EXHIBIT 10.34
FLORISTS' TRANSWORLD DELIVERY, INC.
FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT
This First Amendment and Waiver to Credit Agreement (herein, the
"AMENDMENT") is entered into as of March 12, 2002, by and among Florists'
Transworld Delivery, Inc., a Michigan corporation (the "BORROWER"), IOS Brands
Corporation, a Delaware corporation (the "PARENT"), the Subsidiaries listed on
the signature pages hereof, as Guarantors, the several financial institutions
listed on the signature pages hereof, as Lenders, and ▇▇▇▇▇▇ Trust and Savings
Bank, as Administrative Agent for the Lenders.
PRELIMINARY STATEMENTS
A. The Borrower, the Parent, the Guarantors, the Lenders, and the
Administrative Agent are parties to a Credit Agreement dated as of September 27,
2001 (the "CREDIT AGREEMENT"). All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.
B. The Parent has notified the Administrative Agent and the Lenders
that it plans to enter into a reverse subsidiary merger pursuant to which (i) a
new corporation ("MERGER SUB"), will be incorporated under Delaware law, with
all of the capital stock of Merger Sub owned directly by the Borrower, (ii)
Merger Sub will merge with and into ▇▇▇.▇▇▇, an existing direct subsidiary of
the Borrower, with ▇▇▇.▇▇▇ as the surviving corporation in such merger, and
(iii) all current shareholders of ▇▇▇.▇▇▇ other than the Borrower will receive
in such merger, in exchange for their shares of ▇▇▇.▇▇▇, shares of the common
capital stock of the Parent, at an exchange ratio to be determined, with the
result that ▇▇▇.▇▇▇ will become a wholly-owned direct subsidiary of the Borrower
(the transactions described in the foregoing clauses (i), (ii) and (iii),
collectively, the "▇▇▇.▇▇▇ MERGER TRANSACTION").
C. The Parent and the Borrower have requested that the Lenders consent
to the ▇▇▇.▇▇▇ Merger Transaction, and the Required Lenders are, concurrently
herewith, consenting to the ▇▇▇.▇▇▇ Merger Transaction pursuant to the terms set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. CONSENT AND WAIVER.
By signing below, subject to the satisfaction of the conditions
precedent set forth below, the Lenders hereby consent to the ▇▇▇.▇▇▇ Merger
Transaction, and waive any violations of the following Sections of Credit
Agreement which could or would otherwise be directly caused thereby, as well as
any Default or Event of Default which could or would otherwise result from such
violations, whether such violations occurred or would otherwise occur before, on
or after the date hereof: Sections 4.1 and 4.4 (which would otherwise require
Merger Sub to become a Guarantor and pledge its assets in support of the
Obligations and would require the Borrower to pledge the stock of Merger Sub in
support of the Obligations), Section 8.1 (which would
otherwise require that Merger Sub's existence be maintained), Section 8.9 (which
could require consent of the Required Lenders if the ▇▇▇.▇▇▇ Merger Transaction
were deemed to be an Acquisition), Section 8.10 (which allows mergers of
Subsidiaries but only into the Borrower or another Subsidiary, it being
acknowledged that ▇▇▇.▇▇▇ is specifically excluded from the defined term
"SUBSIDIARY" as defined in the Credit Agreement), Section 8.11 (which restricts
the transfer of stock of Subsidiaries, including Merger Sub), Section 8.17
(which requires consent of the Required Lenders to the formation of new
Subsidiaries), and Section 8.26 (which prohibits ▇▇▇.▇▇▇ from merging or
consolidating with or into any Person).
SECTION 2. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement shall be and hereby is amended as follows:
2.1. Section 8.5 of the Credit Agreement shall be amended to
read in its entirety as follows:
SECTION 8.5. FINANCIAL REPORTS. Each of the Parent and
the Borrower shall, and shall cause each Subsidiary and ▇▇▇.▇▇▇ to,
maintain a standard system of accounting in accordance with GAAP and
shall furnish to the Administrative Agent, each Lender and each of
their duly authorized representatives such information respecting the
business and financial condition of the Parent, the Borrower and each
Subsidiary (and, to the extent specifically required herein, ▇▇▇.▇▇▇)
as the Administrative Agent or such Lender may reasonably request; and
without any request, shall furnish to the Administrative Agent and the
Lenders:
(a) as soon as available, and in any event within 50 days
after the last day of each fiscal quarter of the Parent, a copy of the
consolidated and consolidating balance sheet of the Parent and the
Subsidiaries and ▇▇▇.▇▇▇ as of the last day of such fiscal quarter and
the consolidated and consolidating statements of income, retained
earnings and cash flows of the Parent and the Subsidiaries and ▇▇▇.▇▇▇
for the fiscal quarter and for the fiscal year-to-date period then
ended, each in reasonable detail showing in comparative form the
figures for the corresponding date and period in the previous fiscal
year, prepared by the Parent in accordance with GAAP (subject to the
absence of footnote disclosures and year-end audit adjustments) and
certified by its chief financial officer or treasurer or another
officer of the Parent acceptable to the Administrative Agent;
(b) as soon as available, and in any event within 105 days
after the close of each fiscal year of the Parent, a copy of the
consolidated and consolidating balance sheet of the Parent and the
Subsidiaries and ▇▇▇.▇▇▇ as of the last day of the fiscal year then
ended and the consolidated and consolidating statements of income,
retained earnings and cash flows of the Parent and the Subsidiaries and
▇▇▇.▇▇▇ for the fiscal year then ended, and accompanying notes thereto,
each in reasonable detail showing in comparative form the figures for
the previous fiscal year, accompanied in the case of the consolidated
financial statements by an unqualified opinion of KPMG LLP or another
firm of independent public accountants of recognized standing, selected
by the Parent and
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reasonably satisfactory to the Administrative Agent and the
Required Lenders, to the effect that the consolidated financial
statements have been prepared in accordance with GAAP and present
fairly in accordance with GAAP the consolidated financial condition of
the Parent and the Subsidiaries and ▇▇▇.▇▇▇ as of the close of such
fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance
with generally accepted auditing standards and, accordingly, such
examination included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances;
(c) within the period provided in subsection (b) above, the
written statement of the accountants who certified the audit report
thereby required that in the course of their audit they have obtained
no knowledge of any Default or Event of Default, or, if such
accountants have obtained knowledge of any such Default or Event of
Default, they shall disclose in such statement the nature and period of
the existence thereof;
(d) promptly after receipt thereof, any additional written
reports, management letters or other detailed information contained in
writing concerning significant aspects of the Parent's or any
Subsidiary's or ▇▇▇.▇▇▇'s operations and financial affairs given to it
by its independent public accountants;
(e) promptly after the sending or filing thereof, copies of
each financial statement, report, notice or proxy statement sent by the
Parent or any Subsidiary or ▇▇▇.▇▇▇ to its stockholders or other equity
holders, and copies of each regular, periodic or special report,
registration statement or prospectus (including all Form 10-K, Form
10-Q and Form 8-K reports) filed by the Parent or any Subsidiary or
▇▇▇.▇▇▇ with any securities exchange or the Securities and Exchange
Commission or any successor agency;
(f) as soon as available, and in any event within 105 days
after the end of each fiscal year of the Parent, a copy of the
Parent's, the Borrower's and ▇▇▇.▇▇▇'s consolidated business plan for
the current fiscal year, such business plan to show the Parent's, the
Borrower's and ▇▇▇.▇▇▇'s projected consolidated revenues, expenses and
balance sheet on quarter-by-quarter basis, such business plan to be in
reasonable detail prepared by the Parent and in form satisfactory to
the Administrative Agent and the Required Lenders (which shall include
a summary of all assumptions made in preparing such business plan);
(g) notice of any Change in Control;
(h) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Parent or the Borrower,
written notice of any threatened or pending litigation or governmental
proceeding or labor controversy against the Parent or any Subsidiary
which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect; and
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(i) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Parent or the Borrower,
written notice of the occurrence of any Default or Event of Default
hereunder.
Each of the financial statements furnished to the Lenders pursuant to
subsection (a) of this Section 8.5 shall be accompanied by a written
certificate in the form attached hereto as Exhibit E signed by the
chief financial officer or treasurer of the Parent, or another officer
of the Parent acceptable to the Administrative Agent, to the effect
that to the best of such officer's knowledge and belief no Default or
Event of Default has occurred during the period covered by such
statements or, if any such Default or Event of Default has occurred
during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Parent
or any Subsidiary to remedy the same. Such certificate shall also set
forth the calculations supporting such statements in respect of
Sections 8.22, 8.23, and 8.24 of this Agreement.
2.2. Section 8.23(a) of the Credit Agreement shall be amended
to read in its entirety as follows:
(a) The Parent shall, at all times, maintain Net Worth of the
Parent and the Subsidiaries determined on a consolidated basis (but
EXCLUDING from the calculation of Net Worth for the purpose of this
Section 8.23(a) any increase in such Net Worth as a result of the
▇▇▇.▇▇▇ Merger Transaction as defined in that certain First Amendment
and Waiver to Credit Agreement among the parties hereto dated as of
March 12, 2002) in an amount not less than the sum of (a) $24,000,000,
plus (b) 50% of Net Income for each fiscal quarter of the Parent ending
on and after September 30, 2001, for which such Net Income is a
positive amount (I.E., there shall be no reduction to the amount of Net
Worth required to be maintained hereunder for any fiscal year in which
Net Income is less than zero) plus (c) 100% of the Net Cash Proceeds
from the Parent's or any of the Subsidiaries' issuance of new equity
securities pursuant to Section 1.13(b)(ii) hereof.
2.3. Section 8.26 of the Credit Agreement shall be amended
by deleting the reference to "51%" appearing therein and replacing it
with "100%".
2.4. Section 11.3 of the Credit Agreement shall be amended by
deleting the reference to "Section 8.5(m)" appearing in the first
sentence thereof and replacing it with "Section 8.5(i)".
2.5. Schedule 6.2 to the Credit Agreement shall be amended and
restated to read in its entirety as set forth on Schedule 6.2 attached
hereto.
2.6. Schedule A to the Pledge Agreement shall be amended and
restated to read in its entirety as set forth on Schedule A attached
hereto.
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SECTION 3. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
3.1. The Parent, the Borrower, the Guarantors and the Required
Lenders shall have executed and delivered this Amendment.
3.2. The ▇▇▇.▇▇▇ Merger Transaction shall have occurred or
shall occur contemporaneously herewith, on substantially the terms
described in the recitals hereto and as otherwise disclosed to the
Administrative Agent and the Lenders.
3.3. The Administrative Agent shall have received stock
certificates representing all of the additional shares of ▇▇▇.▇▇▇
issued to the Borrower in the ▇▇▇.▇▇▇ Merger Transaction, together with
stock powers duly endorsed in blank by the Borrower pledging such
shares to the Administrative Agent for the benefit of the Lenders as
Collateral for the obligations secured by the Pledge Agreement.
3.4. The Administrative Agent shall have received, for the
ratable account of the Lenders, a one-time amendment fee in the amount
of 0.15% of the Revolving Credit Commitments of the Lenders (whether
used or unused).
3.5. The Borrower shall have paid all reasonable accrued and
unpaid legal fees, expenses and disbursements of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇,
counsel to the Administrative Agent, incurred in connection with the
Credit Agreement or this Amendment.
SECTION 4. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Borrower hereby represents to the Lenders that as of the date hereof the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct and that the Borrower is in
compliance with the terms and conditions of the Credit Agreement and no Default
or Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment (other than any such Default
or Event of Default as is specifically waived hereby).
SECTION 5. MISCELLANEOUS.
5.1. The Parent, the Borrower and the Guarantors have heretofore
executed and delivered to the Lenders the Collateral Documents. The Borrower
hereby acknowledges and agrees that the Liens created and provided for by the
Collateral Documents continue to secure, among other things, the Obligations
arising under the Credit Agreement as amended hereby; and the Collateral
Documents and the rights and remedies of the Lenders thereunder, the obligations
of the Borrower, the Parent and the Guarantors thereunder, and the Liens created
and provided for thereunder, remain in full force and effect and shall not be
affected, impaired or discharged
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hereby. Nothing herein contained shall in any manner affect or impair the
priority of the liens and security interests created and provided for by the
Collateral Documents as to the indebtedness which would be secured thereby prior
to giving effect to this Amendment.
5.2. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
5.3. The Borrower agrees to pay on demand all reasonable third party
costs and expenses incurred by the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment, including
the reasonable fees and expenses of counsel for the Administrative Agent.
5.4. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGE TO FOLLOW]
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This First Amendment and Waiver to Credit Agreement is entered into as
of this 12th day of March, 2002.
BORROWER
FLORISTS' TRANSWORLD DELIVERY, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇ ▇. ▇▇▇▇▇▇
Title Secretary
GUARANTORS
IOS BRANDS CORPORATION
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇ ▇. ▇▇▇▇▇▇
Title Secretary
VALUE NETWORK SERVICE, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇ ▇. ▇▇▇▇▇▇
Title Secretary
FTD HOLDINGS, INCORPORATED
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇ ▇. ▇▇▇▇▇▇
Title Secretary
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title President
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FTD INTERNATIONAL CORPORATION
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇ ▇. ▇▇▇▇▇▇
Title Secretary
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LENDERS
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, in its
individual capacity as a Lender and as
Administrative Agent
By /s/ ▇▇▇▇▇ ▇. Law
------------------------------------
Name ▇▇▇▇▇ ▇. Law
Title Vice President
U.S. BANK NATIONAL ASSOCIATION
By /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title Vice President
KEYBANK NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title Vice President
STANDARD FEDERAL BANK, N.A., F/K/A
MICHIGAN NATIONAL BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title First Vice President
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SCHEDULE 6.2
SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME ORGANIZATION OWNERSHIP OWNER
Florists' Transworld Michigan 100% IOS BRANDS
Delivery, Inc. Corporation
Florists' Transworld Ontario, 100% Florists' Transworld
Delivery Association Canada Delivery, Inc.
of Canada Limited
Value Network Delaware 100% IOS BRANDS
Service, Inc. Corporation
FTD Holdings, Delaware 100% Florists' Transworld
Incorporated Delivery, Inc.
▇▇▇.▇▇▇ INC. Delaware 100%* Florists' Transworld
Delivery, Inc.
Florists Transworld Mexico, D.F. 100% FTD International
Delivery de Mexico, S. Corporation
de ▇.▇. de C.V.
FTD International Delaware 100% IOS BRANDS
Corporation Corporation
Renaissance Greeting Maine 100% FTD Holdings,
Cards, Inc. Incorporated
Although listed on this Schedule, ▇▇▇.▇▇▇ is specifically excluded from
the definition of "Subsidiary" set forth in the Credit Agreement.
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SCHEDULE A TO PLEDGE AGREEMENT
THE PLEDGED SECURITIES
PERCENTAGE
JURISDICTION OF NO. OF CERTIFICATE OF ISSUER'S
NAME OF PLEDGOR NAME OF ISSUER INCORPORATION SHARES NO. STOCK
--------------- -------------- --------------- ------ ----------- -----------
IOS Brands Corporation Florists' Transworld Michigan 100 #1 100%
Delivery, Inc.
Value Network Service, Delaware 100 #1 100%
Inc.
FTD International Delaware 1,000 #2 100%
Corporation
Florists' Transworld FTD Holdings, Delaware 3,000 #1 (1 share) 100%
Delivery, Inc. Incorporated #2 (2,999
shares)
▇▇▇.▇▇▇, Inc. Delaware _________ ________ 100%
Florists' Transworld Ontario 9.75 #2 65%
Delivery Association of
Canada Limited
Interflora, Inc. Michigan 500 #1 33%
Value Network Service, None
Inc.
FTD Holdings, Renaissance Greeting Maine 800 #1 (1 share) 100%
Incorporated Cards, Inc. #2 (799
shares)
FTD International Florists' Transworld Mexico, Federal 1,950 MXP N/A 65%
Corporation Delivery de Mexico, S. District
de ▇.▇. de C.V.
Renaissance Greeting None
Cards, Inc.