have determined (which determination shall be conclusive and
binding upon the Company) that, by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the Reserve Adjusted Libor applicable pursuant to Section 3.01(b) for any
requested Interest Period with respect to (a) the making of an Adjusted Libor
Loan, (b) an Adjusted Libor Loan that will result from the requested conversion
of an Alternate Base Rate Loan into an Adjusted Libor Loan, or (c) the
continuation of an Adjusted Libor Loan beyond the expiration of the then current
Interest Period with respect thereto, the Lender shall forthwith give notice by
telephone of such determination, promptly confirmed in writing, to the Company
of such determination. Until the Lender notifies the Company that the
circumstances giving rise to the suspension described herein no longer exist,
the Company shall not have the right to request or continue an Adjusted Libor
Loan or to convert an Alternate Base Rate Loan to an Adjusted Libor Loan.
SECTION 3.06. ILLEGALITY. Notwithstanding any other provisions herein, if
any introduction of or change in any law, regulation, treaty or directive or in
the interpretation or application thereof shall make it unlawful for the Lender
to make or maintain Adjusted Libor Loans as contemplated by this Agreement, the
Lender shall forthwith give notice by telephone of such circumstances, promptly
confirmed in writing, and (a) the commitment of the Lender to make and to allow
conversion to or continuations of Adjusted Libor Loans shall forthwith be
cancelled for the duration of such illegality and (b) the Loans then outstanding
as Adjusted Libor Loans, if any, shall be converted automatically to Alternate
Base Rate Loans on the next succeeding last day of each Interest Period
applicable to such Adjusted Libor Loans or within such earlier period as may be
required by law. The Company shall pay to the Lender, upon demand, any
additional amounts required to be paid pursuant to Section 3.08 hereof.
30
SECTION 3.07. INCREASED COSTS. (a) In the event that any introduction of
or change in, on or after the date hereof, any applicable law, regulation,
treaty, order, directive or in the interpretation or application thereof
(including, without limitation, any request, guideline or policy, whether or not
having the force of law, of or from any central bank or other governmental
authority, agency or instrumentality and including, without limitation,
Regulation D), by any authority charged with the administration or
interpretation thereof shall occur, which:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Loan, or any Letter of Credit or change
the basis of taxation of payments to the Lender of principal, interest, fees or
any other amount payable hereunder (other than any tax that is measured with
respect to the overall net income of the Lender or lending office of the Lender
and that is imposed by the United States of America, or any political
subdivision or taxing authority thereof or therein, or by any jurisdiction in
which the Lender's lending office is located, or by any jurisdiction in which
the Lender is organized, has its principal office or is managed and controlled);
or
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement (whether or not having the force
of law) against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of the Lender; or
(iii) shall impose on the Lender any other condition, or change
therein;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or maintaining or participating in advances or extensions of
credit hereunder or to reduce any amount receivable hereunder, in each case by
an amount which the Lender deems material, then, in any such case, the Company
shall pay the Lender, upon demand, such additional amount or amounts as the
Lender shall have determined will compensate the Lender for such increased costs
or reduction.
(b) If the Lender shall have determined that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender (or any
lending office of the Lender) or the Lender's holding company, with any request
or directive regarding capital adequacy (whether or not having the force of the
law) of any such authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on the Lender's capital or on the
capital of the Lender's holding company as a consequence of its obligations
hereunder to a level below that which the Lender could have achieved but for
such adoption, change or compliance (taking into consideration the Lender's
policies and the policies of the Lender's holding company with respect to
capital adequacy) by
31
an amount deemed by the Lender to be material, then from time to time, the
Company shall pay to the Lender, the additional amount or amounts as the Lender
shall have determined will compensate the Lender or the Lender's holding company
for such reduction. The Lender's determination of such amounts shall be
conclusive and binding on the Company absent manifest error.
(c) A certificate of the Lender setting forth the amount or amounts
payable pursuant to Sections 3.07(a) and 3.07(b) above shall be conclusive
absent manifest error. The Company shall pay the Lender the amount shown as due
on any such certificate within 10 days after receipt thereof.
(d) In the event the Lender shall be entitled to compensation
pursuant to Section 3.07(a) or Section 3.07(b), it shall promptly notify the
Company of the event by reason of which it has become so entitled; provided,
however, no failure on the part of the Lender to demand compensation under
clause (a) or clause (b) above on one occasion shall constitute a waiver of its
right to demand compensation on any other occasion.
SECTION 3.08. INDEMNITY. The Company agrees to indemnify the Lender and to
hold the Lender harmless from any loss, cost or expense which the Lender may
sustain or incur, including, without limitation, interest or fees payable by the
Lender to lenders of funds obtained by it in order to maintain Adjusted Libor
Loans hereunder, as a consequence of (a) default by the Company in payment of
the principal amount of or interest on any Adjusted Libor Loan, (b) default by
the Company to accept or make a borrowing of an Adjusted Libor Loan or a
conversion into or continuation of an Adjusted Libor Loan after the Company has
requested such borrowing, conversion or continuation, (c) default by the Company
in making any prepayment of any Adjusted Libor Loan after the Company gives a
notice in accordance with Section 3.03 of this Agreement and/or (d) the making
of any payment or prepayment (whether mandatory or optional) of an Adjusted
Libor Loan or the making of any conversion of an Adjusted Libor Loan to an
Alternate Base Rate Loan on a day which is not the last day of the applicable
Interest Period with respect thereto. A certificate of the Lender setting forth
such amounts shall be conclusive absent manifest error. The Company shall pay
the Lender the amount shown as due on any certificate within ten days after
receipt thereof.
SECTION 3.09. CHANGE OF LENDING OFFICE. The Lender agrees to use
reasonable efforts to designate an alternate lending office with respect to its
Adjusted Libor Loans affected by the events or circumstances described in
Section 3.05, Section 3.06 or Section 3.07 to avoid or minimize the Company's
liability thereunder; provided, however, that such efforts shall not cause the
imposition on the Lender of any additional cost or legal, regulatory or
administrative burdens deemed by the Lender, in its sole discretion, to be
material.
SECTION 3.10. TAXES. Except as set forth in clause (c) below or as
required by
32
law, all payments made by the Company under this Agreement shall be made free
and clear of, and without reduction for or on account of, any present or future
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding income and franchise taxes imposed on the
Lender by (i) the United States of America or any political subdivision or
taxing authority thereof or therein, (ii) the jurisdiction under the laws of
which the Lender is organized or in which it has its principal office or is
managed and controlled or any political subdivision or taxing authority thereof
or therein, or (iii) any jurisdiction in which the Lender's lending office is
located or any political subdivision or taxing authority thereof or therein
(such non-excluded taxes being called "TAXES"). If any Taxes are required to be
withheld from any amounts payable to the Lender hereunder, or under the Notes,
the amount so payable to the Lender shall be increased to the extent necessary
to yield to the Lender (after payment of all Taxes and free and clear of all
liability in respect of such Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes. Whenever any Taxes are payable by the Company, as promptly as possible
thereafter, the Company shall send to the Lender, as the case may be, a
certified copy of an original official receipt showing payment thereof. If the
Company fails to pay Taxes when due to the appropriate taxing authority or fails
to remit to the Lender the required receipts or other required documentary
evidence, the Company shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure together with any expenses payable by the Lender in connection
therewith
SECTION 3.11. PAYMENTS. All payments (including prepayments) to be made by
the Company on account of principal, interest, fees and reimbursement
obligations shall be made without set-off or counterclaim and shall be made to
the Lender, at the Payment Office of the Lender in Dollars in immediately
available funds. The Lender may, in its sole discretion, directly charge
principal and interest payments due in respect of the Loans and reimbursement
obligations with respect to Letters of Credit to the Company's accounts at the
Payment Office or other office of the Lender. Except as otherwise provided in
the definition of "Interest Period", if any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
SECTION 3.12. DISBURSEMENT OF LOANS. The Lender shall make each Loan to be
made by it hereunder available to the Company at the Payment Office by crediting
the account of the Company with such amount and in like funds; provided,
however, that if the proceeds of any Loan or any portion thereof are to be used
to prepay outstanding Loans, then the Lender shall apply such proceeds for such
purpose to extent necessary and credit the balance, if any, to the Company's
account.
33
ARTICLE IV .
REPRESENTATIONS AND WARRANTIES .
In order to induce the Lender to enter into this Agreement and to extend
the credit herein provided for, the Company represents and warrants to the
Lender that:
SECTION 4.01. ORGANIZATION, POWERS. The Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (b) has the corporate power and authority to own its properties and to
carry on its business as now being conducted, (c) is duly qualified to do
business in every jurisdiction wherein the conduct of its business or the
ownership of its properties are such as to require such qualification except
those jurisdictions in which the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect, and (d) has the corporate power
to execute, deliver and perform each of the Loan Documents to which it is a
party, including, without limitation, the power to obtain extensions of credit
hereunder and to execute and deliver the Notes. Each Subsidiary of the Company
is a corporation, limited liability company or partnership (as indicated on
Schedule I hereto) duly organized or formed, as applicable, validly existing
and, except as set forth on Schedule I, in good standing under the laws of the
state of its incorporation or formation, (b) has the corporate, limited
partnership or limited liability company power and authority to own or lease its
properties and to carry on its business as now being conducted, (c) is duly
qualified to do business in every jurisdiction wherein the conduct of its
business or the ownership of its properties are such as to require such
qualification except those jurisdictions in which the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect, and (d) has
the corporate, limited partnership or limited liability company power, as
applicable, to execute, deliver and perform each of the Loan Documents to which
it is a party.
SECTION 4.02. AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by the Company of this Agreement, and the
other Loan Documents to which it is a party, the borrowings and the other
extensions of credit to the Company hereunder, and the execution, delivery and
performance by each of its Subsidiaries of the Loan Documents to which such
Subsidiary is a party, (a) have been duly authorized by all requisite corporate,
limited partnership or limited liability action, (b) will not violate or require
any consent (other than consents as have been made or obtained and which are in
full force and effect) under (i) any provision of law applicable to the Company
or any Subsidiary of the Company, any rule or regulation of any Governmental
Authority, or the Certificate of Incorporation or By-laws of the Company or the
Certificate of Incorporation, By-Laws, or other organizational documents, as
applicable, of any Subsidiary of the Company or (ii) any order of any court or
other Governmental Authority binding on the Company or any Subsidiary of the
Company or any indenture, agreement or other instrument to which the Company or
any Subsidiary of the Company is a party, or by which the Company or any
Subsidiary of the Company or any of its property is bound, and (c) will not be
in conflict with, result in a breach
34
of or constitute (with due notice and/or lapse of time) a default under, any
such indenture, agreement or other instrument, or result in the creation or
imposition of any Lien, of any nature whatsoever upon any of the property or
assets of the Company or any Subsidiary of the Company other than as
contemplated by this Agreement or the other Loan Documents. This Agreement and
each other Loan Document to which the Company or any of its Subsidiaries is a
party constitutes a legal, valid and binding obligation of the Company and each
such Subsidiary of the Company, as the case may be, enforceable against the
Company and each such Subsidiary of the Company, as the case may be, in
accordance with its terms except to the extent that enforcement may be limited
by applicable bankruptcy, reorganization, moratorium, insolvency and similar
laws affecting creditors' rights generally or by equitable principles of general
application, regardless of whether considered in a proceeding in equity or at
law.
SECTION 4.03. FINANCIAL CONDITION. (a) The Company has heretofore
furnished to the Lender (i) the audited consolidated balance sheet of the
Company and its Subsidiaries and the related consolidated statement of income,
retained earnings and cash flow of the Company and its Subsidiaries, audited by
Ernst & Young, independent certified public accountants, for the fiscal year
ended June 28, 1998, and (ii) the unaudited consolidated balance sheet of the
Company and its Subsidiaries and the related consolidated statements of income,
retained earnings and cash flow of the Company and its Subsidiaries for the six
month period ended December 27, 1998. Such financial statements were prepared in
conformity with Generally Accepted Accounting Principles, applied on a
consistent basis, and fairly present the consolidated financial condition and
consolidated results of operations of the Company and its Subsidiaries as of the
date of such financial statements and for the periods to which they relate and,
except as set forth on Schedule V, since June 28, 1998, no Material Adverse
Effect has occurred. The Company shall deliver to the Lender, with a copy for
the Lender a certificate of the Chief Financial Officer of the Company to that
effect on the Closing Date. Other than obligations and liabilities arising in
the ordinary course of business since June 28, 1998, there are no material
obligations or liabilities contingent or otherwise, of the Company or any of its
Subsidiaries which are not reflected or disclosed on such audited statements
other than obligations of the Company and its Subsidiaries incurred in the
ordinary course of business (which shall be deemed to exclude acquisitions by
the Company or any Subsidiary of the Company of the business or assets
(including, without limitation stock) of any Person).
(b) The Company, individually and together with the Guarantors, is
Solvent and immediately after giving effect to each Loan and each other
extension of credit contemplated by this Agreement and the execution of each
Loan Document, will be Solvent.
SECTION 4.04. TAXES. All assessed deficiencies resulting from Internal
Revenue Service examinations of the federal income tax returns of the Company or
any of its Subsidiaries have been discharged or reserved against in accordance
with Generally Accepted Accounting Principles. The Company and each of its
Subsidiaries has filed or caused to be filed all federal,
35
state and local tax returns which are required to be filed, and has paid or has
caused to be paid all taxes as shown on said returns or on any assessment
received by them, to the extent that such taxes have become due, except taxes
which are being contested in good faith and which are reserved against in
accordance with Generally Accepted Accounting Principles.
SECTION 4.05. TITLE TO PROPERTIES. The Company and each of its
Subsidiaries has good title to their respective properties and assets reflected
on the financial statements referred to in Section 4.03 hereof, except for such
properties and assets as have been disposed of since the date of such financial
statements as no longer used or useful in the conduct of their respective
businesses or as have been disposed of in the ordinary course of business
including the sale of stores, and all such properties and assets are free and
clear of all Liens other than Permitted Liens.
SECTION 4.06. LITIGATION. (a) Except as set forth on Schedule VII, there
are no actions, suits or proceedings (whether or not purportedly on behalf of
the Company or any of its Subsidiaries) pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
at law or in equity or before or by any Governmental Authority, which involve
any of the transactions contemplated herein or which, if adversely determined
against the Company or such Subsidiary, could reasonably be expected to result
in a Material Adverse Effect; and (b) neither the Company nor any of its
Subsidiaries is in default with respect to any judgment, writ, injunction,
decree, rule or regulation of any Governmental Authority which could reasonably
be expected to result in a Material Adverse Effect.
SECTION 4.07. AGREEMENTS. Neither the Company nor any of its Subsidiaries
is a party to any agreement or instrument or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree or
regulation which could reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. COMPLIANCE WITH ERISA. Each Plan is in compliance in all
material respects with ERISA; to the knowledge of the Company no Plan which is a
"Multi-Employer Plan (as defined in Section 4001(a)(3) of ERISA) is insolvent
(as defined in Section 4245 of ERISA) or in reorganization (as defined in
Section 4241 of ERISA), no Plan or Plans which are single employer Plans (within
the meaning of Section 4001(a)(15) of ERISA) have an Unfunded Current Liability
in excess of $100,000 in the aggregate, and no Plan which is a single employer
Plan (within the meaning of Section 4001(a)(15) of ERISA) has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code; neither
the Company nor any ERISA Affiliate has incurred any material liability to or on
account of a Plan pursuant to Section 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA or reasonably expects to
36
incur any liability under any of the foregoing sections on account of the prior
termination of participation in or contributions to any such Plan; to the
knowledge of the Company no proceedings have been instituted to terminate any
Plan; to the knowledge of the Company no condition exists which could reasonably
be expected to present a risk to the Company or any ERISA Affiliate of incurring
a liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code in excess of $250,000 in the aggregate; and no lien imposed
under the Code or ERISA on the assets of the Company or any of its ERISA
Affiliates exists or to the knowledge of the Company is likely to arise on
account of any Plan.
SECTION 4.09. FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS. (a) Neither
the Company nor any of its Subsidiaries is engaged principally in, nor has as
one of its important activities, the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States, as amended from time to time).
(b) No part of the proceeds of any Loan and no other extension of credit
hereunder will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or to carry margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock,
or to refund indebtedness originally incurred for such purposes, or (ii) for any
purpose which violates or is inconsistent with the provisions of Regulation T,U,
or X of the Board of Governors of the Federal Reserve System.
(c) The proceeds of each Loan, and each other extension of credit
hereunder shall be used solely for the purposes permitted under Section 3.02.
SECTION 4.10. APPROVALS. No registration with or consent or approval of,
or other action by, any Governmental Authority or any other Person is required
in connection with the execution, delivery and performance of this Agreement by
the Company or any of its Subsidiaries, or with the execution and delivery of
other Loan Documents to which it is a party or, with respect to the Company, the
borrowings and each other extension of credit hereunder other than
registrations, consents and approvals received prior to the date hereof and
disclosed to the Lender and which are in full force and effect.
SECTION 4.11. SUBSIDIARIES. Attached hereto as Schedule I is a correct and
complete list of each of the Company's Subsidiaries as of the Closing Date
showing as to each Subsidiary, its name, the jurisdiction of its incorporation,
its shareholders or other owners of an interest in each Subsidiary and the
number of outstanding shares or other ownership interest owned by each
shareholder or other owner of an interest. Other than P&H, 800 Flowers, Inc.,
1-800-Flowers Retail, Inc., Fresh Intellectual Properties, Inc. and
800-Gifthouse, Inc., no Subsidiary of the Company as of the date hereof is a
Material Subsidiary (as that term is defined herein).
37
SECTION 4.12. HAZARDOUS MATERIALS. Except as may be relevant with respect
to the matters set forth on Schedule VIII, the Company and each of its
Subsidiaries are in compliance in all material respects with all applicable
Environmental Laws and neither the Company nor any of its Subsidiaries has used
Hazardous Materials on, from, or affecting any property now owned or occupied or
hereafter owned or occupied by the Company or any of its Subsidiaries in any
manner which violates any applicable Environmental Law. Except as may be
relevant with respect to the matters set forth on Schedule VIII, to the best
actual knowledge of any officer of the Company, no prior owner of any such
property or any tenant, subtenant, prior tenant or prior subtenant have used
Hazardous Materials on, from, or affecting such property in any manner which
violates any applicable Environmental Law.
SECTION 4.13. INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.14. PLEDGE AGREEMENTS. Each Pledge Agreement executed by the
Company and each Subsidiary of the Company, as applicable, shall, pursuant to
its terms, constitute a valid and continuing lien on and security interest in
the collateral referred to in such Pledge Agreement in favor of the Lender,
which shall be prior to all other Liens, claims and rights of all other Persons
in such collateral.
SECTION 4.15. NO DEFAULT. No Default or Event of Default has occurred and
is continuing.
SECTION 4.16. MATERIAL CONTRACTS. As of the Closing Date, all Material
Contracts are disclosed on Schedule IX hereto. Each such Material Contract is in
full force and effect and is binding upon and enforceable against the Company
and its Subsidiaries, in each case, to the extent they are a party thereto, and,
to the Company's knowledge, all other parties thereto in accordance with its
terms, except, in each case, to the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and subject to general principles of
equity regardless of whether considered in a proceeding in equity or at law and
(a) there exists no default, in any material respect, under any Material
Contract (as defined in clause (a) of the definition thereof) by the Company or
any Subsidiary of the Company or, to the Company's knowledge, by any other party
thereto which has not been fully cured or waived, and (b) there exists no
default under any Material Contract (as defined in clause (b) of the definition
thereof) by the Company or any Subsidiary of the Company, or to the Company's
knowledge by any other party thereto which has not been fully cured or waived,
in each case other than a default which could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.
SECTION 4.17. PERMITS AND LICENSES. The Company and each of its
Subsidiaries
38
each has all permits, licenses, certifications, authorizations and
approvals required for it lawfully to own and operate their respective
businesses except those the failure of which to have could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.18. COMPLIANCE WITH LAW. The Company and each of its
Subsidiaries are each in compliance, with all laws, rules, regulations, orders
and decrees which are applicable to the Company or any of its Subsidiaries, or
to any of their respective properties, which the failure to comply with could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.19. Y2K. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the Company's or any of its
Subsidiaries' computer systems and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which the Company's
or any of its Subsidiaries' systems interface to the extent the failure to
perform such reprogramming could reasonably be expected to have a Material
Adverse Effect), and the testing of all such systems and equipment, as so
reprogrammed, will be completed by June 30, 1999. The cost to the Company and
each of its Subsidiaries of such reprogramming and testing and of the reasonably
foreseeable consequences of the year 2000 to the Company and each of its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or Event
of Default or have a Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and each of its
Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue to be sufficient to permit the Company and each of its Subsidiaries to
conduct their respective businesses without having a Material Adverse Effect.
SECTION 4.20. REPURCHASE OBLIGATIONS. Neither the Company nor any of its
Subsidiaries is obligated to repurchase prior to the Term Loan Maturity Date any
of its shares of capital stock or any option to purchase shares of its capital
stock from any holder thereof other than the obligations referred to in the
definition of Option Liability, and the aggregate consideration required to be
paid in connection with the Option Liability is approximately $6,887,122, as of
September 27, 1998, subject to adjustment as provided in the Stockholders
Agreement.
SECTION 4.21. FISCAL YEAR END. The last day of the Company's fiscal years
ending 1999, 2000, 2001 and 2002 is June 27, July 2, July 1, and June 30,
respectively.
SECTION 4.22. DISCLOSURE. Neither this Agreement, any other Loan Document,
nor any other document, certificate or written statement furnished to the Lender
by or on behalf of the Company or any of its Subsidiaries for use in connection
with the transactions
39
contemplated by this Agreement contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which they were made.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The obligation of
the Lender to make its initial Loan hereunder, and the obligation of the Lender
to issue the initial Letter of Credit, are subject to the following conditions
precedent:
(a) NOTES. On or prior to the Closing Date, the Lender shall have received
a Revolving Credit Note and the Term Note, each duly executed by the Company.
(b) GUARANTIES. On or prior to the Closing Date, the Lender shall have
received a Guaranty duly executed by each Subsidiary of the Company other than
P&H Partnership, Gerber Gardens/1-800 Flowers LLC and Xxxxxx de Excito, Inc.
(c) PLEDGE AGREEMENTS. On or prior to the Closing Date, the Lender shall
have received the Pledge Agreements duly executed by the Company and each
Subsidiary of the Company, as applicable, with respect to the outstanding
capital stock of each Material Subsidiary owned by the Company and/or its
Subsidiaries, together with the stock certificates evidencing the shares pledged
thereunder and stock powers duly executed in blank by the Company or Subsidiary
of the Company, as appropriate.
(d) OPINIONS OF COUNSEL. On or prior to the Closing Date, the Lender shall
have received a written opinion of counsel for the Company and the Corporate
Guarantors dated the Closing Date and addressed to the Lender, substantially in
the form of Exhibit E attached hereto.
(e) SUPPORTING DOCUMENTS. On or prior to the Closing Date, the Lender
shall have received (i) a certificate of good standing for the Company and each
of its Subsidiaries from the secretary of state of the states of their
organizational jurisdiction dated as of a recent date; (ii) certified copies of
the Certificate of Incorporation and By-laws of the Company and the Certificate
of Incorporation and By-Laws or other organizational documents, as applicable of
each of its Subsidiaries; (iii) a certificate of the Secretary or an Assistant
Secretary of the Company and each of its Subsidiaries dated the Closing Date and
certifying: (x) that neither the Certificates of Incorporation nor the By-laws
of the Company nor of any Subsidiary of the Company has been amended since the
date of their certification (or if there has been any such amendment, attaching
a certified copy thereof); (y) that attached thereto is a true and complete
40
copy of resolutions adopted by the Board of Directors of the Company and by the
board of directors or other governing body or Persons of each of its
Subsidiaries authorizing the execution, delivery and performance of each Loan
Document to which it is a party and, with respect to the Company, the borrowings
and other extensions of credit hereunder; and (z) the incumbency and specimen
signature of each officer of the Company and of each officer or other authorized
Person of each of its Subsidiaries executing each Loan Document to which the
Company or any Subsidiary of the Company is a party and any certificates or
instruments furnished pursuant hereto or thereto, and a certification by another
officer of the Company and each of its Subsidiaries as to the incumbency and
signature of the Secretary or Assistant Secretary of the Company and each of its
Subsidiaries; and (iv) such other documents as the Lender may reasonably
request. For purposes of this subsection (e), the term "Subsidiary" shall not
include P&H Partnership, Gerber Gardens/1-800-Flowers, LLC or Xxxxxx de Excito,
Inc.
(f) INSURANCE. On or prior to the Closing Date, the Lender shall have
received a certificate or certificates of insurance from an independent
insurance broker or brokers confirming the insurance required to be maintained
pursuant to Section 6.01 hereof.
(g) ASSETS FREE FROM LIENS. Prior to the Closing Date, the Lender shall
have received UCC-1 financing statement, tax and judgment lien searches
evidencing that the Company's and each of its Subsidiaries' accounts receivable,
inventory, equipment and all other assets of the Company and each of its
Subsidiaries are free and clear of all Liens except (i) Permitted Liens and (ii)
liens to be satisfied on the Closing Date pursuant to the terms hereof.
(h) FEES AND EXPENSES. On or prior to the Closing Date, The Chase
Manhattan Bank shall have received the fees payable on the Closing Date pursuant
to Section 3.04(c) and reimbursement of expenses in accordance with Section
9.03(b).
(i) NO LITIGATION. There shall exist no action, suit, investigation,
litigation or proceeding affecting the Company or any of its Subsidiaries
pending or, to the knowledge of the Company, threatened before any court,
governmental agency or arbiter that could reasonably be expected to be adversely
determined against the Company or such Subsidiary and, if so adversely
determined, could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(j) CONSENTS AND APPROVALS. All governmental and third party consents and
approvals necessary in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained (without the
imposition of any conditions that are not acceptable to the Lender) and shall
remain in effect, and no law or regulation shall be applicable in the reasonable
judgment of the Lender that imposes materially adverse conditions upon the
transactions contemplated hereby.
41
(k) NO MATERIAL ADVERSE CHANGES. Except as set forth on Schedule V, there
shall not have occurred any material adverse change in the business, operations,
properties, prospects or condition (financial or otherwise) of the Company or
the Company and its Subsidiaries, taken as a whole, since June 28, 1998.
(l) EXISTING INDEBTEDNESS. The Lender shall have received concurrently
with the extension of the initial Loan evidence that the Existing Indebtedness
has been paid in full and on such date the credit agreement governing such
indebtedness shall be terminated.
(m) PROJECTIONS. The Lender shall have received projections of the Company
and its Subsidiaries for each fiscal quarter during the period commencing with
the fiscal quarter ended December 27, 1998 and ending on, but including, the
fiscal quarter ending July 2, 2000, and for the fiscal year ending 2001 and
2002, together with calculations demonstrating compliance with each of the
financial covenants set forth in Section 7.13 for each such fiscal quarter and
year end.
(n) FINANCIAL STATEMENTS. The Lender shall have received the consolidated
financial statements of the Company and its Subsidiaries for the second fiscal
quarter ended December 27, 1998, which statements shall be in form and substance
satisfactory to the Lender.
(o) OTHER INFORMATION, DOCUMENTATION. The Lender shall have received such
other and further information and documentation as it may reasonably require,
including, but not limited to, any information or documentation relating to
compliance by the Company and each of its Subsidiaries with the requirements of
all Environmental Laws.
(p) COMPLETION OF PROCEEDINGS. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection with the
transactions contemplated by the Loan Documents, shall be reasonably
satisfactory in form and substance to the Lender, and its counsel.
SECTION 5.02. CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender to make each Loan hereunder and the obligation of the Lender to
issue, amend, renew or extend any Letter of Credit, including, without
limitation, the initial Loan and initial Letter of Credit, are subject to the
conditions precedent set forth in Section 5.01 and the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties by
the Company and each of its Subsidiaries pursuant to this Agreement and the
other Loan Documents to which each is a party shall be true and correct in all
material respects on and as of the Borrowing Date or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, with
the same effect as though such representations and warranties had
42
been made on and as of such date unless such representation is as of a specific
date, in which case, as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred and be
continuing on the Borrowing Date or on the date of issuance, amendment, renewal
or extension of a Letter of Credit or will result after giving effect to the
Loan requested or the requested issuance, amendment, renewal or extension of a
Letter of Credit.
(c) AVAILABILITY. After giving effect to any requested Revolving Credit
Loan or Letter of Credit, the Aggregate Outstandings shall not exceed the
Revolving Credit Commitment then in effect. After giving effect to any issuance,
amendment, renewal or extension of any Letter of Credit, the Aggregate Letters
of Credit Outstanding shall not exceed $3,000,000.
(d) ADDITIONAL DOCUMENTATION. With respect to the issuance, amendment,
renewal or extension of any Letter of Credit, the Lender shall have received the
documents and instruments requested by the Lender in accordance with the last
sentence of Section 2.05(a).
Each borrowing hereunder and each issuance, amendment, renewal or extension of a
Letter of Credit shall constitute a representation and warranty of the Company
that the statements contained in clauses (a), (b), and (c) of Section 5.02 are
true and correct on and as of the Borrowing Date or as of the date of issuance,
amendment, renewal or extension of a Letter of Credit, as applicable, as though
such representation and warranty had been made on and as of such date.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees with the Lender that so long as the
Commitments remain in effect, or any of the principal of or interest on the
Notes or any other Obligations hereunder shall be unpaid it will, and will cause
each of its Subsidiaries to:
SECTION 6.01. EXISTENCE, PROPERTIES, INSURANCE. Do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate,
partnership or limited liability company, as applicable, existence, rights and
franchises and comply in all material respects with all laws applicable to it
(provided the Company, in its discretion, may dissolve Gerber Gardens/1-800
Flowers LLC, Xxxxxx de Excito and Floral Works, Inc. provided such entity was
not a Material Subsidiary at any time during the period commencing the Closing
Date and ending on the proposed date of dissolution); at all times maintain,
preserve and protect all franchises and trade names and preserve all of its
property, in each case, material to its business
43
and keep the same in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
replacements, betterments and improvements thereto so that the business carried
on in connection therewith may be properly and advantageously conducted in the
ordinary course at all times; and at all times maintain insurance covering its
assets and its businesses with financially sound and reputable insurance
companies or associations in such amounts and against such risks (including,
without limitation, hazard, business interruption, public liability and product
liability) as are usually carried by companies engaged in the same or similar
business. Each such policy of insurance shall provide for at least thirty (30)
days' prior written notice to the Lender of any modification or cancellation of
such policies. The Company shall provide to the Lender promptly upon receipt
thereof evidence of the annual renewal of each such policy.
SECTION 6.02. PAYMENT OF INDEBTEDNESS AND TAXES. (a) Pay all indebtedness
and obligations, now existing or hereafter arising, as and when due and payable
except where (i) the validity or amount thereof is being contested in good faith
and by appropriate proceedings, which proceedings shall include good faith
negotiations, (ii) the Company or its Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with Generally Accepted
Accounting Principles, and (iii) the failure to make such payment pending such
contest could not reasonably be expected to have a Material Adverse Effect, and
(b) pay and discharge or cause to be paid and discharged promptly all taxes,
assessments and government charges or levies imposed upon it or upon its income
and profits, or upon any of its property, real, personal or mixed, or upon any
part thereof, before the same shall become in default, as well as all lawful
claims for labor, materials and supplies or otherwise which, if unpaid, might
become a lien or charge upon such properties or any part thereof; PROVIDED,
HOWEVER, that neither the Company nor any Subsidiary of the Company shall be
required to pay and discharge or cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings, and the Company or such
Subsidiary, as the case may be, shall have set aside on its books adequate
reserves determined in accordance with Generally Accepted Accounting Principles
with respect to any such tax, assessment, charge, levy or claim so contested;
FURTHER, PROVIDED that, subject to the foregoing proviso, the Company and each
of its Subsidiaries will pay or cause to be paid all such taxes, assessments,
charges, levies or claims upon the commencement of proceedings to foreclose any
lien which has attached as security therefor.
SECTION 6.03. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the Lender:
(a) (i) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as of the
end of such year and the related audited consolidated statements of
income, shareholders equity and cash flow for such year, setting forth in
each case in comparative form the respective figures as of the end of and
44
for the previous fiscal year, and accompanied by a report thereon of Ernst
& Young or other independent certified public accountants of recognized
standing selected by the Company and satisfactory to the Lender (the
"Auditor"), which report shall be unqualified; and (ii) as soon as
available, but in any event within 90 days after the end of each fiscal
year of the Company and each of its Subsidiaries, a copy of the management
prepared consolidating financial statements of the Company, and its
Subsidiaries setting forth in comparative form the respective figures as
of the end of and for the previous fiscal year and which support the
financial statements delivered pursuant to clause (i), in each case of (i)
and (ii) prepared in accordance with Generally Accepted Accounting
Principles, applied on a consistent basis, and with respect to the
statements referred to in clause (ii) accompanied by a certificate to that
effect executed by the Chief Financial Officer;
(b) as soon as available, but in any event not later than 60 days
after the end of each quarterly period of each fiscal year of the Company,
a copy of the unaudited interim consolidated and consolidating balance
sheet of the Company and its Subsidiaries as of the end of each such
quarter and the related unaudited interim consolidated and consolidating
statements of income, shareholders equity and cash flow for such quarter
and the portion of the fiscal year through such date and setting forth in
each case in comparative form the respective figures for the corresponding
date and period in the previous fiscal year, in each case prepared by the
Chief Financial Officer in accordance with Generally Accepted Accounting
Principles, applied on a consistent basis, and accompanied by a
certificate to that effect executed by the Chief Financial Officer;
(c) a certificate prepared and signed by the Auditor with each
delivery required by clause (a) and a certificate prepared and signed by
the Chief Financial Officer with each delivery required by (a) and (b), as
to whether or not, as of the close of such preceding period and at all
times during such preceding period, the Company or each of its
Subsidiaries, as the case may be, was in compliance with all the
provisions in this Agreement, showing computation of financial covenants
and quantitative negative covenants, and if the Auditor or Chief Financial
Officer, as the case may be, shall have obtained knowledge of any default
in such compliance or notice of such default, it shall disclose in such
certificate such default or defaults or notice thereof and the nature
thereof, whether or not the same shall constitute a Default or an Event of
Default hereunder;
(d) at all times indicated in clause (a) above (i) a copy of the
management letter, if any, prepared by the Auditor, and (ii) a copy of an
organizational chart of the Company and its Subsidiaries (including
ownership and jurisdiction of incorporation);
(e) at all times indicated in clauses (a) and (b) above, a statement
of the Chief
45
Financial Officer certifying the principal amount of all Indebtedness
secured by purchase money liens incurred by the Company and its
Subsidiaries during the applicable fiscal year or fiscal quarter;
(f) if applicable, promptly after filing thereof, copies of all
regular and periodic financial information, proxy materials and other
information and reports which the Company or any of its Subsidiaries shall
file with the Securities and Exchange Commission;
(g) promptly after submission to any government or regulatory
agency, all documents and information furnished to such government or
regulatory agency other than such documents and information prepared in
the normal course of business and which could not reasonably be expected
to result in any materially adverse action to be taken by such agency;
(h) promptly after filing thereof, a copy of (i) a certificate of
amendment pursuant to which the name of any Subsidiary of the Company is
changed and (ii) a certificate of merger or consolidation with respect to
any merger or consolidation permitted pursuant to Section 7.12; and
(i) promptly, from time to time, such other information regarding
the operations, business affairs and condition (financial or otherwise) of
the Company or any of its Subsidiaries as the Lender may reasonably
request.
SECTION 6.04. BOOKS AND RECORDS; ACCESS TO PREMISES. Keep adequate records
and proper books of record and account in which complete entries will be made in
a manner to enable the preparation of financial statements in accordance with
Generally Accepted Accounting Principles, and which shall reflect all financial
transactions of the Company and each of its Subsidiaries. At any time, and from
time to time (and provided that no Default or Event of Default has occurred and
is continuing, upon reasonable prior notice) permit the Lender or any agents or
representatives thereof, to examine and make copies of and abstracts from the
books and records of such information which the Lender deems is necessary or
desirable (including, without limitation, the financial records of the Company
and its Subsidiaries) and to visit the properties of the Company or any of its
Subsidiaries and to discuss the affairs, finances and accounts of the Company or
any of its Subsidiaries with any of their respective executive officers or the
Company's independent accountants.
SECTION 6.05. NOTICE OF ADVERSE CHANGE. Promptly notify the Lender in
writing of (a) any change in the business or the operations of the Company or
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect, and (b) any information which indicates that any financial statements
which are the subject of any representation contained in
46
this Agreement, or which are furnished to the Lender pursuant to this Agreement,
fail, in any material respect, to present fairly, as of the date thereof and for
the period covered thereby, the financial condition and results of operations
purported to be presented therein, disclosing the nature thereof.
SECTION 6.06. NOTICE OF DEFAULT. Promptly notify the Lender of any Default
or Event of Default which shall have occurred, which notice shall include a
written statement as to such occurrence, specifying the nature thereof and the
action (if any) which is proposed to be taken with respect thereto.
SECTION 6.07. NOTICE OF LITIGATION. Promptly notify the Lender of any
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency which, if adversely determined against the
Company or any Subsidiary of the Company on the basis of the allegations and
information set forth in the complaint or other notice of such action, suit or
proceeding, or in the amendments thereof, if any, could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.08. NOTICE OF DEFAULT IN OTHER AGREEMENTS. Promptly notify the
Lender of any default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which the Company or any Subsidiary of the Company is a party
which default could reasonably be expected to have a Material Adverse Effect.
SECTION 6.09. NOTICE OF ERISA EVENT. Promptly deliver to the Lender a
certificate of the Chief Financial Officer of the Company setting forth details
as to such occurrence and such action, if any, which the Company, such
Subsidiary of the Company or such ERISA Affiliate is required or proposes to
take, together with any notices required or proposed to be given to or filed
with or by the Company, such Subsidiary of the Company, ERISA Affiliate, the
PBGC, a Plan participant or the Plan administrator, with respect thereto: that a
Reportable Event has occurred with respect to a Plan, that an accumulated
funding deficiency (as defined in Section 412 of the Code) has been incurred or
an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan that is a single employer plan (within
the meaning of Section 4001(a)(15) of ERISA), that a Plan has been terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA, that one
or more Plans that are Single Employer Plans (within the meaning of Section
4001(a)(15) of ERISA) have an Unfunded Current Liability in excess of $100,000
in the aggregate, that proceedings may be or have been instituted to terminate a
Plan, that a proceeding has been instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan, or that the Company, any Subsidiary
of the Company or any ERISA Affiliate will incur any liability
47
(including any contingent or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4201 or
4204 of ERISA. Upon request of the Lender, the Company will deliver to the
Lender a complete copy of the annual report (Form 5500) of each Plan that is a
single employer Plan (within the meaning of Section 4001(a)(15) of ERISA), filed
with the Internal Revenue Service. In addition to any certificates or notices
delivered to the Lender pursuant to the first sentence hereof, copies of annual
reports and any other notices received by the Company or any Subsidiary of the
Company required to be delivered to the Lender hereunder shall be delivered to
the Lender no later than ten days after the later of the date such report or
notice has been filed with the Internal Revenue Service or the PBGC, given to
Plan participants or received by the Company or a Subsidiary of the Company.
SECTION 6.10. NOTICE OF ENVIRONMENTAL LAW VIOLATIONS. Promptly notify the
Lender of the receipt of any notice of an action, suit, and proceeding before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending against the Company or any
Subsidiary of the Company relating to any alleged violation of any Environmental
Law which could reasonably be expected to have a Material Adverse Effect.
SECTION 6.11. NOTICE REGARDING MATERIAL CONTRACTS. Promptly notify the
Lender of (a) any termination (prior to the end of its stated term), material
amendment, material supplement or other material modification of any Material
Contract and (b) the occurrence of a default in any material respect by any
party to any Material Contract of which the Company is aware.
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAWS. Comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, the breach of which could reasonably be expected to have
a Material Adverse Effect, including, without limitation, the rules and
regulations of the Board of Governors of the Federal Reserve System and the
Federal Deposit Insurance Corporation.
SECTION 6.13. SUBSIDIARIES. Give the Lender prompt written notice of the
creation, establishment or acquisition, in any manner, of any Subsidiary of the
Company not existing on the Closing Date. The Company or its Subsidiary, as
appropriate, shall execute a Pledge Agreement with respect to all of the shares
of capital stock or other ownership interest of each Subsidiary which is or
becomes a Material Subsidiary, (together with certificates and powers with
respect to such interests duly endorsed in blank, and in the event of
uncertificated interests, UCC-1 financing statements identifying such interest
and executed by the holder of such interest or such other documentation as
reasonably requested by the Lender in order to grant and perfect a security
interest in such ownership interest) and shall cause each Subsidiary (excluding
Gerber Gardens/1-800 Flowers LLC, Xxxxxx de Excito, Inc. and P&H Partnership)
48
to execute a Guaranty in favor of the Lender concurrently with the creation,
establishment or acquisition of such Subsidiary and in connection therewith
shall provide to the Lender the supporting documents identified in clauses (i),
(ii), and (iii) of Section 5.01(e) in each case with respect to such Subsidiary;
together with a favorable written opinion of counsel to such Subsidiary
addressed to the Lender, in the form attached hereto as Exhibit E with respect
to such Subsidiary and with respect to the documents required to be executed by
such Subsidiary pursuant to this Section 6.13 but, excluding the matters in
paragraph 7 of Exhibit E.
SECTION 6.14. ENVIRONMENTAL LAWS.
Comply in all material respects with the requirements of all Environmental
Laws, provide to the Lender all documentation in connection with such compliance
that the Lender may reasonably request, and defend, indemnify, and hold harmless
the Lender and its respective employees, agents, officers, and directors, from
and against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs, or expenses of whatever kind or nature, known or unknown,
contingent or otherwise, arising out of, or in any way related to, (a) the
presence, disposal, or release of any Hazardous Materials on any property at any
time owned or occupied by the Company or any Subsidiary of the Company; (b) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such Hazardous Materials; (c) any lawsuit brought
or threatened, settlement reached, or government order relating to such
Hazardous Materials, and/or (d) any violation of applicable Environmental Laws,
including, without limitation, reasonable attorney and consultant fees,
investigation and laboratory fees, court costs, and litigation expenses.
ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees with the Lender that so long as the
Commitments remain in effect or any of the principal of or interest on any Note
or any other Obligations hereunder shall be unpaid, it will not, and will not
cause or permit any Subsidiary of the Company, directly or indirectly, to:
SECTION 7.01. LIENS. Incur, create, assume or suffer to exist any Lien on
any of their respective assets now or hereafter owned, other than:
(a) Liens existing on the date hereof (which are not described in
Sections 7.01(b) through 7.01(l)) as set forth on Schedule II attached hereto
including any renewals or extensions thereof; provided that no such Lien is
extended to cover any additional property and that the amount of Indebtedness
secured thereby is not increased;
49
(b) Liens for taxes, assessments or other governmental charges or
levies not yet delinquent or which are being contested in good faith by
appropriate proceedings, provided, however, that adequate reserves with respect
thereto are maintained on the books of the Company or its Subsidiaries in
accordance with Generally Accepted Accounting Principles;
(c) carriers', warehousemens', mechanics', suppliers' or other like
Liens arising in the ordinary course of business and not overdue for a period of
more than 45 days or which are being contested in good faith by appropriate
proceedings in a manner which will not jeopardize or diminish the interest of
the Lender in any of the collateral subject to the Pledge Agreements;
(d) Liens incurred or deposits to secure the performance of tenders,
bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety, performance and appeal bonds, and other obligations of
similar nature incurred in the ordinary course of business;
(e) any attachment, judgment or similar Lien arising in connection
with any court or governmental proceeding provided that the execution or other
enforcement of such Lien is effectively stayed;
(f) easements, rights of way, restrictions and other similar charges
or encumbrances which in the aggregate do not interfere in any material respect
with the occupation, use and enjoyment by the Company or any of its Subsidiaries
of the property or assets encumbered thereby in the normal course of their
respective business or materially impair the value of the property subject
thereto;
(g) deposits under workmen's compensation, unemployment insurance
and social security laws;
(h) liens granted to the Lender;
(i) purchase money liens for fixed or capital assets including
obligations with respect to Capital Leases; provided in each case (i) no Default
or Event of Default shall have occurred and be continuing or shall occur after
giving effect to such lien, (ii) such purchase money lien does not exceed 100%
of the purchase price of, and encumbers only, the property acquired, and (iii)
such purchase money Lien does not secure any Indebtedness other than in respect
of the purchase price of the asset acquired;
(j) Liens securing the Indebtedness described in Sections 7.02(h)
and 7.02(j);
(k) Liens on shares of capital stock of P&H repurchased from the
holder
50
thereof to secure solely the Indebtedness described in Section 7.02(i)
owing to such holder;
(l) Liens granted by P&H in its accounts receivable, inventory,
furniture, fixtures, equipment and general intangibles to Wachovia Bank as
successor to Central Fidelity National Bank to secure the Existing P&H
Indebtedness provided such liens shall be released in full on or prior to June
30, 1999; and
(m) Liens securing Indebtedness described in Section 7.02(m);
provided, however, such liens shall be limited solely to the personal property
located at the Store purchased from the Franchisee which is the payee with
respect to such Indebtedness.
SECTION 7.02. INDEBTEDNESS. Incur, create, assume or suffer to exist or
otherwise become liable in respect of any Indebtedness, other than:
(a) Indebtedness incurred prior to the date hereof (which are not
described in Section 7.02(b) through 7.02(l)) as described in Schedule III
attached hereto, including any renewals or extensions thereof; provided such
renewal or extension does not result in an increase in the aggregate principal
amount of such Indebtedness;
(b) Indebtedness to the Lender;
(c) Indebtedness for trade payables incurred in the ordinary course
of business; provided such payables shall be paid or discharged when due
(including any extended due date agreed to by the payee with respect to any
trade payable) or in conformity with customary trade terms;
(d) Indebtedness consisting of guarantees permitted pursuant to
Section 7.03;
(e) Subordinated Indebtedness; provided, however, that no Default or
Event of Default shall have occurred and be continuing or would occur after
giving effect to the incurrence of such Subordinated Indebtedness;
(f) Indebtedness secured by purchase money liens as permitted under
Section 7.01(i); provided such Indebtedness incurred in any fiscal year of the
Company shall not exceed $5,000,000, and, further, provided no Default or Event
of Default shall have occurred and be continuing or would occur after giving
effect to the incurrence of such Indebtedness;
(g) Indebtedness owing by the Company to any Guarantor or from any
Guarantor to the Company or from any Guarantor to any Guarantor;
51
(h) the Existing P&H Mortgage, in the aggregate principal amount of
approximately $3,600,000 as of the date hereof, including any renewals,
refinancings or extensions thereof; provided immediately after giving effect to
such renewal, refinancing or extension the aggregate principal amount of such
Indebtedness of the Company and its Subsidiaries shall not exceed an amount
equal to the aggregate principal amount of such Indebtedness immediately prior
to such refinancing plus $4,000,000;
(i) the Option Liability and promissory notes evidencing all or a
portion of the repurchase price of shares of P&H, to the extent repurchase of
such shares is permitted pursuant to Section 7.15(a);
(j) additional Indebtedness not to exceed $200,000 in the aggregate
principal amount at any one time outstanding;
(k) Indebtedness owing by Gerber Gardens/1-800-Flowers, LLC to the
Company or its Subsidiaries in an aggregate amount not to exceed $50,000;
(l) The Existing P&H Indebtedness until June 30, 1999, at which time
all such Indebtedness shall be paid in full and the loan documents governing
such Indebtedness shall be terminated; and
(m) Indebtedness evidencing all or a portion of the purchase price
owing by the Company or any of its Subsidiaries to a Franchisee in connection
with the purchase from such Franchise of a Franchisee Store, to the extent such
purchase is permitted pursuant to Section 7.12.
SECTION 7.03. GUARANTIES. Guarantee, endorse, become surety for, or
otherwise in any way become or be responsible for the Indebtedness or
obligations of any Person, whether by agreement to maintain working capital or
equity capital or otherwise maintain the net worth or solvency of any Person or
by agreement to purchase the Indebtedness of any other Person, or agreement for
the furnishing of funds, directly or indirectly, through the purchase of goods,
supplies or services for the purpose of discharging the Indebtedness of any
other Person or otherwise, or enter into or be a party to any contract for the
purchase of merchandise, materials, supplies or other property if such contract
provides that payment for such merchandise, materials, supplies or other
property shall be made regardless of whether delivery of such merchandise,
supplies or other property is ever made or tendered except:
(a) guaranties executed prior to the date hereof (which are not
described in Sections 7.03(b) through 7.03(g)) as described on
Schedule IV attached hereto but not including any renewals or
extension thereof;
52
(b) endorsements of negotiable instruments for collection or deposit in
the ordinary course of business;
(c) guaranties of any Indebtedness under this Agreement or any other
Loan Document;
(d) guaranties of the obligations of any Guarantor under any lease for a
Retail Store to which it is a party;
(e) guaranties of the obligations of a Franchisee under a lease for a
Franchise Store; provided the aggregate obligations of the Company
and its Subsidiaries under all such guaranties shall not exceed
$3,000,000;
(f) guaranties of the obligations of a Guarantor with respect to
Indebtedness of such Guarantor described in clauses (c), (f) and (j)
of Section 7.02; and
(g) guaranties by the Company, 1-800 Flowers Retail Inc. or the owner of
the capital stock of the Guarantor which will acquire stock or
assets pursuant to a Permitted Acquisition of the obligations of
such Guarantor under the agreement governing the terms of such
Permitted Acquisition.
SECTION 7.04. SALE OF ASSETS. Sell, lease, transfer or otherwise dispose
of their respective properties and assets, whether or not pursuant to an order
of a federal agency or commission, except for (a) the sale of inventory disposed
of in the ordinary course of business, (b) the sale or other disposition of
properties or assets no longer used or useful in the conduct of their respective
businesses, (c) the sale of a Retail Store, including, without limitation, the
inventory equipment and fixtures relating to such Retail Store, to a Franchisee
or other Person in a bona fide arms-length transaction provided (i) the
aggregate Retail Stores sold during the period commencing the Closing Date and
ending July 2, 2000 shall not exceed fifteen (15) and the aggregate Retail
Stores sold in any fiscal year of the Company commencing the fiscal year ending
July 1, 2001 shall not exceed five (5), and (ii) no Default or Event of Default
shall have occurred and be continuing or would occur after giving effect to the
proposed sale of each Retail Store, and (d) the sale of the assets of Floral
Works, Inc. or Gerber Gardens/1-800 Flowers LLC or the sale of the Company's
membership interest therein.
SECTION 7.05. SALES OF RECEIVABLES. Sell, transfer, discount or otherwise
dispose of notes, accounts receivable or other obligations owing to the Company
or any of its Subsidiaries, with or without recourse, except for collection in
the ordinary course of business.
SECTION 7.06. LOANS AND INVESTMENTS. Make or commit to make any advance,
loan, extension of credit, or capital contribution to, or purchase or hold
beneficially any stock
53
or other securities, or evidence of Indebtedness of, purchase or acquire all or
a substantial part of the assets of, make or permit to exist any interest
whatsoever in, any other Person except for (a) the ownership of stock of any
Subsidiaries existing as of the Closing Date or acquired after the date hereof
whether pursuant to a Permitted Acquisition or otherwise, provided the Company
has complied with its obligations under Section 6.13 with respect to such
Subsidiary, (b) investments described on Schedule VI attached hereto, (c) loans
by the Company to any Guarantor (other than Ace and its Subsidiaries and loans
by any Guarantor to the Company or any other Guarantor (other than Ace and its
Subsidiaries), (d) Eligible Investments, (e) loans and advances to employees not
to exceed $250,000 in the aggregate at any one time outstanding, (f) capital
contributions by the Company to any Guarantor or by any Guarantor to any other
Guarantor (other than Ace and its Subsidiaries), (g) loans and capital
contributions by the Company or any Subsidiary of the Company to any Subsidiary
of the Company which is not a Guarantor (other than Gerber
Gardens/1-800-Flowers, LLC); provided the aggregate amount of all such loans and
capital contributions shall not exceed $50,000, (h) securities traded on a
national securities exchange or quoted on NASDAQ in an aggregate amount not to
exceed $250,000, (i) purchases of an equity interest in a public or privately
held entity (calculated exclusive of the limitation set forth in the proceeding
clause (h) in an aggregate amount not to exceed $1,000,000 provided the terms of
any such investment shall not obligate the Company or any of its Subsidiaries to
make additional loans or investments to such entity, (j) Loans and capital
contributions by the Company or any Corporate Guarantor to Ace's or its
Subsidiaries; provided, however, so long as Indebtedness evidenced by the Ace
Notes shall be outstanding, such Loans and capital contributions shall not
exceed in the aggregate $5,800,000; (k) ownership of shares of capital stock of
the Company and P&H resulting from the repurchase of such shares to the extent
permitted pursuant to Section 7.15, (l) loans by the Company and its
Subsidiaries to Gerber Gardens/1-800-Flowers, LLC or P&H Partnership provided
the aggregate amount of all such loans shall not exceed $50,000; (m)
indebtedness owing by a Franchisee to the Company or any Guarantor which
indebtedness evidences all or a portion of the purchase price from the sale of a
Retail Store to such Franchisee provided such sale is permitted pursuant for
Section 7.04 and further provided such indebtedness is secured by at least all
of the personal property located at such Store; and (n) assets of a Person
acquired by the Company or any Guarantor pursuant to a Permitted Acquisition.
SECTION 7.07. NATURE OF BUSINESS. Except as set forth on Schedule XI,
change or alter, in any material respect, the nature of its business from the
nature of the business engaged in by it on the date hereof.
SECTION 7.08. SALE AND LEASEBACK. Enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property,
whether real or personal, used or useful in its business, whether now owned or
hereafter acquired, of it or any of its Subsidiaries, if at the time of such
sale or disposition it intends to lease or otherwise acquire the right to use or
possess (except by purchase) such property or like property for a
54
substantially similar purpose.
SECTION 7.09. FEDERAL RESERVE REGULATIONS. Permit any Loan or the proceeds
of any Loan to be used for any purpose which violates or is inconsistent with
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
SECTION 7.10. ACCOUNTING POLICIES AND PROCEDURES. Permit any change in the
accounting policies and procedures of the Company or any of its Subsidiaries,
including a change in fiscal year, provided, however, that any policy or
procedure required to be changed by the Financial Accounting Standards Board (or
other board or committee thereof) in order to comply with Generally Accepted
Accounting Principles may be so changed.
SECTION 7.11. HAZARDOUS MATERIALS. Cause or permit any of its properties
or assets to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose of, transfer, produce or process Hazardous Materials, except in
compliance with all applicable federal, state and local laws or regulations, or
cause or permit, as a result of any intentional or negligent act or omission on
the part of the Company or any of its Subsidiaries, a release of Hazardous
Materials onto such property or asset or onto any other property.
SECTION 7.12. LIMITATIONS ON FUNDAMENTAL CHANGES, LIMITATIONS ON
CONSIDERATION. Merge or consolidate with, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now or hereafter acquired) to, any
Person, or, except with respect to a Permitted Acquisition, acquire all of the
stock or all or substantially all of the assets or the business of any Person or
liquidate, wind up or dissolve or suffer any liquidation or dissolution,
provided, however, (a) any Guarantor may merge or consolidate with any other
Guarantor (other than Ace and its Subsidiaries and other than Floral Works, Inc.
and Gerber Gardens/1-800-Flowers, LLC); (b) each of Floral Works, Inc. and
Gerber Gardens/1-800-Flowers, LLC may, in its discretion, sell all or
substantially all of its assets or liquidate and dissolve or the Company may
sell its membership interest in Gerber Gardens/1-800-Flowers, LLC; (c) Company
or any of its Subsidiaries may purchase from a Franchisee a Franchise Store
provided that the aggregate Franchise Stores repurchased during the period
commencing the Closing Date and ending July 2, 2000 shall not exceed ten (10)
and the aggregate Franchisee Stores purchased in any fiscal year of the Company
commencing with the fiscal year ending July 1, 2001 shall not exceed five (5);
permit the aggregate Consideration paid in connection with all Permitted
Acquisitions (a) during the period commencing the Closing Date and ending on
July 2, 2000 to exceed $10,000,000 and (b) during any fiscal year of the Company
commencing with the fiscal year ending July 1, 2001 to exceed $5,000,000.
55
SECTION 7.13. FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED NET WORTH. Permit at any time Consolidated Net Worth plus
consolidated Subordinated Debt to be less than the amount set forth below
opposite the applicable period:
Period Amount
------ ------
Closing Date through June 26, 1999 $16,500,000 plus 65% of the Net
Proceeds from the sale or
issuance of equity securities of
the Company or any of its
Subsidiaries during such period
June 27, 1999 through July 1, 2000 $20,000,000 plus 65% of the Net
Proceeds from the sale or
issuance of equity securities of
the Company or any of its
Subsidiaries during such period
and for each comparable period thereafter commencing on the last day of a fiscal
year through the day next preceding the last day of the following fiscal year an
amount not less than $5,000,000 plus the sum of (x) the actual Consolidated Net
Worth plus consolidated Subordinated Debt on the last day of the immediately
preceding fiscal year and (y) plus 65% of the Net Proceeds from the sale or
issuance of equity securities of the Company or any of its Subsidiaries during
such period.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit at any time the
Consolidated Interest Coverage Ratio to be less than 2.00:1.00.
(c) CONSOLIDATED FUNDED DEBT TO CONSOLIDATED EBITDA. Permit at any time
the ratio of Consolidated Funded Debt to Consolidated EBITDA to be greater than
4.00:1.00.
(d) CONSOLIDATED DEBT SERVICE COVERAGE RATIO. Permit at any time the
Consolidated Debt Service Coverage Ratio to be less than 1.25:1.00.
(e) CONSOLIDATED TOTAL UNSUBORDINATED LIABILITIES TO CONSOLIDATED NET
WORTH PLUS SUBORDINATED DEBT. Permit at any time the ratio of Consolidated Total
Unsubordinated Liabilities to Consolidated Net Worth plus Consolidated
Subordinated Debt to be greater than the ratio set forth below opposite the
applicable period:
56
Period Ratio
------ -----
Closing Date through July 1, 2000 4.25:1.00
July 2, 2000 and thereafter 3.75:1.00
(f) CONSOLIDATED NET LOSS. Suffer a consolidated net loss (calculated
exclusive of extraordinary gains but inclusive of extraordinary losses) for any
fiscal year of the Company.
(g) MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES. Permit consolidated Capital
Expenditures of the Company and its Subsidiaries to exceed $16,000,000 for the
Company's fiscal year ending June 27, 1999 and $13,000,000 for any fiscal year
of the Company thereafter.
SECTION 7.14. SUBORDINATED DEBT. Directly or indirectly prepay, defease,
purchase, redeem, or otherwise acquire any Subordinated Debt or amend,
supplement or otherwise modify any of the terms thereof without the prior
written consent of the Lender.
SECTION 7.15. DIVIDENDS. Declare any dividend on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of any class of stock of the Company or any of its Subsidiaries or any warrant
to purchase any class of stock of the Company or any of its Subsidiaries,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash, securities or property
or in obligations of the Company or any of its Subsidiaries or in any
combination thereof, or permit any Affiliate (excluding, for the purposes of
this Section 7.15, Xxxxx X. XxXxxx and Xxxxxxxxxxx XxXxxx) to make any payment
on account of, or purchase or otherwise acquire, any shares of any class of the
stock of the Company or any of its Subsidiaries or any warrant to purchase any
class of stock of the Company or any of its Subsidiaries from any Person;
provided, however, (a) P&H may repurchase shares of its capital stock from any
holder thereof provided (i) no Default or Event of Default has occurred and is
continuing or would occur after giving effect to the proposed repurchase, (ii)
the Company is in compliance with the covenants set forth in Section 7.13 both
prior to and after giving effect to such repurchase, (iii) the purchase price of
such shares, if not purchased pursuant to the Stockholders Agreement or Stock
Option Plan, shall not exceed the Put Price (as that term is defined in the
Stockholders Agreement) which would be payable by P&H if they were purchased
pursuant to the Stockholders Agreement or Stock Option Plan, including without
limitation the terms of any financing of the purchase price, (iv) in the event
the purchase price is not evidenced in whole or part by a promissory note
executed by P&H in favor of the seller of the shares, the certificates
evidencing the repurchased shares are promptly delivered to the Lender to be
held by the Lender pursuant to the terms of the Pledge Agreement and (v) the
Company shall have delivered to the Lender a notice of the terms of such
proposed repurchase and which notice shall include a certification from the
Chief Financial Officer as to the matters referred to in the
57
preceding clauses (i) and (ii), together with demonstration of the Company's
compliance with the financial covenants identified in the preceding clause (ii),
and the requirements set forth in the preceding clause (iii), (b) the Company
may repurchase shares of its capital stock from any holder thereof, provided the
aggregate purchase price for all shares purchased from any one Person during the
term of this Agreement shall not exceed $300,000 and the aggregate purchase
price of all such purchases during the term of this Agreement shall not exceed
$1,000,000 and, further, provided, no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect to such
repurchase, and (c) any direct or indirect Subsidiary of the Company may declare
and pay dividends ratably with respect to its capital stock.
SECTION 7.16. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of the Company's or any of its
Subsidiaries' business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than they would obtain in a comparable
arms-length transaction with a Person not an Affiliate.
SECTION 7.17. IMPAIRMENT OF SECURITY INTEREST. Take or omit to take any
action which could reasonably be expected to have the result of impairing the
security interest in any property subject to a security interest in favor of the
Lender or grant to any person any interest whatsoever in any property which is
subject to a security interest in favor of the Lender.
SECTION 7.18. NO AMENDMENTS. Amend, supplement or otherwise modify the
Stock Option Plan, the Stockholders Agreement or the P&H Acquisition Agreement
if the effect of such amendment, supplement or modification would be to increase
the Option Liability or adversely affect the Lender.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. In the case of the happening of any of
the following events (each an "Event of Default"):
(a) failure to pay the principal of or interest on any Loan, any
reimbursement obligations with respect to a drawing under any Letter of
Credit or Other Letter of Credit, or any fees under this Agreement as and
when due and payable, and with respect to interest payments and fee
payments only, such failure shall continue unremedied for a period of
three Business Days;
(b) default shall be made in (i) the due observance or performance
of any
58
covenant, condition or agreement of the Company or any of its Subsidiaries
to be performed pursuant to Section 6.04, 6.05, 6.06, 6.07, 6.08, 6.11
(only with respect to a Material Contract pursuant to clause (a) of the
definition thereof), 6.13 or Article VII of this Agreement, or (ii) the
due observance or performance of any other covenant, condition or
agreement of the Company or any of its Subsidiaries to be performed
pursuant to this Agreement or any other Loan Document (other than those
specified in clause (a) of this Section 8.01) and such failure shall
continue unremedied for a period of thirty (30) days after written notice
thereof from the Lender or the Lender;
(c) any representation or warranty made or deemed made in this
Agreement or any other Loan Document shall prove to be false or misleading
in any material respect when made or given or when deemed made or given;
(d) any report, certificate, financial statement or other instrument
furnished in connection with this Agreement or any other Loan Document or
the borrowings hereunder, shall prove to be false or misleading in any
material respect when made or given or when deemed made or given;
(e) default in the performance or compliance in respect of any
agreement or condition relating to any Indebtedness of the Company or any
of its Subsidiaries in excess of $500,000 individually or in the aggregate
(other than the Notes and other than with respect to Indebtedness for
trade payables which are paid or discharged when due (including any
extended due date agreed to by the payee with respect to any trade
payable) or in conformity with customary trade terms) if the effect of
such default is to accelerate the maturity of such Indebtedness or to
permit the holder or obligee thereof (or a trustee on behalf of such
holder or obligee) to cause such Indebtedness to become due prior to the
stated maturity thereof, or, except as otherwise permitted by Section
7.02(c), any such Indebtedness shall not be paid when due;
(f) the Company or any of its Subsidiaries (other than Gerber
Gardens/1-800- Flowers LLC) shall (i) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States
Code or any other federal or state bankruptcy, insolvency or similar law,
(ii) consent to the institution of, or fail to controvert in a timely and
appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the employment of a receiver,
trustee, custodian, sequestrator or similar official for the Company or
any of its Subsidiaries or for a substantial part of its property; (iv)
file an answer admitting the material allegations of a petition filed
against it in such proceeding, (v) make a general assignment for the
benefit of creditors, or (vi) take corporate action for the purpose of
effecting any of the foregoing; or the Company or any Material Subsidiary
shall become unable or admit in writing its inability or fail generally to
pay its debts as they become due, or any Subsidiary, other than a
59
Material Subsidiary, becomes unable or admits in writing its inability or
fails generally to pay its debts as they become due, which Subsidiary when
aggregated with all other Subsidiaries unable or which admit in writing
their inability to pay their debts as they become due constitutes a
Material Subsidiary;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Company or any of its Subsidiaries (other than
Gerber Gardens/1-800 Flowers LLC) or of a substantial part of their
respective property, under Title 11 of the United States Code or any other
federal or state bankruptcy insolvency or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any of its Subsidiaries (other than Gerber
Gardens/1-800 Flowers LLC) or for a substantial part of their property, or
(iii) the winding-up or liquidation of the Company or any of its
Subsidiaries (other than Gerber Gardens/1-800 Flowers LLC) and such
proceeding or petition shall continue undismissed for 30 days or an order
or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for 30 days;
(h) One or more orders, judgments or decrees for the payment of
money in excess of $500,000 in the aggregate shall be rendered against the
Company or any of its Subsidiaries and the same shall not have been paid
in accordance with such judgment, order or decree or settlement and either
(i) an enforcement proceeding shall have been commenced by any creditor
upon such judgment, order or decree, or (ii) there shall have been a
period of sixty (60) days during which a stay of enforcement of such
judgment, order or decree, by reason of pending appeal or otherwise, was
not in effect;
(i) any Plan, which is a single employer Plan, shall fail to
maintain the minimum funding standard required under Section 412 of the
Code for any Plan year or part thereof or a waiver of such standard or
extension of any amortization period is applied for or granted under
Section 412 of the Code, any Plan is terminated by the Company or any
ERISA Affiliate or the subject of termination proceedings under ERISA, any
Plan shall have an Unfunded Current Liability, a Reportable Event shall
have occurred with respect to a Plan or the Company, any Subsidiary of the
Company, or any ERISA Affiliate shall have incurred a liability to or on
account of a Plan under Section 515, 4062, 4063, 4201 or 4204 of ERISA,
and there shall result from any such event or events the imposition of a
lien upon the assets of the Company or any of its Subsidiaries, the
granting of a security interest on such assets, or a liability to the PBGC
or a Plan or a trustee appointed under ERISA or a penalty under Section
4971 of the Code, and in each case, such event or condition, together with
all such events or conditions, if any, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $500,000;
(j) any material provision of any Loan Document shall for any reason
cease to be in full force and effect in accordance with its terms or the
Company or any of its Subsidiaries shall so assert in writing;
(k) a Change of Control shall have occurred;
(l) Xx. Xxxxx X. XxXxxx shall cease to be Chief Executive Officer of
the Company; or
(m) any of the Liens purported to be granted pursuant to any
Security Document shall fail or cease for any reason to be legal, valid
and enforceable liens on the collateral purported to be covered thereby or
shall fail or cease to have the priority purported to be created thereby;
then, at any time thereafter during the continuance of any such event, the
Lender may, in its sole discretion, by written or telephonic notice to the
Company, take either or both of the following actions, at the same or different
times, (a) terminate the Commitments and (b) declare (i) the Notes, both as to
principal and interest, (ii) an amount equal to the maximum amount that may be
drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any Letter of Credit shall have presented or be entitled to
present the drafts and other documents required to draw under such Letter of
Credit), and (iii) all other Obligations, to be forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the Notes to the
contrary notwithstanding; PROVIDED, HOWEVER, that if an event specified in
Section 8.01(f) or (g) shall have occurred, the Commitments shall automatically
terminate and interest, principal and amounts referred to in the preceding
clauses (i), (ii), and (iii) shall be immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
expressly waived, anything contained herein or in the Notes to the contrary
notwithstanding. With respect to all Letters of Credit and all Other Letters of
Credit that shall not have matured or presentment for honor shall not have
occurred, the Company shall provide the Lender with Cash Collateral in an amount
equal to the aggregate undrawn amount of the Letters of Credit. Such Cash
Collateral shall be applied by the Lender to reimburse it for drawings under
Letters of Credit and Other Letters of Credit for which the it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Company at such time or, if the maturity
of the Loans has been accelerated, be applied to satisfy other Obligations.
ARTICLE IX
MISCELLANEOUS
61
SECTION 9.01. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including
telecopy), and unless otherwise expressly provided herein, shall be conclusively
deemed to have been received by a party hereto and to be effective on the day on
which delivered by hand to such party or one Business Day after being sent by
overnight mail to the address set forth below, or, in the case of telecopy
notice, when acknowledged as received, or if sent by registered or certified
mail, three (3) Business Days after the day on which mailed in the United
States, addressed to such party at such address:
(a) if to the Lender, at
The Chase Manhattan Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Relationship Manager
1-800-Flowers, Inc.
Telecopy: (000) 000-0000
(b) if to the Company, at
1-800-Flowers, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Telecopy: (000) 000-0000
With a copy to
Xxxxxxxxx, Xxxxxx & Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
- and -
(c) as to each such party at such other address as such party
shall have designated to the other in a written notice
complying as to delivery with the provisions of this Section
9.01.
SECTION 9.02. EFFECTIVENESS; SURVIVAL. This Agreement shall become
effective
62
on the date on which all parties hereto shall have signed a counterpart copy
hereof and shall have delivered the same to the Lender. All representations and
warranties made herein and in the other Loan Documents and in the certificates
delivered pursuant hereto or thereto shall survive the making by the Lender of
the Loans and the issuance of the Letters of Credit, in each case, as herein
contemplated and the execution and delivery to the Lender of the Notes
evidencing the Loans and shall continue in full force and effect so long as the
Obligations hereunder are outstanding and unpaid and the Commitments are in
effect. The obligations of the Company pursuant to Section 3.07, Section 3.08,
Section 3.10 and Section 9.03 shall survive termination of this Agreement and
payment of the Obligations.
SECTION 9.03. EXPENSES. The Company agrees (a) to indemnify, defend and
hold harmless the Lender and its officers, directors, employees, and affiliates
(each, an "indemnified person") from and against any and all losses, claims,
damages, liabilities or judgments to which any such indemnified person may be
subject and arising out of or in connection with the Loan Documents, the
financings contemplated hereby, the use of any proceeds of such financings or
any related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any of such indemnified persons
is a party thereto, and to reimburse each of such indemnified persons upon
demand for any reasonable, legal or other expenses incurred in connection with
the investigation or defending any of the foregoing; provided that the foregoing
indemnity will not, as to any indemnified person, apply to losses, claims,
damages, liabilities, judgments or related expenses to the extent arising from
the willful misconduct or gross negligence of such indemnified person, (b) to
pay or reimburse the Lender for all its reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of and any
amendment, supplement or modification to this Agreement, the Notes any other
Loan Documents, and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including without limitation, the reasonable fees and disbursements of
Xxxxxxx Xxxxx, P.C., counsel to the Lender, and (c) to pay or reimburse the
Lender for all their costs and expenses incurred in connection with the
enforcement and preservation of any rights under this Agreement, the Notes, the
other Loan Documents, and any other documents prepared in connection herewith or
therewith, including, without limitation, the reasonable fees and disbursements
of counsel (including, without limitation, in-house counsel) to the Lender,
including all such out-of-pocket expenses incurred during any work-out,
restructuring or negotiations in respect of the Obligations.
SECTION 9.04. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company, the Lender, all future holders of the Notes and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Lender.
63
(b) The Lender reserves the right to sell participations in or to sell and
assign its rights, duties or obligations with respect to the Loans or the
Commitments to such banks, lending institutions or other parties as it may
choose and without the consent of the Company. Subject to Section 9.11, the Bank
may furnish any information concerning the Company or any of its Subsidiaries in
its possession from time to time to any assignee or participant (or proposed
assignee or participant). The Lender may at any time pledge or assign or grant a
security interest in all or any part of its rights under this Agreement and its
Notes to a Federal Reserve Bank, provided that no such assignment shall release
the transferor Lender from its Commitments or its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party to this
Agreement.
SECTION 9.05. NO WAIVER; CUMULATIVE REMEDIES. Neither any failure nor any
delay on the part of the Lender in exercising any right, power or privilege
hereunder or under any Note or any other Loan Document shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege. The rights, remedies,
powers and privileges herein provided or provided in the other Loan Documents
are cumulative and not exclusive of any rights, remedies powers and privileges
provided by law.
SECTION 9.06. APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.
SECTION 9.07. SUBMISSION TO JURISDICTION; JURY WAIVER. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE
XXXXX XX XXX XXXX, XXXXXX XX XXX XXXX, XXXXXX OF NASSAU OR COUNTY OF SUFFOLK IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR
STATE COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR THEREIN OR THE SUBJECT MATTER HEREOF THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS. TO THE EXTENT
64
PERMITTED BY APPLICABLE LAW, THE COMPANY AGREES NOT TO (I) SEEK AND HEREBY
WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH FEDERAL OR STATE
COURT BY ANY FEDERAL OR STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH
MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT OR (II) ASSERT ANY
COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM IS
A COMPULSORY COUNTERCLAIM UNDER FEDERAL LAW OR NEW YORK LAW, AS APPLICABLE. THE
COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY
METHOD AUTHORIZED BY THE LAWS OF NEW YORK. EACH PARTY HERETO WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT.
SECTION 9.08. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement, any Note or any other Loan Document should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
SECTION 9.09. RIGHT OF SETOFF. If an Event of Default shall have occurred
and be continuing, the Lender and each of its Affiliates are hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Lender or any Affiliate of the Lender to or for the credit or the account
of the Company against any and all of the Obligations of the Company now and
hereafter existing under this Agreement and the Notes held by the Lender,
irrespective of whether or not the Lender shall have made any demand under this
Agreement or any Note and although such obligations may be unmatured. The Lender
further agrees that the foregoing right of set off shall not apply to the funds
held in the Company's Chase Vista Cash Management Fund Account. The rights of
the Lender and each Affiliate of the Lender under this Section 9.09 are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which they may have.
SECTION 9.10. CONFIDENTIALITY. The Lender agrees to keep confidential all
non-public information, materials and documents furnished by the Company to the
Lender pursuant to this Agreement (the "Confidential Information").
Notwithstanding the foregoing, the Lender shall be permitted to disclose
Confidential Information (a) to such of its officers, directors, employees,
agents, representatives and professional advisors in any of the transactions
contemplated by, or the administration of, this Agreement; (b) to the extent
required by
65
applicable laws and regulations or by any subpoena or similar legal process, or
requested by any governmental agency or authority; (c) to the extent such
Confidential Information (i) becomes publicly available other than as a result
of a breach of this Section 9.10 by the disclosing party, or (ii) becomes
available to the Lender on a non-confidential basis from a source other than the
Company or its Subsidiaries which to the Lender's knowledge is not prohibited
from disclosing such Confidential Information to the Lender by a contractual or
other legal obligation; (d) to the extent the Company or any of its Subsidiaries
shall have consented to such disclosure in writing; or (e) to any prospective
transferee or participant in connection with any contemplated transfer of the
Notes or any interest therein provided such transferee or participant agrees to
treat the Confidential Information in a manner consistent with this Section
9.10. Nothing herein shall prohibit the disclosure of Confidential Information
in connection with any litigation or where such disclosure is pursuant to
applicable laws, regulations, court order or similar legal process; provided,
however, in the event that the Lender is requested or required by law to
disclose any of the Confidential Information, the Lender shall provide the
Company with written notice, unless notice is prohibited by law, of any such
request or requirement so that the Company may seek a protective order or other
appropriate remedy; provided that no such notification shall be required in
respect of any disclosure to regulatory authorities having jurisdiction over the
Lender.
SECTION 9.11. HEADINGS. Section headings used herein are for convenience
of reference only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
SECTION 9.12. CONSTRUCTION. This Agreement is the result of negotiations
between, and has been reviewed by, each of the Company, the Lender and their
respective counsel. Accordingly, this Agreement shall be deemed to be the
product of each party hereto, and no ambiguity shall be construed in favor of or
against either the Company or the Lender.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Lender have caused this Agreement
to be duly executed by their duly authorized officers, as of the day and year
first above written.
1-800-FLOWERS, INC.
By:_______________________
Name: Xxxxxxx X. Xxxx
66
Title: Treasurer
THE CHASE MANHATTAN BANK
By:_______________________
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
67
SCHEDULE I
SUBSIDIARIES
NAME OF ENTITY STATE OF OWNERS OF SHARES OR INTERESTS
INCORPORATION NAMES AND PERCENTAGES
OR FORMATION OF SHARES OWNED
68
SCHEDULE II
EXISTING LIENS
69
SCHEDULE III
EXISTING INDEBTEDNESS
70
SCHEDULE IV
EXISTING GUARANTEES
71
SCHEDULE V
FINANCIAL CONDITION CHANGES
72
SCHEDULE VI
EXISTING LETTERS OF CREDIT
TYPE FACE AMOUNT ISSUANCE DATE EXPIRATION DATE
73
SCHEDULE VII
LITIGATION
74
SCHEDULE VIII
HAZARDOUS MATERIALS
75
SCHEDULE IX
MATERIAL CONTRACTS
76
SCHEDULE X
EXISTING INVESTMENTS
77
EXHIBIT A
REVOLVING CREDIT NOTE
$12,000,000 Uniondale, New York
March 19, 1999
FOR VALUE RECEIVED, 1-800-FLOWERS, INC., a Delaware corporation (the
"Company"), promises to pay to the order of THE CHASE MANHATTAN BANK (the
"Lender"), on or before September 19, 2000, TWELVE MILLION DOLLARS
($12,0000,000) or, if less, the unpaid principal amount of all Revolving Credit
Loans made by the Lender to the Company under the Credit Agreement referred to
below.
The Company promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at the rates and at the times
which shall be determined, and to make principal repayments on this Note at the
times which shall be determined, in accordance with the provisions of the Credit
Agreement referred to below.
This Note is the "Revolving Credit Note" referred to in the Credit
Agreement dated as of March 19, 1999, by and between the Company and the Lender
(as the same may be amended, modified or supplemented from time to time, the
"Credit Agreement") and is issued pursuant to and entitled to the benefits of
the Credit Agreement to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Credit Loans
evidenced hereby were made and are to be repaid. Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.
Each of the Lender and any subsequent holder of this Note agrees, by
its acceptance hereof, that before transferring this Note it shall record the
date, Type and amount of each Revolving Credit Loan and the date and amount of
each payment or prepayment of principal of each Revolving Credit Loan previously
made hereunder on the grid schedule annexed to this Note; PROVIDED, HOWEVER,
that the failure of the Lender or holder to set forth such Revolving Credit
Loans, payments and other information on the attached grid schedule shall not in
any manner affect the obligation of the Company to repay the Revolving Credit
Loans made by the Lender in accordance with the terms of this Note.
This Note is subject to optional prepayments pursuant to Section
3.03 of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in immediately available
funds at the office of The Chase Manhattan Bank, located at 000 Xxxxx Xxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxx 00000 or at such other place
as shall be designated in writing for such purpose in accordance with the terms
of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company and endorsers of this Note waive presentment, diligence,
demand, protest, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
1-800-FLOWERS, INC.
By:__________________________
Name:
Title:
2
SCHEDULE
Date Principal Type Applicable Amount of Notation
of Amount of of Interest Interest Principal Made
Loan Loan Loan Rate Period Paid by
---- --------- ---- ---- ---------- ---------- ---------
3
EXHIBIT B
TERM NOTE
$18,000,000 Uniondale, New York
March 19, 1999
FOR VALUE RECEIVED, 1-800-FLOWERS, INC. a Delaware corporation (the
"Company"), promises to pay to the order of THE CHASE MANHATTAN BANK (the
"Lender"), on or before March 31, 2004 (the "Maturity Date"), the principal
amount of EIGHTEEN MILLION DOLLARS ($18,000,000) in sixteen (16) consecutive
quarterly installments of $1,125,000 on the last day of each March, June
September, and December commencing June 30, 2000 provided that the final
installment on the Maturity Date shall be in an amount equal to the remaining
principal amount outstanding on the Maturity Date. The Company also promises to
pay interest on the unpaid principal amount hereof from the date hereof until
paid in full at the rates and at the times which shall be determined in
accordance with the provisions of the Credit Agreement referred to below.
This Note is the "Term Note" issued pursuant to and entitled to the
benefits of the Credit Agreement dated as of March 19, 1999 by and between the
Company and The Chase Manhattan Bank (as the same may be amended, modified or
supplemented from time to time, the "Credit Agreement"), to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Term Loan evidenced hereby was made and is to be repaid. Capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement.
Each of the Lender and any subsequent holder of this Note agrees, by
its acceptance hereof, that before transferring this Note, it shall record the
date and amount of each payment or prepayment of principal of the Term Loan
previously made hereunder on the grid schedule annexed to this Note; PROVIDED,
HOWEVER, that the failure of the Lender or holder to set forth the Term Loan,
payments and other information on the attached grid schedule shall not in any
manner affect the obligation of the Company to repay the Term Loan made by the
Lender in accordance with the terms of this Note.
This Note is subject to optional prepayments pursuant to Section
3.03 of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful
money of the United States of America in immediately available funds at the
office of The Chase Manhattan Bank, located at 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx,
Xxx Xxxx 00000 or at such other place as shall be designated in writing for such
purpose in accordance with the terms of the Credit Agreement.
This Note is an amendment and restatement of, and is being issued in
replacement of and in substitution for, the Revolving Credit Note dated April 3,
1998 in the original principal amount of $5,000,000 and the Standby Credit Note
dated April 3, 1998 in the original principal amount of $15,500,000 each
executed by the Company in favor of the Lender (collectively, the "Original
Notes"). Accordingly, this Note evidences the indebtedness formerly evidenced by
the Original Notes.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company and endorsers of this Note waive diligence, presentment,
protest, demand, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer as of the day and year and at the
place first above written.
1-800-FLOWERS, INC.
By_____________________
Name:
Title:
2
SCHEDULE
Date Principal Type Applicable Amount of Notation
of Amount of of Interest Interest Principal Made
Loan Loan Loan Rate Period Paid by
---- --------- ---- ---- ---------- ---------- ---------
3
EXHIBIT C-1
COMPANY PLEDGE AGREEMENT
PLEDGE AGREEMENT, (the "Agreement") dated as of March 19, 1999 by and
between 1-800-FLOWERS, INC., a Delaware corporation (the "Pledgor") and THE
CHASE MANHATTAN BANK, a New York banking corporation, having an office at 000
Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Pledgee").
RECITALS
A. The Pledgor and the Pledgee have entered into a Credit Agreement dated
as of March 19, 1999 (as the same may be hereafter amended, modified, restated
or supplemented from time to time, the "Credit Agreement") pursuant to which the
Pledgor will receive loans and other financial accommodations from the Lender
and will incur Obligations.
B. The Pledgor is the beneficial owner of that percentage of the issued
and outstanding capital stock or membership or other equity interests of each
Subsidiary of the Pledgor listed on Schedule A annexed hereto (collectively, the
"Pledged Companies") as indicated on such Schedule A.
C. In order to induce the Lender to extend credit to the Pledgor on and
after the date hereof as provided in the Credit Agreement, the Pledgor wishes to
grant to the Pledgee security and assurance in order to secure the payment and
performance of all Obligations, and to that effect to pledge to the Pledgee,
subject to the proviso below, all of the issued and outstanding capital stock of
the Pledged Companies (the "Pledged Shares") and all of the membership or other
equity interests in the Pledged Companies (the "Pledged Rights", together with
the Pledged Shares, collectively, the "Pledged Interests") that is owned by the
Pledgor, including, without limitation, the Pledged Interests listed opposite
the name of the Pledgor as more particularly described on Schedule A and, with
respect to the Pledged Shares, as represented by the stock certificates
referenced thereon.
Accordingly, the parties hereto agree as follows:
1. SECURITY INTEREST. As security for the Obligations, including any and
all renewals or extensions thereof, the Pledgor hereby delivers, pledges and
assigns to the Pledgee and creates in the Pledgee a first security interest in
all of the Pledgor's right, title and interest in and to all of the Pledged
Interests, together with all rights and privileges of the Pledgor with respect
thereto, all proceeds, income and profits thereof and all property received with
respect to the Pledged Interests in addition thereto, in exchange thereof or in
substitution therefor (collectively, the "Collateral"). The Pledgor has
delivered to the Pledgee, with respect to the Pledged Shares existing on the
date hereof, certificates evidencing such Pledged Shares, together with undated
stock powers duly executed in blank by the Pledgor.
2. STOCK DIVIDENDS, OPTIONS, OR OTHER ADJUSTMENTS. The Pledgee shall
receive, as Collateral, any and all additional shares of stock, membership
interests or any other property of any kind distributable on or by reason of the
Collateral pledged hereunder, whether in the form of or by
way of dividends, warrants, partial liquidation, conversion, prepayments or
redemptions (in whole or in part), liquidation, or otherwise with the exceptions
of cash dividends or other cash distributions to the extent permitted under
Section 7(a). If any additional shares of capital stock, instruments, or other
property against which a security interest can only be perfected by possession
by the Pledgee, which are distributable on or by reason of the Collateral
pledged hereunder, shall come into the possession or control of the Pledgor, the
Pledgor shall, hold or control in trust and forthwith transfer and deliver the
same to the Pledgee subject to the provisions hereof.
3. DELIVERY OF SHARE CERTIFICATES; STOCK POWERS; DOCUMENTS. The Pledgor
agrees to deliver all share certificates, undated stock powers duly executed in
blank, documents, agreements, financing statements, amendments thereto,
assignments or other writings as the Pledgee may request to carry out the terms
of this Agreement or to protect or enforce the lien and security interest in the
Collateral hereunder granted hereby to the Pledgee and further agrees to do and
cause to be done, upon the Pledgee's request, all things reasonably determined
by the Pledgee to be necessary to perfect and keep in full force the lien in the
Collateral hereunder granted hereby in favor of the Pledgee, including, but not
limited to, the prompt payment of all documented out-of-pocket fees and expenses
incurred in connection with any filings made to perfect or continue the lien and
security interest in the Collateral hereunder granted hereby in favor of the
Pledgee. The Pledgor agrees to make appropriate entries upon its books and
records (including without limitation its stock record and transfer books)
disclosing the lien against the Collateral hereunder granted hereby to the
Pledgee hereunder. The Pledgor further agrees to promptly deliver to the
Pledgee, or cause the corporation or other entity issuing the Collateral to
deliver directly to the Pledgee, share certificates or other documents
representing Collateral acquired or received after the date of this Agreement
with an undated stock power duly executed by the Pledgor in blank. If at any
time the Pledgee notifies the Pledgor that additional stock powers endorsed in
blank with respect to the Collateral are required, the Pledgor shall promptly
execute in blank and deliver such stock powers as the Pledgee may request.
4. POWER OF ATTORNEY. The Pledgor hereby constitutes and irrevocably
appoints the Pledgee, with full power of substitution and revocation by the
Pledgee, as Pledgor's true and lawful attorney-in-fact, to the full extent
permitted by law, at any time or times when an Event of Default has occurred and
is continuing to affix to certificates and documents representing the Collateral
the stock power delivered with respect thereto, to transfer or cause the
transfer of the Collateral, or any part thereof on the books of the corporation
or other entity issuing the same, to the name of the Pledgee or the Pledgee's
nominee and thereafter to exercise as to such Collateral all the rights, powers
and remedies of an owner. The power of attorney granted pursuant to this
Agreement and all authority hereby conferred are granted and conferred solely to
protect the Pledgee's and the Lender's interest in the Collateral and shall not
impose any duty upon the Pledgee to exercise any power. Subject to Section 11,
this power of attorney shall be irrevocable as one coupled with an interest.
5. INDUCING REPRESENTATIONS OF THE PLEDGOR. The Pledgor makes the
following representations and warranties to the Pledgee; each and all of which
shall survive the execution and delivery of this Agreement:
2
(a) The information concerning the Pledged Companies and the
Pledgor's beneficial ownership of the Pledged Interests thereof that is
contained in Schedule A is correct in all respects.
(b) The Pledgor is the sole legal and beneficial owner of, and has
good and indefeasible title to, the Pledged Interests pledged by the Pledgor,
free and clear of all pledges, liens, security interests and other encumbrances
and restrictions on the transfer and assignment thereof, other than (i) the
security interest created by this Agreement , (ii) the restrictions on transfer
imposed by applicable state and federal securities laws generally, and (iii) the
terms of the Stockholders Agreement with respect to the shares of stock of P&H,
and has the unqualified right and authority to execute this Agreement and to
pledge the Collateral to the Pledgee as provided for herein.
(c) There are no outstanding options, warrants or other agreements
to which the Pledged Companies or the Pledgor is a party with respect to the
Pledged Interests pledged by the Pledgor (other than the shares of stock of P&H
which are subject to the terms of the Stockholders Agreement).
(d) The Pledged Shares pledged by the Pledgor have been validly
issued and are fully paid and non-assessable; the holder or holders of the
Pledged Interests are not and will not be subject to any personal liability as
such holder under any applicable law, subject to Section 630 of the Business
Corporation Law of the State of New York with respect to each Pledged Company
which is a New York corporation; and (other than the shares of stock of P&H
which are subject to the terms of the Stockholders Agreement) are not subject to
any charter, by-law, statutory, contractual or other restrictions governing
their issuance, transfer, ownership or control other than restrictions on
transfer imposed by applicable state and federal securities laws generally.
(e) Any consent, approval or authorization of or designation or
filing with any authority on the part of the Pledgor which is required in
connection with the pledge and security interest granted under this Agreement
has been obtained or effected.
(f) The execution and delivery of this Agreement by the Pledgor, and
the performance by the Pledgor of its obligations hereunder, will not result in
a violation of any mortgage, indenture, contract, instrument, judgment, decree,
order, statute, rule or regulation to which the Pledgor is subject.
(g) The Pledgor has delivered to the Pledgee all instruments and
stock certificates, if any, representing the Pledged Shares, duly endorsed in
blank or accompanied by an assignment or assignments sufficient to transfer
title thereto. There are neither any instruments or certificates evidencing the
Pledged Rights nor registration books in which ownership of the Pledged Rights
are recorded.
6. OBLIGATIONS OF THE PLEDGOR. The Pledgor hereby covenants and agrees
with the Pledgee as follows:
(a) The Pledgor will not, without the prior written consent of the
Lender (which
3
consent shall be in the Lender's sole discretion), sell, transfer
or convey any interest in, or suffer or permit any lien or encumbrance to be
created upon or with respect to, any of the Collateral (other than as created
under this Agreement) during the term of the pledge established hereby.
(b) The Pledgor will, at its own expense, at any time and from time
to time at the Pledgee's request, do, make, procure, execute and deliver all
acts, things, writings, assurances and other documents as may be required by the
Pledgee to further enhance, preserve, establish, demonstrate or enforce the
Pledgee's rights, interests and remedies created by, provided in, or emanating
from, this Agreement.
(c) The Pledgor agrees, except with respect to the Pledged Shares,
that (i) it shall not permit any Pledged Company to issue certificates
representing the Pledged Interests without the Lender's written consent and (ii)
it shall cause each Pledged Company to issue certificates with respect to any
Pledged Interests at the Lender's request.
7. RIGHTS OF THE PLEDGOR. So long as no Event of Default has occurred and
is continuing, and so long as the Pledgee has not transferred the Collateral to
its own name under Section 8 hereof:
(a) The Pledgor shall be entitled to receive and retain any cash
dividends and other cash distributions paid on the Collateral, in each case, to
the extent permitted pursuant to the Credit Agreement.
(b) The Pledgor shall be entitled to vote or consent or grant
waivers or ratifications with respect to the Collateral in any manner not
inconsistent with this Agreement, the Credit Agreement or any other Loan
Document. The Pledgor hereby grants to the Pledgee an irrevocable proxy to vote
the Collateral, which proxy shall be effective immediately upon the occurrence
of and during the continuance of an Event of Default or registration of the
Collateral in the name of the Pledgee pursuant to Section 8 hereof. Upon request
of the Pledgee, the Pledgor agrees to deliver to the Pledgee such further
evidence of such irrevocable proxy or such further irrevocable proxy to vote the
Collateral during the continuance of an Event of Default as the Pledgee may
reasonably request.
8. RIGHTS OF THE PLEDGEE. At any time when an Event of Default has
occurred and is continuing, the Pledgee may in its sole discretion:
(a) Cause the Collateral to be transferred to its name or to the
name of its nominee or nominees and thereafter exercise as to such Collateral
all of the rights, powers and remedies of an owner.
(b) Collect by legal proceedings or otherwise all dividends,
interest, principal payments, capital distributions and other sums now or
hereafter payable on account of said Collateral, and hold the same as part of
the Collateral, or apply the same to any of the Obligations in such manner and
order as the Pledgee may decide in its sole discretion.
4
(c) Enter into any extension, subordination, reorganization,
deposit, merger, or consolidation agreement, or any other agreement relating to
or affecting the Collateral, and in connection therewith deposit or surrender
control of the Collateral thereunder, and accept other property in exchange
therefor and hold and apply such property or money so received in accordance
with the provisions hereof.
(d) Discharge any taxes, liens, security interests or other
encumbrances levied or placed on the Collateral or pay for the maintenance and
preservation of the Collateral; the amount of such payments, plus any and all
fees, costs and expenses of the Pledgee (including reasonable attorneys' fees
and disbursements) in connection therewith shall, at the Pledgee's option, be
(i) reimbursed by the Pledgor on demand, with interest thereon from the date
paid by Pledgee at two percent (2%) per annum above the Alternate Base Rate or
(ii) added to the Obligations secured hereby.
9. EVENT OF DEFAULT; REMEDIES. Upon the occurrence and continuance of an
Event of Default:
(a) In addition to all the rights and remedies of a secured party
under applicable law, the Pledgee shall have the right, and without demand of
performance or other demand, advertisement or notice of any kind, except as
specified below, to or upon Pledgor or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by law), to proceed forthwith to collect, receive, appropriate and
realize upon the Collateral, or any part thereof and to proceed forthwith to
sell, assign, give an option or options to purchase, contract to sell, or
otherwise dispose of and deliver the Collateral or any part thereof in one or
more parcels at public or private sale or sales at any stock exchange or
broker's board or at any of the Pledgee's offices or elsewhere at such prices
and on such terms (including, without limitation, a requirement that any
purchaser of all or any part of the Collateral shall be required to purchase any
securities constituting the Collateral solely for investment and without any
intention to make a distribution thereof) as the Pledgee in its sole and
absolute discretion deems appropriate without any liability for any loss due to
decrease in the market value of the Collateral during the period held. The
Pledgee agrees that if notice of sale shall be required by law such notification
shall be deemed reasonable and properly given if mailed to the Pledgor, postage
prepaid, at least ten (10) days (or such longer period required by any provision
of applicable laws) before any such disposition, to the address indicated in
Section 13(d) below. Any disposition of the Collateral or any part thereof may
be for cash or on credit or for future delivery without assumption of any credit
risk, with the right of the Pledgee to purchase all or any part of the
Collateral so sold at any such sale or sales, public or private, free of any
equity or right of redemption in the Pledgor, which right or equity is, to the
extent permitted by applicable law, hereby expressly waived and released by the
Pledgor.
(b) All of the Pledgee's rights and remedies, including but not
limited to the foregoing, shall be cumulative and not exclusive and shall be
enforceable alternatively, successively or concurrently as the Pledgee may deem
expedient.
(c) The Pledgee may elect to obtain (at the Pledgor's expense) the
advice of any
5
independent investment banking firm with respect to the method and manner of
sale or other disposition of any of the Collateral, the best price reasonably
obtainable therefor, the consideration of cash and/or credit terms, or any other
details concerning such sale or disposition. The Pledgee, in its sole
discretion, may elect to sell on such credit terms which it deems reasonable.
The sale of any of the Collateral on credit terms shall not relieve the Pledgor
of its liability under any Loan Document until its Obligations have been paid in
full. All payments received by the Pledgee in respect of a sale of Collateral
shall be applied to the Obligations in the manner provided in Section 10 of this
Agreement, as and when such payments are received.
(d) The Pledgor recognizes that the Pledgee may be unable to effect
a public sale of all or a part of the Collateral by reason of certain
prohibitions contained in any applicable securities law, but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view for the distribution or resale
thereof. The Pledgor agrees that private sales so made may be at prices and on
other terms less favorable to the seller than if the Collateral were sold at
public sale, and that the Pledgee has no obligation to delay the sale of any
Collateral for the period of time necessary to permit the registration of the
Collateral for public sale under the Securities Act of 1933, as amended. The
Pledgor agrees that a private sale or sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(e) If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority should be
necessary to effectuate any sale or other disposition of the Collateral, or any
partial disposition of the Collateral, the Pledgor will execute all such
applications and other instruments as may be required in connection with
securing any such consent, approval or authorization, and will otherwise use its
best efforts to secure such sale or other disposition of the Collateral as the
Pledgee may reasonably deem necessary pursuant to the terms of this Agreement.
(f) Upon any sale or other disposition, the Pledgee shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold or disposed of. Each purchaser at any such sale or other disposition
(including the Pledgee) shall hold the Collateral free from any claim or right
of the Pledgor of whatever kind, including any equity or right of redemption of
the Pledgor. The Pledgor specifically waives, to the extent permitted by
applicable laws, all rights of redemption, stay or appraisal which it had or may
have under any rule of law or statute now existing or hereafter adopted.
(g) The Pledgee shall not be obligated to make any sale or other
disposition, unless the terms thereof shall be satisfactory to it. The Pledgee
may, subject to applicable laws, without notice or publication, adjourn any
private or public sale, and, upon five (5) days' prior notice to the Pledgor,
hold such sale at any time or place to which the same may be so adjourned. In
case of any sale of all or any part of the Collateral, on credit or future
delivery, the Collateral so sold may be retained by the Pledgee until the
selling price is paid by the purchaser thereof, but the Pledgee and the Lender
shall incur no liability in the case of the failure of such purchaser to take up
and pay for the property so sold
6
and, in case of any such failure, such property may again be sold as herein
provided.
10. DISPOSITION OF PROCEEDS.
(a) The proceeds of any sale or disposition of all or any part of
the Collateral shall be applied by the Pledgee in the following order:
(i) to the payment in full of the costs and expenses of such
sale or sales, collections, and the protection, declaration and enforcement of
any security interest granted hereunder including the reasonable compensation of
the Pledgee's agents and attorneys;
(ii) to the payment of the Obligations; and
(iii) to the payment to the Pledgor of any surplus then
remaining from such proceeds, subject to the rights of any holder of a lien on
the Collateral of which the Pledgee has actual notice.
(b) In the event that the proceeds of any sale or other disposition
of the Collateral are insufficient to cover the principal of, and premium, if
any, and interest on, the Obligations secured thereby plus costs and expenses of
the sale or other disposition, the Pledgor shall remain liable for any
deficiency.
11. TERMINATION. This Agreement shall continue in full force and effect
until all of the Obligations shall have been indefeasibly paid in full and
satisfied, and the Credit Agreement shall have been terminated. Subject to any
sale or other disposition by the Pledgee of the Collateral or any part thereof
pursuant to this Agreement, the Collateral (together with the undated stock
powers delivered by the Pledgor to the Pledgee), shall be returned to the
Pledgor upon full payment, satisfaction and termination of all of the
Obligations.
12. EXPENSES OF THE PLEDGEE. All expenses (including reasonable fees and
disbursements of counsel) incurred by the Pledgee in connection with the
perfection and continuation of the security interest granted hereunder and any
actual or attempted sale or exchange of, or any enforcement, collection,
compromise or settlement respecting,the Collateral, or any other action taken by
the Pledgee hereunder whether directly or as attorney-in-fact pursuant to a
power of attorney or other authorization herein conferred, for the purpose of
satisfaction of the liability of the Pledgor for failure to pay the Obligations
or as additional amounts owing by the Pledgor to cover the Pledgee's costs of
acting against the Collateral, shall be deemed an Obligation of the Pledgor for
all purposes of this Agreement and the Pledgee may apply the Collateral to
payment of or reimbursement of itself for such liability.
7
13. GENERAL PROVISIONS.
(a) All capitalized terms used in this Pledge Agreement and not
defined herein shall have the respective meanings assigned to them in the Credit
Agreement.
(b) The Pledgee and its assigns shall have no obligation in respect
of the Collateral, except to use reasonable care in holding the Collateral and
to hold and dispose of the same in accordance with the terms of this Agreement.
(c) All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing, and unless otherwise
expressly provided herein, shall be conclusively deemed to have been received by
a party hereto and to be effective on the day on which delivered to such party
at the address set forth below, or if sent by registered or certified mail, on
the third Business Day after the day on which mailed in the United States,
addressed to such party at said address:
(i) if to the Pledgee, at
The Chase Manhattan Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Relationship Manager -
1-800-Flowers, Inc.
(ii) if to Pledgor, at
1-800-Flowers, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Telecopy: (000) 000-0000
With a copy to
Xxxxxxxxx, Xxxxxx & Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(iii) As to each party at such other address as such party
shall have designated to the other in a written notice complying as to delivery
with the provisions of this Section 13(c).
(d) No failure on the part of the Pledgee to exercise, and no delay
in exercising, any
8
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Pledgee of any right, power or remedy
hereunder preclude any other or future exercise thereof, or the exercise of any
other right, power or remedy. The remedies herein provided are cumulative and
are not exclusive of any remedies provided by law or any other agreement. The
representations, covenants and agreements of the Pledgor herein contained shall
survive the date hereof. Neither this Agreement nor the provisions hereof can be
changed, waived or terminated orally. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns except that the Pledgor may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Lender.
SECTION 14. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OR CHOICE
OF LAWS. THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
FEDERAL OR STATE COURT IN THE XXXXX XX XXX XXXX, XXXXXX XX XXX XXXX, XXXXXX OF
NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT
AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE COURTS, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY
DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF OR
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR AGREES NOT TO (I) SEEK AND
HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY
FEDERAL OR STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED
UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (II) ASSERT ANY COUNTERCLAIM
IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM IS A COMPULSORY
COUNTERCLAIM UNDER FEDERAL LAW OR NEW YORK LAW, AS APPLICABLE. THE PLEDGOR
AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD
AUTHORIZED BY THE LAWS OF NEW YORK. THE PLEDGOR AND THE PLEDGEE EACH IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on
9
the date first above written.
1-800-FLOWERS, INC.
By:___________________________
Name: Xxxxxxx X. Xxxx
Title: Treasurer
THE CHASE MANHATTAN BANK
By: ________________________
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
10
SCHEDULE A
1. Pledged Company: Fresh Intellectual Properties, Inc.
Jurisdiction of Incorporation: Delaware
Stock owned by Pledgor
Class: Common
Number of Shares: 1000
Stock Certificate No.: #1
Percentage of issued and outstanding shares: 100%
2. Pledged Company: 1-800-Flowers Retail Inc.
Jurisdiction of Incorporation: Delaware
Stock owned by Pledgor
Class: Common
Number of Shares: 1000
Stock Certificate No.: #2
Percentage of issued and outstanding shares: 100%
3. Pledged Company: 800-Flowers, Inc.
Jurisdiction of Incorporation: New York
Stock owned by Pledgor
Class: Common
Number of Shares: 10
Stock Certificate No.: #1
Percentage of issued and outstanding shares: 100%
4. Pledged Company: 800-Gifthouse, Inc.
Jurisdiction of Incorporation: New York
Stock owned by Pledgor
Class: Common
Number of Shares: 10
Stock Certificate No.: #1
Percentage of issued and outstanding shares: 100%
5. Pledged Company: The Plow & Hearth, Inc.
Jurisdiction of Incorporation: Virginia
Stock owned by Pledgor
Class: Common
Number of Shares: 95,672
11
Stock Certificate Nos.: 320 & 321
Percentage of issued and outstanding shares: 88.31%
12
EXHIBIT C-2
SUBSIDIARY PLEDGE AGREEMENT
PLEDGE AGREEMENT, (the "Agreement") dated as of March 19, 1999 by and
between _____________________________, a ____________ corporation (the
"Pledgor") and THE CHASE MANHATTAN BANK, a New York banking corporation having
an office at 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Pledgee").
RECITALS
A. 1-800-Flowers, Inc., a Delaware corporation (the "Company") and the
Pledgee, have entered into a Credit Agreement dated as of March 19, 1999 (as the
same may be hereafter amended, modified, restated or supplemented from time to
time, the "Credit Agreement") pursuant to which the Company will receive loans
and other financial accommodations from the Lender and will incur Obligations.
B. Pursuant to a Guaranty dated the date hereof, the Pledgor has
guaranteed the payment by the Company of all its Obligations (the obligations of
the Pledgor under such Guaranty are hereinafter referred to as the "Guaranty
Obligations").
C. The Pledgor is the beneficial owner of that percentage of the issued
and outstanding capital stock or membership or other equity interests of each
Subsidiary of the Pledgor listed on Schedule A annexed hereto (collectively, the
"Pledged Companies") as indicated on such Schedule A.
D. In order to induce the Lender to enter into the Credit Agreement and to
extend credit to the Company on and after the date hereof as provided in the
Credit Agreement, the Pledgor wishes to grant to the Pledgee security and
assurance in order to secure the payment and performance of all its Guaranty
Obligations, and to that effect to pledge to the Pledgee, subject to the proviso
below, all of the issued and outstanding capital stock of the Pledged Companies
(the "Pledged Shares") and all of the membership or other equity interests in
the Pledged Companies (the "Pledged Rights", together with the Pledged Shares,
collectively, the "Pledged Interests") that is owned by the Pledgor, including,
without limitation, the Pledged Interests listed opposite the name of the
Pledgor as more particularly described on Schedule A and, with respect to the
Pledged Shares, as represented by the stock certificates referenced thereon.
Accordingly, the parties hereto agree as follows:
1. SECURITY INTEREST. As security for the Guaranty Obligations, including
any and all renewals or extensions thereof, the Pledgor hereby delivers, pledges
and assigns to the Pledgee and creates in the Pledgee a first security interest
in all of the Pledgor's right, title and interest in and to all of the Pledged
Interests, together with all rights and privileges of the Pledgor with respect
thereto,
all proceeds, income and profits thereof and all property received with respect
to the Pledged Interests in addition thereto, in exchange thereof or in
substitution therefor (collectively, the "Collateral"). The Pledgor has
delivered to the Pledgee, with respect to the Pledged Shares existing on the
date hereof, certificates evidencing such Pledged Shares, together with undated
stock powers duly executed in blank by the Pledgor.
2. STOCK DIVIDENDS, OPTIONS, OR OTHER ADJUSTMENTS. The Pledgee shall
receive, as Collateral, any and all additional shares of stock, membership
interests or other property of any kind distributable on or by reason of the
Collateral pledged hereunder, whether in the form of or by way of dividends,
warrants, partial liquidation, conversion, prepayments or redemptions (in whole
or in part), liquidation, or otherwise with the exceptions of cash dividends or
other cash distributions to the extent permitted under Section 7(a). If any
additional shares of capital stock, instruments, or other property against which
a security interest can only be perfected by possession by the Pledgee, which
are distributable on or by reason of the Collateral pledged hereunder, shall
come into the possession or control of the Pledgor, the Pledgor shall, hold or
control in trust and forthwith transfer and deliver the same to the Pledgee
subject to the provisions hereof.
3. DELIVERY OF SHARE CERTIFICATES; STOCK POWERS; DOCUMENTS. The Pledgor
agrees to deliver all share certificates, undated stock powers duly executed in
blank, documents, agreements, financing statements, amendments thereto,
assignments or other writings as the Pledgee may request to carry out the terms
of this Agreement or to protect or enforce the lien and security interest in the
Collateral hereunder granted hereby to the Pledgee and further agrees to do and
cause to be done, upon the Pledgee's request, all things reasonably determined
by the Pledgee to be necessary to perfect and keep in full force the lien in the
Collateral hereunder granted hereby in favor of the Pledgee, including, but not
limited to, the prompt payment of all documented out-of-pocket fees and expenses
incurred in connection with any filings made to perfect or continue the lien and
security interest in the Collateral hereunder granted hereby in favor of the
Pledgee. The Pledgor agrees to make appropriate entries upon its books and
records (including without limitation its stock record and transfer books)
disclosing the lien against the Collateral hereunder granted hereby to the
Pledgee hereunder. The Pledgor further agrees to promptly deliver to the
Pledgee, or cause the corporation or other entity issuing the Collateral to
deliver directly to the Pledgee, share certificates or other documents
representing Collateral acquired or received after the date of this Agreement
with an undated stock power duly executed by the Pledgor in blank. If at any
time the Pledgee notifies the Pledgor that additional stock powers endorsed in
blank with respect to the Collateral are required, the Pledgor shall promptly
execute in blank and deliver such stock powers as the Pledgee may request.
4. POWER OF ATTORNEY. The Pledgor hereby constitutes and irrevocably
appoints the Pledgee, with full power of substitution and revocation by the
Pledgee, as Pledgor's true and lawful attorney-in-fact, to the full extent
permitted by law, at any time or times when an Event of Default has occurred and
is continuing to affix to certificates and documents representing the Collateral
the stock
2
power delivered with respect thereto, to transfer or cause the transfer of the
Collateral, or any part thereof on the books of the corporation or other entity
issuing the same, to the name of the Pledgee or the Pledgee's nominee and
thereafter to exercise as to such Collateral all the rights, powers and remedies
of an owner. The power of attorney granted pursuant to this Agreement and all
authority hereby conferred are granted and conferred solely to protect the
Pledgee's and the Lender's interest in the Collateral and shall not impose any
duty upon the Pledgee to exercise any power. Subject to Section 11, this power
of attorney shall be irrevocable as one coupled with an interest.
5. INDUCING REPRESENTATIONS OF THE PLEDGOR. The Pledgor makes the
following representations and warranties to the Pledgee; each and all of which
shall survive the execution and delivery of this Agreement:
(a) The information concerning the Pledged Companies and the
Pledgor's beneficial ownership of the Pledged Interests thereof that is
contained in Schedule A is correct in all respects.
(b) The Pledgor is the sole legal and beneficial owner of, and has
good and indefeasible title to, the Pledged Interests pledged by the Pledgor,
free and clear of all pledges, liens, security interests and other encumbrances
and restrictions on the transfer and assignment thereof, other than the security
interest created by this Agreement, and restrictions on transfer imposed by
applicable state and federal securities laws generally, and has the unqualified
right and authority to execute this Agreement and to pledge the Collateral to
the Pledgee as provided for herein.
(c) There are no outstanding options, warrants or other agreements
to which the Pledged Companies or the Pledgor is a party with respect to the
Pledged Interests pledged by the Pledgor.
(d) The Pledged Shares pledged by the Pledgor have been validly
issued and are fully paid and non-assessable; the holder or holders of the
Pledged Interests are not and will not be subject to any personal liability as
such holder under any applicable law, subject to Section 630 of the Business
Corporation Law of the State of New York with respect to each Pledged Company
which is a New York Corporation; and are not subject to any charter, by-law,
statutory, contractual or other restrictions governing their issuance, transfer,
ownership or control other than restrictions on transfer imposed by applicable
state and federal securities laws generally.
(e) Any consent, approval or authorization of or designation or
filing with any authority on the part of the Pledgor which is required in
connection with the pledge and security interest granted under this Agreement
has been obtained or effected.
(f) The execution and delivery of this Agreement by the Pledgor, and
the performance by the Pledgor of its obligations hereunder, will not result in
a violation of any mortgage, indenture,
3
contract, instrument, judgment, decree, order, statute, rule or regulation to
which the Pledgor is subject.
(g) The Pledgor has delivered to the Pledgee all instruments and
stock certificates, if any, representing the Pledged Shares, duly endorsed in
blank or accompanied by an assignment or assignments sufficient to transfer
title thereto. There are neither any instruments or certificates evidencing the
Pledged Rights nor registration books in which ownership of the Pledged Rights
are recorded.
6. OBLIGATIONS OF THE PLEDGOR. The Pledgor hereby covenants and agrees
with the Pledgee as follows:
(a) The Pledgor will not, without the prior written consent of the
Lender (which consent shall be in the Lender's sole discretion), sell, transfer
or convey any interest in, or suffer or permit any lien or encumbrance to be
created upon or with respect to, any of the Collateral (other than as created
under this Agreement) during the term of the pledge established hereby.
(b) The Pledgor will, at its own expense, at any time and from time
to time at the Pledgee's request, do, make, procure, execute and deliver all
acts, things, writings, assurances and other documents as may be required by the
Pledgee to further enhance, preserve, establish, demonstrate or enforce the
Pledgee's rights, interests and remedies created by, provided in, or emanating
from, this Agreement.
(c) The Pledgor agrees, except with respect to the Pledged Shares,
that (i) it shall not permit any Pledged Company to issue certificates
representing the Pledged Interests without the Lender's written consent and (ii)
it shall cause each Pledged Company to issue certificates with respect to any
Pledged Interests at the Lender's request.
7. RIGHTS OF THE PLEDGOR. So long as no Event of Default has occurred and
is continuing, and so long as the Pledgee has not transferred the Collateral to
its own name under Section 8 hereof:
(a) The Pledgor shall be entitled to receive and retain any cash
dividends and other cash distributions paid on the Collateral, in each case, to
the extent permitted pursuant to the Credit Agreement.
(b) The Pledgor shall be entitled to vote or consent or grant
waivers or ratifications with respect to the Collateral in any manner not
inconsistent with this Agreement, the Credit Agreement or any other Loan
Document. The Pledgor hereby grants to the Pledgee an irrevocable proxy to vote
the Collateral, which proxy shall be effective immediately upon the occurrence
of and during the continuance of Event of Default or registration of the
Collateral in the name of the Pledgee pursuant to Section 8 hereof. Upon request
of the Pledgee, the Pledgor agrees to deliver to the Pledgee such
4
further evidence of such irrevocable proxy or such further irrevocable proxy to
vote the Collateral during the continuance of an Event of Default as the Pledgee
may reasonably request.
8. RIGHTS OF THE PLEDGEE. At any time when an Event of Default has
occurred and is continuing, the Pledgee may in its sole discretion:
(a) Cause the Collateral to be transferred to its name or to the
name of its nominee or nominees and thereafter exercise as to such Collateral
all of the rights, powers and remedies of an owner.
(b) Collect by legal proceedings or otherwise all dividends,
interest, principal payments, capital distributions and other sums now or
hereafter payable on account of said Collateral, and hold the same as part of
the Collateral, or apply the same to any of the Guaranty Obligations in such
manner and order as the Pledgee may decide in its sole discretion.
(c) Enter into any extension, subordination, reorganization,
deposit, merger, or consolidation agreement, or any other agreement relating to
or affecting the Collateral, and in connection therewith deposit or surrender
control of the Collateral thereunder, and accept other property in exchange
therefor and hold and apply such property or money so received in accordance
with the provisions hereof.
(d) Discharge any taxes, liens, security interests or other
encumbrances levied or placed on the Collateral or pay for the maintenance and
preservation of the Collateral; the amount of such payments, plus any and all
fees, costs and expenses of the Pledgee (including reasonable attorneys' fees
and disbursements) in connection therewith shall, at the Pledgee's option, be
(i) reimbursed by the Pledgor on demand, with interest thereon from the date
paid by Pledgee at two percent (2%) per annum above the Alternate Base Rate or
(ii) added to the Guaranty Obligations secured hereby.
9. EVENT OF DEFAULT; REMEDIES. Upon the occurrence and continuance of an
Event of Default:
(a) In addition to all the rights and remedies of a secured party
under applicable law, the Pledgee shall have the right, and without demand of
performance or other demand, advertisement or notice of any kind, except as
specified below, to or upon Pledgor or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by law), to proceed forthwith to collect, receive, appropriate and
realize upon the Collateral, or any part thereof and to proceed forthwith to
sell, assign, give an option or options to purchase, contract to sell, or
otherwise dispose of and deliver the Collateral or any part thereof in one or
more parcels at public or private sale or sales at any stock exchange or
broker's board or at any of the Pledgee's offices or elsewhere at such prices
and on such terms (including, without limitation, a requirement that any
5
purchaser of all or any part of the Collateral shall be required to purchase any
securities constituting the Collateral solely for investment and without any
intention to make a distribution thereof) as the Pledgee in its sole and
absolute discretion deems appropriate without any liability for any loss due to
decrease in the market value of the Collateral during the period held. The
Pledgee agrees that if notice of sale shall be required by law such notification
shall be deemed reasonable and properly given if mailed to the Pledgor, postage
prepaid, at least ten (10) days (or such longer period required by any provision
of applicable laws) before any such disposition, to the address indicated in
Section 13(d) below. Any disposition of the Collateral or any part thereof may
be for cash or on credit or for future delivery without assumption of any credit
risk, with the right of the Pledgee to purchase all or any part of the
Collateral so sold at any such sale or sales, public or private, free of any
equity or right of redemption in the Pledgor, which right or equity is, to the
extent permitted by applicable law, hereby expressly waived and released by the
Pledgor.
(b) All of the Pledgee's rights and remedies, including but not
limited to the foregoing, shall be cumulative and not exclusive and shall be
enforceable alternatively, successively or concurrently as the Pledgee may deem
expedient.
(c) The Pledgee may elect to obtain (at the Pledgor's expense) the
advice of any independent investment banking firm with respect to the method and
manner of sale or other disposition of any of the Collateral, the best price
reasonably obtainable therefor, the consideration of cash and/or credit terms,
or any other details concerning such sale or disposition. The Pledgee, in its
sole discretion, may elect to sell on such credit terms which it deems
reasonable. The sale of any of the Collateral on credit terms shall not relieve
the Pledgor of its liability under any Loan Document until its Guaranty
Obligations have been paid in full. All payments received by the Pledgee in
respect of a sale of Collateral shall be applied to the Guaranty Obligations in
the manner provided in Section 10 of this Agreement, as and when such payments
are received.
(d) The Pledgor recognizes that the Pledgee may be unable to effect
a public sale of all or a part of the Collateral by reason of certain
prohibitions contained in any applicable securities law, but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view for the distribution or resale
thereof. The Pledgor agrees that private sales so made may be at prices and on
other terms less favorable to the seller than if the Collateral were sold at
public sale, and that the Pledgee has no obligation to delay the sale of any
Collateral for the period of time necessary to permit the registration of the
Collateral for public sale under the Securities Act of 1933, as amended. The
Pledgor agrees that a private sale or sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(e) If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority should be
necessary to effectuate any sale or other
6
disposition of the Collateral, or any partial disposition of the Collateral, the
Pledgor will execute all such applications and other instruments as may be
required in connection with securing any such consent, approval or
authorization, and will otherwise use its best efforts to secure such sale or
other disposition of the Collateral as the Pledgee may reasonably deem necessary
pursuant to the terms of this Agreement.
(f) Upon any sale or other disposition, the Pledgee shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold or disposed of. Each purchaser at any such sale or other disposition
(including the Pledgee) shall hold the Collateral free from any claim or right
of the Pledgor of whatever kind, including any equity or right of redemption of
the Pledgor. The Pledgor specifically waives, to the extent permitted by
applicable laws, all rights of redemption, stay or appraisal which it had or may
have under any rule of law or statute now existing or hereafter adopted.
(g) The Pledgee shall not be obligated to make any sale or other
disposition, unless the terms thereof shall be satisfactory to it. The Pledgee
may, subject to applicable laws, without notice or publication, adjourn any
private or public sale, and, upon five (5) days' prior notice to the Pledgor,
hold such sale at any time or place to which the same may be so adjourned. In
case of any sale of all or any part of the Collateral, on credit or future
delivery, the Collateral so sold may be retained by the Pledgee until the
selling price is paid by the purchaser thereof, but the Pledgee shall incur no
liability in the case of the failure of such purchaser to take up and pay for
the property so sold and, in case of any such failure, such property may again
be sold as herein provided.
10. DISPOSITION OF PROCEEDS.
(a) The proceeds of any sale or disposition of all or any part of
the Collateral shall be applied by the Pledgee in the following order:
(i) to the payment in full of the costs and expenses of such
sale or sales, collections, and the protection, declaration and enforcement of
any security interest granted hereunder including the reasonable compensation of
the Pledgee's agents and attorneys;
(ii) to the payment of the Guaranty Obligations; and
(iii) to the payment to the Pledgor of any surplus then
remaining from such proceeds, subject to the rights of any holder of a lien on
the Collateral of which the Pledgee has actual notice.
(b) In the event that the proceeds of any sale or other disposition
of the Collateral are insufficient to cover the principal of, and premium, if
any, and interest on, the Guaranty Obligations
7
secured thereby plus costs and expenses of the sale or other disposition, the
Pledgor shall remain liable for any deficiency.
11. TERMINATION. This Agreement shall continue in full force and effect
until all of the Guaranty Obligations shall have been indefeasibly paid in full
and satisfied, and the Credit Agreement shall have been terminated. Subject to
any sale or other disposition by the Pledgee of the Collateral or any part
thereof pursuant to this Agreement, the Collateral (together with the undated
stock powers delivered by the Pledgor to the Pledgee) shall be returned to the
Pledgor upon full payment, satisfaction and termination of all of the Guaranty
Obligations.
12. EXPENSES OF THE PLEDGEE. All expenses (including reasonable fees and
disbursements of counsel) incurred by the Pledgee in connection with the
perfection and continuation of the security interest granted hereunder and any
actual or attempted sale or exchange of, or any enforcement, collection,
compromise or settlement respecting,the Collateral, or any other action taken by
the Pledgee hereunder whether directly or as attorney-in-fact pursuant to a
power of attorney or other authorization herein conferred, for the purpose of
satisfaction of the liability of the Pledgor for failure to pay the Guaranty
Obligations or as additional amounts owing by the Pledgor to cover the Pledgee's
costs of acting against the Collateral, shall be deemed a Guaranty Obligation of
the Pledgor for all purposes of this Agreement and the Pledgee may apply the
Collateral to payment of or reimbursement of itself for such liability.
13. GENERAL PROVISIONS.
(a) All capitalized terms used in this Pledge Agreement and not
defined herein shall have the respective meanings assigned to them in the Credit
Agreement.
(b) The Pledgee and its assigns shall have no obligation in respect
of the Collateral, except to use reasonable care in holding the Collateral and
to hold and dispose of the same in accordance with the terms of this Agreement.
(c) All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing, and unless otherwise
expressly provided herein, shall be conclusively deemed to have been received by
a party hereto and to be effective on the day on which delivered to such party
at the address set forth below, or if sent by registered or certified mail, on
the third Business Day after the day on which mailed in the United States,
addressed to such party at said address:
(i) if to the Pledgee, at
The Chase Manhattan Bank,
as Lender
8
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Relationship Manager -
1-800-Flowers, Inc.
(ii) if to Pledgor, at
1-800-Flowers, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Telecopy: (000) 000-0000
With a copy to
Xxxxxxxxx, Xxxxxx & Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(iii) As to each party at such other address as such party
shall have designated to the other in a written notice complying as to delivery
with the provisions of this Section 13(d).
(d) No failure on the part of the Pledgee to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Pledgee of any right,
power or remedy hereunder preclude any other or future exercise thereof, or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law or any other
agreement. The representations, covenants and agreements of the Pledgor herein
contained shall survive the date hereof. Neither this Agreement nor the
provisions hereof can be changed, waived or terminated orally. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, legal representatives and assigns except that the Pledgor
may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Lender.
SECTION 14. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OR CHOICE
OF LAWS. THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
FEDERAL OR STATE COURT IN THE XXXXX XX XXX XXXX, XXXXXX XX XXX XXXX, XXXXXX OF
NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT
9
AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE COURTS, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY
DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF OR
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR AGREES NOT TO (I) SEEK AND
HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY
FEDERAL OR STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED
UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (II) ASSERT ANY COUNTERCLAIM
IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM IS A COMPULSORY
COUNTERCLAIM UNDER FEDERAL LAW OR NEW YORK LAW, AS APPLICABLE. THE PLEDGOR
AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD
AUTHORIZED BY THE LAWS OF NEW YORK. THE PLEDGOR AND THE PLEDGEE EACH IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
[PLEDGOR]
By:___________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By: ________________________
Name:
Title:
10
SCHEDULE A
Pledged Company:
Jurisdiction of Incorporation:
Stock owned by Pledgor
Class:
Number of Shares
Stock Certificate no.
Percentage of issued and outstanding shares:
11
EXHIBIT D
CORPORATE GUARANTY
THIS GUARANTY is entered into as of the 19th day of March, 1999, by EACH
OF THE UNDERSIGNED (each a "Guarantor" and, collectively, the "Guarantors") in
favor of and for the benefit of THE CHASE MANHATTAN BANK.
RECITALS
A. Pursuant to a Credit Agreement dated the date hereof, by and between
1-800-Flowers, Inc. (the "Company") and The Chase Manhattan Bank (as the same
may be amended, modified or supplemented from time to time, the "Credit
Agreement"), the Company will receive loans and other financial accommodations
from the Lender and will incur Obligations.
B. The Guarantors, being members of a group of entities affiliated with
the Company and being engaged in related businesses will receive direct and
indirect benefits from such loans and financial accommodations.
C. Each Guarantor wishes to grant the Lender security and assurance in
order to secure the payment and performance by the Company of all of its present
and future Obligations, and, to that effect, to guaranty the Obligations as set
forth herein.
Accordingly, each Guarantor hereby agrees as follows:
1. GUARANTY.
(a) Each Guarantor, jointly and severally, unconditionally and
irrevocably guarantees to the Lender the full and punctual payment by the
Company, when due, whether at the stated due date, by acceleration or otherwise,
of all Obligations of the Company, howsoever created, arising or evidenced,
voluntary or involuntary, whether direct or indirect, absolute or contingent now
or hereafter existing or owing to the Lender (collectively, the "Guaranteed
Obligations"). This Guaranty is an absolute, unconditional, continuing guaranty
of payment and not of collection of the Guaranteed Obligations and includes
Guaranteed Obligations arising from successive transactions which shall either
continue such Guaranteed Obligations or from time to time renew such Guaranteed
Obligations after the same have been satisfied. This Guaranty is in no way
conditioned upon any attempt to collect from the Company or upon any other event
or contingency, and shall be binding upon and enforceable against each Guarantor
without regard to the validity or enforceability of the Credit Agreement, the
Notes or any other Loan Document or of any term of any thereof. If for any
reason the Company shall fail or be unable duly and punctually to pay any of the
Guaranteed Obligations (including, without limitation amounts that would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. ss. 362(a)), each Guarantor will forthwith pay the
same, in cash, immediately upon demand.
(b) In the event the Credit Agreement, any Note or any other Loan
Document shall be terminated as a result of the rejection thereof by any
trustee, receiver or liquidating agent of the Company or any of its properties
in any bankruptcy, insolvency, reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar proceeding, each Guarantor's
obligations
hereunder shall continue to the same extent as if the Credit
Agreement, such Note or such other Loan Document had not been so rejected.
(c) Each Guarantor shall pay all costs, reasonable expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
and damages incurred in connection with the enforcement of the Guaranteed
Obligations of the Company under the Credit Agreement or the Note or any other
Loan Document to the extent that such costs, expenses and damages are not paid
by the Company pursuant to the respective documents.
(d) Each Guarantor further agrees that if any payment made by the
Company or any Guarantor to the Lender on any Obligation is rescinded, recovered
from or repaid by the Lender, in whole or in part, in any bankruptcy, insolvency
or similar proceeding instituted by or against the Company or any Guarantor,
this Guaranty shall continue to be fully applicable to such Guaranteed
Obligation to the same extent as though the payment so recovered or repaid had
never originally been made on such Guaranteed Obligation.
(e) If any Event of Default shall have occurred and be continuing,
the Lender and any Affiliate of the Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Lender, or any
Affiliate of the Lender to or for the credit or the account of any Guarantor
against any of and all the obligations of any Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not the Lender shall
have made any demand hereunder and although such obligations may be unmatured.
The rights under this paragraph 1(e) are in addition to other rights and
remedies (including other rights of set off) which the Lender may have.
2
2. GUARANTY CONTINUING, ABSOLUTE, UNLIMITED.
The obligations of each Guarantor hereunder shall be continuing, absolute,
irrevocable, unlimited and unconditional, shall not be subject to any
counterclaim, set-off, deduction or defense based upon any claim any Guarantor
may have against the Lender or the Company or any other person, and shall remain
in full force and effect without regard to, and, to the fullest extent permitted
by applicable law, shall not be released, discharged or in any way affected by,
any circumstance or condition (whether or not any Guarantor shall have any
knowledge or notice thereof) whatsoever which might constitute a legal or
equitable discharge or defense including, but not limited to, (a) any express or
implied amendment, modification or supplement to the Credit Agreement, any Note,
or any other Loan Document or any other agreement referred to in any thereof, or
any other instrument applicable to the Company or to the Loans, or the Letters
of Credit or any part thereof; (b) any failure on the part of the Company to
perform or comply with the Credit Agreement, any Note or any other Loan Document
or any failure of any other person to perform or comply with any term of the
Credit Agreement, any Note, or any other Loan Document or any other agreement as
aforesaid; (c) any waiver, consent, change, extension, indulgence or other
action or any action or inaction under or in respect of the Credit Agreement,
any Note, or any other Loan Document or any other agreement as aforesaid,
whether or not the Lender, the Company or any Guarantor has notice or knowledge
of any of the foregoing; (d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding with
respect to the Company, or its properties or its creditors, or any action taken
by any trustee or receiver or by any court in any such proceeding; (e) any
furnishing or acceptance of additional security or any release of any security;
(f) any limitation on the liability or obligations of the Company under the
Credit Agreement, any Note or any other Loan Document or any termination,
cancellation, frustration, invalidity or unenforceability, in whole or in part,
of the Credit Agreement, any Note, this Guaranty or any other Loan Document or
any term of any thereof; (g) any lien, charge or encumbrance on or affecting any
Guarantor's or any of the Company's respective assets and properties; (h) any
act, omission or breach on the part of the Lender under the Credit Agreement,
any Note or any other Loan Document or any other agreement at any time existing
between the Lender and the Company or any law, governmental regulation or other
agreement applicable to the Lender or any Loan; (i) any claim as a result of any
other dealings among the Lender, any Guarantor or the Company; (j) the
assignment of this Guaranty, the Credit Agreement, any Note or any other Loan
Document by the Lender to any other Person; or (k) any change in the name of the
Lender, the Company or any other Person referred to herein.
3
3. WAIVER.
Each Guarantor unconditionally waives, to the fullest extent permitted by
applicable law: (a) notice of any of the matters referred to in Section 2
hereof; (b) all notices which may be required by statute, rule of law or
otherwise to preserve any rights against any Guarantor hereunder, including,
without limitation, notice of the acceptance of this Guaranty, or the creation,
renewal, extension, modification or accrual of the Guaranteed Obligations or
notice of any other matters relating thereto, any presentment, demand, notice of
dishonor, protest, nonpayment of any damages or other amounts payable under the
Credit Agreement, any Note or any other Loan Documents; (c) any requirement for
the enforcement, assertion or exercise of any right, remedy, power or privilege
under or in respect of the Credit Agreement, any Note or any other Loan
Documents, including, without limitation, diligence in collection or protection
of or realization upon the Guaranteed Obligations or any part thereof or any
collateral thereof; (d) any requirement of diligence; (e) any requirement to
mitigate the damages resulting from a default by the Company under the Credit
Agreement, any Note or any other Loan Documents; (f) the occurrence of every
other condition precedent to which any Guarantor or the Company may otherwise be
entitled; (g) the right to require the Lender to proceed against the Company or
any other person liable on the Guaranteed Obligations, to proceed against or
exhaust any security held by the Company or any other person, or to pursue any
other remedy in the Lender's or the Lender's power whatsoever, and (h) the right
to have the property of the Company first applied to the discharge of the
Guaranteed Obligations.
The Lender may, at their election, exercise any right or remedy they may
have against the Company without affecting or impairing in any way the liability
of any Guarantor hereunder and each Guarantor waives, to the fullest extent
permitted by applicable law, any defense arising out of the absence, impairment
or loss of any right of reimbursement, contribution or subrogation or any other
right or remedy of any Guarantor against the Company, whether resulting from
such election by the Lender or otherwise. Each Guarantor waives any defense
arising by reason of any disability or other defense of the Company or by reason
of the cessation for any cause whatsoever of the liability, either in whole or
in part, of the Company to the Lender for the Guaranteed Obligations.
Each Guarantor assumes the responsibility for being and keeping informed
of the financial condition of the Company and of all other circumstances bearing
upon the risk of nonpayment of the Guaranteed Obligations and agrees that the
Lender shall not have any duty to advise any Guarantor of information regarding
any condition or circumstance or any change in such condition or circumstance.
Each Guarantor acknowledges that the Lender has not made any representations to
any Guarantor concerning the financial condition of the Company.
4. REPRESENTATIONS AND COVENANTS OF EACH GUARANTOR.
(a) The representations and warranties contained in Article IV of
the Credit
4
Agreement, to the extent they relate to a Guarantor, are true and correct as of
the date hereof and the Lender is entitled to rely on such representations and
warranties to the same extent as though the same were set forth in full herein.
(b) Each Guarantor hereby agrees to perform the covenants contained
in Article VI and Article VII of the Credit Agreement, to the extent they relate
to the Guarantor, and the Lender is entitled to rely on such agreement to
perform such covenants to the same extent as though the same were set forth in
full herein.
5. PAYMENTS.
Each payment by each Guarantor to the Lender under this Guaranty shall be
made in the time, place and manner provided for payments in the Credit Agreement
without set-off or counterclaim to the account at which such payment is required
to be paid by the Company under the Credit Agreement.
6. PARTIES.
This Guaranty shall inure to the benefit of the Lender and their
respective successors, assigns or transferees, and shall be binding upon the
Guarantors and their respective successors and assigns. No Guarantor may
delegate any of its duties under this Guaranty without the prior written consent
of the Lender.
7. NOTICES.
Any notice shall be conclusively deemed to have been received by a party
hereto and to be effective on the day on which delivered to such party at the
address set forth below, or if sent by registered or certified mail, on the
third Business Day after the day on which mailed in the United States, addressed
to such party at said address:
(a) if to the Lender,
The Chase Manhattan Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Account Officer -
1-800-FLOWERS, INC.
Telecopy:
5
(b) if to a Guarantor,
1-800-Flowers, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Telecopy: (000) 000-0000
With a copy to
Xxxxxxxxx, Xxxxxx & Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
and
(c) as to each such party at such other address as such party shall
have designated to the other in a written notice complying as to delivery with
the provisions of this Section 7.
8. REMEDIES.
Each Guarantor stipulates that the remedies at law in respect of any
default or threatened default by a Guarantor in the performance of or compliance
with any of the terms of this Guaranty are not and will not be adequate, and
that any of such terms may be specifically enforced by a decree for specific
performance or by an injunction against violation of any such terms or
otherwise.
9. RIGHTS TO DEAL WITH THE COMPANY.
At any time and from time to time, without terminating, affecting or
impairing the validity of this Guaranty or the obligations of any Guarantor
hereunder, the Lender may deal with the Company in the same manner and as fully
as if this Guaranty did not exist and shall be entitled, among other things, to
grant the Company, without notice or demand and without affecting any
Guarantor's liability hereunder, such extension or extensions of time to
perform, renew, compromise, accelerate or otherwise change the time for payment
of or otherwise change the terms of indebtedness or any part thereof contained
in or arising under the Credit Agreement, any Note or any other Loan Documents,
or to waive any obligation of the Company to perform, any act or acts as the
Lender may deem advisable.
6
10. SUBROGATION.
(a) Upon any payment made or action taken by a Guarantor pursuant to this
Guaranty, such Guarantor shall, subject to the provisions of Sections 10(b) and
(c) hereof, be fully subrogated to all of the rights of the Lender against the
Company arising out of the action or inaction of the Company for which such
payment was made or action taken by such Guarantor.
(b) Any claims of such Guarantor against the Company arising from payments
made or actions taken by such Guarantor pursuant to the provisions of this
Guaranty shall be in all respects subordinate to the full and complete or final
and indefeasible payment or performance and discharge, as the case may be, of
all amounts, obligations and liabilities, the payments or performance and
discharge of which are guaranteed by this Guaranty, and no payment hereunder by
a Guarantor shall give rise to any claim of such Guarantor against the Lender.
(c) Notwithstanding anything to the contrary contained in this Section 10,
no Guarantor shall be subrogated to the rights of the Lender against the Company
until all of the Obligations of the Company have been paid finally and
indefeasibly in full, and that subrogation shall be suspended upon the
occurrence of the events described in Section 1(d) until the Lender is
indefeasibly paid in full.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
All representations, warranties, covenants and agreements made herein,
including representations and warranties deemed made herein, shall survive any
investigation or inspection made by or on behalf of the Lender and shall
continue in full force and effect until all of the obligations of the Guarantors
under this Guaranty shall be fully performed in accordance with the terms
hereof, and until the payment in full of the Guaranteed Obligations.
12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THIS
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT IN THE XXXXX XX XXX XXXX, XXXXXX XX XXX XXXX,
XXXXXX OF NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
THE VENUE OF
7
THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS GUARANTY OR ANY
DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER THEREOF MAY
NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH GUARANTOR AGREES (I) NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY
REVIEW OF THE JUDGMENT OF ANY SUCH FEDERAL OR STATE COURT BY ANY FEDERAL OR
STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO
GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (II) NOT TO ASSERT ANY COUNTERCLAIM,
IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM IS A COMPULSORY
COUNTERCLAIM UNDER FEDERAL LAW OR NEW YORK LAW, AS APPLICABLE. EACH GUARANTOR
AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS GUARANTY OR ANY METHOD
AUTHORIZED BY THE LAWS OF NEW YORK. THE LENDER AND EACH GUARANTOR IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY, THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13. MISCELLANEOUS.
(a) All capitalized terms used herein and not defined herein shall have
the meanings specified in the Credit Agreement.
(b) This Guaranty is the joint and several obligation of each Guarantor,
and may be enforced against each Guarantor separately, whether or not
enforcement of any right or remedy hereunder has been sought against any other
Guarantor. Each Guarantor acknowledges that its obligations hereunder will not
be released or affected by the failure of the other Guarantors to execute the
Guaranty or by a determination that all or a part of this Guaranty with respect
to any other Guarantor is invalid or unenforceable.
(c) If any term of this Guaranty or any application thereof shall be
invalid or unenforceable, the remainder of this Guaranty and any other
application of such term shall not be affected thereby.
(d) Any term of this Guaranty may be amended, waived, discharged or
terminated only by an instrument in writing signed by each Guarantor and the
Lender.
(e) The headings in this Guaranty are for purposes of reference only and
shall not limit or define the meaning hereof.
8
(f) No delay or omission by the Lender in the exercise of any right under
this Guaranty shall impair any such right, nor shall it be construed to be
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise of any other right.
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
executed and delivered as of the day and year first above written.
800-FLOWERS, INC.
By:___________________________
Title:
1-800-FLOWERS RETAIL INC.
By:___________________________
Title:
FRESH INTELLECTUAL
PROPERTIES, INC.
By:___________________________
Title:
800-GIFTHOUSE, INC.
By:___________________________
Title:
1-800-FLOWERS TEAM
SERVICES, INC.
By:___________________________
Title:
9
TELEWAY, INC.
By:____________________________
Title:
BLOOMLINK SYSTEMS, INC.
By:____________________________
Title:
1-800-FLOWERS ACQUISITION CORP.
By:____________________________
Title:
ST. CLAIRE FLORAL CO., INC.
By:_____________________________
Title:
FLORAL WORKS, INC.
By:_____________________________
Title:
AMALGAMATED CONSOLIDATED
ENTERPRISES, INC.
By:_____________________________
Title:
THE PLOW & HEARTH, INC.
By:_____________________________
10
Title:
X.X. XXXXXX COMPANY, INC.
By:____________________________
Title:
XXXXXX'X ACQUISITION
CORPORATION
By:____________________________
Title:
XXXXXX'X, INC.
By:_____________________________
Title:
FLORISTS' CAPITAL CORPORATION
INC.
By:____________________________
Title:
11
EXHIBIT E
[LETTERHEAD OF COUNSEL TO THE
COMPANY AND ITS SUBSIDIARIES]
March 19, 1999
The Chase Manhattan Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We have acted as counsel to 1-800-Flowers, Inc. (the "Company"), a
Delaware corporation, and to 800-Flowers, Inc., a New York corporation,
1-800-Flowers Retail Inc., a Delaware corporation, Fresh Intellectual
Properties, Inc., a Delaware corporation, 800-Gifthouse, Inc., a New York
corporation, The Plow & Hearth, Inc., a Virginia corporation, 1-800-Flowers Team
Services, Inc., a Delaware corporation, Teleway, Inc., a New York corporation,
Bloomlink Systems, Inc., a New York corporation, St. Claire Floral Co., Inc., a
New York corporation, Floral Works, Inc., a Delaware corporation, Amalgamated
Consolidated Enterprises, Inc., a Nevada corporation, XX Xxxxxx Company, Inc., a
California corporation, Xxxxxx'x Acquisition Corporation, a California
corporation, Xxxxxx'x, Inc., a California corporation, and Florists' Capital
Corporation, a California corporation (collectively, the "Guarantors"), in
connection with the Credit Agreement (the "Agreement") dated the date hereof
between the Company and The Chase Manhattan Bank, pursuant to which the Lender
has agreed to extend credit to the Company in an aggregate principal amount not
to exceed $30,000,000. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Agreement.
In acting as such counsel, we have examined:
(a) a counterpart of the Agreement executed by the Company;
(b) the Revolving Credit Note and the Term Note, each executed by the
Company in favor of the Lender;
(c) a counterpart of the Pledge Agreement executed by the Company; and
(d) a counterpart of the Guaranty executed by each Guarantor;
The documents referred to in items (a) through (d) above are hereinafter
referred to collectively as the "Loan Documents".
We have assumed the authenticity of all documents submitted to us as
originals, the conformity to the originals of all documents submitted to us as
certified, conformed or photostatic copies and the authenticity of the originals
of such copies. We have also examined originals, or copies certified to our
satisfaction, of such corporate records, certificates of public officials,
certificates of corporate officers of the Company and each Guarantor and such
other instruments and documents as we have deemed necessary as a basis for the
opinions hereinafter set forth. As to questions of fact, we have, to the extent
that such facts were not independently established by us, relied upon such
certificates.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that,
1. The Company and the Guarantors are each a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
their incorporation and in good standing in each jurisdiction wherein the
conduct of its business or any ownership of its properties requires it to be
qualified to do business except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect, and each has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged and to execute and perform each of the Loan Documents to
which it is a party.
2. The Company and the Guarantors each have the requisite corporate power
and authority to execute, deliver and perform the Loan Documents to which it is
a party, each of which has been duly authorized by all necessary and proper
corporate action.
3. The Loan Documents to which the Company or the Guarantors are a party
constitute the legal, valid and binding obligation of the Company and the
Guarantors (to the extent they are a party thereto) enforceable against the
Company and each Guarantor, as the case may be, in accordance with their
respective terms subject as to enforcement by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally, and by equitable principles of general application.
4. Neither the execution and delivery by the Company and the Guarantors of
the Loan Documents to which they are a party nor the performance by the Company
or the Guarantors of their respective obligations under the Loan Documents, will
(a) violate any law, rule or regulation or, to our knowledge, any order or
decree of any court or governmental instrumentality binding upon the Company or
any Guarantor, (b) contravene the Certificate of Incorporation or By-Laws of the
Company or any Guarantor or, result in a breach of or constitute a default (with
due notice or lapse of time or both) under any agreements to which the Company
or any Guarantor is bound of which we are aware,
2
or, to our knowledge, result in the creation or imposition of any lien, charge,
or encumbrance upon any of the property or assets of the Company or any
Guarantor other than the liens granted pursuant to the Loan Documents, or (c)
require the consent, license, approval or authorization of any governmental or
public body or authority.
5. Neither the Company nor any Guarantor is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940.
6. No consent or authorization of, filing with or other act by or in
respect of any governmental authority is required to be obtained by the Company
or any Guarantor for the valid execution, delivery and performance of the Loan
Documents to which they are a party.
7. Assuming the proceeds of the Loans are used for the purposes set forth
in Section 3.02 of the Agreement, the making of the loans contemplated therein
and the application of the proceeds thereof will not violate the provisions of
Regulation U or X of the Board of Governors of the Federal Reserve System.
8. To the best of our knowledge there are no actions, suits or proceedings
against any of the Company or any Guarantor, pending or threatened against the
Company or any Guarantor, before any court, governmental agency or arbitrator
which challenges the validity or enforceability of any Loan Document or which,
if adversely determined, would impair the ability of the Company or any
Guarantor to perform their respective obligations under the Loan Documents to
which they are a party.
9. The Company is the owner of record of all of the outstanding capital
stock of each Guarantor. The authorized capital stock of each Guarantor is as
set forth on Schedule A to the Pledge Agreement. All such outstanding shares of
capital stock have been duly authorized and validly issued, are fully paid and
non-assessable and, except for liens granted to the Lender under the Pledge
Agreement are owned by the Company, free and clear of all liens, charges, claims
or encumbrances or limitations on voting rights. To the best of our knowledge
after due inquiry there are no existing convertible securities, options,
warrants, calls, subscriptions, rights (including preemptive rights) or other
similar agreements relating to the capital stock of any Guarantor, other than
the Stockholders Agreement with respect to the shares of P&H.
10. Each Pledge Agreement creates a valid first priority lien and security
interest in favor of the Lender in the shares of capital stock of the Pledged
Companies and the Collateral (each as defined in the Pledge Agreement) and the
Lender's possession of the certificates representing the shares of the Pledged
Companies delivered to the Lender today results in perfection of such liens and
security interest for so long as the Lender maintains such possession.
Very truly yours,
3
EXHIBIT F
PERMITTED ACQUISITION SUMMARY
I. TRANSACTION SUMMARY
1. Name of Seller(s):
2. Name of Purchaser(s):
(describe corporate relationship to Company)
(e.g., wholly-owned direct subsidiary)
3. Type of Transaction (asset or stock acquisition):
If stock transaction, name of acquired entity:
4. Description of Purchase Price and Financing: (amount, how and when
payable, adjustments, common stock, other)
5. Description of Other Financial Aspects of Transaction:
(including, without limitation, liabilities assumed or acquired
(directly or indirectly)).
6. Description of Business which is the subject of Transaction:
4
II. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Agent and each Lender
with respect to the transaction summarized above (the "Transaction") as follows:
1. The information provided with respect to the Transaction in paragraphs
1 through 6 of paragraph I, above is true and correct.
2. The acquisition agreement governing the Transaction shall include
without limitation, the following representations and warranties by the seller
(and which representations shall not be waived by purchaser without the prior
written consent of the Lenders); (i) the proposed transaction has been approved
by all necessary corporate, partnership or limited liability company action or
other action required under seller's governing instruments (or will be so
approved on or prior to the date of closing) and does not require the consent or
approval of any third parties including, without limitation, any governmental
authority, other than consents and approvals received and in full force and
effect at the time of closing of the Transaction, and (ii) the shares of stock
or assets to be acquired in the Transaction will be sold free and clear of all
Liens and encumbrances other than Permitted Liens.
3. No Default or Event of Default has occurred and is continuing on the
date hereof or will occur after giving effect to the Transaction, including,
without limitation, any Event of Default arising from the failure to comply with
the covenants set forth in Section 7.13. Attached to this Certificate is a
calculation demonstrating the Company's compliance with the covenants set forth
in Section 7.13 as of the date of closing of the Transaction.
4. The Transaction constitutes a Permitted Acquisition.
Capitalized terms used herein are not defined, shall have the
meanings set forth in the Credit Agreement dated as of March 19, 1999, between
1-800-Flowers, Inc. and The Chase Manhattan Bank (the "Credit Agreement").
5
IN WITNESS WHEREOF, the Company has executed this certificate as of the
___ day of _______________________, 199_.
1-800-FLOWERS, INC.
By:________________________________
Name:
Title:
6
