EXHIBIT 4.13
XXXXX HORTICULTURE, INC.
NINTH AMENDMENT
TO CREDIT AGREEMENT AND
SECOND AMENDMENT TO HOLDINGS PLEDGE AGREEMENT
This NINTH AMENDMENT TO CREDIT AGREEMENT AND SECOND AMENDMENT TO
HOLDINGS PLEDGE AGREEMENT (this "Amendment") is dated as of December 16, 1997
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 5 hereof, the Credit Support Parties (as
defined in Section 5 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, that certain Second
Amendment dated as of October 26, 1995, that certain Third Amendment dated as of
March 15, 1996, that certain Fourth Amendment dated as of August 28, 1996, that
certain Fifth Amendment and Consent dated as of November 14, 1996, that certain
Sixth Amendment dated as of February 14, 1997, that certain Seventh Amendment
and Consent to Credit Agreement dated as of March 26, 1997, and that certain
Eighth Amendment and Limited Waiver to Credit Agreement dated as of November 7,
1997 (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, Company has requested Lenders to amend the Credit Agreement to
(i) amend the definitions of "Company Borrowing Base", "Sun Gro Borrowing Base"
and "Eligible Accounts Receivable" to allow for the impact of increased
seasonality and to add certain other definitions, (ii) provide for an equity
contribution by MDCP, (iii) amend the mandatory prepayment provisions to provide
for a sharing of certain payments in the event of an initial public offering,
(iv) adjust certain of the financial covenants set forth therein, (v) amend the
assignment provisions to provide for proportionate assignment of commitments
made under the Xxxxx II Credit Agreement and (vi) make certain other amendments
as set forth below; and
WHEREAS Borrowers, Lenders and Holdings desire to amend the Holdings
Pledge Agreement to permit the Xxxxx II Transactions:
1
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 1: Certain Defined Terms
A. Subsection 1.1 of the Credit Agreement is hereby amended by adding
thereto the following definitions, which shall be inserted in the proper
alphabetical order:
" 'Xxxxx I Exposure' means at any date of determination the sum of (i)
the aggregate principal amount of domestic Term Loans outstanding under this
Agreement, (ii) the aggregate principal amount of Canadian Term Loans
outstanding under this Agreement, and (iii) the aggregate Revolving Loan
Exposure of all Lenders."
" 'Xxxxx II Exposure' means at any date of determination the sum of (i)
the Canadian Term Loan Exposure of all lenders under the Xxxxx II Credit
Facility, (ii) the Acquisition Exposure of all lenders under the Xxxxx II
Credit Facility, and (iii) the Working Capital Revolving Loan Exposure of
all lenders under the Xxxxx II Credit Facility (all capitalized terms used
in this definition and not otherwise defined in this Agreement to be as
defined in the Xxxxx II Credit Facility)."
" 'Total Xxxxx Exposure' means at any date of determination, the sum of
the Xxxxx I Exposure and the Xxxxx II Exposure."
B. Company Borrowing Base. Subsection 1.1 of the Credit Agreement is
hereby amended by (1) deleting clause (ii)(a) of the definition of "Company
Borrowing Base" therefrom in its entirety and substituting the following
therefor: "(a) during the period beginning January 1 and ending May 31 in each
year, fifty-five percent (55%) of Eligible Inventory of Company, and during the
period beginning June 1 and ending December 31 in each year, fifty percent (50%)
of Eligible Inventory of Company and" and (2) deleting the two references to
"$40,000,000" appearing in the definition of "Company Borrowing Base" and
substituting "$50,000,000" for each such reference.
C. Eligible Accounts Receivable. Subsection 1.1 of the Credit
Agreement is hereby amended by deleting the reference in clause (b) of the
definition of "Eligible Accounts Receivable" to "April 30" and substituting "May
31" therefor and by deleting the reference in such clause (b) to "$15,000,000"
and substituting "$20,000,000" therefor.
D. Sun Gro Borrowing Base. Subsection 1.1 of the Credit Agreement is
hereby amended by (1) deleting clause (ii) (a) of the definition of "Sun Gro
Borrowing Base" therefrom in its entirety and substituting the following
therefor: "(a) during the period beginning January 1 and ending May 31 in each
year, fifty-five percent (55%) of Eligible Inventory of Sun Gro, and during the
period beginning June 1 and ending December 31 in each
2
year, fifty percent (50%) of Eligible Inventory of Sun Gro and" and (2) deleting
the two references to "$40,000,000" appearing in the definition of "Sun Gro
Borrowing Base" and substituting "$50,000,000" for each such reference.
1.2 Amendments to Section 2: Amounts and Terms of Commitments and
Loans
A. Prepayments and Reductions Due to Issuance of Equity Securities.
Subsection 2.4B of the Credit Agreement is hereby amended by deleting clauses
(iii)(c) and (d) in their entirety and substituting therefor the following:
"(c) Prepayments and Reductions Due to IPO. On the date of receipt by
Holdings or any of its Subsidiaries other than the Company or any of
its Subsidiaries of the cash proceeds (net of underwriting discounts
and commissions and other reasonable costs associated therewith) from
an initial Public Offering, the Commitments shall terminate and the
Company shall (x) prepay in full the outstanding principal amount of
all outstanding Revolving Loans and Term Loans, together with all
accrued and unpaid interest thereon, (y) pay in full all fees and other
amounts payable under the Loan Documents and (z) fully cash
collateralize all outstanding Letters of Credit or make such other
arrangements as are satisfactory in form and substance to Agent for the
termination of such Letters of Credit.
(d) Prepayments and Reductions Due to Issuance of Other Securities.
(I) On the date of receipt by Company or any of its Subsidiaries of the
cash proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) from the issuance of any equity
or debt Securities of Company or any of its Subsidiaries (other than
any Indebtedness permitted pursuant to subsection 7.1 as in effect on
the Closing Date and other than the proceeds of up to $3,000,000 in
MDCP equity contributions made to Holdings and contributed by Holdings
to Company on or prior to February 1, 1998 (the "Parent Equity
Contribution")), (i) both Company and Sun Gro Canada shall prepay their
respective Term Loans in an aggregate amount equal to such net cash
proceeds and (2) to the extent the amount of such net cash proceeds
exceeds the aggregate outstanding principal amount of the Term Loans,
both Company and Sun Gro Canada shall prepay their respective Revolving
Loans, and the Revolving Loan Commitments shall be permanently reduced,
in an aggregate amount equal to such excess. Any such mandatory
prepayments shall be applied as specified in subsection 2.4B(iv).
(II) No later than the first Business Day following the date of receipt
by Holdings of the cash proceeds (net of underwriting discounts and
commissions and other reasonable costs associated therewith) from the
issuance of any of its
3
debt or equity Securities (other than (W) the proceeds of the Parent
Equity Contribution, (X) any warrants to purchase Holdings Common Stock
or Holdings Preferred Stock issued to any holders of any Indebtedness
incurred pursuant to subsection 7.1(vi) at the time of incurrence
thereof, (Y) up to $1,500,000 in aggregate issuance price of Holdings
Common Stock or Holdings Preferred Stock issued to officers and
employees of Company and its Subsidiaries and (Z) the proceeds of an
initial Public Offering pursuant to subsection 2.4B(iii)(c) above),
such net cash proceeds shall be applied (1) to prepay Indebtedness
pursuant to the Xxxxx II Credit Agreement based on the proportionate
percentage which the Xxxxx II Exposure bears to the Total Xxxxx
Exposure and (2) to prepay Indebtedness under this Agreement based on
the proportionate percentage which the Xxxxx I Exposure bears to the
Total Xxxxx Exposure, such prepayments being applied to prepay first
the respective Term Loans of the Company and of Sun Gro Canada in an
aggregate amount equal to such net cash proceeds and then, to the
extent the amount of such net cash proceeds exceeds the aggregate
outstanding principal amount of the Term Loans, to prepay the
respective Revolving Loans of the Company and of Sun Gro Canada, and
the Revolving Loan Commitments shall be permanently reduced, in an
aggregate amount equal to such excess. Any such mandatory prepayments
shall be applied as specified in subsection 2.4B(iv)."
1.3 Amendments to Section 7: Borrowers' Negative Covenants
A. Consolidated Capital Expenditures. Subsection 7.8 of the Credit
Agreement is hereby amended by deleting the table contained therein in its
entirety and substituting the following therefor:
Maximum Consolidated
"Period Capital Expenditures
------------------- --------------------
Closing Date to
December 31, 1995 $ 2,750,000
Fiscal Year 1996 $ 8,350,000
Fiscal Year 1997 $12,100,000
Fiscal Year 1998 $13,000,000
Fiscal Year 1999 $ 8,300,000
Fiscal Year 2000
and each Fiscal
Year thereafter $10,800,000"
B. Restriction on Leases. Subsection 7.9 of the Credit Agreement is
hereby amended by deleting the reference to "$3,500,000" contained therein and
substituting "$5,000,000" therefor.
4
1.4 Amendment to Section 8: Events of Default
Section 8 of the Credit Agreement is hereby amended by adding after
subsection 8.18 a new subsection 8.19 as follows:
"8.19 Equity Contributions.
(i) Holdings shall not have received from MDCP on or prior to
February 1, 1998, not less than $2,000,000 of the Parent Equity
Contribution; or (ii) Company shall not have received from Holdings on
or prior to such date an equity contribution in an amount equal to the
Parent Equity Contribution;"
1.5 Amendments to Section 10: Miscellaneous
Section 10 of the Credit Agreement is hereby amended by deleting the
period at the end of the first sentence of subsection 10.1A and by substituting
the following therefor: "; and provided, further that no such sale, assignment,
transfer or participation may be made by a Lender to an Eligible Assignee
without a concurrent sale, assignment, transfer or participation to such
Eligible Assignee of the assigning Lender's proportionate share of the
commitments under the Xxxxx II Credit Agreement."
Section 2. AMENDMENT TO THE HOLDINGS PLEDGE AGREEMENT
2.1 Amendment to Section 1: Pledge of Security
Subsection 1(e) of the Holdings Pledge Agreement is hereby amended to
add the parenthetical phrase "(other than Xxxxx II)" after the phrase "a direct
Subsidiary of Pledgor".
Section 3. CONDITIONS TO EFFECTIVENESS
Sections 1 and 2 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 "Ninth Amendment
Effective Date"):
A. On or before the Ninth Amendment Effective Date, Holdings and each
Borrower shall deliver to Lenders (or to Agent for Lenders) executed copies of
this Amendment.
B. Agent shall have received copies of this Amendment executed by
Requisite Lenders.
5
C. On or before the Ninth Amendment Effective Date, all corporate and
other proceedings taken or required 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 4. 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 and Holdings
represent and warrant 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 and the Holdings Pledge Agreement as amended by this Amendment (the
"Amended Agreements").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreements have been duly
authorized by all necessary corporate action on the part of each Loan Party
party hereto.
C. Signature and Incumbency. The signature and incumbency
certificates of officers of Holdings and each Borrower delivered in connection
with the Fifth Amendment correctly reflect, as of the Ninth Amendment Effective
Date, the signature and incumbency of each officer of Holdings and each Borrower
executing this Amendment.
D. No Conflict. After giving effect to the amendments effected
hereby, the execution and delivery by each Loan Party of this Amendment and the
performance by each Loan Party hereto of the Amended Agreements 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 and other than
is contemplated to be created with respect to Xxxxx II in connection with the
Xxxxx II Credit Facility), 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 Ninth Amendment Effective Date and disclosed in
writing to Lenders.
6
E. 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 Agreements 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.
F. Binding Obligation. This Amendment has been duly executed and
delivered by each Loan Party and this Amendment and the Amended Agreements 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.
G. Incorporation of Representations and Warranties From Credit
Agreement. After giving effect to the amendments effected hereby, the
representations and warranties contained in Section 5 of the Credit Agreement
are and will be true, correct and complete in all material respects on and as of
the Ninth 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.
H. Absence of Default. After giving effect to the amendments
effected hereby, 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 5. 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 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
7
(ii) pledged certain Collateral to Agent to secure the obligations of
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, the Holdings Pledge Agreement, and
this Amendment and consents to the amendment of the Credit Agreement and the
Holdings Pledge 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
Agreements 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 Agreements and the Credit Support Documents, in each case to which it is
a party or otherwise bound, are true, correct and complete in all material
respects on and as of the Ninth 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.
8
Section 6. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Ninth 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.
9
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: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Title: C. F. O
---------------------------------
SUN GRO HORTICULTURE INC.,
as Borrower
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Title:
----------------------------------
SUN GRO HORTICULTURE CANADA LTD.,
as Borrower
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Title:
----------------------------------
XXXXX HOLDINGS, INC. (formerly known
as Xxxxx Horticulture Inc.)
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Title:
----------------------------------
S-1
BT COMMERCIAL CORPORATION,
as a Domestic Lender and as Agent
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Title:
----------------------------------
BT BANK OF CANADA,
as a Canadian Lender
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Title: Managing Director
---------------------------------
BANKERS TRUST COMPANY,
as an Issuing Lender
By:
------------------------------------
Title:
---------------------------------
S-2
XXXXXX TRUST AND SAVINGS BANK,
as a Domestic Lender
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Title: Vice President
---------------------------------
FLEET BANK OF MASSACHUSETTS, N.A.,
as a Domestic Lender
By:
------------------------------------
Title:
---------------------------------
LASALLE NATIONAL BANK,
as a Domestic Lender
By: /s/ X. Xxxx Xxxxx
------------------------------------
Title: Senior Vice President
---------------------------------
NATIONSBANK OF TEXAS, N.A.,
as a Domestic Lender and Canadian Lender
By: /s/ Xxxxx Beckemier
------------------------------------
Title: Vice President
---------------------------------
UNION BANK OF CALIFORNIA, N.A.
as a Domestic Lender and Canadian Lender
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Title: Vice President
---------------------------------
S-3
XXXXX FARGO BANK, N.A.
as a Domestic Lender and Canadian Lender
By: signature illegible
------------------------------------
Title: Vice President
---------------------------------
BANK OF MONTREAL,
as a Canadian Lender
By: /s/ Xxxx XxXxxx
------------------------------------
Title: Senior Account Manager
---------------------------------
S-4
FLEET NATIONAL BANK,
as a Domestic Lender
By:
-------------------------------------
Title:
---------------------------------
S-5
