EXHIBIT 10.1
XXXXX NURSERIES, INC.
THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
This THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
(this "AMENDMENT") is dated as of August 8, 2006 and entered into by and among
XXXXX NURSERIES, INC., a California corporation ("COMPANY"), and XXXXX SGUS
INC., a Nevada corporation ("XXXXX SGUS" and, together with Company,
individually a "BORROWER" and collectively the "BORROWERS"), the financial
institutions party hereto, and DEUTSCHE BANK TRUST COMPANY AMERICAS, as
administrative agent for Lenders (in such capacity, "AGENT"), and, for purposes
of Section 5 hereof, the Credit Support Parties (as defined in Section 5
hereof), and is made with reference to that certain Credit Agreement dated as of
September 30, 2003, as amended to the date hereof (the "CREDIT AGREEMENT"), by
and among Borrowers, the financial institutions party thereto (each individually
referred to herein as a "LENDER" and collectively as "LENDERS") and the Agent.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the Borrowers have requested that the Credit
Agreement be amended as provided herein;
WHEREAS, the Agent and the Lenders party hereto have agreed to
amend the Credit Agreement on the terms and conditions hereinafter set forth;
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 1.1: GENERAL DEFINITIONS.
A. Subsection 1.1 of the Credit Agreement is hereby amended by
adding the following definitions thereto in appropriate alphabetical order:
"THIRD AMENDMENT EFFECTIVE DATE" shall mean the date on which
the Third Amendment and Limited Waiver to Credit Agreement by and among
Borrowers, Lenders and Agent became effective in accordance with the terms of
such Third Amendment and Limited Waiver to Credit Agreement.
"2006 REQUIRED ASSET SALES" means the sales of the assets
identified on the 2006 Required Asset Sale Schedule dated as of July 6, 2006 and
previously delivered by Borrowers to Agent and Lenders.
"2006 REQUIRED ASSET SALE PROCEEDS" means the Net Asset Sale
Proceeds received by the Borrowers from the sales of the 2006 Required Asset
Sales.
B. Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting the definition of "Applicable Margin" in its entirety and
substituting therefor the following:
"APPLICABLE MARGIN" shall mean, (i) prior to the Third
Amendment Effective Date, the percentage per annum equal to the Applicable
Margin for such LIBOR Rate Loan or Prime Rate Loan as set forth in the
definition of "Applicable Margin" as in effect immediately prior to the Third
Amendment Effective Date, and (ii) at any time on and after the Third Amendment
Effective Date with respect to any LIBOR Rate Loan or Prime Rate Loan, as the
case may be, a percentage per annum equal to the applicable percentage amount
set forth below for such Loan with respect to LEVEL I, PROVIDED that commencing
with the delivery of the first compliance certificate that is required to be
delivered pursuant to SECTION 7.1(E) after the Third Amendment Effective Date,
from and after any Start Date to and including the corresponding End Date, the
Applicable Margin with respect to LIBOR Rate Loans and Prime Rate Loans,
respectively, shall be a percentage per annum equal to the applicable percentage
per annum set forth below, but only if, as of the Test Date for such Start Date,
the Borrowers shall have obtained the Leverage Ratio indicated below:
APPLICABLE MARGIN
-------------------------------------------------------
Revolving Loans
--------------------------
Prime Rate LIBOR Rate
Leverage Ratio Loans Loans
--------------------------- ------------ ------------
Level I Greater than or equal to 2.00% 3.00%
4.25 to 1.00
Level II Less than 4.25 to 1.00 but 1.75% 2.75%
greater than or equal to
3.75 to 1.00
Level III Less than 3.75 to 1.00 but 1.50% 2.50%
greater than or equal to
3.25 to 1.00
Level IV Less than 3.25 to 1.00 but 1.25% 2.25%
greater than or equal to
2.75 to 1.00
Level V Less than 2.75 to 1.00 1.00% 2.00%
PROVIDED, that, notwithstanding the foregoing, if the Borrowers shall fail to
deliver the compliance certificate that is required to be delivered pursuant to
SECTION 7.1(E), from the date on which such compliance certificate was so
required to be delivered until the date of actual delivery thereof, the
Applicable Margin shall be a percentage per annum equal to the applicable
percentage amount set forth above with respect to LEVEL I. If a Default or an
Event of Default shall exist at the time any reduction in the Applicable Margin
is to be implemented, that reduction shall be deferred until the date on which
such Default or Event of Default is cured or waived and at all times during the
existence of such Default or Event of Default, the Applicable Margin shall be a
percentage per annum equal to the applicable percentage amounts set forth above
with respect to LEVEL I.
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1.2 AMENDMENTS TO SECTION 2.4: REPAYMENT OF TERM LOANS; REPAYMENTS
AND UNSCHEDULED REDUCTION OF REVOLVING LOAN COMMITMENTS.
SECTION 2.4(B)(III)(1)(A) of the Credit Agreement
shall be amended by deleting in its entirety and substituting therefor
the following:
"(1) (A) PREPAYMENTS AND REDUCTIONS FROM ASSET SALES
OTHER THAN THE FARM A SALE. No later than the first Business Day after
receipt by any Credit Party or any of its Subsidiaries of any Net Asset
Sale Proceeds in respect of any Asset Sale other than the Farm A Sale,
the Reserved Lagoon Valley Proceeds or the 2006 Required Asset Sale
Proceeds, Borrowers shall either (1) prepay the Loans in an aggregate
amount equal to the Net Asset Sale Proceeds of such Asset Sales or (2)
so long as no Default or Event of Default shall have occurred and be
continuing and to the extent that aggregate Net Asset Sale Proceeds of
such Asset Sales from the Closing Date through the date of
determination do not exceed the sum of $20,000,000 plus the 2006
Required Asset Sale Proceeds, deliver to Agent an officer's certificate
setting forth (x) that portion of such Net Asset Sale Proceeds that
such Credit Party or Subsidiary intends to reinvest in land, equipment
or other productive assets used in the business of Borrowers and their
Subsidiaries within 365 days of such date of receipt and (y) the
proposed use of such portion of the Net Asset Sale Proceeds and such
other information with respect to such reinvestment as Agent may
reasonably request; PROVIDED, however, that to the extent such amount
of Net Asset Sale Proceeds is not reinvested within the 365-day period,
Borrowers shall, on the last day of such 365-day period prepay the
Loans by the aggregate amount equal to such amount of Net Asset Sale
Proceeds not so applied. No later than the first Business Day following
the date of receipt of the Reserved Lagoon Valley Proceeds and the 2006
Required Asset Sale Proceeds, Borrowers shall prepay the Revolving
Loans (without any permanent reduction in the Revolving Loan
Commitments) in an amount equal to such Reserved Lagoon Valley Proceeds
and the 2006 Required Asset Sale Proceeds, respectively."
1.3 AMENDMENTS TO SECTION 4.5
A. Section 4.5 of the Credit Agreement shall be amended by
deleting the table contained therein and substituting therefor the following:
----------------------------------------------------- --------------------------------------
"Applicable Unused Portion Unused Line Fee Percentage
----------------------------------------------------- --------------------------------------
Less than 33% 0.375%
----------------------------------------------------- --------------------------------------
Greater than or equal to 33% and less than 66% 0.500%
----------------------------------------------------- --------------------------------------
Greater than or equal to 66% 0.750%"
----------------------------------------------------- --------------------------------------
1.4 AMENDMENTS TO ARTICLE 8: NEGATIVE COVENANTS.
A. Subsection 8.1(a) of the Credit Agreement shall be amended
by deleting all of the text commencing with and including the line "2nd Fiscal
Quarter, Fiscal Year 2006" from the table set forth therein through to the end
of such table in its entirety and substituting therefor the following:
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MINIMUM FIXED CHARGE
"FISCAL QUARTER COVERAGE RATIO
--------------- --------------
4th Fiscal Quarter, Fiscal Year 2006 0.45:1.00
lst Fiscal Quarter, Fiscal Year 2007 0.55:1.00
2nd Fiscal Quarter, Fiscal Year 2007 0.85:1.00
3rd Fiscal Quarter, Fiscal Year 2007 0.95:1.00
4th Fiscal Quarter, Fiscal Year 2007 0.85:1.00
1st Fiscal Quarter, Fiscal Year 2008 1.00:1.00"
and each Fiscal Quarter thereafter
B. Subsection 8.1 of the Credit Agreement shall be further
amended by adding a new Section 8.1(c) as follows:
"(c) MAXIMUM UTILIZATION. The Borrowers shall not permit Total
Revolving Utilization at any time to exceed the maximum Total Revolving
Utilization for corresponding Fiscal Quarter as set forth on the Maximum
Projected Utilization Schedule dated as of July 6, 2006 and previously delivered
by Borrowers to Agent and Lenders."
C. RESTRICTIONS ON FUNDAMENTAL CHANGES; ASSET SALES AND
ACQUISITIONS. Subsection 8.5(g) of the Credit Agreement shall be amended by
adding at the beginning thereof the following:
"(i) Borrowers and their Subsidiaries shall make the 2006 Required
Asset Sales by December 31, 2006, on the terms and conditions set forth
in the 2006 Required Asset Sale Schedule; and (ii)."
1.5 REDUCTION OF REVOLVING LOAN COMMITMENTS.
The Borrowers hereby irrevocably notify Agent that, upon the
Third Amendment Effective Date, the Borrowers hereby reduce the aggregate
Revolving Loan Commitments to $100,000,000, such Revolving Loan Commitment
reduction to reduce the Revolving Loan Commitment of each Lender proportionately
to its Proportionate Share.
SECTION 2. LIMITED WAIVER
Subject to the terms and conditions set forth herein and in
reliance on the representations and warranties of Borrowers herein contained,
Lenders hereby waive compliance with the provisions of Section 8.1(a) of the
Credit Agreement for the second Fiscal Quarter in Fiscal Year 2006.
Without limiting the generality of the provisions of Section
11.10 of the Credit Agreement, the waiver set forth above shall be limited
precisely as written and relates solely to the noncompliance by Borrowers with
the provisions of Section 8.1(a) of the Credit Agreement in the manner and to
the extent described above, and nothing in this Waiver shall be deemed to:
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(a) constitute a waiver of compliance by Borrowers
with respect to (i) Section 8.1(a) of the Credit Agreement in
any other instance or (ii) any other term, provision or
condition of the Credit Agreement or any other instrument or
agreement referred to therein; or
(b) prejudice any right or remedy that Agent or any
Lender may now have (except to the extent such right or remedy
was based upon existing defaults that will not exist after
giving effect to this Waiver) or may have in the future under
or in connection with the Credit Agreement or any other
instrument or agreement referred to therein.
Except as expressly set forth herein, the terms, provisions
and conditions of the Credit Agreement and the other Credit Documents shall
remain in full force and effect and in all other respects are hereby ratified
and confirmed.
SECTION 3. CONDITIONS TO EFFECTIVENESS
Sections 1 and 2 of this Amendment shall become effective as
of August 8, 2006 (the "THIRD AMENDMENT EFFECTIVE DATE") only upon the
satisfaction of all of the following conditions precedent:
A. BORROWER DOCUMENTS. Borrowers shall deliver to Lenders on
or before the Third Amendment Effective Date the following, each, unless
otherwise noted, dated as of the Third Amendment Effective Date:
1. Signature and incumbency certificates of their officers
executing this Amendment; and
2. Copies of this Amendment executed by Borrowers and the
Credit Support Parties.
B. EXECUTION OF AMENDMENT BY LENDERS. Majority Lenders shall
have executed and delivered copies of this Amendment to Agent.
C. FEES. Borrowers shall pay to each Lender which executes and
delivers this Amendment to Agent on or before 5:00 PM New York City time on the
Third Amendment Effective Date an amendment fee in an amount equal to 0.15% of
the aggregate amount of such Lender's Revolving Exposure under the Credit
Agreement (after giving effect to the Revolving Loan Commitment reduction
provided for in this Amendment).
D. OTHER PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incidental thereto not previously found acceptable by Agent,
acting on behalf of Lenders, shall be reasonably satisfactory in form and
substance to Agent, and Agent shall have received all such counterpart originals
or certified copies of such documents as Agent may reasonably request.
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SECTION 4. BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Borrowers represent
and warrant to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Each Borrower has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement as amended by this Amendment (the "Amended Agreement").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of each Borrower.
C. NO CONFLICT. The execution and delivery by Borrowers of
this Amendment and the performance by each Borrower of the Amended Agreement do
not and will not: (i) violate any provision of any law or any governmental rule
or regulation applicable to any Borrower or any of its Subsidiaries, the
Certificate or Articles of Incorporation or Bylaws of any Borrower or any of its
Subsidiaries or any order, judgment or decree of any court or other agency of
government binding on any Borrower 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 Material Contract of any Borrower 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 any Borrower or any of its Subsidiaries
(other than Liens created under any of the Credit 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 Material Contract of any Borrower or any of
its Subsidiaries, except for such approvals or consents which will be obtained
on or before the Third Amendment Effective Date and disclosed in writing to
Lenders.
D. GOVERNMENTAL CONSENTS. The execution and delivery by each
Borrower of this Amendment and the performance by each Borrower of this
Amendment 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 (other than filings or recordings
required by the transactions contemplated hereunder).
E. BINDING OBLIGATION. This Amendment has been duly executed
and delivered by each Borrower and is the legally valid and binding obligations
of each Borrower, enforceable against each Borrower in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 6 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective Date and on and as of the
date of the execution of this Amendment by Borrowers 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.
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G. ABSENCE OF DEFAULT. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 5. ACKNOWLEDGEMENT AND CONSENT
Each of the Borrowers, Xxxxx Horticulture, Inc. and Xxxxx
Fertilizer, Inc. (collectively, the "CREDIT SUPPORT PARTIES") is a party to
certain Guaranties and Collateral Documents, in each case as amended through the
Third Amendment Effective Date, pursuant to which such Credit Support Party has
guarantied the Obligations and created Liens in favor of Agent on certain
Collateral to secure the obligations of such Credit Support Party under the
Credit Agreement, the Collateral Documents and the Guaranties to which such
Credit Support Party is a party. 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 and the other Credit Documents
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 Company now or hereafter existing under
or in respect of the Amended Agreement.
Each Credit Support Party acknowledges and agrees that any of
the Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Third Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party (other than Company) 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 Credit 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 Credit 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 6. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
OTHER CREDIT DOCUMENTS.
(i) On and after the Third Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Credit 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 Credit 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 Credit Documents.
B. FEES AND EXPENSES. Each Borrower acknowledges that all
reasonable costs, fees and expenses incurred by Agent and its counsel
with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrowers.
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. 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.
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F. FURTHER ASSURANCES. Each Borrower agrees that from time to
time, at the expense of Borrowers, each Borrower will promptly execute
and deliver any additional amendments and related documents that Agent
may reasonably request, in order to effectuate this Amendment and the
transactions contemplated hereunder.
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 NURSERIES, INC.,
as Borrower, Credit Support Party and
Funds Administrator
By: /S/ XXXXXXX XXXXXXXX
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
XXXXX SGUS INC.,
as Borrower and Credit Support Party
By: /S/ XXXXXXX XXXXXXXX
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
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ADDITIONAL CREDIT SUPPORT PARTIES:
XXXXX HORTICULTURE, INC.
By: /S/ XXXXXXX XXXXXXXX
-----------------------------------
Name Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
XXXXX FERTILIZER INC.
By: /S/ XXXXXXX XXXXXXXX
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
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LENDERS:
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Agent and Lender
By: /S/ XXXXXXX X. XXXXXXX
-----------------------------------
Name: XXXXXXX X. XXXXXXX
Title: DIRECTOR
By: /S/ XXXXXXXXXX XXXXXX
-----------------------------------
Name: XXXXXXXXXX XXXXXX
Title: DIRECTOR
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MAXIMUM PROJECTED UTILIZATION SCHEDULE
--------------------------------------
dated as of July 6, 2006
MAXIMUM TOTAL
FISCAL QUARTER REVOLVING UTILIZATION
------------------------- ---------------------------
7/1/06 - 9/30/06 $10,800,000
10/1/06 - 12/31/06 $23,300,000
1/1/07 - 3/31/07 $10,800,000
4/1/07 - 6/30/07 $15,200,000
7/1/07 - 9/30/07 $10,800,000
10/1/07 - 12/31/07 $10,800,000
1/1/08 - 3/31/08 and $15,400,000
Thereafter $10,800,000
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