XXXXX HORTICULTURE, INC.
EIGHTH AMENDMENT AND LIMITED WAIVER
TO CREDIT AGREEMENT
AND FIRST AMENDMENT TO
HOLDINGS GUARANTY AND HOLDINGS PLEDGE AGREEMENT
This EIGHTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT AND FIRST
AMENDMENT TO HOLDINGS GUARANTY AND HOLDINGS PLEDGE AGREEMENT (this "Amendment")
is dated as of November 7, 1997 and entered into by and among XXXXX
HORTICULTURE, INC. (formerly known as Xxxxx Nurseries Inc.), a California
corporation ("Company"), SUN GRO HORTICULTURE INC., a Nevada corporation ("Sun
Gro"), and SUN GRO HORTICULTURE CANADA LTD., a Canadian corporation ("Sun Gro
Canada"; together with Company and Sun Gro, collectively, "Borrowers"), the
financial institutions listed on the signature pages hereof ("Lenders") and BT
COMMERCIAL CORPORATION, as Agent for Lenders ("Agent"), and, for purposes of
Section 7 hereof, the Credit Support Parties (as defined in Section 7 hereof)
listed on the signature pages hereof, and is made with reference to that certain
Credit Agreement dated as of August 4, 1995, by and among Company, Sun Gro and
Sun Gro Canada, Lenders and Agent, as amended by that certain First Amendment
dated as of October 11, 1995, that certain Second Amendment dated as of October
26, 1995, that certain Third Amendment dated as of March 15, 1996, that certain
Fourth Amendment dated as of August 28, 1996, that certain Fifth Amendment and
Consent dated as of November 14, 1996, that certain Sixth Amendment dated as of
February 14, 1997, and that certain Seventh Amendment and Consent to Credit
Agreement dated as of March 26, 1997 (as so amended, the "Credit Agreement").
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company has requested Lenders to amend the Credit Agreement
and certain related Loan Documents to permit (i) the formation of Xxxxx II, a
wholly owned Subsidiary of Holdings, by Holdings, (ii) the capitalization of
Xxxxx II with all or a portion of the proceeds of up to $2,500,000 from the
issuance of debt or equity by Holdings to MDCP, (iii) the acquisition of the
assets of PCN by Xxxxx II on October 20, 1997, for approximately $1,700,000, and
(iv) Xxxxx II and its Subsidiaries to engage in the nursery business or
businesses related thereto (the transactions described in the foregoing clauses
(i)-(iv) being herein collectively referred to as the "Xxxxx II Transactions");
and
WHEREAS, Borrowers, Lenders and Holdings desire to amend the Credit
Agreement and certain other Loan Documents to permit the Xxxxx II Transactions
and to waive
1
any noncompliance by Loan Parties with the provisions of the Loan Documents
prohibiting the Xxxxx II Transactions:
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 Amendment to Section 1: Provisions Relating to Defined Terms
Subsection 1.1 of the Credit Agreement is hereby amended by
adding thereto the following definitions, which shall be inserted in the proper
alphabetical order:
"`Xxxxx II' means Xxxxx II, Inc., a Delaware corporation."
"`Xxxxx II Credit Facility' means the senior secured credit facilities
in an aggregate commitment amount of up to $60,000,000 substantially on the
terms and conditions set forth in that certain commitment letter dated as of
October 8, 1997, between Holdings and BT Commercial Corporation to finance
its acquisition of companies and/or of the assets and operations of
companies engaged in the nursery business or businesses related thereto and
to provide for the working capital needs and general corporate purposes of
such acquired companies or business operations."
"`PCN' means Pacific Color Nurseries, Inc., a California corporation."
1.2 Amendment to Section 8: Events of Default
Section 8 of the Credit Agreement is hereby amended by replacing
subsection 8.18 with the following:
"8.18 Certain Covenants Relating to Holdings.
A. Holdings shall engage in any business other than owning
the capital stock of Company, Xxxxx II and their respective
Subsidiaries and entering into and performing its obligations under
and in accordance with the Loan Documents and the Related Agreements
to which it is a party and the loan documents to be entered into by
Holdings with respect to the Xxxxx II Credit Facility, including
without limitation a demand note in favor of MDCP of up to $2,500,000
for the capitalization of Xxxxx II, a guarantee of Xxxxx II's
obligations thereunder and a pledge of all of the outstanding stock of
Xxxxx II in support of such guarantee, or shall own any assets other
than (a) the capital stock of Company, Xxxxx II and their Subsidiaries
and (b) Cash and Cash
2
Equivalents in an amount not to exceed $100,000 at any one time for
the purpose of paying general operating expenses of Holdings; or
B. Holdings shall have failed, on or prior to January 31,
1998, either (i) to have entered into the Xxxxx II Credit Facility and
related loan documents, which Xxxxx II Credit Facility and related loan
documents shall be in form and substance satisfactory to all Lenders,
or (ii) to have contributed all shares of stock of Xxxxx II to Company
so that Xxxxx II and its Subsidiaries become Subsidiaries of Company
and to have caused Company and Xxxxx II to have taken all such actions
and executed all such documents as may be required pursuant to
subsections 6.11 and 6.12 hereof with respect to any new Domestic
Subsidiary Company; or"
Section 2. AMENDMENT TO THE HOLDINGS GUARANTY
Amendment to Section 4: Covenants.
Subsection 4.4 of the Holdings Guaranty is hereby amended by
replacing subsection 4.4 with the following:
"4.4 Conduct of Business.
Guarantor shall engage only in the business of owning the
capital stock of Company, Xxxxx II and their respective Subsidiaries
and entering into and performing its obligations under and in
accordance with the Loan Documents and the Related Agreements to which
it is a party and the loan documents to be entered into by Holdings
with respect to the Xxxxx II Credit Facility, including without
limitation a demand note in favor of MDCP of up to $2,500,000 for the
capitalization of Xxxxx II, a guarantee of Xxxxx II's obligations
thereunder and a pledge of all of the outstanding stock of Xxxxx II in
support of such guarantee. Guarantor shall own no assets other than (a)
the capital stock of Company, Xxxxx II and their Subsidiaries and (b)
Cash and Cash Equivalents in an amount not to exceed $100,000 at any
one time for the purpose of paying general operating expenses of
Holdings. Guarantor shall not directly engage in any business and shall
limit its activities to those activities necessary to discharge its
obligations as a holding company for Company and Xxxxx II."
3
Section 3. AMENDMENT TO THE HOLDINGS PLEDGE AGREEMENT
Amendment to Section 5: Transfers and Other Liens; Additional
Pledged Collateral; etc.
Subsection 5 of the Holdings Pledge Agreement is hereby amended
by replacing subsection 5(b)(iii) with the following:
"(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock issued to or otherwise
acquired by Pledgor of any Person (other than Xxxxx II) that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of Pledgor;"
Section 4. LIMITED WAIVER
4.1 Waiver of Noncompliance
Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Borrowers contained herein, Lenders
hereby waive:
A. compliance (to the extent, and only to the extent, necessary to
permit the Xxxxx II Transactions to occur) with the provisions of (i)
subsection 8.18A of the Credit Agreement, (ii) subsection 4.4 of the
Holdings Guaranty, and (iii) subsection 5(b))(iii) of the Holdings Pledge
Agreement (each as in effect prior to the Eighth Amendment Effective Date)
and waive any Events of Default and Potential Events of Default arising as
a result of any noncompliance therewith arising out of the Xxxxx II
Transactions prior to the Eighth Amendment Effective Date (as hereinafter
defined); and
B. compliance with any covenant contained in any Loan Document
prohibiting Holdings from permitting any Lien on or any pledge of any of
the assets of Holdings (a "Negative Pledge Covenant") but only with respect
to a pledge by Holdings of all of the outstanding stock of Xxxxx II in
support of a guarantee by Holdings of Xxxxx II's obligations under the
Xxxxx II Credit Facility.
4.2 Limitation of Waivers
Without limiting the generality of the provisions of subsection 10.6
of the Credit Agreement, the waivers set forth above shall be limited precisely
as written and relate solely to noncompliance with subsection 8.18A of the
Credit Agreement, subsection 4.4 of the Holdings Guaranty, subsection 5(b)(iii)
of the Holdings Pledge Agreement and any Negative
4
Pledge Covenant (each as in effect prior to the Eighth Amendment Effective Date)
in the manner and to the extent described above, and nothing in this Section 4
shall be deemed to:
A. constitute a waiver of compliance by Borrowers or Holdings with
respect to (a) subsection 8.18 of the Credit Agreement, subsection 4.4 of
the Holdings Guaranty, subsection 5(b)(iii) of the Holdings Pledge Agreement
and any Negative Pledge Covenant in any other instance or (b) any other
term, provision or condition of the Credit Agreement or other Loan Documents
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 that such right or remedy was based upon existing
defaults that will not exist after giving effect to this Amendment) or may
have in the future under or in connection with the Credit Agreement or other
Loan Documents 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 Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
Section 5. CONDITIONS TO EFFECTIVENESS
Sections 1, 2, 3 and 4 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 "Eighth
Amendment Effective Date"):
A. On or before the Eighth Amendment Effective Date, Holdings and
each Borrower shall deliver to Lenders (or to Agent for Lenders) executed copies
of this Amendment.
B. Agent shall have received copies of this Amendment executed by
Requisite Lenders.
C. On or before the Eighth Amendment Effective Date, all corporate
and other proceedings taken or required to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and such counsel,
and Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Agent may reasonably request.
5
Section 6. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Borrower and Holdings
represent and warrant to each Lender that the following statements are true,
correct and complete:
A. Corporate Power and Authority. Each Loan Party has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement and other Loan Documents as amended by this Amendment (the "Amended
Agreements").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreements have been duly
authorized by all necessary corporate action on the part of each Loan Party
party hereto.
C. Signature and Incumbency. The signature and incumbency
certificates of officers of Holdings and each Borrower delivered in connection
with the Fifth Amendment correctly reflects, as of the Eighth Amendment
Effective Date, the signature and incumbency of each officer of Holdings and
each Borrower executing this Amendment and each of the Loan Documents entered
into on or about the Eighth Amendment Effective Date.
D. No Conflict. After giving effect to the amendments and waivers
effected hereby, the execution and delivery by each Loan Party of this Amendment
and the performance by each Loan Party hereto of the Amended Agreements do not
and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Holdings or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Holdings or any of its Subsidiaries or
any order, judgment or decree of any court or other agency of government binding
on Holdings or any of its Subsidiaries, (ii) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Holdings or any of its Subsidiaries, (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of Holdings or any of its Subsidiaries (other than Liens created under
any of the Loan Documents in favor of Agent on behalf of Lenders and other than
is contemplated to be created with respect to Xxxxx II in connection with the
Xxxxx II Credit Facility), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Holdings
or any of its Subsidiaries, except for such approvals or consents which have
been obtained on or before the Eighth Amendment Effective Date and disclosed in
writing to Lenders.
E. Governmental Consents. The execution and delivery by the Loan
Parties hereto of this Amendment and the performance by the Loan Parties hereto
of the Amended Agreements do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
F. Binding Obligation. This Amendment has been duly executed and
delivered by each Loan Party and this Amendment and the Amended Agreements are
the
6
legally valid and binding obligations of such Loan Party, enforceable against
such Loan Party in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
G. Incorporation of Representations and Warranties From Credit
Agreement. After giving effect to the amendments and waivers effected hereby,
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 Eighth Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
H. Absence of Default. After giving effect to the amendments and
waivers effected hereby, no event has occurred and is continuing or will result
from the consummation of the transactions contemplated by this Amendment that
would constitute an Event of Default or a Potential Event of Default.
Section 7. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Guaranty, the Company Security
Agreement, the Company Pledge Agreement, the Company Trademark Security
Agreement, the Company Patent Security Agreement and the Collateral Account
Agreement pursuant to which Company has (i) guarantied the Obligations and (ii)
created liens in favor of Agent on certain Collateral to secure the Obligations
and to secure its obligations under the Company Guaranty. Sun Gro is a party to
the Domestic Subsidiary Guaranty, the Domestic Subsidiary Security Agreement,
the Domestic Subsidiary Pledge Agreement, the Domestic Subsidiary Trademark
Security Agreement, the Domestic Subsidiary Patent Security Agreement and the
Collateral Account Agreement pursuant to which Sun Gro has (i) guarantied the
Obligations and (ii) created liens in favor of Agent on certain Collateral to
secure the obligations of Sun Gro under the Domestic Subsidiary Guaranty. Sun
Gro Canada is a party to the Canadian Subsidiary Security Agreement and the
Canadian Subsidiary Pledge Agreement pursuant to which Sun Gro Canada has
created liens in favor of Agent on certain Collateral to secure certain of the
Obligations. Holdings is a party to the Holdings Guaranty and the Holdings
Pledge Agreement pursuant to which Holdings has (i) guarantied the Obligations
and (ii) pledged certain Collateral to Agent to secure the obligations of
Holdings under the Holdings Guaranty. Company, Sun Gro, Sun Gro Canada and
Holdings are collectively referred to herein as the "Credit Support Parties",
and the Guaranties and Collateral Documents referred to above are collectively
referred to herein as the "Credit Support Documents".
7
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement, the other Loan Documents and this
Amendment and consents to the amendment of the Credit Agreement and the other
Loan 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 Borrowers now
or hereafter existing under or in respect of the Amended Agreements and the
Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreements and the Credit Support Documents, in each case to which it is
a party or otherwise bound, are true, correct and complete in all material
respects on and as of the Eighth 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.
Section 8. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(i) On and after the Eighth 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.
8
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
XXXXX HORTICULTURE, INC. (formerly
known as Xxxxx Nurseries Inc.),
as Borrower
By: _______________________________
Title: ____________________________
SUN GRO HORTICULTURE INC.,
as Borrower
By: _______________________________
Title: ____________________________
SUN GRO HORTICULTURE CANADA LTD.,
as Borrower
By: _______________________________
Title: ____________________________
XXXXX HOLDINGS, INC. (formerly known
as Xxxxx Horticulture Inc.)
By: _______________________________
Title: ____________________________
S-1
BT COMMERCIAL CORPORATION,
as a Domestic Lender and as Agent
By: ________________________________
Title: _____________________________
BT BANK OF CANADA,
as a Canadian Lender
By: _______________________________
Title: ____________________________
BANKERS TRUST COMPANY,
as an Issuing Lender
By: _______________________________
Title: ____________________________
S-2
XXXXXX TRUST AND SAVINGS BANK,
as a Domestic Lender
By: _______________________________
Title: ____________________________
FLEET BANK OF MASSACHUSETTS, N.A., as
a Domestic Lender
By: _______________________________
Title: ____________________________
LASALLE NATIONAL BANK,
as a Domestic Lender
By: _______________________________
Title: ____________________________
NATIONSBANK OF TEXAS, N.A.,
as a Domestic Lender and Canadian Lender
By: _______________________________
Title: ____________________________
UNION BANK OF CALIFORNIA, N.A.
as a Domestic Lender and Canadian Lender
By: _______________________________
Title: ____________________________
S-3
XXXXX FARGO BANK, N.A.
as a Domestic Lender and Canadian Lender
By: _______________________________
Title: ____________________________
BANK OF MONTREAL,
as a Canadian Lender
By: _______________________________
Title: ____________________________
S-4
