AMENDMENT AGREEMENT NO. 2
TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT AGREEMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment Agreement") is made and entered into as of this 31st day of
July, 2000, by and among XXXXXX XXXXXXX, INC., a Florida corporation (the
"Parent"), XXXXXX XXXXXXX RETAIL, INC., a Delaware corporation (the "Borrower"),
BANK OF AMERICA, N.A., successor by merger of NationsBank, N.A., a national
banking association, as Agent (the "Agent") for the Lenders parties, from time
to time (the "Lender" or "Lenders" as the case may be) to the Credit Agreement
described below.
W I T N E S S E T H:
WHEREAS, the Parent, the Borrower, the Agent and Bank of America, as
Lender, have entered into an Amended and Restated Credit Agreement dated June 4,
1999, as amended by Amendment Agreement No. 1 dated as of June 13, 2000 (the
"Credit Agreement") pursuant to which the Lender has agreed to make available to
the Borrower a revolving credit facility of up to $40,000,000; and
WHEREAS, as a condition to the making of loans the Lender has required
that each Subsidiary of the Parent (other than the Borrower) execute a Facility
Guaranty whereby it guarantees payment of the Obligations arising under the
Credit Agreement; and
WHEREAS, the Borrower has failed to comply with certain of the
financial covenants contained in the Credit Agreement and has requested that
certain of the covenants be amended; and
WHEREAS, as a result of significant legal restructuring of the Parent
and its Subsidiaries the Lender has required that the Parent be made a
co-borrower under the Credit Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, promises and
conditions herein set forth, it is hereby agreed as follows:
1. Definitions. The term "Credit Agreement" as used herein and in the
Loan Documents shall mean that certain Credit Agreement as heretofore and hereby
amended and as from time to time further amended or modified. Unless the context
otherwise requires, all capitalized terms used herein without definition shall
have the respective meanings provided therefor in the Credit Agreement.
2. Amendments. Subject to the conditions set forth herein, the Credit
Agreement shall be and hereby is amended, effective as of the date hereof, as
follows:
1
(a) Wherever the term "Borrower" is used in the Credit
Agreement such term shall mean and include the Parent, and the Borrower
and the Parent hereby agree that they are jointly and severally liable
for payment of the Obligations. The Parent hereby agrees to perform,
comply with and be bound by each of the provisions of the Credit
Agreement which apply to a "Borrower".
(b) The following new definitions are hereby added to Section
1.2 in the appropriate alphabetical order:
"Amendment No. 2" means Amendment Agreement No. 2
dated July 31, 2000 to this Agreement.
"Asset Disposition" means any voluntary disposition,
whether by sale, lease or other transfer, of (a) any of the
assets, excluding cash and cash equivalents and inventory sold
in the ordinary course of business, of the Borrower or its
Subsidiaries, and (b) any of the capital stock, or securities
or investments exchangeable, exercisable or convertible for or
into, or otherwise entitling the holder to receive any of the
capital stock, of any Subsidiary (other than a disposition to
the Borrower or a Guarantor).
"Assignment of Leases" means, collectively, the
Assignment of Lease delivered from time to time by the
Borrower or any Subsidiary to the Agent relating to real
property leased by the Borrower or any Subsidiary.
"Consolidated Revenue" means, as of any date on which
the amount thereof is to be determined, the gross revenue of
the Parent and its Subsidiaries all as determined on a
consolidated basis in accordance with GAAP.
"Minimum Order Generation EBITDA" means, with respect
to Florafax Financial Services Corp., National Flora, Inc.,
Flower Club International, Inc. and Worldwide Floral & Gifts,
Inc. and their Subsidiaries the sum of, without duplication,
(i) net income, (ii) interest expense, (iii) taxes on income,
(iv) amortization and (v) depreciation, all determined on a
consolidated basis in accordance with GAAP and in the same
manner as Consolidated EBITDA is determined.
"Mortgaged Property" means, collectively, the real
property, leasehold interests, improvements, fixtures and
other items of real and personal property related thereto and
the products and proceeds thereof of the Borrower and its
Subsidiaries at the Closing Date, and thereafter, any of such
property owned or acquired by the Borrower or any Subsidiary.
"Net Proceeds" (a) from any public or private
offering of any security or Indebtedness means cash payments
received by the Borrower or any Subsidiary thereof as and when
received, net of all legal, accounting, banking and
underwriting fees and expenses, commissions, discounts and
other issuance expenses incurred in connection therewith and
2
all taxes required to be paid or accrued as a consequence of
such issuance; and (b) from any Asset Disposition means cash
payments received by the Borrower or any Subsidiary therefrom
(including any cash payments received pursuant to any note or
other debt security received in connection with any Asset
Disposition) as and when received, net of (i) all legal fees
and expenses and other fees and expenses paid to third parties
and incurred in connection therewith, (ii) all taxes required
to be paid or accrued as a consequence of such disposition,
(iii) all amounts applied to repayment of Indebtedness (other
than the Obligations) secured by a Lien on the asset or
property disposed and (iv) all amounts reinvested by the
Borrower or a Subsidiary substantially contemporaneously with
such disposition (or to be invested within 90 days pursuant to
an investment plan approved by the Agent) in replacement
assets of substantially equal or greater value and utility.
(c) The definitions of "Applicable Margin" and "Applicable
Unused Fee" in Section 1.2 are hereby amended in their entirety so that
as amended they shall read as follows:
"Applicable Margin" means from the date of Amendment
No. 2 three and one-half percent (3 1/2%) in the case of
Eurodollar Rate Loans and two percent (2%) in the case of Base
Rate Loans.
"Applicable Unused Fee" means from the date of
Amendment No. 2 one-half of one percent (1/2%).
(d) The definition of "Mortgage" in Section 1.2 is hereby
amended in its entirety so that as amended it shall read as follows:
"Mortgage" means, collectively, all mortgages,
leasehold mortgages, deeds of trust and deeds to secure debt
and Assignments of Leases granting a Lien to the Agent (or a
trustee for the benefit of the Agent) for the benefit of the
Lenders in Collateral constituting real property (including
certain real property leases), as such documents may be
amended, modified or supplemented from time to time.
(e) The definition of "Total Revolving Credit Commitment" in
Section 1.2 is hereby amended in its entirety so that as amended it
shall read as follows:
"Total Revolving Credit Commitment" means for the
periods set forth below the amount set forth opposite such
period:
Period Amount
From date of Amendment No. 2 $36,000,000
through February 27, 2001
February 28, 2001 through $25,000,000
3
May 30, 2001
Thereafter $20,000,000
; provided, however, that any reduction of the Revolving
Credit Facility pursuant to either of Section 2.7 or Section
2.14 shall reduce the amounts set forth above for each of the
periods remaining from and after the date of such payment.
(f) A new Section 2.14 is hereby added to the Agreement which
Section shall read as follows:
2.14 Mandatory Prepayment. In addition to reductions
of the Revolving Credit Facility effected under Section 2.7
from and after the receipt by the Borrower of $8,000,000 of
the Net Proceeds from the Asset Dispositions described on
Schedule 2.14, the Borrower shall make, or shall cause each
applicable Subsidiary to make, unless the Lenders agree
otherwise, a prepayment of the Revolving Credit Facility from
the proceeds of (i) each private or public offering of equity
securities of the Parent or any Subsidiary (other than
securities issued by the Parent or a Subsidiary) in an amount
equal to fifty percent (50%) of the Net Proceeds of each
issuance of equity securities of the Parent or any Subsidiary
(including without limitation any security not constituting
Indebtedness exchangeable, exercisable or convertible for or
into equity securities), (ii) the issuance of any Indebtedness
for Money Borrowed permitted by the Required Lenders, in an
amount equal to one hundred percent (100%) of the Net Proceeds
from the issuance of such Indebtedness excluding Indebtedness
permitted to be issued under Section 9.5(d), (f) and (g), and
(iii) each Asset Disposition permitted under Section 9.6 in an
amount equal to one hundred percent (100%) of the Net Proceeds
of such Asset Disposition, each such prepayment to be made
simultaneously with receipt of such proceeds and upon not less
than two (2) Business Days' written notice to the Agent, which
notice shall include a certificate of an Authorized
Representative setting forth in reasonable detail the
calculations utilized in computing the amount of such
prepayment.
All mandatory prepayments made pursuant to this
Section 2.14 shall be applied to permanently reduce the
Outstandings and the Total Revolving Credit Commitment.
(g) A new Section 4.4 is hereby added to the Agreement which
Section shall read as follows:
"4.4 Additional Collateral. The Borrower shall
deliver to the Agent not later than thirty (30) days after the date of
Amendment No. 2 (i) the duly executed Mortgages in recordable form
sufficient to create in favor of the Agent a first priority Lien on the
real property described therein which real property is described on
Schedule 4.4 attached hereto, (ii) Assignments of Lease pursuant to
which the Borrower, Parent or Subsidiary, party to each lease covered
thereby, assign to the Agent all of its interest in such lease to the
4
extent assignable, and (iii) applications, together with motor vehicle
titles, pursuant to which a Lien in favor of the Agent is to be
recorded on each such title, covering each motor vehicle owned by the
Borrower or any of its Subsidiaries and currently titled in the name of
Borrower or any Subsidiary. The Borrower shall use commercially
reasonable efforts to cause any vehicle owned by Borrower or any of its
Subsidiaries, but not titled in the name of Borrower or any of its
Subsidiaries, to be titled in the correct entity's name as promptly as
practicable, and to deliver applications, together with motor vehicle
titles, pursuant to which a Lien in favor of the Agent is to be
recorded on each such title within 30 days following the receipt of
title in the correct entity's name. In addition, Borrower and its
Subsidiaries shall use commercially reasonable efforts to obtain from
each landlord party to the leases described in the Assignment of Leases
a landlord waiver and consent in form reasonably acceptable to the
Agent. Neither the Borrower nor any Subsidiary shall be entitled to
renew any lease identified on Schedule 4.4 attached hereto as to which
there has not been delivered to the Agent an Assignment of Lease and a
landlord waiver and consent acceptable to the Agent.
(h) Section 8.1 is hereby amended by adding new subsections
(h), (i), (j) and (k) thereto which subsections shall read as follows:
"(h) within 30 days after the end of each calendar
month, deliver to the Agent and each Lender a consolidated
balance sheet of the Parent and its Subsidiaries as at the end
of such month and the related consolidated statement of income
for such month and for the period from the beginning of the
then current Fiscal Year through the end of such month;
(i) commencing September 15, 2000, within 5 days
after the end of each week a report as to the amount of
Consolidated Revenues for such week in form acceptable to the
Agent;
(j) prior to September 15, 2000, provide copies of
the Flash Reports used by management promptly after receipt by
management; and
(k) on or before Thursday of each week deliver to
the Agent a projected cash flow forecast for the next
following period of eight consecutive weeks and not later than
Monday of each week a variance report showing the variance
from the prior week's period forecast of projected cash flow."
(i) A new Section 8.21 is hereby added to Article VIII which
section shall read as follows:
"8.21 Consultant. Within 30 days following the date
of this Amendment Agreement the Lender shall engage an
independent business consultant (the "Consultant") to assess
on behalf of the Lender the operations, finances and business
affairs of the Parent and its Subsidiaries and to furnish a
report of its findings and recommendations to the Lender.
5
Lender shall, in good faith, permit the Parent to review the
scope of the engagement and estimated costs of the services of
the Consultant which engagement shall include a limitation on
such costs. The Parent and the Borrower jointly and severally
agree to pay all reasonable costs, fees and expenses of the
Consultant incurred in connection with the performance by the
Consultant of its duties described herein. The Parent and its
Subsidiaries shall cooperate fully and in a timely manner with
the reasonable request by the Consultant, including its agents
and employees, for information, records and access to
management."
(j) Subsections (b), (c) and (e) of Section 9.1 are hereby
amended in their entirety so that as amended they shall read as
follows:
(b) Consolidated Leverage Ratio. Permit the
Consolidated Leverage Ratio as of the end of any Four-Quarter
Period ending on or after May 31, 2001 to be greater than
1.50 to 1.00.
(c) Consolidated Fixed Charge Ratio. Permit at any
time on or after May 31, 2001 the Consolidated Fixed Charge
Ratio to be less than 1.25 to 1.00.
(e) Capital Expenditures. Make or become committed to
make Capital Expenditures (on a non-cumulative basis, with the
effect that amounts not expended may not be carried forward to
a subsequent period) which exceed in the aggregate in any
fiscal quarter $500,000.
(k) Section 9.1 is hereby further amended by adding new
Subsections (f), (g), (h) and (i) thereto which subsections shall read
as follows:
(f) Consolidated Revenue. Permit the amount of
Consolidated Revenue during the months set forth below to be
less than that set forth opposite each such month:
Required
Month Consolidated Revenue
----- --------------------
August 2000 $14,700,000
September 2000 $15,500,000
October 2000 $17,600,000
November 2000 $18,000,000
December 2000 $31,000,000
January 2001 $15,600,000
February 2001 $30,000,000
March 2001 $17,800,000
April 2001 $22,300,000
May 2001 $33,500,000
6
(g) Consolidated EBITDA. Permit the amount of
Consolidated EBITDA for the 3-month period ending on the dates
set forth below, to be less than the amount set forth opposite
such date:
Quarter Ending Amount
-------------- ------
August 31, 2000 ($8,000,000)
November 30, 2000 ($ 800,000)
February 28, 2001 $9,000,000
(h) Minimum Order Generation EBITDA. Permit the
amount of Minimum Order Generation EBITDA for the 3-month
period ending on the dates set forth below to be less than the
amount set forth opposite such date:
Quarter Ending Amount
-------------- ------
August 31, 2000 $1,100,000
November 30, 2000 $1,200,000
February 28, 2001 $2,000,000
(i) Calculation. Notwithstanding any other provision
of the Agreement to the contrary, for the purpose of
calculating Consolidated EBITDA for purposes of Section 9.1(b)
and Consolidated EBIT for purposes of Section 9.1(c) for the
periods ending May 31, 2001 and August 31, 2001, such
calculation shall be for the two quarters ending May 31, 2001
and three quarters ending August 31, 2001 rather than for a
Four-Quarter Period.
(l) Section 9.2 is hereby amended in its entirety so that as
amended it shall read as follows:
9.2 Acquisitions. Make or consummate any Acquisition
or take any action to solicit the tender of securities or
proxies in respect thereof in order to effect any Acquisition.
(m) Section 9.6 is hereby amended by (i) deleting the word
"and" at the end of clause (c), (ii) deleting the period at the end of
clause (d) and inserting in lieu thereof a semi-colon and the following
proviso:
; provided, however, that the Net Proceeds received from the
disposition of any assets shall be applied in the manner set
forth in Section 2.14.
(n) Section 9.9 is hereby amended in its entirety so that as
amended it shall read as follows:
7
9.9 Restricted Payment. Make any Restricted Payment
or apply or set apart any of their assets therefor or agree to
do any of the foregoing.
(o) Section 9.10 is hereby amended by (i) inserting the word
"and" at the end of clause (b), (ii) inserting a period at the end of
clause (c) immediately preceding the word "and" and (iii) deleting the
remainder of Section 9.10.
(p) A new Section 9.18 is hereby added to Article IX which
section shall read as follows:
9.18 Subsidiary. Create or acquire any Subsidiary.
(q) Exhibit H is hereby amended in its entirety and shall be
in the form of Exhibit H attached to this Amendment Agreement.
3. Guarantors. Each of the Guarantors has joined into the execution of
this Agreement for the purpose of consenting to the amendment contained herein
and reaffirming its guaranty of the Obligations as increased by the terms of
this Amendment Agreement.
8
4. Borrower's Representations and Warranties. The Borrower and the
Parent each hereby represent, warrant and certify that:
(a) The representations and warranties made by it in Article
VII of the Credit Agreement are true on and as of the date hereof
before and after giving effect to this Amendment Agreement except that
the financial statements referred to in Section 7.6(a) shall be those
most recently furnished to each Lender pursuant to Section 8.1(a) and
(b) of the Credit Agreement;
(b) It has the power and authority to execute and perform this
Agreement and has taken all action required for the lawful execution,
delivery and performance thereof;
(c) Except as disclosed to the Lender in writing, there has
been no material adverse change in the condition, financial or
otherwise, of the Parent and its Subsidiaries since the date of the
most recent financial reports of the Parent received by each Lender
under Section 8.1 of the Credit Agreement, other than changes in the
ordinary course of business, none of which has been a material adverse
change;
(d) The business and properties of the Parent and its
Subsidiaries are not, and since the date of the most recent financial
report of the Parent and its Subsidiaries received by the Lender under
Section 8.1 of the Credit Agreement have not been, adversely affected
in any substantial way as the result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workmen, flood,
embargo, riot, activities of armed forces, war or acts of God or the
public enemy, or cancellation or loss of any major contracts; and
(e) After giving effect to this Amendment Agreement, no event
has occurred and no condition exists which, upon the consummation of
the transaction contemplated hereby, constituted a Default or an Event
of Default on the part of the Parent or the Borrower under the Credit
Agreement or the Notes either immediately or with the lapse of time or
the giving of notice, or both.
5. Conditions to Effectiveness. This Amendment Agreement shall become
effective upon receipt by the Lender of the following:
(a) four (4) counterparts of this Amendment Agreement executed
by the parties hereto;
(b) Replacement Revolving Note in the amount of the Lender's
Credit Commitment duly executed by both Borrowers and a Swing Line Note
executed by both Borrowers;
(c) an opinion of counsel for the Borrower and each of the
Guarantors in form acceptable to the Lender;
(d) copies of resolutions of the Boards of Directors of the
Borrower and each of the Guarantors authorizing the transaction
contemplated by this Amendment Agreement certified by the Secretary or
Assistant Secretary of each Borrower and Guarantor;
(e) such other instruments and documents as the Lender may
reasonably request; and
(f) payment to the Lender of all reasonable out-of-pocket
expenses of the Agent and Lender incurred in connection with this
Amendment Agreement, including reasonable fees and expenses of its
counsel.
6. Structuring and Amendment Fees. The Parent and the Borrower jointly
and severally agree to pay to the Lender a structuring and amendment fee of
$1,860,000 which fee shall be deemed earned as of the date of this Amendment
Agreement payable as follows:
(a) $180,000 upon execution and delivery of this Amendment
Agreement by the parties hereto;
(b) $180,000 on the earlier of March 1, 2001 or the Revolving
Credit Termination Date; and
(c) $1,500,000 on the earlier of May 31, 2001 or the Revolving
Credit Termination Date.
9
The Borrower and Parent agree that the failure to pay the balance of
the structuring and amendment fee shall constitute an Event of Default. The
Lender acknowledges and agrees that the Borrower shall not be obligated to pay
the Lender the unpaid bank fee of $400,000 accrued in 1999.
7. Entire Agreement. This Agreement sets forth the entire understanding
and agreement of the parties hereto in relation to the subject matter hereof and
supersedes any prior negotiations and agreements among the parties relative to
such subject matter. None of the terms or conditions of this Amendment Agreement
may be changed, modified, waived or canceled orally or otherwise, except by
writing, signed by all the parties hereto, specifying such change, modification,
waiver or cancellation of such terms or conditions, or of any proceeding or
succeeding breach thereof.
8. Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all of the other
Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.
9. Counterparts. This Amendment Agreement may be executed in
any number of counterparts and all the counterparts taken together
shall be deemed to constitute one and the same instrument.
[Remainder of page intentionally left blank.]
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
PARENT:
XXXXXX XXXXXXX, INC.
WITNESS:
By:_______________________________________
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
----------------------------
BORROWER:
XXXXXX XXXXXXX RETAIL, INC.
WITNESS:
By:______________________________________
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
----------------------------
11
GUARANTORS:
A.G.A. Flowers, Inc.
Dr. Delphinium Designs, Inc.
Xxxxxx Acquisition Corp.
GS Accounts Receivable Co.
GS Call/Credit Card Holding Co.
GS Catalog Holding Co.
GS Database Co.
GS Database Management Co.
GS East Holding Co.
GS Finance Co.
GS Intangibles Management Co.
GS Interactive, Inc.
GS Internet Holdings Co.
GS Master Holding Co.
GS Nevada, Inc.
GS Retail Holding Co.
Xxxxxx Xxxxxxx Properties, Inc.
Martina's NV, Inc.
The Rose Shop NV, Inc.
By:_________________________________
Name: Xxxxxx X. Xxxxxx
Title: President
12
GS Arizona, Inc.
GS Michigan, Inc.
Xxxxxx Xxxxxxx Pennsylvania, Inc.
GS North Carolina, Inc.
GS Ohio, Inc.
Martina's, Inc.
GSI Acquisition, Inc.
GS Florida Flowers, Inc.
National Flora, Inc.
Thrifty Acquisition, Inc.
Credit Card Management System, Inc.
Xxxxxx Acquisition, Inc.
Florafax Financial Services Corp.
Xxxxxx Xxxxxxx Operations Co.
Xxxxxx Xxxxxxx Delaware, Inc.
GS Call Center Co.
GS Gift Certificate Co.
GS Missouri, Inc.
GS South Carolina, Inc.
GS Tennessee, Inc.
GS Texas General, Inc.
GS Wisconsin General, Inc.
National Flora Florida, Inc.
GS California, Inc.
GS Illinois, Inc.
GS Minnesota, Inc.
Flower View Gardens, Inc.
Flower Club International, Inc.
Calyx & Corolla, Inc.
Xxxxxx Xxxxxxx Pittsburgh, Inc.
Worldwide Floral & Gifts, Inc.
By:_______________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Xxxx & Exotic LLC
By: Xxxxxx Xxxxxxx, Inc., its Sole Member
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
13
Xxxxxx Xxxxxxx Texas, L.P.
By: GS Texas General, Inc., its General Partner
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Xxxxxx Xxxxxxx Wisconsin Limited Partnership
By: GS Wisconsin General, Inc., its General Partner
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Xxxxxx Xxxxxxx Georgia, L.P.
By: Martina's, Inc.
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
14
LENDER:
BANK OF AMERICA, N.A.
By:____________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
15
