EXHIBIT 10.1
XXXXX NURSERIES, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is
dated as of June 30, 2005 and entered into by and among XXXXX NURSERIES, INC., a
California corporation ("COMPANY"), ENVIRO-SAFE LABORATORIES, INC., a Florida
corporation ("ENVIRO-SAFE"), and XXXXX SGUS INC., a Nevada corporation ("XXXXX
SGUS" and, together with Company and Enviro-Safe, 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 4 hereof, the Credit
Support Parties (as defined in Section 4 hereof), and is made with reference to
that certain Credit Agreement dated as of September 30, 2003 (the "CREDIT
AGREEMENT"), by and among Borrowers, the financial institutions party thereto
(each individually referred to herein as a "LENDER" and collectively as
"LENDERS"), the Agent, BANK OF AMERICA, N.A. and LASALLE BANK NATIONAL
ASSOCIATION, as co-syndication agents (in such capacity, "CO-SYNDICATION
AGENTS"), and XXXXXX TRUST AND SAVINGS BANK and XXXXX FARGO BANK, N.A., as
co-documentation agents (in such capacity, "CO-DOCUMENTATION AGENTS").
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.
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A. Subsection 1.1 of the Credit Agreement is hereby amended by
adding thereto in appropriate alphabetical order the following definitions:
" `FARM A' means Company's 116-acre parcel commonly
known as "Farm A" located at 00000 XX 000xx Xxxxxx, Xxxxx, Xxxxxxx.
`FARM A SALE' means the sale of Farm A."
B. Subsection 1.1 of the Credit Agreement is hereby further
amended by adding to the end of the definition of "Capital Expenditures" the
following:
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"Notwithstanding anything to the contrary contained in this definition
of "Capital Expenditures", Capital Expenditures shall not include up to
$12,000,000 in aggregate expenditures made to replace assets sold in
the Farm A Sale."
C. Subsection 1.1 of the Credit Agreement is hereby further
amended by deleting the definition of "EBITDA" therefrom in its entirety and
substituting therefor the following:
" `EBITDA' shall mean, for any fiscal period, without
duplication, (a) Consolidated Net Income (other than extraordinary
items) of the Consolidated Entity for such period, PLUS (b) the amount
of all Interest Expense, income tax expense, depreciation and
amortization, including amortization of any goodwill or other
intangibles, for such period, to the extent deducted in calculating
Consolidated Net Income for such period, PLUS (c) for purposes of the
calculating Borrowers' Fixed Charge Coverage Ratio and Leverage Ratio
only, certain adjustments related to work force reductions in the
periods and in the amounts set forth for such periods on SCHEDULE B,
PART 1.1, and PLUS or MINUS (as the case may be) (d)(i) any other
non-cash charges including any non-cash goodwill impairment charges,
marked to market expenses for Derivative Contracts and write-offs in
connection with fixed assets; PROVIDED there shall be excluded any such
non-cash charges which require an accrual of or a reserve for cash
charges for any future period and (ii) any gains and losses
attributable to any fixed asset sales, which have been, in the case of
either CLAUSE (i) or (ii), subtracted or added, as the case may be, in
calculating Consolidated Net Income for such period, all determined in
accordance with GAAP; PROVIDED FURTHER that in no event shall any gains
or losses attributable to the Sun Gro Sale be included in any
calculation of EBITDA."
1.2 AMENDMENTS TO SECTION 2.4: REPAYMENT OF TERM LOANS;
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REPAYMENTS AND UNSCHEDULED REDUCTION OF REVOLVING LOAN
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COMMITMENTS.
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A. Subsection 2.4(b)(iii)(1) of the Credit Agreement shall be
amended by deleting it 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
or the Reserved Lagoon Valley 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 $20,000,000,
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,
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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, 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.
(B) PREPAYMENTS AND REDUCTIONS FROM THE FARM A SALE.
No later than the first Business Day after receipt by any Credit Party
or any of its Subsidiaries of any gross cash proceeds (including any
cash received by way of a deferred payment pursuant to, or by
monetization of, a note receivable, lease, sublease or otherwise, and
including the receipt of any deposits, but only as and when so
received) with respect to the Farm A Sale, Borrowers shall prepay the
Loans in an aggregate amount equal to such gross cash proceeds. To the
extent that provisions of this Agreement other than subsection
2.4(b)(iii)(1)(A) reference "Net Asset Sale Proceeds", such reference
shall be deemed, with respect to the Farm A Sale, to be a reference to
the gross cash proceeds received from such Farm A Sale."
B. Subsection 2.4(b)(vi) of the Credit Agreement shall be
amended by deleting it in its entirety and substituting therefor the following:
"(vi) Application of Mandatory Prepayments of Term
Loans to Scheduled Installments of Principal Thereof. Any mandatory
prepayments of the Term Loans pursuant to SECTION 2.4(b)(iii)(1)(b)
shall be applied to reduce each remaining unpaid scheduled installment
of principal of the Term Loans set forth in SECTION 2.4(a) in inverse
order of maturity. All other mandatory prepayments of the Term Loans
pursuant to SECTION 2.4(b)(iii) shall be applied to reduce each
remaining unpaid scheduled installment of principal of the Term Loans
set forth in SECTION 2.4(a) on a pro rata basis (in accordance with the
respective unpaid principal amounts thereof)."
1.3 AMENDMENTS TO SECTION 8: NEGATIVE COVENANTS.
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A. Subsection 8.1(a) of the Credit Agreement shall be amended
by deleting all text commencing with and including the line "1st 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:
MINIMUM FIXED CHARGE
"FISCAL QUARTER COVERAGE RATIO
--------------- --------------
1st Fiscal Quarter, Fiscal Year 2006 1.00:1.00
2nd Fiscal Quarter, Fiscal Year 2006 1.00:1.00
3rd Fiscal Quarter, Fiscal Year 2006 1.00:1.00
4th Fiscal Quarter, Fiscal Year 2006 1.00:1.00
1st Fiscal Quarter, Fiscal Year 2007 1.05:1.00
2nd Fiscal Quarter, Fiscal Year 2007
and each Fiscal Quarter thereafter 1.10:1.00"
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B. Subsection 8.1(b) of the Credit Agreement shall be amended
by deleting all text commencing with and including the line "4th Fiscal Quarter,
Fiscal Year 2005" from the table set forth therein through to the end of such
table in its entirety and substituting therefor the following:
MAXIMUM LEVERAGE
"FISCAL QUARTER RATIO
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4th Fiscal Quarter, Fiscal Year 2005 5.30:1.00
1st Fiscal Quarter, Fiscal Year 2006 5.35:1.00
2nd Fiscal Quarter, Fiscal Year 2006 5.50:1.00
3rd Fiscal Quarter, Fiscal Year 2006 5.00:1.00
4th Fiscal Quarter, Fiscal Year 2006 4.90:1.00
1st Fiscal Quarter, Fiscal Year 2007 4.80:1.00
2nd Fiscal Quarter, Fiscal Year 2007 4.60:1.00
3rd Fiscal Quarter, Fiscal Year 2007 4.50:1.00"
and each Fiscal Quarter thereafter
C. Subsection 8.5 of the Credit Agreement shall be amended by
adding at the end of clause (d) thereof the following:
"and (iii) Farm A provided that (x) the consideration received for the
Farm A Sale shall be in an amount at least equal to $17,000,000 or, if
greater, the fair market value thereof (as reasonably determined by the
Board of Directors of Company), (y) at least 75% of the consideration
received shall be cash, and (z) upon receipt of the gross cash proceeds
of the Farm A Sale, the Borrowers shall apply such gross proceeds in
accordance with SECTION 2.4(b)(iii)(1)(b)); PROVIDED that Borrowers
shall not expend in excess of $12,000,000 in replacement of the assets
sold in the Farm A Sale."
1.4 AMENDMENTS TO SCHEDULE B.
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A. The Schedules to the Credit Agreement are hereby amended by
deleting SCHEDULE B, PART 1.1 in its entirety and by substituting therefor
SCHEDULE B, PART 1.1, as attached to this Amendment as ANNEX A.
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective as of June
30, 2005 (the "AMENDMENT EFFECTIVE DATE") only upon the satisfaction on or
before July 13, 2005 of all of the following conditions precedent:
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A. BORROWER DOCUMENTS. Borrowers shall deliver to Lenders the
following, each, unless otherwise noted, dated as of the 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 on or before 5:00 PM New York City time on July 13, 2005
an amendment fee in an amount equal to 0.10% of the aggregate amount of such
Lender's Term Exposure and Revolving Exposure under the Credit Agreement (as in
effect immediately prior to 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.
SECTION 3. 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
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(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 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 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.
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 4. ACKNOWLEDGEMENT AND CONSENT
Each of the Borrowers and Xxxxx Horticulture, Inc.
(collectively, the "CREDIT SUPPORT PARTIES") is a party to certain Guaranties
and Collateral Documents, in each case as amended through the 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
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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 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.
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
OTHER CREDIT DOCUMENTS.
(i) On and after the 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.
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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.
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.
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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
----------------------------------
Title: CHIEF FINANCIAL OFFICER
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ENVIRO-SAFE LABORATORIES, INC.,
as Borrower and Credit Support Party
By: /S/ XXXXXXX XXXXXXXX
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Title: CHIEF FINANCIAL OFFICER
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XXXXX SGUS INC.,
as Borrower and Credit Support Party
By: /S/ XXXXXXX XXXXXXXX
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Title: CHIEF FINANCIAL OFFICER
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S-1
ADDITIONAL CREDIT SUPPORT PARTY:
XXXXX HORTICULTURE, INC.
By: /S/ XXXXXXX XXXXXXXX
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Title: CHIEF FINANCIAL OFFICER
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S-2
LENDERS:
DEUTSCHE BANK TRUST COMPANY AMERICAS, as
Agent and Lender
By: /S/ XXXXXX XXXXXXXXX
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Title: DIRECTOR
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S-3
ANNEX A
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SCHEDULE B, PART 1.1
EBITDA ADJUSTMENTS
(IN THOUSANDS)
Q3 - 2004 Q4 - 2004 Q1 - 2005 Q2 - 2005 Q3 2005
--------- --------- --------- --------- -------
Total EBITDA Adjustments $873 $873 $873 $1,473 $ 71
Annex A-1
