XXXXX HORTICULTURE, INC.
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as
of March 15, 1996 and entered into by and among XXXXX HORTICULTURE, INC.
(formerly known as Xxxxx Nurseries Inc.), a California corporation ("Company"),
SUN GRO HORTICULTURE INC., a Nevada corporation ("Sun Gro"), and SUN GRO
HORTICULTURE CANADA LTD., a Canadian corporation ("Sun Gro Canada"; together
with Company and Sun Gro, collectively, "Borrowers"), the financial institutions
listed on the signature pages hereof ("Lenders") and BT COMMERCIAL CORPORATION,
as Agent for Lenders ("Agent"), and, for purposes of Section 4 hereof, the
Credit Support Parties (as defined in Section 4 hereof) listed on the signature
pages hereof, and is made with reference to that certain Credit Agreement dated
as of August 4, 1995 by and among Company, Sun Gro and Sun Gro Canada, Lenders
and Agent, as amended by that certain First Amendment dated as of October 11,
1995 and that certain Second Amendment dated as of October 26, 1995 (as so
amended, the "Credit Agreement"). Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
WHEREAS, Borrowers and Lenders desire to amend the Credit Agreement to
(i) adjust certain of financial covenants set forth therein, and (ii) make
certain other amendments as set forth below:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 7: Borrowers' Negative Covenants
A. Minimum Interest Coverage Ratio. Subsection 7.6A of the Credit
Agreement is hereby amended by deleting the third, fourth, fifth and sixth lines
in the table contained therein in their entirety and substituting the following
therefor:
"1st Fiscal Quarter, 1996 1.50:1.00
2nd Fiscal Quarter, 1996 1.50:1.00
3rd Fiscal Quarter, 1996 1.50:1.00
4th Fiscal Quarter, 1996 1.55:1.00"
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B. Maximum Leverage Ratio. Subsection 7.6B of the Credit Agreement
is hereby amended by deleting the third, fourth, fifth and sixth lines in the
table contained therein in there entirety and substituting the following
therefor:
"1st Fiscal Quarter, 1996 6.50:1.00
2nd Fiscal Quarter, 1996 5.60:1.00
3rd Fiscal Quarter, 1996 5.60:1.00
4th Fiscal Quarter, 1996 5.60:1.00"
C. Minimum Consolidated Adjusted EBITDA. Subsection 7.6C of the
Credit Agreement is hereby amended by deleting the sixth line in the table
contained therein and substituting the following therefor:
"4th Fiscal Quarter, 1996 $32,000,000"
Section 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Third Amendment
Effective Date"):
A. On or before the Third Amendment Effective Date, Holdings and each
Borrower shall deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Third Amendment Effective
Date:
1. Certificate of the corporate secretary or assistant secretary
for each of Holdings and each Borrower certifying as of the Third Amendment
Effective Date that:
a. The Certificate or Articles of Incorporation of Holdings
or such Borrower have not been amended, modified or otherwise changed
since the Closing Date; and
b. The Bylaws of Holdings or such Borrower have not been
amended, modified or otherwise changed since the Closing Date;
2. Resolutions of Board of Directors of each of Holdings and each
Borrower approving and authorizing the execution, delivery, and performance
of this Amendment, certified as of the Third Amendment Effective Date by
Holdings or such Borrower's corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
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3. Signature and incumbency certificates of officers of each of
Holdings and each Borrower executing this Amendment; and
5. Executed copies of this Amendment.
B. On or before the Third Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Agent and such counsel, and Agent and such
counsel shall have received all such counterpart originals or certified copies
of such documents as Agent may reasonably request.
Section 3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. Corporate Power and Authority. Each Loan Party has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of each Loan Party party hereto.
C. No Conflict. The execution and delivery by each Loan Party of
this Amendment and the performance by each Loan Party hereto of the Amended
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Holdings or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Holdings
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Holdings or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Holdings or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Holdings or any of its Subsidiaries
(other than Liens created under any of the Loan Documents in favor of Agent on
behalf of Lenders), or (iv) require any approval of stockholders or any approval
or consent of any Person under any Contractual Obligation of Holdings or any of
its Subsidiaries, except for such approvals or consents which have been obtained
on or before the Third Amendment Effective Date and disclosed in writing to
Lenders.
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D. Governmental Consents. The execution and delivery by the Loan
Parties hereto of this Amendment and the performance by the Loan Parties hereto
of the Amended Agreement do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
E. Binding Obligation. This Amendment and the Amended Agreement have
been duly executed and delivered by each Loan Party and are the legally valid
and binding obligations of such Loan Party, enforceable against such Loan Party
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 5 of the
Credit Agreement and contained in the other Loan Documents are and will be true,
correct and complete in all material respects on and as of the Third Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
Section 4. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Guaranty, the Company Security
Agreement, the Company Pledge Agreement, the Company Trademark Security
Agreement, the Company Patent Security Agreement and the Collateral Account
Agreement pursuant to which Company has (i) guarantied the Obligations and (ii)
created liens in favor of Agent on certain Collateral to secure the Obligations
and to secure its obligations under the Company Guaranty. Sun Gro is a party to
the Domestic Subsidiary Guaranty, the Domestic Subsidiary Security Agreement,
the Domestic Subsidiary Pledge Agreement, the Domestic Subsidiary Trademark
Security Agreement, the Domestic Subsidiary Patent Security Agreement and the
Collateral Account Agreement pursuant to which Sun Gro has (i) guarantied the
Obligations and (ii) created liens in favor of Agent on certain Collateral and
to secure the obligations of Sun Gro under the Domestic Subsidiary Guaranty.
Sun Gro Canada is a party to the Canadian Subsidiary Security Agreement and the
Canadian Subsidiary Pledge Agreement pursuant to which Sun Gro Canada has
created liens in favor of Agent on certain Collateral to secure certain of the
Obligations. Holdings is a party to the Holdings Guaranty and the Holdings
Pledge Agreement pursuant to which Holdings has (i) guarantied the Obligations
and (ii) pledged certain Collateral to Agent to secure the obligations of
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Holdings under the Holdings Guaranty. Company, Sun Gro, Sun Gro Canada and
Holdings are collectively referred to herein as the "Credit Support Parties",
and the Guaranties and Collateral Documents referred to above are collectively
referred to herein as the "Credit Support Documents".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as such
terms are defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Borrowers now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Third Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party (other than Borrowers) acknowledges and
agrees that (i) notwithstanding the conditions to effectiveness set forth in
this Amendment, such Credit Support Party is not required by the terms of the
Credit Agreement or any other Loan Document to consent to the amendments to the
Credit Agreement effected pursuant to this Amendment and (ii) nothing in the
Credit Agreement, this Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future amendments to the
Credit Agreement.
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Section 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Third Amendment Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference
in the other Loan Documents to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall
mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of
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which is governed by Section 2 hereof) shall become effective upon the execution
of a counterpart hereof by Requisite Lenders, Holdings and each Borrower and
receipt by Company and Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
XXXXX HORTICULTURE, INC. (formerly known
as Xxxxx Nurseries Inc.),
as Borrower
By:
-------------------------------
Title:
----------------------------
SUN GRO HORTICULTURE INC.,
as Borrower
By:
-------------------------------
Title:
----------------------------
SUN GRO HORTICULTURE CANADA LTD.,
as Borrower
By:
-------------------------------
Title:
----------------------------
XXXXX HOLDINGS, INC., (formerly known as Xxxxx
Horticulture Inc.)(for purposes of Section 4
only) as a Credit Support Party
By:
-------------------------------
Title:
----------------------------
S-1
BT COMMERCIAL CORPORATION,
as a Domestic Lender and as Agent
By:
-------------------------------
Title:
----------------------------
BT BANK OF CANADA,
as a Canadian Lender
By:
-------------------------------
Title:
----------------------------
BANKERS TRUST COMPANY,
as an Issuing Lender
By:
-------------------------------
Title:
----------------------------
S-2
XXXXXX TRUST AND SAVINGS BANK,
as a Domestic Lender
By:
-------------------------------
Title:
----------------------------
FLEET BANK OF MASSACHUSETTS, N.A.,
as a Domestic Lender
By:
-------------------------------
Title:
----------------------------
LASALLE NATIONAL BANK,
as a Domestic Lender
By:
-------------------------------
Title:
----------------------------
NATIONSBANK, N.A.,
as a Domestic Lender and Canadian Lender
By:
-------------------------------
Title:
----------------------------
UNION BANK,
as a Domestic Lender and Canadian Lender
By:
-------------------------------
Title:
----------------------------
S-3
XXXXX FARGO BANK,
as a Domestic Lender and Canadian Lender
By:
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Title:
----------------------------
BANK OF MONTREAL,
as a Canadian Lender
By:
-------------------------------
Title:
----------------------------
S-4
