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Exhibit 4.6    
  

 
 

GENERAL SECURITY AGREEMENT    
  

        THIS AGREEMENT is made as of the 1st day of November, 2002, 

	

BY:	
 	
ARCHIBALD CANDY (CANADA) CORPORATION, a corporation incorporated under the laws of Canada and having its chief executive office at 1 Valleybrook Drive, North York, Ontario M3B 2S7

(the "Guarantor")
	

 	
 	

 
	

IN FAVOUR OF:	
 	
FOOTHILL CAPITAL CORPORATION, as administrative agent on behalf of the Lenders

(the "Agent")
	

 	
 	

 
	RECITALS:	 	 

	A.
	The
Guarantor, pursuant to the Guarantee Agreement, has guaranteed the obligations of Archibald Candy Corporation under the Loan Agreement; and

	B.
	The
Guarantor has agreed to provide the Agent, on behalf of the Lenders, with a security interest in certain assets of the Guarantor as contemplated in this Agreement as security for
the obligations of the Guarantor to the Agent and the Lenders under the Guarantee Agreement. 

 
 

ARTICLE 1.
  INTERPRETATION    
  

1.1    Definitions    

        In
this Agreement: 

        1.1.1    "Accessions" means Goods that are installed in or affixed to other Goods; 

        1.1.2    "Account" means any monetary obligation not evidenced by Chattel Paper, an Instrument or a Security,
whether or not it has been earned by performance; 

        1.1.3    "this Agreement", "hereto",  "herein", "hereof", "hereby",  "hereunder" and any similar expressions refer to this Agreement and the Schedules hereto as they may be amended or supplemented from time to time, and
not to any particular Article, section or other portion hereof or thereof; 

        1.1.4    "Base Rate" has the meaning attributed to such term in the Loan Agreement; 

        1.1.5    "Business Day" means any day, other than Saturday, Sunday or any other day on which banks in the United
States or Toronto, Canada are authorized or required to close; 

        1.1.6    "Chattel Paper" means one or more than one writing that evidences both a monetary obligation and a
security interest in or a lease of specific Goods; 

        1.1.7    "Collateral" means all of the undertaking, property and assets of the Guarantor subject to, or intended
to be subject to, the Security Interest, and any reference to "Collateral" shall be deemed to be a reference to "Collateral or any part thereof" except where otherwise specifically provided; 

        1.1.8    "Consumer Goods" means Goods that are used or acquired for use primarily for personal, family or
household purposes; 

        1.1.9    "Copyrights" shall mean all copyrights, copyright registrations and applications for copyright
registrations, including, without limitation, all renewals and extensions thereof, the right to recover for all past, present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto, including without limitation, each item identified in Schedule "A" hereto; 

        1.1.10    "Document of Title" means any writing that purports to be issued by or addressed to a bailee and
purports to cover such Goods in the bailee's possession as are identified or fungible portions of an identified mass, and that in the ordinary course of business is treated as establishing that the
Person in possession of it is entitled to receive, hold and dispose of the document and the Goods it covers; 

        1.1.11    "Equipment" means Goods that are not Inventory or Consumer Goods; 

        1.1.12    "Event of Default" has the meaning attributed to such term in the Loan Agreement; 

 

        1.1.13    "Excluded Internet Domain Names" means any Internet Domain Name that would be rendered invalid,
abandoned, void or unenforceable by reason of it being included as part of the Collateral; 

        1.1.14    "Goods" means tangible personal property other than Chattel Paper, Documents of Title, Instruments,
Money and Securities, and includes fixtures, growing crops, the unborn young of animals, timber to be cut, and minerals and hydrocarbons to be extracted; 

        1.1.15    "Guarantee Agreement" means the guarantee and indemnity dated as of the date hereof executed by the
Guarantor in favour of the Agent, on behalf of the Lenders; 

        1.1.16    "Guaranteed Obligations" has the meaning attributed to such term in the Guarantee Agreement; 

        1.1.17    "Instrument" means, 

        1.1.17.1    a
bill, note or cheque within the meaning of the Bills of Exchange Act (Canada) or any other writing
that evidences a right to the payment of Money and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, or 

        1.1.17.2    a
letter of credit and an advice of credit if the letter or advice states that it must be surrendered upon claiming payment thereunder, 

but
does not include a writing that constitutes part of Chattel Paper, a Document of Title or a Security; 

        1.1.18    "Intangible" means all personal property, including choses in action, that is not Goods, Chattel Paper,
Documents of Title, Instruments, Money or Securities; 

        1.1.19    "Indebtedness" has the meaning attributed to such term in the Loan Agreement; 

        1.1.20    "Intellectual Property" shall mean, collectively, all Internet Domain Names, all Copyrights, all Patents
and all Trademarks, together with (a) all inventions, processes, production methods, proprietary information, know-how and trade secrets; (b) all licenses or user or other
agreements granted to the Guarantor with respect to Internet Domain Names, Copyrights, Patents or Trademarks; (c) all information, customer lists, identification of suppliers, data, plans,
specifications, designs, drawings, recorded knowledge, surveys, test reports, manuals, materials standards, processing standards, performance standards, catalogues, computer and automatic machinery
software and programs; (d) all information relating to sales or service of products now or hereafter manufactured; (e) all accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored; and (f) all licenses, consents, permits, variances, certifications and approvals of governmental agencies; 

        1.1.21    "Internet Domain Names" means all internet domain names licensed or used by the Guarantor, including,
without limitation, all items set forth on Schedule "D" hereto. Notwithstanding the foregoing, the Internet Domain Names do not and shall not include any Excluded Internet Domain Names; 

        1.1.22    "Inventory" means Goods that are held by a Person for sale or lease or that have been leased or that are
to be furnished or have been furnished under a contract of service, or that are raw materials, work in process or materials used or consumed in a business or profession; 

        1.1.23    "Lenders" means the lenders set forth in the Loan Agreement; 

        1.1.24    "Lien" has the meaning attributed to such term in the Loan Agreement; 

        1.1.25    "Loan Agreement" means the post-petition loan and security agreement and guaranty dated as
of November 1, 2002 between Archibald Candy Corporation, a Delaware corporation, as borrower, Laura Secord Holdings Corp. and the Guarantor as guarantors, the lenders named therein, as lenders,
and the Agent, as arranger and administrative agent; 

        1.1.26    "Money" means a medium of exchange authorized or adopted by the Parliament of Canada as part of the
currency of Canada or by a foreign government as part of its currency; 

        1.1.27    "Patents" shall mean all patents and patent applications, registrations and recordings, and all right,
title and interest therein and thereto, including, without limitation, the inventions and improvements described and claimed therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-art thereof, all income, royalties, damages and payments now or hereafter due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past or future infringements thereof, the right to 

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sue for past, present and future infringements thereof, and all rights corresponding thereto, including without limitation each item identified in Schedule "B" hereto; 

        1.1.28    "Permitted Liens" has the meaning attributed to such term in the Loan Agreement; 

        1.1.29    "Person" means any individual, partnership, limited partnership, joint venture, syndicate, sole
proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or
agency, government or governmental agency, authority or entity however designated or constituted; 

        1.1.30    "PPSA" means the Personal Property Security Act
(Ontario) as amended from time to time and any Act substituted therefor and amendments thereto; 

        1.1.31    "Proceeds" means identifiable or traceable personal property in any form derived directly or indirectly
from any dealing with property or the proceeds therefrom, and includes any payment representing indemnity or compensation for loss of or damage to the property or proceeds therefrom; 

        1.1.32    "Receiver" means any of a receiver, manager, receiver-manager and receiver and manager; 

        1.1.33    "Security" means a document that is, 

        1.1.33.1    issued
in bearer, order or registered form, 

        1.1.33.2    of
a type commonly dealt in upon securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for
investment, 

        1.1.33.3    one
of a class or series or by its terms is divisible into a class or series of documents, and 

        1.1.33.4    evidence
of a share, participation or other interest in property or in an enterprise or is evidence of an obligation of the issuer, 

and
includes an uncertificated security within the meaning of Part VI (Investment Securities) of the Business Corporations Act (Ontario); 

        1.1.34    "Security Interest" has the meaning attributed to such term in section 2.1; and 

        1.1.35    "Trademarks" shall mean all trade names, trademarks and service marks, logos, trademark and service mark
registrations, and applications for trademark and service mark registrations, including, without limitation, all renewals of trademark and service mark registrations and recordations, all rights
corresponding thereto throughout the world, the right to recover for all past, present and future infringements thereof, all other rights of any kind whatsoever accruing thereunder or pertaining
thereto, all re-issues, extensions or renewals thereof and all liceneses thereof, all whether now owned or hereafter acquired, together, in each case, with the product lines and goodwill
of the business connected with the use of, and symbolized by, each such trade name, trademark and service mark, including each item identified in Schedule "C" hereto. 

1.2    Headings    

        The
inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. 

1.3    References to Articles and Sections    

        Whenever
in this Agreement a particular Article, section or other portion thereof is referred to then, unless otherwise indicated, such reference pertains to the particular Article,
section or portion thereof contained herein. 

1.4    Currency    

        Except
where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency. 

1.5    Gender and Number    

        In
this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. 

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1.6    Invalidity of Provisions    

        Each
of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of
competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law which renders
any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a
valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 

1.7    Amendment, Waiver    

        No
amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 

1.8    Governing Law, Attornment    

        This
Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the Guarantor hereby irrevocably
attorns to the jurisdiction of the courts of Ontario. 

 
 

ARTICLE 2.
  SECURITY INTEREST    
  

2.1    Creation of Security Interest    

        Subject
to sections 2.2 and 2.3 hereof, the Guarantor hereby grants to the Agent, on behalf of itself and the Lenders by way of security interest, pledge and charge, a security interest
(the "Security Interest") in the undertaking of the Guarantor and in: 

        2.1.1    all
Goods (including without limitation all parts, accessories, attachments, additions and Accessions thereto) whether or not such Goods are now or
hereafter become fixtures, all Accounts, all Chattel Paper, all Documents of Title (whether negotiable or not), all Instruments, all Intangibles, all Intellectual Property, all Money and all
Securities, and all other personal property, if any, in each case now owned or hereafter acquired by or on behalf of the Guarantor or in respect of which the Guarantor now or hereafter has any right,
title or interest (including, without limitation, such as may be returned to or repossessed by the Guarantor) and including, without limitation, all contracts, licenses, computer software, warranties,
ownership certificates, manuals, publications, books, statements of account, bills, invoices, letters and other documents or records in any form evidencing or relating to any of the foregoing
property; 

        2.1.2    all
renewals of, accretions to and substitutions for any of the property described in section 2.1.1; and 

        2.1.3    all
Proceeds (including Proceeds of Proceeds) of any of the property described in sections 2.1.1 and 2.1.2 and, notwithstanding anything else set out
herein, all Proceeds of Excluded Internet Domain Names. 

2.2    Exception for Last Day of Leases    

        The
Security Interest granted hereby does not and shall not extend to, and Collateral shall not include, the last day of the term of any lease or sub-lease of real property,
oral or written, or any agreement therefor, now held or hereafter acquired by the Guarantor, but upon the sale of the leasehold interest or any part thereof the Guarantor shall stand possessed of such
last day in trust to assign the same as the Agent, on behalf of the Lenders, shall direct. 

2.3    Exception for Contractual Rights    

        The
Security Interest granted hereby does not and shall not extend to, and Collateral shall not include, any agreement, right, franchise, license or permit (the "contractual rights") to
which the Guarantor is a party or of which the Guarantor has the benefit, to the extent that the creation of the Security Interest therein would constitute a breach of the terms of or permit any
Person to terminate the contractual rights, but the Guarantor shall hold its interest therein in trust for the benefit of the Agent, on behalf of the Lenders, and shall assign such contractual rights
to the Agent, on behalf of the Lenders, forthwith upon obtaining the consent of the other party 

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thereto. The Guarantor agrees that it shall, upon the request of the Agent, on behalf of the Lenders, use all commercially reasonable efforts to obtain any consent required to permit any contractual
rights to be subjected to the Security Interest. 

2.4    Attachment    

        The
attachment of the Security Interest has not been postponed and the Security Interest shall attach to any particular Collateral as soon as the Guarantor has rights in such Collateral. 

 
 

ARTICLE 3.
  GUARANTEED OBLIGATIONS SECURED    
  

3.1    Guaranteed Obligations Secured    

        The
Security Interest granted hereby secures payment, performance and satisfaction of the Guaranteed Obligations. 

 
 

ARTICLE 4.
  REPRESENTATIONS AND WARRANTIES    
  

4.1    Representations and Warranties    

        The
Guarantor represents and warrants, and so long as this Agreement remains in effect shall be deemed continuously to represent and warrant, that: 

        4.1.1    it
is duly incorporated and validly existing under the laws of its jurisdiction of incorporation and has the corporate power and capacity to own its
properties and assets and to carry on its business as presently carried on by it; 

        4.1.2    it
has the corporate power and capacity to enter into this Agreement, the Guarantee Agreement and the Loan Agreement and to do all acts and things as are
required or contemplated hereunder or thereunder to be done, observed and performed by it; 

        4.1.3    this
Agreement, the Guarantee Agreement and the Loan Agreement each constitutes a legal, valid and binding obligation of the Guarantor enforceable
against it in accordance with its respective terms; 

        4.1.4    the
Guarantor does not have a French form of name or a combined English and French form of name; 

        4.1.5    the
Guarantor has good and indefeasible title to its Collateral, and valid and enforceable leasehold interests in the Collateral it leases, in each case,
free of all Liens except for Permitted Liens. 

 
 

ARTICLE 5.
  AGREEMENTS OF THE GUARANTOR    
  

5.1    General Agreements    

        The
Guarantor agrees that: 

        5.1.1    it
shall pay or satisfy all Guaranteed Obligations upon demand in accordance with the Guarantee Agreement; 

        5.1.2    it
shall prevent any Collateral, except Inventory sold or leased as permitted hereby or as permitted by the Loan Agreement, from being or becoming an
Accession to property not covered by this Agreement or any other document delivered in connection with the Loan Agreement; 

        5.1.3    it
shall not create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether
now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness
is refinanced, renewed or extended under Section 7.1(d) of the Loan Agreement and so long as the replacement Liens only encumber those assets that secure the refinanced, renewed or extended
Indebtedness); 

        5.1.4    it
shall not change its name without giving prior written notice to the Agent of the new name and the date upon which such change of name is to take
effect; and 

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        5.1.5    it
shall do, execute, acknowledge and deliver such financing statements and further assignments, transfers, documents, acts, matters and things
(including further schedules to this Agreement) as may be reasonably requested by the Agent or with respect to Collateral in order to give effect to this Agreement. 

5.2    Verification of Collateral    

        The
Agent, on behalf of the Lenders, and the Lenders shall have the right at any time and from time to time to verify the existence and state of the Collateral in any manner the Agent or
the Lenders may consider appropriate and the Guarantor agrees to furnish all assistance and information and to perform all such acts as the Agent or the Lenders may reasonably request in connection
therewith and for such purpose to grant to the Agent, the Lenders or its respective agents access to all places where Collateral may be located and to all premises occupied by the Guarantor. 

 
 

ARTICLE 6.
  SECURITIES    
  

6.1    Securities    

        If
Collateral at any time includes Securities, the Guarantor authorizes the Agent to transfer the same or any part thereof into its own name on behalf of the Lenders, or that of the
Lenders' or their respective nominees so that the Agent, on behalf of the Lenders, the Lenders or their respective nominees, as the case may be, may appear as the sole owner of record thereof;
provided that, until the occurrence of an Event of Default, the Agent or the Lenders, as the case may be, shall deliver promptly to the Guarantor all notices or other communications received by the
Agent, the Lenders or their respective nominees as such registered owner and, upon demand and receipt of payment of any necessary expenses thereof, shall grant to the Guarantor or its nominee a proxy
to vote and take all action with respect to such Securities. After the occurrence of an Event of Default, the Guarantor waives all rights to receive any notices or communications received by the
Agent, the Lenders or their respective nominees as such registered owner, as the case may be, and agrees that no proxy granted by the Agent and the Lenders to the Guarantor or its nominee as aforesaid
shall thereafter be effective. 

 
 

ARTICLE 7.
  COLLECTION OF DEBTS    
  

7.1    Collection of Debts    

        After
the occurrence of an Event of Default, the Agent may give notice of the Security Interest to any Person obligated to pay any debt or liability constituting Collateral and may also
direct such Person to make all payments on account of any such debt or liability to the Agent, on behalf of the Lenders. The Guarantor acknowledges that any payments received by the Guarantor from
such Persons, whether before or after notification of the Security Interest to such Persons and whether before or after the occurrence of an Event of Default, shall be received and held by the
Guarantor in trust, or as agent or mandatary in the Province of Quebec, for the Agent, on behalf of the Lenders, and shall be turned over to the Agent upon request. 

 
 

ARTICLE 8.
  REMEDIES    
  

8.1    Appointment of Receiver    

        8.1.1    Upon
the occurrence of an Event of Default, the Lenders, in accordance with this Agreement and in addition to the remedies set out in Section 9 of
the Loan Agreement, may instruct the Agent to appoint by instrument any Person, whether an officer or an employee of the Agent or the Lenders or not, to be a Receiver of Collateral and may remove any
Receiver so appointed and appoint another in place of such Receiver in the same manner. Any such Receiver shall be deemed the agent of the Guarantor and not of the Lenders or the Agent for the purpose
of (i) carrying on and managing the business and affairs of the Guarantor, and (ii) establishing liability for all acts or omissions of the Receiver while acting as such, and the Agent
or the Lenders shall not be in any way responsible for any acts or omissions on the part of any such Receiver, its officers, employees and agents. The Guarantor hereby irrevocably authorizes the Agent
or the Lenders to give instructions to the Receiver relating to the performance of its duties. The Guarantor hereby irrevocably waives any right it may have now or in the future under any applicable
law, including, without limitation, the PPSA, to make application to a court for 

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the removal, replacement or discharge of the Receiver or for directions on any matter relating to the duties of the Receiver (unless such duties are not being performed in a commercially reasonable
manner) or in respect of the Receiver's accounts or remuneration or in respect of any other matter. 

        8.1.2    Subject
to the provisions of the instrument appointing it, any such Receiver shall have the power to take possession of Collateral, to preserve
Collateral or its value in such manner as it considers appropriate, to carry on or concur in carrying on all or any part of the business of the Guarantor and to sell, lease or otherwise dispose of or
concur in selling, leasing or otherwise disposing of Collateral in such manner and on such terms as it considers to be commercially reasonable. To facilitate the foregoing powers, any such Receiver
may enter upon, use and occupy all premises owned or occupied by the Guarantor wherein Collateral may be situate to the exclusion of all others to the extent permitted by law, including the Guarantor,
maintain Collateral upon such premises, borrow money on a secured or unsecured basis, incur reasonable expenses in the exercise of the rights, powers and remedies set out in this Agreement and use
Collateral directly in carrying on the Guarantor's business or as security for loans or advances to enable it to carry on the Guarantor's business or otherwise, as such Receiver shall, in its
discretion, determine. In addition, the Receiver shall have the following rights, powers and remedies: 

        8.1.2.1    to
make payments to Persons having prior rights or Liens on properties on which the Guarantor may hold a Lien and to Persons having prior rights or
Liens on the Collateral; and 

        8.1.2.2    to
demand, commence, continue or defend proceedings in the name of the Agent, the Lenders or of the Receiver or in the name of the Guarantor for the
purpose of protecting, seizing, collecting, realizing or obtaining possession or payment of the Collateral and to give effectual receipts and discharges therefor. 

        8.1.3    Except
as may be otherwise directed by the Agent or the Lenders, all Proceeds received from time to time by such Receiver in carrying out its appointment
shall be received in trust, or as agent in the Province of Quebec, for and paid over to the Agent, on behalf of the Lenders. Every such Receiver may, in the discretion of the Agent or the Lenders, be
vested with all or any of the rights and powers of the Agent or the Lenders. 

8.2    Exercise of Remedies by the Agent and the Lenders    

        Upon
the occurrence of an Event of Default, the Lenders or the Agent may, either directly or through its respective agents or nominees, exercise all the powers and rights available to a
Receiver by virtue of section 8.1. In addition to the rights granted in this Agreement and in any other agreement now or hereafter in effect between the Guarantor and the Agent and/or the
Lenders and in addition to any other rights the Lenders or the Agent may have at law or in equity or otherwise, the Lenders and the Agent shall have, both before and after the occurrence of an Event
of Default, all rights and remedies of a secured party under the PPSA. 

8.3    Possession of Collateral    

        The
Guarantor acknowledges that the Agent, the Lenders or any Receiver appointed by it may take possession of Collateral wherever it may be located and by any method permitted by law and
the Guarantor agrees upon request from the Agent, the Lenders or any such Receiver to assemble and deliver possession of Collateral at such place or places as directed. 

8.4    Remedies Not Exclusive    

        All
rights, powers and remedies of the Agent and the Lenders under this Agreement may be exercised separately or in combination and shall be in addition to, and not in substitution for,
any other security now or hereafter held by the Agent or the Lenders and any other rights, powers and remedies of the Agent or the Lenders however created or arising. No single or partial exercise by
the Agent or the Lenders of any of the rights, powers and remedies under this Agreement or under any other security now or hereafter held by the Agent or the Lenders shall preclude any other and
further exercise of any other right, power or remedy pursuant to this Agreement or any other security or at law, in equity or otherwise. The Agent and the Lenders shall at all times have the right to
proceed against Collateral or any other security in such order and in such manner as it shall determine without waiving any rights, powers or remedies which the Agent or the Lenders may have with
respect to this Agreement or any other security or at law, in equity or otherwise. No delay or omission by the Agent or the Lenders in exercising any right, power or remedy hereunder or otherwise
shall operate as a waiver thereof or of any other right, power or remedy. 

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8.5    Guarantor Liable for Deficiency    

        The
Guarantor shall remain liable to the Agent and the Lenders for any deficiency after the proceeds of any sale, lease or disposition of Collateral are received by the Agent, on behalf
of the Lenders, or by the Lenders. 

8.6    Exclusion of Liability    

        The
Agent and the Lenders shall not, nor shall any Receiver appointed by it, be liable for any failure to exercise its rights, powers or remedies arising hereunder or otherwise,
including without limitation any failure to take possession of, collect, enforce, realize, sell, lease or otherwise dispose of, preserve or protect the Collateral, to carry on all or any part of the
business of the Guarantor relating to the Collateral or to take any steps or proceedings for any such purposes. Neither the Agent, the Lenders nor any Receiver appointed by it shall have any
obligation to take any steps or proceedings to preserve rights against prior parties to or in respect of Collateral including without limitation any Instrument, Chattel Paper or Securities, whether or
not in the Agent's, Lenders' or the Receiver's possession, and neither the Agent, the Lenders nor any Receiver appointed by it shall be liable for failure to do so. Subject to the foregoing, the Agent
and the Lender shall use reasonable care in the custody and preservation of the Collateral in its possession. 

8.7    Notice of Sale    

        Unless
required by law, neither the Agent, the Lenders nor any Receiver appointed by it shall be required to give the Guarantor any notice of any sale, lease or other disposition of the
Collateral, the date, time and place of any public sale of Collateral or the date after which any private disposition of Collateral is to be made. 

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ARTICLE 9.
  APPLICATION OF PROCEEDS    
  

9.1    Application of Proceeds    

        To
the extent not inconsistent with the Loan Agreement or applicable law, the Proceeds arising from the enforcement of the Security Interest as a result of the possession by the Agent,
the Lenders or the Receiver of the Collateral or from any sale, lease or other disposition of, or realization of security on, the Collateral (except following acceptance of Collateral in satisfaction
of the Guaranteed Obligations) shall be applied by the Agent, the Lenders or the Receiver in the following order: 

        9.1.1    first,
in payment of the Agent's and the Lender's reasonable costs, charges and expenses (including legal fees on a solicitor and his own client basis) incurred in the
exercise of all or any of the rights, powers or remedies granted to it under this Agreement, and in payment of the reasonable remuneration of the Receiver, if any, and the reasonable costs, charges
and expenses incurred by the Receiver, if any, in the exercise of all or any of the rights, powers or remedies granted under this Agreement; 

        9.1.2    second,
in payment of amounts paid by the Agent, the Lenders or the Receiver pursuant to section 8.1.1; 

        9.1.3    third,
in payment of all money borrowed or advanced by the Agent, the Lenders or the Receiver, if any, pursuant to the exercise of the rights, powers or remedies set
out in this Agreement and any interest thereon; 

        9.1.4    fourth,
in payment of the remainder of the Guaranteed Obligations in such order of application as the Lenders may determine; 

        9.1.5    fifth,
subject to sections 9.2 and 9.3, to any Person who has a security interest in Collateral that is subordinate to that of the Lenders and whose interest, 

        9.1.5.1    was
perfected by possession, the continuance of which was prevented by the Agent, the Lenders or the Receiver taking possession of Collateral, or 

        9.1.5.2    was,
immediately before the sale, lease or other disposition by the Agent, the Lenders or the Receiver, perfected by registration; 

        9.1.6    sixth,
subject to sections 9.2 and 9.3, to any other Person with an interest in such Proceeds who has delivered a written notice to the Agent, the Lenders or the
Receiver of the interest before the distribution of such Proceeds; and 

        9.1.7    last,
subject to sections 9.2 and 9.3, to the Guarantor or any other Person who is known by the Agent, the Lenders or the Receiver to be an owner of the Collateral. 

9.2    Proof of Interest    

        The
Agent, the Lenders or the Receiver may require any Person mentioned in sections 9.1.5, 9.1.6 or 9.1.7 to furnish proof of that Person's interest, and unless the proof is furnished
within ten days after demand by the Agent, the Lenders or the Receiver, the Agent, the Lenders or the Receiver need not pay over any portion of the Proceeds referred to therein to such Person. 

9.3    Payment Into Court    

        Where
there is a question as to who is entitled to receive payment under sections 9.1.5, 9.1.6 or 9.1.7, the Agent, the Lenders or the Receiver may pay the Proceeds referred to therein
into court. 

9.4    Monies Actually Received    

        The
Guarantor shall be entitled to be credited only with the actual Proceeds arising from the possession, sale, lease or other disposition of, or realization of security on, the
Collateral when received by the Agent, the Lenders or the Receiver and such actual Proceeds shall mean all amounts received in cash by the Agent, the Lenders or the Receiver upon such possession,
sale, lease or other disposition of, or realization of security on, the Collateral. 

9

 

 
 

ARTICLE 10.
  GENERAL    
  

10.1    Power of Attorney    

        The
Guarantor hereby appoints the Agent as the Guarantor's attorney, with full power of substitution, in the name and on behalf of the Guarantor, to execute, deliver and do all such
acts, deeds, leases, documents, transfers, demands, conveyances, assignments, contracts, assurances, consents, financing statements and things as the Guarantor has herein agreed to execute, deliver
and do or as may be required by the Agent, the Lenders or any Receiver to give effect to this Agreement or in the exercise of any rights, powers or remedies hereby conferred on the Agent or the
Lenders, and generally to use the name of the Guarantor in the exercise of all or any of the rights, powers or remedies hereby conferred on the Agent or the Lenders. This appointment, coupled with an
interest, shall not be revoked by the insolvency, bankruptcy, dissolution, liquidation or other termination of the existence of the Guarantor or for any other reason. 

10.2    Set-Off    

        The
Lenders may at any time and from time to time, without notice to the Guarantor or to any other Person, set-off, appropriate and apply any and all deposits, general or
special, matured or unmatured, held by or for the benefit of the Guarantor with any of the Lenders, and any other indebtedness and liability of such Lender to the Guarantor, matured or unmatured,
against and on account of the Guaranteed Obligations when due, in such order of application as such Lender may from time to time determine. 

10.3    Dealings with Others    

        The
Agent and the Lenders may grant extensions of time and other indulgences, take and give up security, accept compositions, make settlements, grant releases and discharges and
otherwise deal with the Guarantor, debtors of the Guarantor, sureties and other Persons and with Collateral and other security as the Lenders see fit, without prejudice to the liability of the
Guarantor to the Agent and the Lenders or the rights, powers and remedies of the Agent and the Lenders under this Agreement. 

10.4    No Obligation to Advance    

        Nothing
herein contained shall in any way obligate the Agent or the Lenders to advance any funds, or otherwise make or continue to make any credit available, to the Guarantor. 

10.5    Perfection of Security    

        The
Guarantor authorizes the Agent, on behalf of the Lenders to file such financing statements and other documents and do such acts, matters and things as the Agent or the Lenders may
consider appropriate to perfect and continue the Security Interest, to protect and preserve the interest of the Agent and the Lenders in Collateral and to realize upon the Security Interest. 

10.6    Communication    

        Any
notice or other communication, including a demand or a direction, required or permitted to be given hereunder shall be given in accordance with section 10.7 of the Guarantee
Agreement. 

10.7    Successors and Assigns    

        This
Agreement shall be binding on the Guarantor and its successors and shall enure to the benefit of the Agent and the Lenders and their successors and assigns. This Agreement shall be
assignable by the Agent and the Lenders free of any set-off, counter-claim or equities between the Guarantor and the Agent or the Lenders, and the Guarantor shall not assert against an
assignee of the Agent or the Lenders any claim or defence that the Guarantor has against the Agent or the Lenders. 

10.8    Copy Received    

        The
Guarantor hereby acknowledges receipt of a copy of this Agreement. 

(Remainder
of this page intentionally left blank) 

10

 

        IN WITNESS WHEREOF the Guarantor has executed this Agreement as of this 1st day of November, 2002. 

	 	 	ARCHIBALD CANDY (CANADA) CORPORATION
	

 	
 	

 	
 	

 	
 	

 
	 	 	by:	 	/s/ Ted A. Shepherd

	 	 	 	 	Name:	 	Ted A. Shepherd
	 	 	 	 	Title:	 	President and Chief Executive Officer
	

 	
 	

 	
 	

 	
 	

 
	 	 	by:	 	/s/ Richard J. Anglin

	 	 	 	 	Name:	 	Richard J. Anglin
	 	 	 	 	Title:	 	Vice President and Chief Financial Officer

11

 
 

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Exhibit 4.6

GENERAL SECURITY AGREEMENT

ARTICLE 1. INTERPRETATION

ARTICLE 2. SECURITY INTEREST

ARTICLE 3. GUARANTEED OBLIGATIONS SECURED

ARTICLE 4. REPRESENTATIONS AND WARRANTIES

ARTICLE 5. AGREEMENTS OF THE GUARANTOR

ARTICLE 6. SECURITIES

ARTICLE 7. COLLECTION OF DEBTS

ARTICLE 8. REMEDIES

ARTICLE 9. APPLICATION OF PROCEEDS

ARTICLE 10. GENERAL

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Exhibit 4.7  

 
 

GUARANTEE AND INDEMNITY    
  

        THIS GUARANTEE AND INDEMNITY is made as of the 1st day of November, 2002, 

	BY:	 	ARCHIBALD CANDY (CANADA) CORPORATION, a corporation incorporated under the laws of Canada
	

 	
 	

(the "Guarantor")
	
IN FAVOUR OF:	
 	
FOOTHILL CAPITAL CORPORATION, as administrative agent on behalf of the Lenders
	

 	
 	

(the "Agent")

RECITALS:  

	A.
	Archibald
Candy Corporation has entered into the Loan Agreement.

	B.
	It
is a condition of the Loan Agreement that the Guarantor enter into this Agreement to guarantee the Guaranteed Obligations. 

        NOW THEREFORE in consideration of the sum of $1.00, the Lenders making available certain credit facilities on the terms set forth in the
Loan Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Guarantor agrees with the Agent as follows: 

ARTICLE 1.

INTERPRETATION  

        1.1    Definitions    

        In
this Agreement, in addition to the definitions set out in the recitals hereto, if any: 

        1.1.1    "this Agreement", "hereto", "herein", "hereof", "hereby", "hereunder" and any similar expressions refer
to this Guarantee and Indemnity as it may be supplemented, amended or restated from time to time, and not to any particular Article, section or other portion hereof; 

        1.1.2    "Borrower" means Archibald Candy Corporation, a corporation incorporated under the laws of Delaware, and
its successors; 

        1.1.3    "Business Day" means any day, other than Saturday, Sunday or any other day on which banks in the United
States or Toronto, Canada are authorized or required to close; 

        1.1.4    "Canadian Taxes" means all Taxes imposed, levied, collected, withheld or assessed by any Governmental
Body of or within Canada or any political subdivision thereof (excluding, any Taxes imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein
(i) measured by or based on the net income or net profits of a Lender, or (ii) to the extent that such Tax results from a change in the circumstances of the Lender, or a change in the
branch or lending office of the Lender participating in the transactions set forth herein); 

        1.1.5    "Conversion Rate" means, in relation to the conversion of one currency to another on a particular day,
the rate of exchange quoted by Wells Fargo Bank, National Association as its spot rate of exchange for the conversion of one currency to the other at approximately noon (Toronto time) on such day; 

        1.1.6    "Event of Default" has the meaning attributed to such term in the Loan Agreement; 

        1.1.7    "Governmental Body" means any government, parliament or legislature, or any regulatory authority, agency,
commission or board of any government, parliament or legislature or any court or (without limitation to the foregoing) any other law-, regulation- or rule-making entity, having
or purporting to have jurisdiction in the relevant
circumstances, or any Person acting or purporting to act under the authority of any of the foregoing (including, without limitation, any arbitrator); 

        1.1.8    "Guaranteed Obligations" means all of the Obligations, as defined in the Loan Agreement; 

        1.1.9    "Hypothec" means the deed of movable hypothec dated as of the date hereof made by the Guarantor in favour
of the Agent; 

        1.1.10    Indemnifiable Circumstance" has the meaning attributed to such term in section 2.2; 

        1.1.11    "Indemnified Amounts" means the amounts to be paid by the Guarantor under section 2.2; 

        1.1.12    "Lenders" means the lenders set forth in the Loan Agreement; 

        1.1.13    "Loan Agreement" means the loan and security agreement and guaranty dated as of November 1, 2002
between the Borrower, as borrower, Laura Secord Holdings Corp. and the Guarantor, as guarantors, the lenders named therein, as lenders, and the Agent, as arranger and administrative agent; 

        1.1.14    "Person" means any individual, partnership, limited partnership, joint venture, syndicate, sole
proprietorship, company or corporation with or without share capital, unincorporated association, trust, government, parliament or legislature, or any regulatory authority, agency, commission, board
or other entity however designated or constituted of any government, parliament or legislature, including without limitation any trustee, executor, administrator or other legal personal
representative, liquidator, trustee in bankruptcy, receiver, receiver and manager, and agent; 

        1.1.15    "Proceedings" means any receivership, insolvency, proposal, bankruptcy, compromise, arrangement,
reorganization, winding-up, dissolution or other similar proceedings, whether or not any of the foregoing is judicial in nature; 

        1.1.16    "Security" means: 

        1.1.16.1    any
mortgage, charge, assignment, lien, security interest or other encumbrance; 

        1.1.16.2    any
guarantee; and 

        1.1.16.3    any
other arrangement designed to secure the payment or performance of any obligation, liability or indebtedness; 

whether
obtained from the Borrower, the Guarantor or any other Person and whether obtained before, at the time of or after the execution and delivery of this Agreement; 

        1.1.17    "Security Agreement" means the general security agreement dated as of the date hereof made by the
Guarantor in favour of the Agent on behalf of the Lenders; and 

        1.1.18    "Taxes" means all taxes of any kind or nature whatsoever including, without limitation, income taxes,
sales or value-added taxes, levies, stamp taxes, royalties, duties, and all fees, deductions, compulsory loans and withholdings imposed, levied, collected, withheld or assessed as of the date hereof
or at any time in the future, by any Governmental Body of or within Canada or any other jurisdiction whatsoever having power to tax, together with penalties, fines, additions to tax and interest
thereon. 

        1.2    Headings    

        The
inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. 

        1.3    References to Articles and Sections    

        Whenever
in this Agreement a particular Article, section or other portion thereof is referred to, such reference pertains to the Article, section or portion thereof contained herein
unless otherwise indicated. 

        1.4    References to Agreements and Enactments    

        Except
as otherwise specifically provided: 

        1.4.1    reference
in this Agreement to any contract, agreement or any other document shall be deemed to include (i) reference to the same as supplemented,
amended or restated from time to time and (ii) reference to any contract, agreement or any other document which substitutes, in whole or in part, for the same from time to time; and 

        1.4.2    reference
in this Agreement to any enactment, including, without limitation, any statute, law, by-law, regulation, rule, ordinance or order,
shall be deemed to include reference to such enactment as re-enacted or amended from time to time and to any enactment in substitution therefor. 

        1.5    Currency    

        All
amounts in this Agreement are stated and shall be paid in Canadian currency, provided that if Guaranteed Obligations are outstanding in a currency other than Canadian currency, the
Lenders, at their option, may require that such amounts be paid in such other currency, to the extent that the Guaranteed Obligations are outstanding in such other currency. 

        1.6    Gender and Number    

        In
this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. 

        1.7    Invalidity of Provisions    

        Each
of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of
competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law which renders
any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a
valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 

        1.8    No Conditions Precedent    

        This
Agreement is effective upon execution and delivery of this Agreement by the Guarantor. Such execution and delivery constitutes conclusive evidence that this Agreement was not
delivered in escrow and that any conditions precedent to the effectiveness of this Agreement have been satisfied or waived by the Guarantor. 

        1.9    Entire Agreement    

        This
Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including
any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement and the Loan Agreement. No
reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, the Loan Agreement or any
amendment or supplement thereof, by any party to this Agreement or the Loan Agreement or its directors, officers, employees or agents, to any other party to this Agreement or the Loan Agreement or its
directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement or the Loan Agreement, and none of the parties to this
Agreement or the Loan Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact.
Accordingly, there
shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 

        1.10    Waiver, Amendment    

        Except
as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 

        1.11    Governing Law, Attornment    

        This
Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 

        1.12    Loan Agreement to Govern    

        If
there is any inconsistency between the terms of this Agreement and the terms of the Loan Agreement, the terms of the Loan Agreement will prevail to the extent of the inconsistency. 

ARTICLE 2.

GUARANTEE AND INDEMNITY  

        2.1    Guarantee    

        The
Guarantor unconditionally and irrevocably guarantees the due and punctual payment and performance of all Guaranteed Obligations (whether or not involving parties other than the
Borrower, the Agent and the Lenders). 

        2.2    Indemnity    

        The
Guarantor shall indemnify and save the Agent and the Lenders harmless from and against any losses which may arise by virtue of any of the Guaranteed Obligations, the Loan Agreement
or any other agreement relating to any of the foregoing being or becoming for any reason whatsoever in whole or in part: 

        2.2.1    void,
voidable, ultra vires, illegal, invalid, ineffective or otherwise unenforceable by the Agent or the
Lenders in accordance with its terms, or 

        2.2.2    released
or discharged by operation of law (other than as a result of irrevocable payment in full of the Guaranteed Obligations), 

(all
of the foregoing collectively, an "Indemnifiable Circumstance"). For greater certainty, these losses shall include without limitation the amount of all Guaranteed Obligations which would have
been payable by the Borrower but for the existence of an Indemnifiable Circumstance. 

        2.3    Guarantor Liable as Principal    

        The
Guarantor shall be liable to the Agent and the Lenders as principal debtor and not as surety only, and will not plead or assert to the contrary in any action taken by the agent or
the Lenders in enforcing this Agreement. 

        2.4    Continuing Guarantee and Indemnity    

        The
guarantee and indemnity herein shall be a continuing guarantee of the payment and performance of all the Guaranteed Obligations and a continuing indemnity for the payment of all
Indemnified Amounts and shall apply to and secure any ultimate balance thereof due or remaining unpaid to the Agent and the Lenders. The guarantee and indemnity herein shall not be considered as
wholly or partially satisfied by the intermediate payment or satisfaction at any time of all or any part of the Guaranteed Obligations or Indemnified Amounts. All dividends, compositions and payments
received by the Agent or the Lenders from the Borrower or any other Person shall be applied as payments in gross without any right on the part of the Guarantor to claim the benefit of any such
dividends, compositions or payments or any Security held by the Agent or the Lenders until payment in full of all Guaranteed Obligations and Indemnified Amounts. 

        2.5    Reinstatement    

        The
guarantee and indemnity herein shall be reinstated if at any time any payment of any Guaranteed Obligations or Indemnified Amounts is rescinded or must otherwise be returned by the
Agent or the Lenders upon any Proceedings of or affecting the Borrower or any other Person or for any other reason whatsoever, all as though such payment had not been made. The Agent or the Lenders
may concede or compromise any claim that such payment ought to be rescinded or otherwise returned, without discharging, diminishing or in any way affecting the liability of the Guarantor hereunder or
the effect of this section 2.5. 

ARTICLE 3.

ENFORCEMENT  

        3.1    Demand    

        Upon
the occurrence of an Event of Default, the Guarantor shall, on demand by the Agent on behalf of the Lenders, forthwith pay to the Agent, or perform or cause the performance of, all
Guaranteed Obligations for which such demand was made. All Indemnified Amounts shall be payable by the Guarantor to the Agent forthwith upon demand by the Agent, on behalf of the Lenders. 

        3.2    Right to Immediate Payment or Performance    

        The
Agent and the Lenders shall not be bound to make any demand on or to seek or exhaust its recourse against the Borrower or any other Person or to realize on any Security held by it in
respect of the Guaranteed Obligations before being entitled to demand payment from or performance by the Guarantor and enforce its rights under this Agreement, and the Guarantor hereby renounces all
benefits of discussion and division. 

        3.3    Interest    

        All
amounts payable by the Guarantor under this Agreement shall bear interest payable by the Guarantor from the date of demand for payment both before and after default and judgment at
the default rate as set out in Section 2.6(c) of the Loan Agreement. 

        3.4    Lenders' Statement    

        The
statement in writing of the Lenders or of the Agent on behalf of the Lenders as to the amount of the Guaranteed Obligations, the Indemnified Amounts and all other amounts payable
hereunder shall be binding upon the Guarantor and conclusive against it in the absence of manifest error. 

ARTICLE 4.

LIABILITY FOR TAXES  

        4.1    Gross-Up    

        All
payments made by the Guarantor to the Agent or the Lenders under this Agreement shall be made in full, without set-off or counterclaim, and free of and without deduction
or withholding for or on account of any present or future Canadian Taxes provided that, if the Guarantor shall be required by law to deduct or withhold any Canadian Taxes from or in respect of any
payment or sum payable to the Agent or the Lenders, the payment or sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions
or withholdings applicable to additional amounts paid under this ARTICLE 4) 

the Agent or the Lenders, as the case may be, receive an amount equal to the sum it would have received if no deduction or withholding had been made, and the Guarantor shall pay the full amount
deducted or withheld to the relevant taxation or other authority in accordance with applicable law; provided, however, that Guarantor is not required to increase any such amounts payable to the Agent
or any Lender if the increase in such amount payable results from the Agent's or such Lender's own wilful misconduct or gross negligence. Guarantor will furnish to the Agent as promptly as possible
after the date of payment of any Canadian Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by Guarantor. 

        4.2    Indemnity for Taxes    

        The
Guarantor shall indemnify the Agent and the Lenders in respect of: 

        4.2.1    the
full amount of Canadian Taxes imposed or levied upon the Agent or the Lenders in respect of any payment received or receivable by it hereunder from
or on behalf of the Guarantor, whether or not such Canadian Taxes were correctly or legally asserted; and 

        4.2.2    any
net Canadian Taxes imposed by any jurisdiction on any increased amounts payable under section 4.1 after taking into account any refund,
credit, allowance, remission or deduction from income otherwise determined or tax otherwise payable available to the Agent or the Lenders in respect of the Canadian Taxes deducted or withheld as
contemplated by section 4.1 (whether or not claimed by the Agent or the Lenders, as the case may be). 

Payment
under this indemnification shall be made within ten days from the date the Agent or the Lenders make written demand therefor accompanied by a certificate of the Lenders stating the amount of
the relevant Taxes and the calculation thereof. 

        4.3    Lenders' Discretion Preserved    

        Nothing
contained in this ARTICLE 4 shall interfere with the right of the Agent or the Lenders to arrange its tax affairs in whatever manner it may think fit and, in particular, it shall
not be under any obligation to claim relief from its tax liability in respect of its payments, deductions or withholdings in priority to any other claims, reliefs, credits or deductions available to
it. 

ARTICLE 5.

APPROPRIATION AND SET-OFF BY LENDERS  

        5.1    Appropriation    

        The
Lenders shall be at liberty, without in any way prejudicing or affecting its rights hereunder, to appropriate or to refrain from appropriating any payment made to, or monies received
by, the Lenders from: 

        5.1.1    the
Borrower or others to any portion of the Guaranteed Obligations, and 

        5.1.2    the
Guarantor to any portion of the Guaranteed Obligations, the Indemnified Amounts, all other amounts payable hereunder and any other obligations,
liabilities and indebtedness of the Guarantor to the Agent or the Lenders, 

in
each case whether then due or to become due, and whether absolute or contingent, and from time to time to revoke or alter any such appropriation, all as the Lenders may from time to time in their
sole discretion determine. 

        5.2    Set-Off by Lenders    

        Each
of the Lenders may, without demand or notice of any kind, set off, appropriate and apply any and all deposits, general or special, matured or unmatured, in any currency, held by or
for the benefit of the Guarantor with such Lender, and any other indebtedness and liability of such Lender to the Guarantor, matured or unmatured, in any currency, against and on account of the
Guarantor's liability hereunder in any currency irrespective of whether or not the Lender has made any demand for payment hereunder or the Guaranteed Obligations are due, in such order of application
as such Lender may from time to time elect. If the amounts being set-off are not payable in the same currency, such Lender may convert either amount into the other currency at the
Conversion Rate on the day as of which that set-off is being effected, or if that day is not a Business Day then on the Business Day preceding the day as of which that set-off
is being effected. 

ARTICLE 6.

GUARANTOR NOT TO COMPETE  

        6.1    Guarantor Not to Compete    

        The
Guarantor shall not: 

        6.1.1    except
as authorized under the Loan Agreement, take any Security or dividend from the Borrower or any other guarantor or Person liable directly or as
surety for all or any part of the Guaranteed Obligations; 

        6.1.2    claim,
rank, prove or vote as a creditor in any Proceedings of or affecting the Borrower or any other guarantor or Person liable directly or as surety
for all or any part of the Guaranteed Obligations; 

        6.1.3    assert
any right (including without limitation any right of set-off, right of indemnity or reimbursement or right of contribution, and any
right whether or not the right arises under any Security) against the Borrower or any other guarantor or Person liable directly or as surety for all or any part of the Guaranteed Obligations; or 

        6.1.4    have
any right of subrogation to the Agent and/or the Lenders or be otherwise entitled to claim the benefit of any Security now or hereafter held by the
Agent on behalf of the Lenders or by the Lenders, in respect of the Guaranteed Obligations; 

until
the Agent and the Lenders have received payment and performance in full of all Guaranteed Obligations, all Indemnified Amounts and all other amounts payable hereunder. Any money, Security, or
other personal or real property taken or received by the Guarantor in contravention of this section 6.2 shall be held by the Guarantor in trust for the Agent, on behalf of the Lenders, or, in
the Province of Québec, as agent or mandatary for the Agent, on behalf of the Lenders, and shall be delivered or transferred to the Agent, on behalf of the Lenders, on demand. 

ARTICLE 7.

PROTECTION OF LENDER  

        7.1    Defects in Creation of Guaranteed Obligations    

        Neither
the Agent nor the Lenders shall be concerned to see or enquire into the capacity and powers of the Borrower or its directors, officers, employees or agents acting or purporting
to act on its behalf. All obligations, liabilities and indebtedness purporting to be incurred by the Borrower in favour of the Agent or the Lenders shall be deemed to form part of the Guaranteed
Obligations even though the Borrower may not be a legal entity or the incurring of such obligations, liabilities or indebtedness was irregularly, fraudulently, defectively or informally effected or in
excess of the capacity or powers of the Borrower or its directors, officers, employees or agents and notwithstanding that the Agent or the Lenders have specific notice of the capacity and powers of
the Borrower or its directors, officers, employees or agents. 

        7.2    Liability Absolute    

        The
liability of the Guarantor hereunder shall be absolute and unconditional and shall not be discharged, diminished or in any way affected by: 

        7.2.1    any
amalgamation, merger, consolidation or reorganization of the Borrower, the Guarantor, the Agent or any Lender or any continuation of the Borrower,
the Guarantor, the Agent or any Lender from the statute under which it now or hereafter exists to another statute whether under the laws of the same jurisdiction or another jurisdiction; 

        7.2.2    any
change in the name, business, objects, capital structure, ownership, constating documents, by-laws or resolutions of the Borrower, the
Guarantor, the Agent or any Lender, including without limitation any transaction (whether by way of transfer, sale or otherwise) whereby all or any part of the undertaking, property and assets of the
Borrower, the Guarantor, the Agent or any Lender becomes the property of any other Person; 

        7.2.3    any
Proceedings of or affecting the Borrower, the Guarantor, the Agent or any Lender or any other Person and any court orders made or action taken by the
Borrower, the Guarantor, the Agent or any Lender or any other Person under or in connection with those Proceedings, whether or not those Proceedings or orders or that action results in any of the
matters described in sections 7.3.1.1 to 7.3.1.8 occurring with or without the consent of the Lenders; 

        7.2.4    the
current existence or subsequent occurrence of an Indemnifiable Circumstance; 

        7.2.5    any
defence, counterclaim or right of set-off available to the Borrower; 

        7.2.6    the
fact that the Borrower ceases to be liable for any reason whatsoever to the Agent or the Lenders in respect of all or any part of the Guaranteed
Obligations (otherwise than by reason of the payment of those Guaranteed Obligations to the Agent or the Lenders) or the fact that a court determines that the liability of the Borrower to the Lenders
in respect of all or any part of the Guaranteed Obligations has been satisfied or is deemed to have been satisfied (except in circumstances where payment of those Guaranteed Obligations has been
received by the Lenders); and 

        7.2.7    any
other circumstance which might otherwise constitute in whole or in part a defence available to, or a discharge of, the Guarantor, the Borrower
or any other Person in respect of the Guaranteed Obligations or the liability of the Guarantor (otherwise than by reason of the payment of those Guaranteed Obligations to the Agent or the Lenders). 

        7.3    Dealings by Lenders    

        7.3.1    The
Lenders may from time to time in their absolute discretion, without discharging, diminishing or in any way affecting the liability of the Guarantor
hereunder: 

        7.3.1.1    advance
any funds to the Borrower or make or continue to make any credit facilities available to the Borrower constituting or relating to Guaranteed
Obligations; 

        7.3.1.2    permit
any increase or decrease, however significant, of the Guaranteed Obligations or otherwise supplement, amend, restate or substitute, in whole or
in part, however significant, the Guaranteed Obligations, the Loan Agreement or any other agreement relating to any of the foregoing or, in whole or in part, terminate the availability of any credit
facilities relating to, or demand repayment of any Guaranteed Obligations; 

        7.3.1.3    enforce
or take action under or abstain from enforcing or taking action under the Loan Agreement or any other agreement; 

        7.3.1.4    receive,
give up, subordinate, release or discharge any Security; supplement, amend, restate, substitute, renew, abstain from renewing, perfect or
abstain from perfecting or maintaining the perfection of any Security; enforce, take action under or realize in any manner or abstain from enforcing, taking action under or realizing any Security;
deal with or abstain from dealing with all or any part of the undertaking, property and assets covered by any Security or allow or abstain from allowing the Borrower or other Persons to deal with all
or any part of such undertaking, property and assets; 

        7.3.1.5    renew
all or any part of the Guaranteed Obligations or grant extensions of time or any other indulgences to the Borrower or to any other guarantor or
other Person liable directly or as surety for all or any part of the Guaranteed Obligations; 

        7.3.1.6    accept
or make any compositions or arrangements with or release, discharge or otherwise deal with or abstain from dealing with the Borrower or any
other guarantor or other Person liable directly or as surety for all or any part of the Guaranteed Obligations; 

        7.3.1.7    in
whole or in part prove or abstain from proving a claim of the Lenders in any Proceedings of or affecting the Borrower or any other Person; and 

        7.3.1.8    agree
with the Borrower, any other guarantor or any other Person to do anything described in sections 7.3.1.1 to 7.3.1.7; 

whether
or not any of the matters described in sections 7.3.1.1 to 7.3.1.8 above occur alone or in connection with one or more other such matters. 

        7.3.2    In
no case will the liability of the Guarantor hereunder be discharged, diminished or in any way affected as a result of: 

        7.3.2.1    any
default under, or breach by the Agent, the Lenders or its respective agents of, (i) the Loan Agreement or any other agreement including
without limitation any Security, (ii) any applicable law, or (iii) any other obligation or duty binding the Agent, the Lenders or its agents. 

        7.3.3    No
loss of or in respect of any Security for the Guaranteed Obligations or any part thereof, whether occasioned through the fault of the Agent, the
Lenders or otherwise, shall discharge, diminish or in any way affect the liability of the Guarantor hereunder. Neither the Agent, the Lenders nor any of its directors, officers, employees or agents or
any receiver or receiver-manager appointed by it or by a court shall have any liability, whether in tort, contract or otherwise, for any act taken or omitted to be taken by the Agent or the Lenders or
by any of such other Persons in connection with the Guaranteed Obligations or any part thereof or any Security for the Guaranteed Obligations or any part thereof including without limitation any of
the matters described above in this section 7.3, unless and until the Guaranteed Obligations are fully 

satisfied. The Guarantor waives all rights it may have as surety, whether at law, in equity or otherwise, that are inconsistent with the provisions of this Agreement. 

        7.4    Waiver of Notice    

        The
Guarantor expressly waives any right to receive notice of the existence or creation of all or any of the Guaranteed Obligations and presentment, demand, notice of dishonour, protest,
notice of any of the events or circumstances described in sections 7.1, 7.2 or 7.3 and all other notices whatsoever in respect of the Guaranteed Obligations except to the extent, if at all,
that the Personal Property Security Act (Ontario) or other applicable law requires notice to be given to the Guarantor in connection with any
disposition of collateral by or on behalf of the Lenders. The Guarantor hereby acknowledges communication to it of the terms of the Loan Agreement and all agreements and other documents referred to in
the Loan Agreement and of all the provisions therein contained and consents to and approves the same. 

        7.5    Expanded Interpretation    

        Notwithstanding
anything else in this Agreement, where the Agent or the Lenders allow the Borrower or any other Person to deal with any property and assets covered by any Security on
terms which stipulate that the Security continues to cover such property and assets after such dealing, each reference to the Borrower in ARTICLE 7 shall be deemed to include the Person
acquiring an interest in such property and assets. 

ARTICLE 8.

MISCELLANEOUS  

        8.1    Payment of Costs and Expenses    

        Unless
otherwise paid by and agreed to be paid by the Borrower pursuant to the Loan Agreement, the Guarantor shall pay to the Agent and the Lenders on demand all costs and expenses of
the Agent and the Lenders, its officers, employees and agents and any receiver or receiver-manager appointed by it or by a court in connection with this Agreement, the Hypothec and the Security
Agreement, including, without limitation: 

        8.1.1    any
actual or proposed amendment or modification hereof or any waiver hereunder and all instruments supplemental or ancillary thereto; 

        8.1.2    obtaining
advice as to the Agent's and/or the Lenders' rights and responsibilities under this Agreement; and 

        8.1.3    the
defence, establishment, protection or enforcement of any of the rights or remedies of the Agent or the Lenders under this Agreement including,
without limitation, all costs and expenses of establishing the validity and enforceability of, or of collection of amounts owing under, this Agreement; 

and
further including, without limitation, all of the fees, expenses and disbursements of the Agent and the Lenders' lawyers, on a solicitor and his own client basis, incurred in connection therewith
and all sales or value-added taxes payable by the Agent or the Lenders (whether refundable or not) on all such costs and expenses. 

        8.2    Currency Conversion and Indemnity    

        If,
in connection with any claim or proof made or filed against the Guarantor, any action brought in connection with this Agreement or any judgment or order obtained as a result thereof,
it becomes necessary to convert any amount due hereunder in one currency (the "first Currency") into another currency (the "second Currency"), then the conversion shall be made at the Conversion Rate
on the first Business Day prior to the day on which payment is received. 

        If
the conversion in connection with any action is not able to be made in the manner contemplated by the preceding paragraph in the jurisdiction in which the action is brought, then the
conversion shall be made at the Conversion Rate on the day on which the judgment is given. 

        If
the Conversion Rate on the date of payment is different from the Conversion Rate on such first Business Day or on the date of judgment or such other date upon which a court may order
the conversion made, as the case may be, the Guarantor shall pay such additional amount (if any) in the second Currency as may be necessary to ensure that the amount paid on such payment date is the
aggregate amount in the second Currency which, when converted at the Conversion Rate on the date of payment, is the amount due in the first Currency, together with all costs and expenses of
conversion. Any additional amount owing by the Guarantor to the Agent or the Lenders pursuant to the provisions of this section shall be due as a separate debt and shall give rise to a separate cause
of action and shall not be affected by or merged into any judgment obtained for any other amounts due under or in respect of this Agreement. 

        8.3    No Set-off By Guarantor    

        All
amounts payable by the Guarantor under this Agreement shall be paid without set-off or counterclaim and without any deduction or withholding whatsoever unless and to the
extent that the Guarantor shall be prohibited by law from doing so, in which case the Guarantor shall pay to the Agent and the Lenders such additional amount
as shall be necessary to ensure that the Agent and the Lenders, as the case may be, receive the full amount it would have received if no such deduction or withholding had been made. 

        8.4    No Waiver    

        No
delay on the part of the Agent or the Lenders in the exercise of any right, power or remedy hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise
by the Agent or the Lenders of any right, power or remedy shall preclude other or further exercise thereof or the exercise of any other right, power or remedy. No action of the Agent or the Lenders
permitted hereunder shall in any way impair or affect its rights, powers or remedies under this Agreement. 

        8.5    Additional Security    

        This
Agreement shall be in addition to, and shall not be in any way prejudiced by nor shall this Agreement prejudice: 

        8.5.1    any
other Security now or hereafter held by the Lenders or by the Agent on behalf of the Lenders, and 

        8.5.2    the
endorsement by the Guarantor of any notes or other documents, 

and
the Agent's and the Lenders' rights under this Agreement shall not be merged in any such other Security or endorsement. 

        8.6    Assignment by Lenders    

        The
Agent and the Lenders may sell, assign or transfer all or any of the Guaranteed Obligations to the extent permitted, and in accordance with the procedures set forth, in the Loan
Agreement, and in such event each and every immediate and successive assignee, transferee or holder of all or any of the Guaranteed Obligations, shall have, in respect of the rights or obligations
sold, assigned or transferred to it, the full benefit hereof to the same extent as if it were an original party hereto and to the Guaranteed Obligations or the part thereof so sold, assigned or
transferred, without regard to any set-off, counterclaim or equities between the Borrower, the Agent and the Lenders or the Guarantor, the Agent and the Lenders. 

        8.7    Communication    

        Any
notice or other communication, including a demand or a direction, required or permitted to be given hereunder shall be in writing and shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as the Guarantor or 

the Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile, as the case may be, at its address set forth below: 

	(a)    if to the Agent:
	

Foothill Capital Corporation

1 Boston Place

Boston, Massachusetts
	

Attention:	
 	

Business Finance Division Manager
	Telecopier number:	 	617.722.9493
	

with a copy to
	

Torys LLP

237 Park Avenue

New York, New York

10017-3142
	

Attention:	
 	

Emanuel Grillo
	Telecopier number:	 	212.745.0200
	

(b)    if to the Guarantor:
	

Archibald Candy (Canada) Corporation

c/o Archibald Candy Corporation

1137 West Jackson Boulevard

Chicago, Illinois

60607
	

Attention:	
 	

President and Chief Operating Officer
	Telecopier number:	 	312.243.3992
	

with a copy to
	

Winston & Strawn

35 West Wacker Drive

Chicago, Illinois

60601
	

Attention:	
 	

Patrick Doyle
	Telecopier number:	 	312.558.5700

        All
notices or demands sent in accordance with this Section 8.7, other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of
the New York Uniform Commercial Code or other applicable personal property security legislation, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. The Guarantor acknowledges and agrees that notices sent by the Agent or the Lenders in connection with the exercise of enforcement rights against Collateral under the
provisions of the New York Uniform Commercial Code or other applicable personal property security legislation shall be deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth above. 

        Notwithstanding
the foregoing, if applicable personal property security legislation requires that a notice or other communication be given in a specified manner, then any such notice or
communication shall be given in such manner. 

        8.8    Successors and Assigns    

        This
Agreement shall be binding upon the Guarantor and its successors and enure to the benefit of the Agent, the Lenders and their respective successors and assigns. 

        8.9    Copy Received    

        The
Guarantor acknowledges receipt of a copy of this Agreement. 

(Remainder
of this page intentionally left blank) 

        IN WITNESS WHEREOF the Guarantor has executed this Agreement as of the date first above written. 

	 	 	ARCHIBALD CANDY (CANADA) CORPORATION
	

 	
 	
by:	

/s/  TED A. SHEPHERD      
 Name: Ted A. Shepherd

Title: President and Chief Executive Officer
	

 	
 	

by:	

/s/  RICHARD J. ANGLIN      
 Name: Richard J. Anglin

Title: Vice President and Chief Financial Officer

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