EXHIBIT 10.26
FIFTH AMENDMENT, WAIVER AND CONSENT TO
LOAN AND SECURITY AGREEMENT
This Fifth Amendment, Waiver and Consent to Loan and Security
Agreement, dated as of October 24, 1996 (this "Amendment"), is by and among
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Xxxxx Nursery, Inc., a Delaware corporation, Tip Top Nurseries, Inc., an Arizona
corporation, Nurseryland Garden Centers, Inc., a California corporation, as
borrowers (collectively, the "Borrowers"), Sunbelt Nursery Group, Inc., a
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Delaware corporation, Sunbelt Nursery Holdings, Inc., an Arizona corporation,
Sunbelt Management Services, Inc., a Delaware corporation, as guarantors
(collectively, the "Guarantors" and, together with the Borrowers, the "Loan
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Parties"), and American National Bank and Trust Company of Chicago, a national
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banking association, as lender (the "Lender"). Capitalized terms used in this
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Amendment and not otherwise defined have the meanings assigned to such terms in
the Loan Agreement (as defined below).
W I T N E S S E T H:
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WHEREAS, the Loan Parties and the Lender are parties to the Loan and
Security Agreement dated as of October 14, 1994 (as such agreement may be
amended, modified, restated or supplemented from time to time, the "Loan
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Agreement");
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WHEREAS, the Loan Parties are not in compliance with the financial
covenants set forth in Sections 8.16(A) and 8.16(B) of the Loan Agreement for
the quarter ending July 31, 1996;
WHEREAS, the Loan Parties' noncompliance with the foregoing financial
covenants has given rise to Events of Default under Section 9.1(B) of the Loan
Agreement;
WHEREAS, the existence of such Events of Default entitle the Lender
to, among other things, terminate all further extensions of credit to the Loan
Parties under the Loan Agreement, accelerate all existing Indebtedness and
foreclose on the Collateral of the Loan Parties;
WHEREAS, the Loan Parties have requested that the Lender waive the
foregoing Events of Default;
WHEREAS, the Lender has agreed to waive such Events of Default in
connection with the implementation of certain amendments to the Loan Agreement,
all of which are acceptable to the Loan Parties;
WHEREAS, the Loan Parties and the Lender desire to (i) amend the Loan
Agreement to, among other things, (a) modify certain financial and other
covenants, (b) add a new financial covenant, (c) periodically reduce the Maximum
Revolving Facility
and the Total Facility and (d) change the interest rate applicable to the
Revolving Loans and (ii) waive certain Events of Default specified in this
Amendment, all on the terms and subject to the conditions of this Amendment;
NOW, THEREFORE, in consideration of the foregoing recitals, the
actions contemplated therein and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties to this Amendment
agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
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On the date this Amendment becomes effective, after completion by the
Loan Parties of the conditions set forth in Section 4 of this Amendment (the
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"Closing Date"), the Loan Agreement is amended as follows:
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1.1 Section 1.1 of the Loan Agreement is amended by deleting the last
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sentence of the definition of "Maximum Revolving Facility" in its entirety and
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replacing it as follows:
The Maximum Revolving Facility shall be $9,250,000 through December
10, 1996. Commencing December 11, 1996, the Maximum Revolving
Facility shall be $8,500,000 through December 23, 1996. Commencing
December 24, 1996, the Maximum Revolving Facility shall be $8,000,000.
1.2 Section 1.1 of the Loan Agreement is further amended by deleting
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the definition of "Total Facility" in its entirety and replacing it as follows:
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"Total Facility" shall mean the amount of $9,250,000 through
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December 10, 1996. Commencing December 11, 1996, the Total Facility
shall mean the amount of $8,500,000 through December 23, 1996.
Commencing December 24, 1996, the Total Facility shall mean the amount
of $8,000,000.
1.3 Section 2.1(A) of the Loan Agreement is amended by deleting the
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first sentence of such section in its entirety and replacing it as follows:
Subject to the provisions of Section 4 below, after execution of the
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Financing Agreements, Lender shall advance to each Borrower, on a
revolving credit basis, Revolving Loans ("Revolving Loans") in such
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aggregate amounts as such Borrower may from time to time request but
not exceeding at any one time outstanding an amount equal to (i) the
Borrowing Base of such Borrower plus, for the period commencing
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October 24, 1996, and ending December 8, 1996, $1,000,000, minus (ii)
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the aggregate stated amount of all outstanding Letters of Credit;
provided, however, that Lender shall not be obligated to make any such
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advance to any Borrower if, after such advance, the aggregate amount
of all Revolving Loans made to all Borrowers would exceed the Maximum
Revolving Facility minus the aggregate stated amount of all Letters of
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Credit for all Borrowers.
1.4 Section 2.5(B) of the Loan Agreement is amended by adding the
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following sentence to such section as follows:
Borrowers shall pay to Lender a fee (the "Amendment Fee") equal to
$25,000, payable in five monthly installments of $5,000 due on the
first day of each month, commencing December 1, 1996. The Amendment
Fee shall be fully earned on the date of the Fifth Amendment, Consent
and Waiver to Loan and Security Agreement among the Loan Parties and
Lender and shall be nonrefundable.
1.5 Section 7 of the Loan Agreement is amended by adding the
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following Section 7.18 to such section as follows:
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7.18 Appraisals. The Loan Parties shall provide Lender by
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January 31, 1997, with an appraisal for each parcel of Mortgaged Real
Property performed by an appraisal firm(s) acceptable to Lender in its
sole discretion.
1.6 Section 8.16(A) of the Loan Agreement is amended by deleting such
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section in its entirety and replacing it as follows:
(A) Debt Service Coverage Ratio. The Loan Parties shall not permit
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the Debt Service Coverage Ratio to be less than (i) 2.2:1 for the period
commencing January 27, 1997, and ending Xxxxx 00, 0000, (xx) 4.5:1 for the
period commencing January 27, 1997, and ending June 29, 1997, and (iii)
2.0:1 for the period commencing January 27, 1997, and ending September 28,
1997.
1.7 Section 8.16(B) of the Loan Agreement is amended by deleting such
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section in its entirety and replacing it as follows:
(B) Gross Profit. The Gross Profit (as defined by GAAP) of the
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Loan Parties on a consolidated basis shall not be less than (i)
$4,500,000 for the period commencing August 26, 1996, and ending
October 27, 1996, (ii) $6,000,000 for the period commencing August 26,
1996, and ending November 24, 1996, (iii) $10,500,000 for the period
commencing August 26, 1996, and ending December 29, 1996, (iv)
$11,500,000 for the period commencing August 26, 1996, and ending
January 26, 1997, and (v) $14,000,000 for the period commencing August
26, 1996, and ending February 23, 1997.
1.8 Section 8.21 of the Loan Agreement is amended by deleting such
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section in its entirety.
SECTION 2. WAIVER AND CONSENT
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2.1 Debt Service Coverage Ratio. On the Closing Date, the Lender
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waives any Event of Default under Section 9.1(B) of the Loan Agreement due
solely to the Loan Parties' noncompliance during the quarter ending July 31,
1996, with the covenant set forth in Section 8.16(A) of the Loan Agreement.
2.2 EBITDA. On the Closing Date, the Lender waives any Event of
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Default under Section 9.1(B) of the Loan Agreement due solely to the Loan
Parties' noncompliance during the quarter ending July 31, 1996, with the
covenant set forth in Section 8.16(B) of the Loan Agreement.
2.3 Change in Fiscal Year. On the Closing Date, the Lender consents
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to the change in the Loan Parties' fiscal year to a twelve month period ending
on or about June 30. The Loan Agreement and other Financing Agreements shall be
deemed automatically amended without further action to reflect such change in
the Loan Parties' fiscal year.
2.4 1996 Financial Statements. On the Closing Date, the Lender
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agrees, subject to the conditions set forth below, to accept reviewed (rather
than audited) financial statements solely for the period ending December 31,
1996; provided, however, that the waiver set forth in this Section 2.4 is only
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effective if Price Waterhouse LLP, or some other public accounting firm
acceptable to the Lender, (i) observes the physical inventory count conducted by
the Loan Parties with respect to such period and (ii) provides evidence to
Lender that, as of December 31, 1996, it has performed audit procedures
satisfactory to Lender with respect to cash, liabilities and fixed assets.
2.5 No Other Waiver. Nothing in this Agreement should in any way be
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deemed a (i) waiver of any Event of Default under the Loan Agreement other than
those specifically identified in Sections 2.1 and 2.2 hereof or (ii) an
agreement to forbear from exercising any remedies with respect to any such other
Event of Default.
SECTION 3. REPRESENTATIONS AND WARRANTIES
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To induce the Lender to enter into this Amendment and to extend
further credit under the Loan Agreement, as amended by this Amendment, each Loan
Party severally represents and warrants to the Lender that:
3.1 Due Authorization, Etc. The execution, delivery and performance
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by such Loan Party of this Amendment are within its corporate powers, have been
duly authorized by all necessary corporate action, have received all necessary
governmental, regulatory or other approvals (if any are required), and do not
and will not contravene or conflict with any provision of (i) any law, (ii) any
judgment, decree or order, or (iii) such Loan Party's Certificate of
Incorporation or By-Laws, and do not and will not contravene or conflict with,
or cause any lien to arise under any provision of any agreement or instrument
binding upon such Loan Party or upon any of its property. This Amendment and
the Loan Agreement, as amended by this Amendment, are the legal, valid and
binding obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms.
3.2 No Default, Etc. As of the Closing Date, (i) except as set forth
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in Section 2 of this Amendment, no Event of Default or Default under the Loan
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Agreement, as amended by this Amendment, has occurred and is continuing or will
result from the amendments set forth in this Amendment and (ii) the
representations and warranties of such Loan Party contained in the Loan
Agreement are true and correct.
3.3 Litigation. As of the Closing Date, except as previously
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disclosed by such Loan Party to the Lender in writing, no claims, litigation
(including, without limitation, derivative actions), arbitration proceedings,
governmental investigations or proceedings or regulatory proceedings are
pending, or to the knowledge of such Loan Party, threatened against it, nor does
such Loan Party know of any basis for the foregoing. In addition, there are no
inquiries, formal or informal, which might give rise to such actions,
proceedings or investigations.
3.4 Pier 1 Agreements. As of the Closing Date, no default exists
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under any of the Pier 1 Agreements.
3.5 Securities Matters. All filings made by the Loan Parties to the
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Securities and Exchange Commission during the last 12 months have complied with
the Securities Laws and all provisions of such Securities Laws, including any
provision requiring the filing of audited financial statements.
SECTION 4. CONDITIONS TO EFFECTIVENESS
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The obligation of the Lender to make the amendments and waivers
contemplated by this Amendment and the effectiveness thereof, are subject to the
following:
4.1 Representations and Warranties. The representations and
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warranties of the Loan Parties contained in this Amendment are true and correct
as of the Closing Date.
4.2 Documents. The Lender has received all of the following, each
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duly executed and dated as of the Closing Date (or such other date as is
satisfactory to the Lender) in form and substance satisfactory to the Lender:
(A) Fifth Amendment. This Amendment;
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(B) Legal Opinion. An opinion of the Loan Parties' legal counsel to
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the effect that (i) the Loan Parties' have the power and authority to
execute, deliver and perform this Amendment and that this Amendment has
been duly authorized and (ii) this Amendment is the legal, valid and
binding obligations of the Loan Parties;
(C) Resolutions. Resolutions of the Board of Directors of each Loan
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Party authorizing or ratifying the execution, delivery and performance of
this Amendment;
(D) Consents, Etc. Certified copies of all documents evidencing any
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necessary corporate action, consents and governmental approvals, if any,
with respect to this Amendment or any other document provided for under
this Amendment; and
(E) Other. Such other documents as the Lender may reasonably request.
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SECTION 5. MISCELLANEOUS
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5.1 Captions. The recitals to this Amendment (except for
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definitions) and the section captions used in this Amendment are for convenience
only, and do not affect the construction of this Amendment.
5.2 Governing Law; Severability. THIS AMENDMENT IS A CONTRACT MADE
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UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Wherever possible, each provision of this
Amendment must be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment is prohibited by or
invalid under such law, such provision is only ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Amendment.
5.3 Counterparts. This Amendment may be executed in any number of
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counterparts and by the different parties on separate counterparts, and each
such counterpart is deemed to be an original, but all such counterparts together
constitute but one and the same Amendment.
5.4 Successors and Assigns. This Amendment is binding upon each Loan
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Party and the Lender and their respective
successors and assigns, and inures to the sole benefit of each Loan Party and
the Lender and their successors and assigns. The Loan Parties have no right to
assign their respective rights or delegate their respective duties under this
Amendment.
5.5 References. From and after the Closing Date, each reference in
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the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," or
words of like import, and each reference in any Financing Agreement to the Loan
Agreement or to any term, condition or provision contained "thereunder,"
"thereof," "therein," or words of like import, mean and are a reference to the
Loan Agreement (or such term, condition or provision, as applicable) as amended,
supplemented or otherwise modified by this Amendment.
5.6 Continued Effectiveness. Notwithstanding anything contained in
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this Amendment, the terms of this Amendment are not intended to and do not serve
to effect a novation as to the Loan Agreement. The parties to this Amendment
expressly do not intend to extinguish the Loan Agreement. Instead, it is the
express intention of the parties to this Amendment to reaffirm the indebtedness
created by and secured under the Loan Agreement. The Loan Agreement, as amended
by this Amendment, remains in full force and effect.
5.7 Costs, Expenses and Taxes. Each Loan Party affirms and
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acknowledges that Section 10.2 and Section 10.3 of the Loan Agreement applies to
this Amendment and the transactions and agreements and documents contemplated
under this Amendment.
5.8 Guarantors Reaffirmation. Each of the Guarantors acknowledges
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that it has read this Amendment and consents to this Amendment and agrees that
its Guaranty of the Guaranteed Obligations (as defined in such Guaranty)
continues in full force and effect, is valid and enforceable and is not impaired
or otherwise affected by the execution of this Amendment or any other document
or instrument delivered in connection with this Amendment.
* * * * *
Delivered at Chicago, Illinois, as of the day and year first above written.
XXXXX NURSERY, INC.,
as a Borrower
By: /s/ Xxxxxxx X. Xxxxx
_____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
TIP TOP NURSERIES, INC.,
as a Borrower
By: /s/ Xxxxxxx X. Xxxxx
_____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
NURSERYLAND GARDEN CENTERS, INC.,
as a Borrower
By: /s/ Xxxxxxx X. Xxxxx
_____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
SUNBELT NURSERY GROUP, INC.,
as a Guarantor
By: /s/ Xxxxxxx X. Xxxxx
_____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
SUNBELT NURSERY HOLDINGS, INC.,
as a Guarantor
By: /s/ Xxxxxxx X. Xxxxx
_____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
SUNBELT MANAGEMENT SERVICES, INC.,
as a Guarantor
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By:/s/ Xxxxxxxxx X. Xxxxxxx
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Xxxxxxxxx X. Xxxxxxx
First Vice President
Xxxxxxx X. Xxxxx, guarantor under the Guaranty dated as of October 14,
1994 (the "Xxxxx Guaranty") made in favor of the Lender, acknowledges that he
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has read this Amendment referenced herein and consents to this Amendment and
agrees that his guarantee of the Guaranteed Obligations (as defined in the Xxxxx
Guaranty) continues in full force and effect, is valid and enforceable and is
not impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection with this Amendment.
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
