EXHIBIT 4.9
XXXXX HORTICULTURE, INC.
FIFTH AMENDMENT AND CONSENT
TO CREDIT AGREEMENT
This FIFTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT (this "Amendment")
is dated as of November 14, 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 6 hereof, the Credit Support Parties (as defined in Section 6 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, and that
certain Fourth Amendment dated as of August 28, 1996 (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) increase the aggregate Revolving Loan Commitments by $10 million (from $50
million to $60 million), (ii) adjust certain of the financial covenants set
forth therein, and (iii) make certain other amendments as set forth below; and
WHEREAS, Company has requested that Lenders consent to the acquisition
by Company of all of the issued and outstanding shares of capital stock of Xxxxx
Nurseries, Inc. ("FN"), Xxxxx Rainbow Nurseries, Inc. ("FRN"), a wholly-owned
Subsidiary of FN, and FRN, Inc., a wholly-owned Subsidiary of FRN; and
WHEREAS, subject to the terms and conditions of this Amendment, Lenders
are willing to agree to such amendments and consent to such acquisition.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
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Section 1. AMENDMENTS TO THE CREDIT AGREEMENT.
1.1 Amendments to Section 1: Provisions Relating to 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:
"'Fifth Amendment' means that certain Fifth Amendment and Consent to
Credit Agreement dated as of November 14, 1996 among Holdings, Borrowers,
FN, FRN, FRN, Inc., Agent and Lenders."
"'Fifth Amendment Effective Date' has the meaning assigned to that term
in the Fifth Amendment."
"'FII' means Xxxxx Industries, Inc., a Nevada corporation."
"'Xxxxx Acquisition' means the acquisition by Company of all of the
issued and outstanding shares of capital stock of FN and each of FN's
Subsidiaries pursuant to the Xxxxx Acquisition Agreements."
"'Xxxxx Acquisition Agreements' means collectively, (i) the Xxxxx Stock
Purchase Agreement, (ii) that certain Escrow Agreement dated as of November
27, 1996 among Company, FII, the other stockholders of FN and an escrow
agent, (iii) that certain non-competition agreement dated as of November 27,
1996 by and among FII, Xxxxxx Xxxxx, FN and FRN, (iv) the Flynn Oregon
Agreements, (v) the New Preferred Stock Purchase Agreement, (vi) the New
Warrants, and (vii) any agreement or document entered into by any Loan Party
in connection with any of the foregoing, in each case (for clauses (i)
through (vii) above) as any such agreement or document may be amended from
time to time after the Fifth Amendment Effective Date to the extent
permitted by subsection 7.15 or 8.17."
"'Flynn Oregon Agreements' means (i) that certain Custom Farming
Agreement dated as of November 27, 1996, entered into by and between FRNO
and FRN, pursuant to the Xxxxx Stock Purchase Agreement and (ii) that
certain Equipment and Inventory Purchase Agreement dated as of November 27,
1996 by and between FRNO and FRN."
"'Xxxxx Purchase Option Payments' means the Consolidated Capital
Expenditures by FRN in connection with its exercise of the purchase options
with respect to the Real Property Assets described in Schedule 3.31 annexed
to the Xxxxx Stock Purchase Agreement and costs relating thereto."
"'Xxxxx Stock Purchase Agreement' means that certain Stock Purchase
Agreement dated as of November 27, 1996 by and among FII, certain individual
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stockholders of FN and Company, as such agreement may be amended from time
to time after the Fifth Amendment Effective Date to the extent permitted
under subsection 7.15."
"'FN' means Xxxxx Nurseries, Inc., a California corporation."
"'FRN' means Xxxxx Rainbow Nurseries, Inc., a Hawaii corporation."
"'FRN, Inc.' means FRN, Inc., a California corporation."
"'FRNO' means Flynn Rainbow Nurseries (Oregon), Inc."
"'New Preferred Stock Holders' means Madison Dearborn Capital Partners,
L.P., California State Teachers Retirement System, Chillmark Fund II, L.P.
and Xxxxxx Co-Investment, L.L.C."
"'New Preferred Stock Purchase Agreement' means that certain Purchase
Agreement dated as of November 27, 1996 by and among Holdings and New
Preferred Stock Holders, as such agreement may be amended from time to time
after the Fifth Amendment Effective Date to the extent permitted under
subsection 8.17."
"'New Warrants' means those warrants dated as of November 27, 1996
issued by Holdings to the New Preferred Stock Holders, which warrants, if
exercised, represent approximately 7.5% of the outstanding Holdings Common
Stock on a fully diluted basis, and any warrants issued in replacement of or
in substitution for such warrants, in each case as such warrants may be
amended from time to time after the Fifth Amendment Effective Date to the
extent permitted under subsection 8.17."
B. Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting the definition of "Company Borrowing Base" therefrom in its entirety
and substituting the following therefor:
"'Company Borrowing Base' means, as at any date of determination,
an aggregate amount equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable of
Company and FRN plus
(ii) the lesser of (a) fifty percent (50%) of Eligible Inventory
of Company and FRN and (b) an amount which, when aggregated with the
amount calculated pursuant to clause (ii) of the definition of Sun Gro
Borrowing Base (as set forth in the most recent Borrowing Base
Certificate
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delivered to Agent) at such date of determination, equals $30,000,000
(it being understood that the amount calculated pursuant to this clause
(ii) and the amount calculated pursuant to clause (ii) of the
definition of Sun Gro Borrowing Base shall not at any time exceed
$30,000,000), minus
(iii) the aggregate amount of reserves, if any, established by
Agent in the exercise of its Permitted Discretion against Eligible
Accounts Receivable and Eligible Inventory of Company and FRN;
provided that Agent, in the exercise of its Permitted Discretion, may (a)
increase or decrease reserves against Eligible Accounts Receivable and
Eligible Inventory of Company and FRN and (b) reduce the advance rates
provided in this definition, or restore such advance rates to any level
equal to or below the advance rates in effect as of the Closing Date."
C. Subsection 1.1 of the Credit Agreement is hereby further amended by
adding after the reference to "Company" appearing in the first line of the
definition of "Eligible Accounts Receivable" the word, "FRN".
D. Subsection 1.1 of the Credit Agreement is hereby further amended by
deleting the first sentence of the definition of "Eligible Inventory" in its
entirety and substituting therefor the following:
"'Eligible Inventory' means, with respect to Company, FRN or Sun
Gro, the aggregate amount of Inventory of such Loan Party deemed by Agent
in the exercise of its Permitted Discretion to be eligible for inclusion in
the calculation of the Borrowing Base minus, in the case of Eligible
Inventory of Company or FRN, the Inventory Scrap Reserve."
E. Subsection 1.1 of the Credit Agreement is hereby further amended by
inserting the phrase "or FRN" after each reference to "Company" appearing in the
definition of "Inventory Scrap Reserve" and inserting the phrase "or FRN's"
after the reference to "Company's" appearing in such definition.
F. Subsection 1.1 of the Credit Agreement is hereby further amended
by inserting the phrase ", the Xxxxx Acquisition Agreements, the Xxxxxxx
Acquisition Agreements," after the reference to "the Acquisition Agreement,"
appearing in the first line of the definition of "Related Agreements."
1.2 Amendment to Section 2: Amounts and Terms of Commitments and
Loans
Subsection 2.1A(iii) of the Credit Agreement is hereby amended by
deleting the reference to "$50,000,000" contained therein and substituting
"$60,000,000" therefor.
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1.3 Amendments to Section 5: Representations and Warranties
A. Takeout Securities Indenture. Subsection 5.2E is hereby amended
by adding the following at the end of subsection 5.2E(iii):
"The Loans and all other monetary obligations of Company under the
Credit Agreement and the other Loan Documents, including reimbursement
obligations with respect to the Letters of Credit, constitute `Senior
Debt' and `Designated Senior Debt' as defined in the Takeout Securities
Indenture and are senior to Company's obligations under the Takeout
Securities Indenture. The Loans and all other monetary obligations of
Holdings, Sun Gro and any other Loan Party (other than Company) under
the Credit Agreement and the other Loan Documents, including
reimbursement obligations with respect to the Letters of Credit,
constitute `Guarantor Senior Debt' and `Designated Senior Debt' as
defined in the Takeout Securities Indenture and are senior to
Holdings', Sun Gro's and such Loan Parties' obligations under the
Takeout Securities Indenture."
X. Xxxxx Stock Purchase Agreement. Section 5 of the Credit Agreement
is hereby amended by adding thereto at the end thereof the following:
"5.18 Xxxxx Stock Purchase Agreement.
A. Company has delivered to Lenders complete and correct copies
of the Xxxxx Acquisition Agreements and of all exhibits and schedules
thereto.
B. Except to the extent otherwise set forth herein or in the
schedules thereto, each of the representations and warranties given by
FN Shareholders (as defined therein) to Company in the Xxxxx Stock
Purchase Agreement is true and correct in all material respects as of
the Fifth Amendment Effective Date, subject to the qualifications set
forth in the schedules to the Xxxxx Stock Purchase Agreement.
C. Each of the representations and warranties given by Company to
FN Shareholders (as defined therein) in the Xxxxx Stock Purchase
Agreement is true and correct in all material respects as of the Fifth
Amendment Effective Date.
D. Notwithstanding anything in the Xxxxx Stock Purchase Agreement
to the contrary, the representations and warranties of Borrowers set
forth in subsections 5.18B and 5.18C shall, solely for purposes of this
Agreement, survive the Fifth Amendment Effective Date for the benefit
of Lenders."
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C. No Material Adverse Change. Section 5.4 is hereby amended by
adding after "Since December 21, 1994" the following: "and except as set forth
on Schedule 5.4".
D. Employee Benefit Plans. Section 5.11D is hereby amended by
deleting the reference to "$400,000" contained therein and substituting
"$600,000" therefor.
1.4 Amendments to Section 6: Borrower's Affirmative Covenants
A. Supplemental Actions. Subsection 6.10 of the Credit Agreement is
hereby amended by adding the following at the end of Subsection 6.10:
"G. Borrowers shall deliver to Agent, within 45 days after the
Fifth Amendment Effective Date, (i) certificates of insurance naming
Agent on behalf of Lenders as loss payee under all casualty insurance
policies maintained by FN, FRN or FRN, Inc., and as an additional
insured under all liability and business interruption insurance
policies maintained by FN, FRN or FRN, Inc., all as required pursuant
to Subsection 6.4 or pursuant to the Collateral Documents (which
certificates of insurance shall contain such endorsements as are
reasonably requested by Agent), (ii) certificates of title with respect
to all rolling stock of FN, FRN or FRN, Inc. and the taking of all
actions necessary to cause Agent to be noted as lienholder thereon or
otherwise necessary to perfect the first priority Lien granted to Agent
on behalf of Lenders in such rolling stock, and (iii) Lock Box
Agreement or Blocked Account Agreement executed by each person that is
a party thereto with respect to each Deposit Account of FN, FRN or FRN,
Inc.
H. Borrowers hereby represent that FRN, Inc. does not own assets
exceeding $5,000 in the aggregate and does not have any Indebtedness or
Contingent Obligations (other than under the Loan Documents).
Borrowers hereby covenant that FRN, Inc. shall not at any time own any
assets in excess of $5,000 in the aggregate and that FRN, Inc. shall
not at any time have any Indebtedness or Contingent Obligations (other
than under the Loan Documents). Borrowers hereby covenant that they
shall cause FRN, Inc. to be merged with and into FRN (with FRN become
the surviving corporation) within 30 days of the Fifth Amendment
Effective Date, with the terms and documents relating to such merger
being in form and substance satisfactory to Agent in all respects (it
being understood that failure to comply with such covenant shall be an
immediate Event of Default)."
B. Additional Mortgages. Subsection 6.12 of the Credit Agreement is
hereby amended by deleting the parenthetical language which appears immediately
after
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the reference to "as soon as practicable after the acquisition of such Covered
Real Property Asset" contained in clause (ii) therein and substituting therefor
the following:
"(and (w) in the case of any Covered Real Property Asset acquired
in connection with the Xxxxxxx Acquisition, as soon as practicable
after the consummation of the Xxxxxxx Acquisition but in any event
within ninety days after the effective date of the Fourth Amendment,
Consent and Waiver to Credit Agreement dated as of August 28, 1996 by
and among Company, Sun Gro, Sun Gro Canada, Lenders and Agent (the
"Fourth Amendment Effective Date"), (x) in the case of any Covered Real
Property which is a Material Leasehold acquired in connection with the
Xxxxx Acquisition, to the extent any Loan Party shall have obtained the
applicable landlord consents necessary to encumber such Material
Leasehold, as soon as practicable after the consummation of the Xxxxx
Acquisition but in any event within sixty days after the Fifth
Amendment Effective Date (it being understood that with respect to each
such Material Leasehold, the Loan Parties shall use their reasonable
best efforts to deliver all landlord and any other third party consents
necessary to encumber such Material Leasehold within such sixty day
period); provided, however, that if Agent or its counsel do not deliver
initial drafts of such Additional Mortgages on or before thirty days
after the Fifth Amendment Effective Date, the time period for executing
and delivering such Additional Mortgages shall be extended (beyond such
sixty day period) by one day for each day past such thirty day period
until Agent or its counsel deliver such initial drafts, (y) in the case
of any Covered Real Property Asset which is a Fee Property acquired in
connection with the Xxxxx Acquisition, as soon as practicable after the
consummation of the Xxxxx Acquisition but in any event within forty-
five days after the Fifth Amendment Effective Date; provided, however,
that if Agent or its counsel do not deliver initial drafts of such
Additional Mortgages on or before thirty days after the Fifth Amendment
Effective Date, the time period for executing and delivering such
Additional Mortgages shall be extended (beyond such forty-five day
period) by one day for each day past such thirty day period until Agent
or its counsel deliver such initial drafts and (z) in the case of any
Covered Real Property Asset acquired in connection with the exercise of
any purchase options with respect to any Real Property Asset leased by
Company or any of its Subsidiaries as of the Fifth Amendment Effective
Date, as soon as practicable after such exercise of such purchase
option but in any event within forty-five days after the date of
acquisition of such Real Property Asset in connection with such
exercise; provided, however, that if Agent or its counsel do not
deliver initial drafts of such Additional Mortgages on or before thirty
days after the Fifth Amendment Effective Date, the time period for
executing and delivering such Additional Mortgages shall be extended
(beyond such forty-five day
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period) by one day for each day past such thirty day period until Agent
or its counsel deliver such initial drafts)".
1.5 Amendment to Subsection 7.6: Financial Covenants
A. Minimum Interest Coverage Ratio. Subsection 7.6A of the Credit
Agreement is hereby amended by deleting the table contained therein in its
entirety and substituting the following therefor:
Minimum
"Period Interest Coverage Ratio
------------------------ -----------------------
3rd Fiscal Quarter, 1995 1.65:1.00
4th Fiscal Quarter, 1995 1.65:1.00
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 1.45:1.00
1st Fiscal Quarter, 1997 1.45:1.00
2nd Fiscal Quarter, 1997 1.55:1.00
3rd Fiscal Quarter, 1997 1.55:1.00
4th Fiscal Quarter, 1997 1.55:1.00
1st Fiscal Quarter, 1998 1.55:1.00
2nd Fiscal Quarter, 1998 1.70:1.00
3rd Fiscal Quarter, 1998 1.70:1.00
4th Fiscal Quarter, 1998 1.75:1.00
1st Fiscal Quarter, 1999 1.85:1.00
2nd Fiscal Quarter, 1999 1.90:1.00
3rd Fiscal Quarter, 1999 1.90:1.00
4th Fiscal Quarter, 1999 1.95:1.00
1st Fiscal Quarter, 2000 2.00:1.00
2nd Fiscal Quarter, 2000 2.10:1.00
3rd Fiscal Quarter, 2000 2.10:1.00
4th Fiscal Quarter, 2000
and each Fiscal
Quarter thereafter 2.20:1.00"
B. Maximum Leverage Ratio. Subsection 7.6B of the Credit Agreement is
hereby amended by deleting the table contained therein in its entirety and
substituting the following therefor:
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"Period Maximum Leverage Ratio
------------------------ ----------------------
3rd Fiscal Quarter, 1995 5.25:1.00
3rd Fiscal Quarter, 1995 5.25:1.00
4th Fiscal Quarter, 1995 5.60:1.00
1st Fiscal Quarter, 1996 6.50:1.00
2nd Fiscal Quarter, 1996 5.60:1.00
3rd Fiscal Quarter, 1996 6.25:1.00
4th Fiscal Quarter, 1996 6.40:1.00
1st Fiscal Quarter, 1997 7.00:1.00
2nd Fiscal Quarter, 1997 5.75:1.00
3rd Fiscal Quarter, 1997 5.75:1.00
4th Fiscal Quarter, 1997 5.75:1.00
1st Fiscal Quarter, 1998 6.35:1.00
2nd Fiscal Quarter, 1998 5.10:1.00
3rd Fiscal Quarter, 1998 5.10:1.00
4th Fiscal Quarter, 1998 5.10:1.00
1st Fiscal Quarter, 1999 5.60:1.00
2nd Fiscal Quarter, 1999 4.50:1.00
3rd Fiscal Quarter, 1999 4.50:1.00
4th Fiscal Quarter, 1999 4.50:1.00
1st Fiscal Quarter, 2000 5.00:1.00
2nd Fiscal Quarter, 2000 4.00:1.00
3rd Fiscal Quarter, 2000 4.00:1.00
4th Fiscal Quarter, 2000
and each Fiscal
Quarter thereafter 4.00:1.00"
C. Minimum Consolidated Adjusted EBITDA. Subsection 7.6C of the
Credit Agreement is hereby amended by deleting the table contained therein in
its entirety and substituting the following therefor:
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Minimum Consolidated
"Period Adjusted EBITDA
------------------------ --------------------
3rd Fiscal Quarter, 1995 $30,500,000
4th Fiscal Quarter, 1995 $31,000,000
1st Fiscal Quarter, 1996 $31,000,000
2nd Fiscal Quarter, 1996 $31,000,000
3rd Fiscal Quarter, 1996 $29,000,000
4th Fiscal Quarter, 1996 $29,000,000
1st Fiscal Quarter, 1997 $29,500,000
2nd Fiscal Quarter, 1997 $32,000,000
3rd Fiscal Quarter, 1997 $32,000,000
4th Fiscal Quarter, 1997 $32,250,000
1st Fiscal Quarter, 1998 $32,500,000
2nd Fiscal Quarter, 1998 $35,000,000
3rd Fiscal Quarter, 1998 $35,000,000
4th Fiscal Quarter, 1998 $36,000,000
1st Fiscal Quarter, 1999 $37,250,000
2nd Fiscal Quarter, 1999 $38,500,000
3rd Fiscal Quarter, 1999 $38,500,000
4th Fiscal Quarter, 1999 $38,500,000
1st Fiscal Quarter, 2000 $39,000,000
2nd Fiscal Quarter, 2000 $39,000,000
3rd Fiscal Quarter, 2000 $39,000,000
4th Fiscal Quarter, 2000
and each Fiscal Quarter
thereafter $39,000,000"
1.6 Amendment to Subsection 7.8: Consolidated Capital Expenditures
Subsection 7.8 of the Credit Agreement is hereby amended (i) 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 $ 9,300,000
Fiscal Year 1999 $ 8,300,000
Fiscal Year 2000
and each Fiscal
Year thereafter $10,800,000"
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and (ii) by (a) deleting the reference to "and" and adding"," at the end of
clause (ii) of the last proviso contained therein, and (b) adding the following
after clause (iii) of the last proviso contained therein, but before the last
period: ", (iv) Company may incur additional Consolidated Capital Expenditures
on or before November 29, 1996 in an aggregate amount (including all fees and
expenses relating thereto and including Indebtedness assumed by Company or its
Subsidiaries in an amount equal to $7,500,000, which Indebtedness is paid in
full by Company and its Subsidiaries on the Fifth Amendment Effective Date) not
to exceed $12,500,000, consisting of the Xxxxx Acquisition, and (v) FN or any of
its Subsidiaries may incur additional Consolidated Capital Expenditures on or
before December 31, 1997 in an aggregate amount not to exceed $3,500,000
consisting of Xxxxx Purchase Option Payments."
1.7. Amendment to Subsection 7.15: Borrower's Negative Covenants
Amendments of Certain Documents. Subsection 7.15B of the Credit
Agreement is hereby amended by deleting the comma appearing at the end of clause
(i) thereof and substituting therefor the phrase ", or any material terms of any
of the Xxxxxxx Acquisition Agreements, in each case as in effect on the Fourth
Amendment Effective Date, or any material terms of any of the Xxxxx Acquisition
Agreements, in each case as in effect on the Fifth Amendment Effective Date."
1.8 Amendments to Section 8: Events of Default
A. Change in Control. Subsection 8.12 of the Credit Agreement is
hereby amended by adding after the end of clause (vi) the following clause:
"(vii) the occurrence of a "Change in Ownership" or "Fundamental
Change" or "Event of Non-Compliance" under the restated articles of
incorporation of Holdings; or".
B. Failure to Consummate Acquisition or Merger. Subsection 8.16 of
the Credit Agreement is hereby amended by inserting after the reference "reason"
appearing therein the following:
"or the issuance of the preferred stock of Holdings on the Fifth
Amendment Effective Date shall be unwound, reversed or otherwise
rescinded in whole or in part for any reason".
C. Amendment of Certain Documents of Holdings. Subsection 8.17 of
the Credit Agreement is hereby amended by (i) inserting after the reference
"Holdings Certificate of Designation" appearing therein the phrase "(other than
the amendment effected pursuant to the Restated Articles of Incorporation of
Holdings as in effect on the Fifth Amendment Effective Date)" and (ii) inserting
after the reference "Closing Date," appearing therein the phrase "or any of the
New Preferred Stock Purchase
11
Agreement or the New Warrants, in each case as in effect on the Fifth Amendment
Effective Date, in each case".
D. Equity Contributions. Section 8 of the Credit Agreement is hereby
further amended by deleting subsection 8.19 in its entirety and substituting
therefor the following:
"8.19 Equity Contributions.
(i) Holdings shall not have received from the New Preferred
Stock Holders on or prior to the earlier of the Fifth Amendment
Effective Date and November 29, 1996 an equity contribution in an
aggregate amount equal to or greater than $20,000,000 (the "Parent
Equity Contribution"); or (ii) Company shall not have received from
Holdings on or prior to such earlier date an equity contribution in an
amount equal to the Parent Equity Contribution; or (iii) Company shall
not have used the proceeds from the Parent Equity Contribution within
one Business Day of receipt of such proceeds (x) to prepay all
Revolving Loans of Company and of Sun Gro on a pro rata basis (in
accordance with the respective outstanding principal amount thereof)
without any corresponding reduction in their respective Revolving Loan
Commitments, and (y) to the extent the amount of such proceeds exceeds
the aggregate outstanding principal amount of Revolving Loans, to
prepay all Term Loans in accordance with the application order set
forth in the first sentence of subsection 2.4B(iv)(b) in an amount
equal to such excess (it being understood by all parties hereto that
Company shall apply the proceeds from the Parent Equity Contribution in
the manner set forth in this clause (iii) of this subsection 8.19
notwithstanding anything to the contrary contained in subsection
2.4B(iii)(c) or 2.4B(iv)(b)):"
1.9 Substitution of Schedules
Schedules 2.1, 4.1C, 5.5, 5.6 and 5.13. Schedule 2.1, Schedule 4.1C,
Schedule 5.5, Schedule 5.6 and Schedule 5.13 to the Credit Agreement are hereby
amended by deleting said Schedule 2.1, Schedule 4.1C, Schedule 5.5, Schedule 5.6
and Schedule 5.13 in their entirety and substituting in place thereof a new
Schedule 2.1, Schedule 4.1C, Schedule 5.5, Schedule 5.6 and Schedule 5.13 in the
form of Annex A to this Amendment.
1.10 Amendment of Exhibits
Exhibits V and VIII. The third paragraph of Exhibit V to the Credit
Agreement is hereby amended by deleting the reference to "$50,000,000" and
substituting "$60,000,000" therefor. Exhibit VIII to the Credit Agreement is
hereby amended by
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deleting Annex 1 to said Exhibit VIII in its entirety and substituting in place
thereof a new Annex 1 to Exhibit VIII in the form of Annex B to this Amendment.
1.11 Amendment of Schedules
Schedules 5.4 and 5.8C. The schedules to the Credit Agreement are
hereby amended to include a new Schedule 5.4 in the form of Annex A to this
Amendment. In addition, Schedule 5.8C to the Credit Agreement is hereby amended
by deleting the reference to "1. Bridge Note Agreement" of said Schedule 5.8C.
Schedule I to the Company Security Agreement is hereby amended by adding thereto
under the heading "Assigned Agreements" the following:
"1. That certain Stock Purchase Agreement dated as of November 27,
1996 by and among Xxxxx Industries, Inc., certain individual stock holders
of Xxxxx Nurseries, Inc. and Xxxxx Horticulture, Inc., as such agreement may
be amended from time to time after the Fifth Amendment Effective Date to the
extent permitted under subsection 7.15.
2. That certain Escrow Agreement dated as of November 27, 1996
among Xxxxx Horticulture, Inc., Xxxxx Industries, Inc., the other
stockholders of Xxxxx Nurseries, Inc. and an escrow agent, as such agreement
may be amended from time to time after the Fifth Amendment Effective Date to
the extent permitted under subsection 7.15 or 8.17.
3. That certain Acquisition Agreement dated as of August 30, 1996
by and among Xxxxxx X. Xxxxxxx, Xxxxxxx Perennial Gardens, Inc. and Xxxxx
Horticulture, Inc."
Section 2. PRO RATA SHARES
Upon the effectiveness of this Amendment, each existing Domestic Lender
which increases its Revolving Loan Commitment (an "Increasing Lender" and
collectively, the "Increasing Lenders"), as set forth on Schedule 2.1 to the
Credit Agreement, as amended by this Amendment, shall pay to Agent by wire
transfer of immediately available funds such amount, if any, as calculated by
Agent, as reflects such Increasing Lender's increased Pro Rata Share of the
outstanding Revolving Loans (and, if applicable, such Increasing Lender's
increased Pro Rata Share of any participations which have been funded by
Domestic Lenders with respect to outstanding Letters of Credit). Agent shall
promptly pay to each other Domestic Lender such amounts, as calculated by Agent,
as may be necessary to reflect such other Domestic Lender's then Pro Rata Share,
as set forth on Schedule 2.1 to the Credit Agreement, as amended by this
Amendment, of the outstanding Revolving Loans (and, if applicable, such other
Lender's then Pro Rata Share of any participations which have been funded by
Domestic Lenders with respect to outstanding Letters of Credit).
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Section 3. CONSENT
3.1 Consent to Xxxxx Acquisition
----------------------------
A. Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Company contained herein, Lenders
hereby consent to the Xxxxx Acquisition by Company for a total consideration
(including all fees and expenses relating thereto and including Indebtedness
assumed by Company or its Subsidiaries in an amount not exceeding $7,500,000,
which Indebtedness is paid in full by Company and its Subsidiaries on the Fifth
Amendment Effective Date) not exceeding $12,500,000.
B. Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Company contained herein, Lenders
hereby consent to the following transactions between Company and Blooming Farm,
Inc. ("BFI"): (i) Purchase and Sale Agreement, dated June 21, 1996, between
Company, as seller, and BFI, as buyer, for that certain 53-acre parcel of real
property described therein, as unamended; (ii) Warranty Deed, dated June 21,
1996, from Company to BFI, for the transfer and conveyance of such real
property, as unamended; (iii) Secured Promissory Note, dated June 21, 1996, from
BFI to Company in the amount of $151,050.00 as payment of the purchase price for
such real property, as unamended; (iv) Trust Deed, dated June 21, 1996, from BFI
to Company to secure BFI's payment of such Promissory Note, as unamended; and
(v) Agricultural Lease, dated June 21, 1996, between Company and BFI for the
lease of such real property by BFI to Company, as unamended.
3.2 Limitation of Consent
---------------------
Without limiting the generality of the provisions of subsection 10.6 of
the Credit Agreement, the consent set forth above shall be limited precisely as
written and relate solely to the Xxxxx Acquisition in the manner and to the
extent described above, and nothing in this Section 3 shall be deemed to:
1. constitute a waiver of compliance by Company with respect to any
other term, provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein (whether in connection with the
Xxxxx Acquisition or otherwise); or
2. prejudice any right or remedy that Agent or any Lender may now have
(except to the extent that such right or remedy was based upon existing
defaults that will not exist after giving effect to this Section 3) or may
have in the future under or in connection with the Credit Agreement or any
other instrument or agreement referred to therein.
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Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
Section 4. CONDITIONS TO EFFECTIVENESS
Sections 1, 2 and 3 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 "Fifth Amendment
Effective Date"):
A. On or before the Fifth 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 Fifth Amendment Effective
Date:
1. Certified copies of its Articles or Certificate of
Incorporation, or a Certificate of the corporate secretary or assistant
secretary for each of Holdings and each Borrower certifying as of the Fifth
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. Certified copies of the Certificate or Articles of
Incorporation of FN, FRN and FRN, Inc., each dated a recent date prior to
the Fifth Amendment Effective Date;
3. Copies of the Bylaws of FN, FRN and FRN, Inc., each
certificated as of the Fifth Amendment Effective Date by the applicable
corporate secretary or an assistant secretary;
4. A good standing certificate of Holdings, each Borrower, FN, FRN
and FRN, Inc. from the Secretary of State of the jurisdiction of its
incorporation and the jurisdiction in which its principal place of business
is located, each dated a recent date prior to the Fifth Amendment Effective
Date;
5. Resolutions of Board of Directors of each of Holdings, each
Borrower, FN, FRN, and FRN, Inc. approving and authorizing the execution,
delivery, and performance of this Amendment, each of the other Loan
Documents entered into on or about the Fifth Amendment Effective Date and
the Xxxxx Acquisition Agreements and, in the case of Company and Sun Gro,
approving and
15
authorizing the execution, delivery and payment of each Allonge to Revolving
Note, substantially in the form of Annex C to this Amendment (collectively,
the "Allonges"), certified as of the Fifth Amendment Effective Date by the
applicable Loan Party's corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
6. Signature and incumbency certificates of officers of each of
Holdings, each Borrower, FN, FRN and FRN, Inc. executing this Amendment,
each of the other Loan Documents entered into on or about the Fifth
Amendment Effective Date and the Xxxxx Acquisition Agreements;
7. Copies of this Amendment executed by Holdings, each Borrower,
FN, FRN, FRN, Inc. and each Lender, and the Allonges, each executed by
Company and Sun Gro, drawn to the order of each Domestic Lender;
8. Executed originals of the Domestic Subsidiary Guaranty, a
Domestic Subsidiary Pledge Agreement, a Domestic Subsidiary Security
Agreement and a Domestic Subsidiary Trademark Security Agreement, executed
by each of FN, FRN and FRN, Inc. and an executed original of a Pledge
Amendment to the Company Pledge Agreement pursuant to which Company pledges
to Agent all of the issued and outstanding capital stock of FN and certain
intercompany promissory notes;
9. Evidence in form and substance satisfactory to Agent that
Holdings, Company and Company's Subsidiaries have taken or caused to be
taken such actions (other than the filing or recording of items described in
clauses (ii), (iii) and (iv) below) in such a manner so that Agent has a
valid and perfected first priority security interest as of the Fifth
Amendment Effective Date in the entire personal and mixed property
Collateral of FN, FRN and FRN, Inc. Such actions shall include, without
limitation, the following:
(i) delivery to Agent of certificates (which certificates shall be
registered in the name of Agent or properly endorsed in blank for
transfer or accompanied by irrevocable undated stock powers duly
endorsed in blank, all in form and substance satisfactory to Agent)
representing the capital stock pledged pursuant to the Domestic
Subsidiary Pledge Agreements executed by FN and FRN or the Pledge
Amendment to the Company Pledge Agreement and delivery to Agent of
intercompany promissory notes executed and duly endorsed by FN, FRN,
FRN, Inc. and Company in form and substance satisfactory to Agent and
all other instruments (duly endorsed where appropriate) evidencing the
Collateral pledged pursuant to such Domestic Subsidiary Pledge
Agreements or such Pledge Amendment;
16
(ii) delivery to Agent of Uniform Commercial Code financing
statements as to the Collateral of FN, FRN or FRN, Inc. for all
jurisdictions as may be necessary or desirable to perfect the security
interests in such Collateral;
(iii) delivery to Agent of the IP Collateral Documents of FN, FRN
or FRN, Inc., together with accurate and complete schedules thereto and
any cover sheets, if required, for filing with the United States Patent
and Trademark Office (the "PTO");
(iv) delivery to Agent of a deposit account notice with respect to
each Deposit Account listed on Schedule I annexed to the Domestic
Subsidiary Security Agreements of FN, FRN or FRN, Inc. (it being
understood by each party hereto that Company shall deliver to Agent a
Lock Box Agreement or a Blocked Account Agreement executed by each
Person that is a party thereto with respect to each such Deposit
Account within forty-five days after the Fifth Amendment Effective
Date); and
(v) delivery to Agent of such other documents and instruments that
Agent reasonably deems necessary or advisable to establish, preserve
and perfect the first priority Liens granted to Agent on behalf of
Lenders under the Collateral Documents of FN, FRN or FRN, Inc.;
10. A Borrowing Base Certificate substantially in the form of
Annex B annexed hereto, prepared as of a recent date prior to the Fifth
Amendment Effective Date;
11. Executed copies of the Xxxxx Acquisition Agreements (including
all schedules, exhibits and amendments thereto), each in form and substance
satisfactory to Agent;
12. Uniform Commercial Code, tax, judgment and other Lien searches
relating to any personal or mixed property of FN, FRN and FRN, Inc. in form
and substance satisfactory to Agent and UCC-3 termination statements,
mortgage releases or other comparable instruments, executed by all necessary
Persons, terminating any and all existing UCC-1 financing statements or
mortgages relating to any personal, mixed or real property of FN, FRN or
FRN, Inc. in favor of any third parties (other than UCC-1 financing
statements filed pursuant to item 9 above) in form and substance
satisfactory to Agent;
13. Evidence in form and substance satisfactory to Agent
(including without limitation an Officers' Certificate to the effect set
forth in clauses (i) - (iv) below) that:
17
(i) the Xxxxx Acquisition Agreements shall be in full force and
effect and shall not have been amended, supplemented, waived or
otherwise modified without the consent of Agent;
(ii) all conditions to the Xxxxx Acquisition set forth in the
Xxxxx Acquisition Agreements shall have been satisfied in all material
respects or the fulfillment of any such conditions shall have been
waived with the consent of Agent (which consent shall not be
unreasonably withheld);
(iii) the Xxxxx Acquisition shall have occurred in accordance
with the Xxxxx Acquisition Agreements; and
(iv) the aggregate purchase price for the Xxxxx Acquisition
(including all fees and expenses relating thereto) does not exceed the
sum of (x) $4,500,000 in cash ($500,000 of which shall be in an escrow
account in accordance with the Xxxxx Acquisition Agreements) plus (y)
the assumption of Indebtedness not exceeding $7,500,000, all of which
Indebtedness is paid in full on the Fifth Amendment Effective Date plus
(z) the payment of fees and expenses not exceeding $250,000 (other than
fees payable to Agent or Lenders);
14. (i) Pro forma balance sheet of Company and its Subsidiaries
as of October 8, 1996 after giving effect to the Xxxxx Acquisition and the
financings contemplated thereby, (ii) projected financial statements
(including balance sheets and statements of operations, stockholders' equity
and cash flows) of Company and its Subsidiaries for the five-year period
after consummation of the Xxxxx Acquisition, and (iii) financial statements
of FN and FRN attached to the Xxxxx Stock Purchase Agreement as Schedules
3.8 and 3.9 thereto, all of the foregoing in form and substance satisfactory
to Agent and Lenders;
15. Any and all environmental reports relating to any facilities
of FN, FRN or FRN, Inc. received by Company from FII, FN, FRN or FRN, Inc.
or obtained by Company or any of its Subsidiaries from any independent
consultants;
16. Evidence in form and substance satisfactory to Agent that
Holdings has received from New Preferred Stock Holders an equity
contribution in an aggregate amount equal to or greater than $20,000,000 in
cash and that Company has received from Holdings an equity contribution
equal to such amount in cash, and an Officers' Certificate of Holdings and
Company in form and substance satisfactory to Agent to such effect;
17. Evidence in form and substance satisfactory to Agent
(including an Officers' Certificate of Holdings and Borrowers to such
effect) that:
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(i) FRNO and Company have entered into the Flynn Oregon Agreements
and that all of the equipment and inventory of FRNO have been
transferred to FRN;
(ii) all of the "C" stock investments and "C" stock loans made in
or to FN by Farm Credit Systems of California have been repaid in full
or redeemed in full, as applicable, prior to the consummation of the
Xxxxx Acquisition and all Liens relating thereto have been released;
(iii) all of the Indebtedness outstanding under the Credit
Agreement dated as of October 20, 1995 among FN, FRN, FII and Farm
Credit Services, as amended (the "Existing Xxxxx Credit Agreement"),
shall have been repaid in full, that the Existing Xxxxx Credit
Agreement and all related documents have been terminated and that all
Liens relating thereto have been released;
(iv) all intercompany Indebtedness owing by FN, FRN or FRN, Inc.
to FII have been paid in full or cancelled prior to the Xxxxx
Acquisition;
(v) after giving effect to the Xxxxx Acquisition, none of FN, FRN
or FRN, Inc. will have any outstanding Indebtedness or Contingent
Obligations (other than under the Loan Documents) except (a) the
Indebtedness under the Existing Xxxxx Credit Agreement (as herein
defined), all of which shall have been repaid on the Fifth Amendment
Effective Date and (b) capital lease obligations described in Schedule
5.5 annexed to the Credit Agreement; and
(vi) all of the Xxx Xxxxx shares shall have been cancelled;
18. A copy of each of the leases to which FN, FRN or FRN, Inc. is
a party (as a lessee or as a lessor), each of which (including any purchase
option provisions contained therein) shall be in form and substance
satisfactory to Agent;
19. Unless waived by Agent, (i) a Non-Disturbance Agreement (as
defined in the Xxxxx Stock Purchase Agreement) from each lender encumbering
any Real Property Asset of FN, FRN or FRN, Inc., (ii) a Real Property Lease
Consent (as defined in the Xxxxx Stock Purchase Agreement) from each lessor
of any such Real Property Asset, and (iii) an Estoppel Letter (as defined in
the Xxxxx Stock Purchase Agreement) from each landlord, lessor, sublessor or
licensor of any such Real Property Asset, in each case (for clauses (i),
(ii) and (iii)) in form and substance satisfactory to Agent, in each case
other than Non-Disturbance Agreements, Real Property Lease Consents and
Estoppel Letters relating to two Master Lease Agreements dated June 30, 1997
with Xxxxxxx Xxxxxxxxx and certain related parties;
19
20. Evidence in form and substance satisfactory to Agent
(including an Officers' Certificate of Holdings and Borrowers) that (i) on
the Fifth Amendment Effective Date, the aggregate amount of outstanding
Indebtedness under the Existing Xxxxx Credit Agreement does not exceed
$7,500,000, and (ii) Company and its Subsidiaries have repaid in full all
amounts outstanding under the Existing Xxxxx Credit Agreement and have
terminated any commitments to lend or make other extensions of credit
thereunder. Company and its Subsidiaries shall have delivered to Agent all
termination statements, terminations of lockbox agreements, blocked account
agreements and collateral account agreements, assignment documents,
satisfactions, reconveyances, releases and similar documents as to any
financing statements, mortgages, deeds of trust, assignments and other
agreements or instruments creating or perfecting liens or security interests
which shall release all liens securing any and all indebtedness under the
Existing Xxxxx Credit Agreement; and
21. An Officers' Certificate of Holdings and each Borrower, in
form and substance satisfactory to Agent, to the effect that the
representations and warranties in Section 5 of the Credit Agreement are
true, correct and complete in all material respects on and as of the Fifth
Amendment Effective Date (both before and after giving effect to the Xxxxx
Acquisition and this Amendment) to the same extent as though made on and as
of that date (or, to the extent such representations and warranties
specifically relate to an earlier date, that such representations and
warranties were true, correct and complete in all material respects on and
as of such earlier date) and that Holdings or such Borrower shall have
performed in all material respects all agreements and satisfied all
conditions which this Amendment and the Credit Agreement as amended by this
Amendment provide shall be performed or satisfied by it on or before the
Fifth Amendment Effective Date except as otherwise disclosed to and agreed
to in writing by Agent.
22. A fully executed and notarized modification, in form and
substance satisfactory to Agent, to each of the Initial Mortgages, each of
the Additional Mortgages that have been executed by any of the Borrowers or
their Subsidiaries on or before the date hereof, and the Pledge and
Collateral Consent Assignment dated as of October 2, 1995, executed by Xxxxx
Horticulture, Inc., in favor of Agent (collectively, the "Mortgage
Modifications").
23. CLTA Endorsements 110.5 (or the applicable state equivalent)
to each of the Initial Mortgage Policies and Additional Mortgage Policies
(collectively, the "Title Endorsements"), assuring Agent that the applicable
Initial Mortgages and Additional Mortgages remain valid and enforceable
first priority mortgage liens on the respective Initial Mortgaged Properties
and respective Additional Properties, free and clear of all defects and
encumbrances except Permitted Encumbrances, which Title Endorsements shall
be in form and substance reasonably satisfactory to Agent; provided,
however, that this condition
20
may also be satisfied by the issuance of new lender's title policies, in
form and substance reasonably satisfactory to Agent, and which new lender's
title policies shall generally be in the form of the Initial Mortgage
Policies and Additional Mortgage Policies (including, without limitation,
all title endorsements thereto) dated as of the date of recordation of the
applicable Mortgage Modification and assuring Agent that the applicable
Initial Mortgages and Additional Mortgages, as modified by the applicable
Mortgage Modifications, are valid and enforceable first priority mortgage
liens on the respective Initial Mortgaged Properties and respective
Additional Properties, free and clear of all defects and encumbrances except
Permitted Encumbrances. In addition, the Initial Mortgage Policies and
Additional Mortgage Policies shall be modified and/or endorsed to provide
for any other matters that Agent may reasonably request, including, without
limitation, to provide for affirmative insurance and such reinsurance as
Agent may reasonably request, all of the foregoing in form and substance
reasonably satisfactory to Agent.
24. (i) A copy of each document described in Subsection 3.1B,
(ii) a Pledge and Collateral Assignment Agreement executed by company, as
pledgor, and BFI, as landlord, in favor of Agent, to be recorded in the real
estate records of Washington County, Oregon, (iii) a UCC-1 Financing
Statement, executed by Company, as debtor, and Agent, as secured party, to
be filed with the Oregon Secretary of State, and (iv) a copy of any title
insurance policies issued in connection with any of the foregoing.
B. On or before the Fifth Amendment Effective Date, Lenders and their
respective counsel shall have received (i) originally executed copies of one or
more favorable written opinions of Xxxxxxxx & Ellis, Schreck, Jones, Bernhard,
Xxxxxxx & Xxxxxxx, Xxxxx & Xxxxxx, and Xxxxxxxxx, Ball, Wichman, Case & Ichiki,
in each case counsel to Loan Parties, in form and substance reasonably
satisfactory to Agent and its counsel, dated as of the Fifth Amendment Effective
Date, substantially in the form set forth in Annex D, Annex E, Annex F, and
Annex G hereto, respectively, and as to such other matters as Agent acting on
behalf of Lenders may reasonably request, (ii) originally executed copies of a
written opinion of Canadian counsel to Loan Parties in form and substance
reasonably satisfactory to Agent and its counsel, and (iii) copies of written
opinions of (x) Schreck, Jones, Bernhard, Woloson & Xxxxxxx to New Preferred
Stock Holders, and (y) Heller, Ehrman, White & XxXxxxxxx, and Xxxxxxxx & Wedge,
in each case to Loan Parties, together with reliance letters relating thereto in
form and substance satisfactory to Agent.
C. Agent and each Lender shall have received the fees payable by
Company on the Fifth Amendment Effective Date in such amounts as have been
separately agreed upon.
D. On or before the Fifth Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with this Amendment and all
21
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 5. COMPANY'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 hereto has all
requisite corporate power and authority to enter into this Amendment, each of
the other Loan Documents entered into as of the date hereof, and each of the
Xxxxx Acquisition Agreements, and to carry out the transactions contemplated by,
and perform its obligations under, the Credit Agreement as amended by this
Amendment (the "Amended Agreement"), such other Loan Documents, and each of the
Xxxxx Acquisition Agreements, and Company and Sun Gro have all requisite
corporate power and authority to issue the Allonges.
B. Authorization of Agreements. The execution and delivery of this
Amendment, each of the other Loan Documents entered into as of the date hereof,
the Allonges, and each of the Xxxxx Acquisition Agreement, the performance of
the Amended Agreement, such other Loan Documents, and each of the Xxxxx
Acquisition Agreement, and the payment of the Notes as amended by the Allonges
(the "Amended Notes") have been duly authorized by all necessary corporate
action on the part of each Loan Party thereto.
C. No Conflict. The execution and delivery by each Loan Party hereto
of this Amendment, each of the other Loan Documents entered into as of the date
hereof, and each of the Xxxxx Acquisition Agreements, the execution and delivery
by Company and Sun Gro of the Allonges, the performance by each Loan Party
hereto of the Amended Agreement and such other Loan Documents and each of the
Xxxxx Acquisition Agreements, and the payment of the Amended Notes by Company
and Sun Gro 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 (including without limitation FN and 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 any
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
22
of Holdings or any of its Subsidiaries, except for such approvals or consents
which have been obtained on or before the Fifth Amendment Effective Date and
disclosed in writing to Lenders.
D. Governmental Consents. The execution and delivery by the Loan
Parties hereto of this Amendment, each of the other Loan Documents entered into
as of the date hereof and each of the Xxxxx Acquisition Agreements, the
execution and delivery by Company and Sun Gro of the Allonges, the performance
by the Loan Parties party hereto of the Amended Agreement and such other Loan
Documents and the Xxxxx Acquisition Agreements and the payment of the Amended
Notes by Company and Sun Gro 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, except for
(i) filings required by federal or state securities laws, (ii) such other
registrations, consents, approvals, notices or other actions which have been
made, obtained, given or taken on or before the Fifth Amendment Effective Date
and (iii) filings and recordings which are required to be made to perfect
security interests in the Collateral.
E. Binding Obligation. This Amendment and each of the other Loan
Documents entered into as of the date hereof and the Amended Agreement have been
duly executed and delivered by each Loan Party hereto, the Allonges have been
duly executed and delivered by Company and Sun Gro, and each of this Amendment
and such other Loan Documents, the Amended Agreement and the Amended Notes are
the legally valid and binding obligations of each Loan Party thereto,
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. The subordination provisions
of each of the Takeout Securities are enforceable against the holders thereof in
accordance with their terms and the Loans, Letters of Credit and all other
monetary Obligations under the Credit Agreement (after giving effect to the
increase in the Revolving Loan Commitments contemplated by this Amendment) are
within the definitions of "Bank Indebtedness," "Senior Indebtedness" and
"Designated Senior Indebtedness" included in such provisions.
F. Issuance of Preferred Stock. All shares of preferred stock of
Holdings issued pursuant to the New Preferred Stock Purchase Agreement have been
duly and validly issued, fully paid and nonassessable. No stockholder of
Holdings has or will have any preemptive rights to subscribe for any additional
preferred stock of Holdings. Any issuance of any preferred stock of Holdings,
upon such issuance and sale, will either (a) have been registered and qualified
under applicable federal and state securities laws or (b) is exempt therefrom.
G. Subsidiaries of FN. FN has no Subsidiaries other than FRN and
FRN, Inc.
23
H. Patents of FN, FRN and FRN, Inc. FN, FRN and FRN, Inc. have no
right, title or interest in any patents or patent applications under any law.
I. 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 Fifth Amendment
Effective Date (both before and after giving effect to the Xxxxx Acquisition and
this Amendment) 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.
J. 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.
K. Receivables Facility. The Receivables Sale and Contribution
Agreement dated May 31, 1996 by and between FRN and FRN, Inc. (the "Receivables
Agreement") and all related agreements have been terminated and FRN has not
sold, transferred, contributed or conveyed whether outright or by way of
security at any time any accounts, accounts receivable, documents, chattel
paper, and general intangible, or any other property to FRN, Inc., and no
obligations are outstanding to Capital USA Funding, L.P., Commerzbank
Aktiengesellschaft, New York Branch, Boatmen's Trust Company of Arkansas or any
other financial institution under the receivables facility relating to the
Receivables Agreement.
Section 6. 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, a Domestic Subsidiary Security Agreement, the
Domestic Subsidiary Pledge Agreement, a Domestic Subsidiary Trademark Security
Agreement, and a Domestic Subsidiary Patent Security 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 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 Company has created liens in favor
of Agent on certain Collateral to secure 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
24
Collateral to Agent to secure the obligations of Holdings under the Holdings
Guaranty. Each of FN, FRN and FRN, Inc. has become a party to the Domestic
Subsidiary Guaranty, a Domestic Subsidiary Security Agreement, a Domestic
Subsidiary Pledge Agreement, a Domestic Subsidiary Trademark Security Agreement,
and a Domestic Subsidiary Patent Security Agreement pursuant to which such Loan
Party has (i) guarantied the Obligations and (ii) created liens in favor of
Agent on certain Collateral to secure the obligations of such Loan Party under
the Domestic Subsidiary Guaranty. Company, Sun Gro, Sun Gro Canada, Holdings,
FN, FRN, and FRN, Inc. 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 Fifth 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 7. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Fifth 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 Sections 1, 2 and 3 hereof, the
26
effectiveness of which is governed by Section 4 hereof) shall become effective
upon the execution of a counterpart hereof by each Lender and each of the other
parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
27
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.
BORROWERS:
XXXXX HORTICULTURE, INC.
(formerly known as Xxxxx Nurseries Inc.)
By:
-------------------------------
Title:
----------------------------
S-1
SUN GRO HORTICULTURE INC.
By:
-------------------------------
Title:
----------------------------
S-2
SUN GRO HORTICULTURE CANADA LTD.
By:
-------------------------------
Title:
----------------------------
S-3
XXXXX HOLDINGS, INC.,
(formerly known as Xxxxx Horticulture Inc.) (for
purposes of Section 6 only) as a Credit Support
Party
By:
-------------------------------
Title:
----------------------------
S-4
XXXXX NURSERIES, INC.
(for purposes of Section 6 only) as a Credit
Support Party
By:
-------------------------------
Title:
----------------------------
S-5
XXXXX RAINBOW NURSERIES, INC.
(for purposes of Section 6 only) as a Credit
Support Party
By:
-------------------------------
Title:
----------------------------
S-6
FRN, INC.
(for purposes of Section 6 only) as a Credit
Support Party
By:
-------------------------------
Title:
----------------------------
S-7
LENDERS:
BT COMMERCIAL CORPORATION,
as a Domestic Lender and as Agent
By:
-------------------------------
Title:
----------------------------
S-8
BT BANK OF CANADA,
as a Canadian Lender
By:
-------------------------------
Title:
----------------------------
S-9
BANKERS TRUST COMPANY,
as an Issuing Lender
By:
-------------------------------
Title:
----------------------------
S-10
XXXXXX TRUST AND SAVINGS BANK,
as a Domestic Lender
By:
-------------------------------
Title:
----------------------------
S-11
FLEET BANK OF MASSACHUSETTS, N.A.,
as a Domestic Lender and Canadian Lender
By:
-------------------------------
Title:
----------------------------
S-12
LASALLE NATIONAL BANK,
as a Domestic Lender
By:
-------------------------------
Title:
----------------------------
X-00
XXXXXXXXXXX XX XXXXX, N.A.,
as a Domestic Lender and Canadian Lender
By:
-------------------------------
Title:
----------------------------
X-00
XXXXX XXXX XX XXXXXXXXXX, N.A.,
as a Domestic Lender and Canadian Lender
By:
-------------------------------
Title:
----------------------------
S-15
XXXXX FARGO BANK, N.A.,
as a Domestic Lender and Canadian Lender
By:
-------------------------------
Title:
----------------------------
S-16
BANK OF MONTREAL,
as a Canadian Lender
By:
-------------------------------
Title:
----------------------------
X-00
XXXXXXXX XXXXXX XXXX COMPANY, L.C.
By: Xxxx Xxxxxxxxxxxx, its sole Manager
By:
-------------------------------------
Title:
---------------------------------
Address: 0000 X. Xxxxxxx Xxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx
S-2
