EXHIBIT 4.1
XXXXX HORTICULTURE, INC.
SEVENTH AMENDMENT AND CONSENT
TO CREDIT AGREEMENT
This SEVENTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT (this
"AMENDMENT") is dated as of March 26, 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 6 hereof, the Credit Support Parties (as defined in Section 6 hereof)
listed on the signature pages hereof, and is made with reference to that certain
Credit Agreement dated as of August 4, 1995 by and among Company, Sun Gro and
Sun Gro Canada, Lenders and Agent, as amended by that certain First Amendment
dated as of October 11, 1995, that certain Second Amendment dated as of October
26, 1995, that certain Third Amendment dated as of March 15, 1996, that certain
Fourth Amendment dated as of August 28, 1996, that certain Fifth Amendment and
Consent dated as of November 14, 1996, and that certain Sixth Amendment dated as
of February 14, 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, Borrowers and Lenders desire to amend the Credit Agreement to
(i) increase the aggregate Revolving Loan Commitments by $15,000,000 (from
$60,000,000 to $75,000,000), (ii) adjust certain of the financial covenants set
forth therein, and (iii) make certain other amendments as set forth below;
WHEREAS, Borrowers desire that Lenders consent to certain transactions
relating to certain real property assets of Borrowers; and
WHEREAS, subject to the terms and conditions of this Amendment, Lenders
are willing to agree to such amendments.
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: PROVISIONS RELATING TO DEFINED TERMS
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A. Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the definitions of "Blooming Farm", "Blooming Farm Lease" and "Blooming
Farm Note" therefrom in their entirety and substituting the following therefor:
"'BLOOMING FARM' means, collectively, (a) approximately 295 acres
of real property located in Washington County, Oregon that is the subject of
Blooming Farm Lease No. 1 and (b) approximately 53 acres of real property
located in Washington County, Oregon that is the subject of Blooming Farm
Lease No. 2.
'BLOOMING FARM LEASE' means, collectively, Blooming Farm Lease No.
1 and Blooming Farm Lease No. 2.
'BLOOMING FARM LEASE NO. 1' means that certain Agricultural Lease
dated August 4, 1995, between BFI, as lessor, and Company, as lessee, as
amended by that certain First Amendment to Agricultural Lease dated as of
February 28, 1997, between BFI and Company.
'BLOOMING FARM LEASE NO. 2' means that certain Agricultural Lease
dated as of June 21, 1996, between BFI, as lessor and Company, as lessee.
'BLOOMING FARM NOTE' means, collectively, (a) that Promissory Note
dated as of August 4, 1995 in the original principal amount of $826,865.00,
issued by BFI to OGP and (b) that Promissory Note dated as of June 21, 1996
in the original principal amount of $151,050.00, issued by BFI to Company."
B. Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the definition of "Company Borrowing Base" therefrom in its entirety
and substituting the following therefor:
"'COMPANY BORROWING BASE' means, as at any date of determination,
an aggregate amount equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable of
Company plus
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(ii) the lesser of (a) fifty percent (50%) of Eligible Inventory
of Company and (b) an amount which, when aggregated with the amount
calculated pursuant to clause (ii) of the definition of Sun Gro
Borrowing Base (as set forth in the most recent Borrowing Base
Certificate delivered to Agent) at such date of determination, equals
$40,000,000 (it being understood that the amount calculated pursuant to
this clause (ii) and the amount calculated
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pursuant to clause (ii) of the definition of Sun Gro Borrowing Base
shall not at any time exceed $40,000,000), minus
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(iii) the aggregate amount of reserves, if any, established by
Agent in the exercise of its Permitted Discretion against Eligible
Accounts Receivable and Eligible Inventory of Company;
provided that Agent, in the exercise of its Permitted Discretion, may (a)
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increase or decrease reserves against Eligible Accounts Receivable and
Eligible Inventory of Company and (b) reduce the advance rates provided in
this definition, or restore such advance rates to any level equal to or
below the advance rates in effect as of the Closing Date."
C. Subsection 1.1 of the Credit Agreement is hereby further amended
by (i) deleting the reference to ", FRN" appearing after the word "Company"
appearing in the first line of the definition of "Eligible Accounts Receivable",
and (ii) by adding after the reference to "$10,000,000" appearing in the second
line of clause (b) of the definition of "Eligible Accounts Receivable" the
phrase "(or, during the period commencing on January 1 of any year and ending on
April 30 of such year, up to $15,000,000)."
D. Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting the first sentence of the definition of "Eligible Inventory" in its
entirety and substituting therefor the following:
"`ELIGIBLE INVENTORY' means, with respect to Company, or Sun Gro,
the aggregate amount of Inventory of such Loan Party deemed by Agent in the
exercise of its Permitted Discretion to be eligible for inclusion in the
calculation of the Borrowing Base minus, in the case of Eligible Inventory
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of Company, the Inventory Scrap Reserve."
E. Subsection 1.1 of the Credit Agreement is hereby further amended
by adding the following immediately after the definition of "Term Notes":
"'TITLE POLICY' means an ALTA mortgagee title insurance policy
issued by a title insurer reasonably satisfactory to Agent, in an amount
reasonably satisfactory to Agent, assuring Agent that the applicable
Mortgage creates a valid and enforceable first priority mortgage lien (or
such other priority lien as may be specified in such Mortgage) on the
applicable Real Property Asset, free and clear of all defects and
encumbrances except Permitted Encumbrances and subject to a standard survey
exception, which title insurance policy shall be in form and substance
reasonably satisfactory to Agent and shall include an endorsement for
mechanics' liens, for future advances under this Agreement, the Notes and
the other Loan Documents, and for any other matters that Agent may
reasonably request, and shall provide for affirmative insurance and such
reinsurance as Agent may reasonably request, all of the foregoing in form
and substance reasonably satisfactory to Agent."
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F. Subsection 1.1 of the Credit Agreement is hereby further amended by
deleting the phrase "or FRN" appearing after each reference to "Company"
appearing in the definition of "Inventory Scrap Reserve" and deleting the phrase
"or FRN's" appearing after the reference to "Company's" appearing in such
definition.
G. Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting the two references to "$38,000,000" appearing in the term "Sun Gro
Borrowing Base" and substituting therefor "$40,000,000" for each such reference.
1.2 AMENDMENT TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS AND
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LOANS
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Subsection 2.1A(iii) of the Credit Agreement is hereby amended by
deleting the reference to "$60,000,000" contained therein and substituting
"$75,000,000" therefor.
1.3 AMENDMENTS TO SECTION 5: REPRESENTATIONS AND WARRANTIES
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Section 5 of the Credit Agreement is hereby amended by adding thereto
at the end thereof the following:
"5.19 CERTAIN MERGERS.
The merger of FRN, Inc. into FRN, with FRN being the surviving
corporation, has become effective prior to March 26, 1997, and as a
result of such merger, FRN, as the surviving corporation of such
merger, by operation of law (with no further action required),
succeeded to all of the rights, assets, properties, obligations and
liabilities of FRN, Inc. as of the effective date of such merger. The
merger of FRN into FN, with FN being the surviving corporation, has
become effective prior to March 26, 1997 (and after the effectiveness
of the merger described in the preceding sentence) and as a result of
such merger, FN, as the surviving corporation of such merger, by
operation of law (with no further action required), succeeded to all of
the rights, assets, properties, obligations and liabilities of FRN as
of the effective date of such merger. The merger of FN into Company,
with Company being the surviving corporation, has become effective
prior to March 26, 1997 (and after the effectiveness of the two mergers
described in the two preceding sentences) and as a result of such
merger, Company, as the surviving corporation of such merger, by
operation of law (with no further action required), succeeded to all of
the rights, assets, properties, obligations and liabilities of FN as of
the effective date of such merger. The consummation of the three
mergers described above does not adversely affect the water rights of
the Loan Parties."
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1.4 AMENDMENT TO SUBSECTION 7.1: INDEBTEDNESS.
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Subsection 7.1 of the Credit Agreement is hereby amended by adding at
the end thereof the following:
"Notwithstanding any of the foregoing, Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness (other
than Indebtedness under the Loan Documents) if Company or such
Subsidiary could not incur such Indebtedness under the Takeout
Securities Indenture but for clause (xi) of the term "Permitted
Indebtedness" as defined in such indenture."
1.5 AMENDMENT TO SUBSECTION 7.6: FINANCIAL COVENANTS
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A. MINIMUM INTEREST COVERAGE RATIO. Subsection 7.6A of the Credit
Agreement is hereby amended by deleting the table contained therein in its
entirety and substituting the following therefor:
MINIMUM
"PERIOD INTEREST COVERAGE RATIO
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3rd Fiscal Quarter, 1995 1.65:1.00
4th Fiscal Quarter, 1995 1.65:1.00
1st Fiscal Quarter, 1996 1.50:1.00
2nd Fiscal Quarter, 1996 1.50:1.00
3rd Fiscal Quarter, 1996 1.50:1.00
4th Fiscal Quarter, 1996 1.35:1.00
1st Fiscal Quarter, 1997 1.25:1.00
2nd Fiscal Quarter, 1997 1.35:1.00
3rd Fiscal Quarter, 1997 1.35:1.00
4th Fiscal Quarter, 1997 1.45:1.00
1st Fiscal Quarter, 1998 1.55:1.00
2nd Fiscal Quarter, 1998 1.70:1.00
3rd Fiscal Quarter, 1998 1.70:1.00
4th Fiscal Quarter, 1998 1.75:1.00
1st Fiscal Quarter, 1999 1.85:1.00
2nd Fiscal Quarter, 1999 1.90:1.00
3rd Fiscal Quarter, 1999 1.90:1.00
4th Fiscal Quarter, 1999 1.95:1.00
1st Fiscal Quarter, 2000 2.00:1.00
2nd Fiscal Quarter, 2000 2.10:1.00
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3rd Fiscal Quarter, 2000 2.10:1.00
4th Fiscal Quarter, 2000
and each Fiscal Quarter thereafter 2.20:1.00"
B. MAXIMUM LEVERAGE RATIO. Subsection 7.6B of the Credit Agreement
is hereby amended by deleting the table contained therein in its entirety and
substituting the following therefor:
"PERIOD MAXIMUM LEVERAGE RATIO
----------------------------- ---------------------------
3rd Fiscal Quarter, 1995 5.25:1.00
4th Fiscal Quarter, 1995 5.60:1.00
1st Fiscal Quarter, 1996 6.50:1.00
2nd Fiscal Quarter, 1996 5.60:1.00
3rd Fiscal Quarter, 1996 6.25:1.00
4th Fiscal Quarter, 1996 6.75:1.00
1st Fiscal Quarter, 1997 8.35:1.00
2nd Fiscal Quarter, 1997 6.50:1.00
3rd Fiscal Quarter, 1997 6.30:1.00
4th Fiscal Quarter, 1997 6.20:1.00
1st Fiscal Quarter, 1998 6.35:1.00
2nd Fiscal Quarter, 1998 5.10:1.00
3rd Fiscal Quarter, 1998 5.10:1.00
4th Fiscal Quarter, 1998 5.10:1.00
1st Fiscal Quarter, 1999 5.60:1.00
2nd Fiscal Quarter, 1999 4.50:1.00
3rd Fiscal Quarter, 1999 4.50:1.00
4th Fiscal Quarter, 1999 4.50:1.00
1st Fiscal Quarter, 2000 5.00:1.00
2nd Fiscal Quarter, 2000 4.00:1.00
3rd Fiscal Quarter, 2000 4.00:1.00
4th Fiscal Quarter, 2000
and each Fiscal Quarter thereafter 4.00:1.00"
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C. MINIMUM CONSOLIDATED ADJUSTED EBITDA. Subsection 7.6C of the
Credit Agreement is hereby amended by deleting the table contained therein in
its entirety and substituting the following therefor:
MINIMUM CONSOLIDATED
"PERIOD ADJUSTED EBITDA
-------------------------- -------------------------
3rd Fiscal Quarter, 1995 $30,500,000
4th Fiscal Quarter, 1995 $31,000,000
1st Fiscal Quarter, 1996 $31,000,000
2nd Fiscal Quarter, 1996 $31,000,000
3rd Fiscal Quarter, 1996 $29,000,000
4th Fiscal Quarter, 1996 $27,750,000
1st Fiscal Quarter, 1997 $26,000,000
2nd Fiscal Quarter, 1997 $29,000,000
3rd Fiscal Quarter, 1997 $29,750,000
4th Fiscal Quarter, 1997 $32,250,000
1st Fiscal Quarter, 1998 $32,500,000
2nd Fiscal Quarter, 1998 $35,000,000
3rd Fiscal Quarter, 1998 $35,000,000
4th Fiscal Quarter, 1998 $36,000,000
1st Fiscal Quarter, 1999 $37,250,000
2nd Fiscal Quarter, 1999 $38,500,000
3rd Fiscal Quarter, 1999 $38,500,000
4th Fiscal Quarter, 1999 $38,500,000
1st Fiscal Quarter, 2000 $39,000,000
2nd Fiscal Quarter, 2000 $39,000,000
3rd Fiscal Quarter, 2000 $39,000,000
4th Fiscal Quarter, 2000
and each Fiscal Quarter thereafter $39,000,000"
1.6 AMENDMENT TO SUBSECTION 7.8: CONSOLIDATED CAPITAL EXPENDITURES
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Subsection 7.8 of the Credit Agreement is hereby amended by deleting
the reference to "FN" appearing in clause (v) thereof and substituting therefor
the word "Company."
1.7 AMENDMENT TO SUBSECTION 7.15; BORROWER'S NEGATIVE COVENANTS
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AMENDMENTS OF CERTAIN DOCUMENTS. Subsection 7.15B of the Credit
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Agreement is hereby amended by deleting the comma appearing at the end of clause
(i) thereof and substituting therefor the phrase ", or any material terms of any
of the Blooming Farm Exchange Documents or the Allendale Contract (each as
defined in the
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Seventh Amendment to this Agreement) in each case as in effect on the
effectiveness date of the Seventh Amendment to this Agreement."
1.8 SUBSTITUTION AND AMENDMENT OF SCHEDULES
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A. SCHEDULES TO CREDIT AGREEMENT. Schedule 2.1 to the Credit
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Agreement is hereby amended by deleting said Schedule 2.1 in its entirety and
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substituting in place thereof new Schedule 2.1 in the form of Annex A to this
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Amendment. Schedule 4.1C to the Credit Agreement is hereby amended by (i)
deleting therefrom the name and share information relating to Xxxxxx Xxxxxxx,
(ii) deleting "Xxxxxx Systems" therefrom and substituting therefor "Xxxxxx
Xxxxxx," and (iii) deleting therefrom the following:
"Company Name: Xxxxx Nurseries, Inc.
Jurisdiction of
Incorporation: California
Authorized Shares: 5,000,000
Issued Shares: 483,400
Owner: Xxxxx Horticulture, Inc.
Company Name: Xxxxx Rainbow Nurseries, Inc.
Jurisdiction of
Incorporation: Hawaii
Authorized Shares: 1,000
Issued Shares: 1,000
Owner: Xxxxx Nurseries, Inc.
Company Name: FRN, Inc.
Jurisdiction of
Incorporation: California
Authorized Shares: 1,000
Issued Shares: 1,000
Owner: Xxxxx Rainbow Nurseries, Inc."
Schedule 5.5 to the Credit Agreement is hereby amended by adding thereto
additional information in the form of Annex A to this Agreement and by deleting
therefrom information in the form of Annex A to this Agreement:
B. SCHEDULES TO COMPANY SECURITY AGREEMENT. Schedules I, II and III
to the Company Security Agreement are hereby amended by adding thereto
additional information in the form of Annex B to this Amendment.
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C. SCHEDULE TO COMPANY TRADEMARK SECURITY AGREEMENT. Schedule A to
the Company Trademark Security Agreement is hereby amended by adding thereto
additional information in the form of Annex C to this Amendment.
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1.9 AMENDMENT OF EXHIBITS
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EXHIBITS V AND VIII. The third paragraph of Exhibit V to the Credit
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Agreement is hereby amended by deleting the reference to "$60,000,000" and
substituting "$75,000,000" therefor. Exhibit VIII to the Credit Agreement is
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hereby amended by deleting Annex 1 to said Exhibit VIII in its entirety and
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substituting in place thereof a new Annex 1 to Exhibit VIII in the form of Annex
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D to this Amendment.
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SECTION 2. PRO RATA SHARES
Upon the effectiveness of this Amendment, each existing Domestic Lender
which increases its Revolving Loan Commitment (an "INCREASING LENDER" and
collectively, the "INCREASING LENDERS"), as set forth on Schedule 2.1 to the
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Credit Agreement, as amended by this Amendment, shall pay to Agent by wire
transfer of immediately available funds such amount, if any, as calculated by
Agent, as reflects such Increasing Lender's increased Pro Rata Share of the
outstanding Revolving Loans (and, if applicable, such Increasing Lender's
increased Pro Rata Share of any participations which have been funded by
Domestic Lenders with respect to outstanding Letters of Credit). Agent shall
promptly pay to each other Domestic Lender such amounts, if any, as calculated
by Agent, as may be necessary to reflect such other Domestic Lender's then Pro
Rata Share, as set forth on Schedule 2.1 to the Credit Agreement, as amended by
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this Amendment, of the outstanding Revolving Loans (and, if applicable, such
other Lender's then Pro Rata Share of any participations which have been funded
by Domestic Lenders with respect to outstanding Letters of Credit).
SECTION 3. CONSENT
A. Subject to the terms and conditions set forth herein and in
reliance on the representations and warranties of Loan Parties contained herein,
Lenders hereby:
1. consent to the like-kind exchange of real property located in
Washington County, Oregon between BFI and Company as contemplated by the
following documents (collectively, the "BLOOMING FARM EXCHANGE DOCUMENTS"): (i)
Like-Kind Exchange Agreement dated as of February 28, 1997, between Company and
BFI; (ii) Warranty Deed dated as of February 28, 1997, from Company, as grantor,
to BFI, as grantee; (iii) Xxxx of Sale dated as of February 28, 1997, from
Company, as grantor, to BFI, as grantee; (iv) Warranty Deed dated as of February
28, 1997, from BFI, as grantor to Company, as grantee; (v) Xxxx of Sale dated as
of February 28, 1997, from BFI, as grantor to Company, as grantee; (vi) First
Amendment to Agricultural Lease dated as of February 28, 1997, between BFI, as
lessor and Company, as lessee; (vii) Request for Partial Reconveyance dated as
of February 28, 1997 by Company, as beneficiary; (viii) Second Amendment to Line
of Credit Trust Deed, Assignment of Rents, Security Agreement and Fixture Filing
(Oregon) dated as of February 28, 1997 between Agent, as beneficiary and
Company, as grantor; (ix) Request for Partial Reconveyance dated as of February
28, 1997
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by Agent, as beneficiary; (x) Amendment to Deed of Trust dated as of February
28, 1997 between Company, as beneficiary, and BFI, as grantor; (xi) Second
Amendment to Pledge and Collateral Assignment dated as of February 28, between
Agent, as secured party, and Company, as grantor; and (xii) First Amendment to
Line of Credit Trust Deed, Assignment of Rents, Security Agreement and Fixture
Filing (Oregon) dated as of February 28, 1997 between Agent, as beneficiary, and
Company, as grantor.
2. acknowledge that, pursuant to that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions dated July 5, 1995, between X.
Xxxxxx, as seller ("XXXXXX") and Xxxxx Nurseries Inc. (predecessor in interest
to Company), as buyer, as amended by that certain First Amendment to Agreement
for Purchase and Sale of Real Property and Escrow Instructions dated May, 1996
(as amended, the "ALLENDALE CONTRACT"), Company is required to grant back to
Xxxxxx a 55-acre parcel (the "RECONVEYANCE PARCEL") when the Reconveyance Parcel
has been legally subdivided pursuant to applicable law. Lenders hereby consent
to the transfer of the Reconveyance Parcel and agree to execute a request for
partial reconveyance authorizing and requesting the trustee to release the
Reconveyance Parcel from the lien of that certain Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing (California) dated as of December
9, 1996, from Company, as trustor, to Agent, as beneficiary, and recorded in the
Official Records of Xxxxxx County, California on March 17, 1997.
B. Without limiting the generality of the provisions of subsection
10.6 of the Credit Agreement, the consent set forth above shall be limited
precisely as written and relate solely to the Blooming Farm Exchange Documents
and the Reconveyance Parcel in the manner and to the extent described above, and
nothing in this Section 3 shall be deemed to:
1. constitute a waiver of compliance by Company with respect to any
other term, provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein (whether in connection with the
Blooming Farm Exchange Documents, the Reconveyance Parcel or otherwise); or
2. prejudice any right or remedy that Agent or any Lender may now have
(except to the extent that such right or remedy was based upon existing
defaults that will not exist after giving effect to this Section 3) or may
have in the future under or in connection with the Credit Agreement or any
other instrument or agreement referred to therein.
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.
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SECTION 4. CONDITIONS TO EFFECTIVENESS
Sections 1, 2 and 3 of this Amendment shall become effective only upon
the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "SEVENTH
AMENDMENT EFFECTIVE DATE"):
A. On or before the Seventh Amendment Effective Date, Holdings and
each Borrower shall deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Seventh Amendment
Effective Date:
1. Certified copies of its Articles or Certificate of
Incorporation, or a Certificate of the corporate secretary or assistant
secretary for each of Holdings and each Borrower certifying as of the
Seventh Amendment Effective Date that:
a. The Certificate or Articles of Incorporation of Holdings
or such Borrower have not been amended, modified or otherwise changed
since the Closing Date;
b. The Bylaws of Holdings or such Borrower have not been
amended, modified or otherwise changed since the Closing Date; and
c. The signature and incumbency certificates of officers of
Holdings and each Borrower delivered in connection with the Fifth
Amendment and attached to such Certificate being delivered pursuant to
this Section 4.A.1. correctly reflects, as of the Seventh Amendment
Effective Date, the signature and incumbency of each officer of
Holdings and each Borrower listed therein and of each officer of
Holdings and each Borrower executing this Amendment and each of the
Loan Documents (including without limitation the Mortgage Modifications
and the Allonges) entered into on or about the Seventh Amendment
Effective Date.
2. A good standing certificate of Holdings and each Borrower
from the Secretary of State of the jurisdiction of its incorporation and the
jurisdiction in which its principal place of business is located, each dated
a recent date prior to the Seventh Amendment Effective Date;
3. Resolutions of Board of Directors of each of Holdings and
each Borrower approving and authorizing the execution, delivery, and
performance of this Amendment, each of the other Loan Documents entered into
on or about the Seventh Amendment Effective Date (including without
limitation the Mortgage Modifications) and, in the case of Company and Sun
Gro, approving and authorizing the execution, delivery and payment of each
Allonge to Revolving Note, substantially in the form of Annex E to this
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Amendment (collectively, the "ALLONGES"), certified as of the Seventh
Amendment Effective Date by the applicable Loan Party's corporate
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secretary or an assistant secretary as being in full force and effect
without modification or amendment;
4. To the extent that the Certificate being delivered pursuant
to Section 4.A.1.c. hereto does not certify as to the signature and
incumbency of officers of Holdings or any Borrower, signature and incumbency
certificates of officers of Holdings and/or such Borrower executing this
Amendment and each of the other Loan Documents (including without limitation
the Mortgage Modifications and the Allonges) entered into on or about the
Seventh Amendment Effective Date;
5. Copies of this Amendment executed by Holdings and each
Borrower and each Lender, and the Allonges, each executed by Company and Sun
Gro, drawn to the order of each Domestic Lender;
6. Delivery to Agent of Uniform Commercial Code financing
statement amendments with respect to Uniform Commercial Code financing
statements that were filed as to the Collateral of FN, FRN or FRN, Inc.;
7. If required by Agent, delivery to Agent of any cover sheets,
if required, for filing with the United States Patent and Trademark Office
in connection with any IP Collateral Documents of FN, FRN or FRN, Inc.;
8. A Borrowing Base Certificate substantially in the form of
Annex D annexed hereto, prepared as of a recent date prior to the Seventh
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Amendment Effective Date;
9. An Officers' Certificate of Holdings and each Borrower, in
form and substance satisfactory to Agent, to the effect that the
representations and warranties in Section 5 of the Credit Agreement are
true, correct and complete in all material respects on and as of the Seventh
Amendment Effective Date (both before and after giving effect to this
Amendment) to the same extent as though made on and as of that date (or, to
the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date) and
that Holdings or such Borrower shall have performed in all material respects
all agreements (including without limitation each of the agreements in
subsections 6.10, 6.12 and 6.14 of the Credit Agreement) and satisfied all
conditions which this Amendment and the Credit Agreement as amended by this
Amendment provide shall be performed or satisfied by it on or before the
Seventh Amendment Effective Date except as otherwise disclosed to and agreed
to in writing by Agent.
10. Fully-executed and notarized (where applicable) copies of all
of the Blooming Farm Exchange Documents, recorded in the official records of
Washington County, Oregon (where applicable) in the order listed in Section
3.A. above.
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11. In connection with the Blooming Farm Exchange Documents,
Title Policies insuring Agent's interest in the trust deeds securing the
Real Property Assets that are the subject of the Blooming Farm Exchange
Documents.
12. In connection with the increase in the Revolving Loan
Commitments, a fully executed and notarized modification, in form and
substance satisfactory to Agent (collectively, the "MORTGAGE
MODIFICATIONS"), to (a) each of the Initial Mortgages, (b) each of the
Additional Mortgages that have been executed by any of the Borrowers or
their Subsidiaries on or before the date hereof, (c) the Pledge and
Collateral Consent Assignment dated as of October 2, 1995, executed by
Company in favor of Agent (the "FIRST PLEDGE") and (d) the Pledge and
Collateral Consent Assignment dated as of November 14, 1996, executed by
Company in favor of Agent (the "SECOND PLEDGE").
13. In connection with the increase in the Revolving Loan
Commitments, CLTA Endorsements 110.5 (or the applicable equivalent in use in
states where Real Property Assets are located), to each of the Initial
Mortgage Policies, the Additional Mortgage Policies and any other Title
Policy showing Agent as the insured party (collectively, the "TITLE
ENDORSEMENTS"), dated as of the date of recording the date of the applicable
Mortgage Modification and assuring Agent that the Initial Mortgages, the
Additional Mortgages and the trust deeds that are the subject of the First
Pledge and the Second Pledge remain valid and enforceable first priority
mortgage liens on the respective Real Property Assets, free and clear of all
defects and encumbrances except Permitted Encumbrances, which Title
Endorsements shall be in form and substance reasonably satisfactory to
Agent; provided, however, that this condition may also be satisfied by the
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issuance of new lender's title policies, in form and substance reasonably
satisfactory to Agent, and which new lender's title policies shall generally
be in the form of the Initial Mortgage Policies and Additional Mortgage
Policies (including, without limitation, all title endorsements thereto)
dated as of the date of recordation of the applicable Mortgage Modification
and assuring Agent that the Initial Mortgages, the Additional Mortgages and
the trust deeds that are the subject of the First Pledge and the Second
Pledge, as modified by the applicable Mortgage Modifications, are valid and
enforceable first priority mortgage liens on the respective Real Property
Assets, free and clear of all defects and encumbrances except Permitted
Encumbrances. In addition, the Initial Mortgage Policies, the Additional
Mortgage Policies and any other Title Policies shall be modified and/or
endorsed to provide for any other matters that Agent may reasonably request,
including, without limitation, to provide for affirmative insurance and such
reinsurance as Agent may reasonably request, all of the foregoing in form
and substance reasonably satisfactory to Agent.
14. Delivery to Agent of the following: (i) an executed
Agreement and Plan of Merger dated as of December 27, 1996 between FRN and
FRN, Inc., certified by the Secretary of State of the State of California a
certified copy of the Articles of Merger, with Certificate of Merger
attached thereto, dated as of
13
December 27, 1996 between FRN and FRN, Inc. certified by the Secretary of
State of the State of Hawaii, (ii) an executed Agreement and Plan of Merger
dated as of December 27, 1996 between FN and FRN, certified by the Secretary
of State of the State of California a certified copy of the Articles of
Merger, with Certificate of Merger attached thereto, dated as of December
27, 1996 between FRN and FRN, Inc. certified by the Secretary of State of
the State of Hawaii, and (iii) an executed Agreement and Plan of Merger
dated as of December 27, 1996 between FN and Company, certified by the
Secretary of State of the State of California.
B. On or before the Seventh Amendment Effective Date, Lenders and
their respective counsel shall have received (i) originally executed copies of
one or more favorable written opinions of Xxxxxxxx & Xxxxx, Xxxxxxx Xxxxxx,
Xxxxx & Xxxxxx and Xxxxx, Xxxxxx & Xxxxxx in each case counsel to Loan Parties,
in form and substance reasonably satisfactory to Agent and its counsel, dated as
of the Seventh Amendment Effective Date, substantially in the form set forth in
Annex F, Annex G, Annex H and Annex I hereto, respectively, and as to such other
------- ------- ------- -------
matters as Agent acting on behalf of Lenders may reasonably request, (ii) if
requested by Lenders, originally executed copies of favorable written opinions
of Xxxxx & Xxxxxx, Xxxxx Xxxxxx Xxxxxxxx, Xxxxxxxx & Xxxxxx, Xxxxx Xxxxx &
Beaumont and Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P., in each case local
counsel to Loan Parties, in form and substance reasonably satisfactory to Agent
and its counsel, dated as of the Seventh Amendment Effective Date, substantially
in the form set forth in Annex J, and (iii) originally executed copies of a
-------
written opinion of Canadian counsel to Loan Parties in form and substance
reasonably satisfactory to Agent and its counsel.
C. Agent and each Lender shall have received the fees payable by
Company on the Seventh Amendment Effective Date in such amounts as have been
separately agreed upon.
D. On or before the Seventh Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with this Amendment 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.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, each Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Each Loan Party hereto and BFI
has all requisite corporate power and authority to enter into this Amendment and
each of the
14
other Loan Documents entered into as of the date hereof (including without
limitation the Allonges and the Mortgage Modifications) and each of the Blooming
Farm Exchange Documents, and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment
(the "AMENDED AGREEMENT") and such other Loan Documents and each of the Blooming
Farm Exchange Documents.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and each of the other Loan Documents entered into as of the date
hereof (including without limitation the Allonges and the Mortgage
Modifications) and each of the Blooming Farm Exchange Documents, the performance
of the Amended Agreement and such other Loan Documents and each of the Blooming
Farm Exchange Documents, and the payment of the Notes as amended by the Allonges
(the "AMENDED NOTES") have been duly authorized by all necessary corporate
action on the part of each Loan Party thereto and BFI.
C. NO CONFLICT. The execution and delivery by each Loan Party
hereto and BFI of this Amendment and each of the other Loan Documents entered
into as of the date hereof (including without limitation the Allonges and the
Mortgage Modifications) and each of the Blooming Farm Exchange Documents, the
performance by each Loan Party hereto and BFI of the Amended Agreement and such
other Loan Documents and each of the Blooming Farm Exchange Documents, and the
payment of the Amended Notes by Company and Sun Gro do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Holdings or any of its Subsidiaries or BFI, the Certificate or
Articles of Incorporation or Bylaws of Holdings or any of its Subsidiaries or
BFI or any order, judgment or decree of any court or other agency of government
binding on Holdings or any of its Subsidiaries or BFI, (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
or BFI, (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 or BFI
(other than any Liens created under any of the Loan Documents in favor of Agent
on behalf of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Holdings
or any of its Subsidiaries or BFI, except for such approvals or consents which
have been obtained on or before the Seventh Amendment Effective Date and
disclosed in writing to Lenders.
D. GOVERNMENTAL CONSENTS. The execution and delivery by the Loan
Parties hereto and BFI of this Amendment and each of the other Loan Documents
entered into as of the date hereof (including without limitation the Allonges
and the Mortgage Modifications) and each of the Blooming Farm Exchange
Documents, the performance by the Loan Parties party hereto and BFI of the
Amended Agreement and such other Loan Documents and each of the Blooming Farm
Exchange Documents and the payment of the Amended Notes by Company and Sun Gro
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body, except for (i) filings required by
federal or state securities laws, (ii) such other registrations, consents,
approvals, notices or other
15
actions which have been made, obtained, given or taken on or before the Seventh
Amendment Effective Date and (iii) filings and recordings which are required to
be made to perfect security interests in the Collateral.
E. BINDING OBLIGATION. This Amendment and each of the other Loan
Documents entered into as of the date hereof (including without limitation the
Allonges and the Mortgage Modifications) and each of the Blooming Farm Exchange
Documents, have been duly executed and delivered by each Loan Party hereto and
BFI, and each of this Amendment and such other Loan Documents, the Amended
Agreement and the Amended Notes and each of the Blooming Farm Exchange Documents
are the legally valid and binding obligations of each Loan Party thereto and BFI
to the extent it is a party thereto, enforceable against such Loan Party or BFI,
as applicable, in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability. The subordination provisions of each of the Takeout
Securities are enforceable against the holders thereof in accordance with their
terms and the Loans, Letters of Credit and all other monetary Obligations under
the Credit Agreement (after giving effect to the increase in the Revolving Loan
Commitments contemplated by this Amendment) are, whether incurred before, on or
after the Seventh Amendment Effective Date, within the definitions of "Senior
Debt" and "Designated Senior Debt" included in such provisions.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement and contained in the other Loan Documents are and will be true,
correct and complete in all material respects on and as of the Seventh Amendment
Effective Date (both before and after giving effect to this Amendment) to the
same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
G. ABSENCE OF DEFAULT. After giving effect to this Amendment, 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 6. ACKNOWLEDGEMENT AND CONSENT
Company is a party to the Company Guaranty, the Company Security
Agreement, the Company Pledge Agreement, the Company Trademark Security
Agreement, the Company Patent Security Agreement and the Collateral Account
Agreement pursuant to which Company has (i) guarantied the Obligations and (ii)
created liens in favor of Agent on certain Collateral to secure the Obligations
and to secure its obligations under the Company Guaranty. Sun Gro is a party to
the Domestic Subsidiary Guaranty, a Domestic
16
Subsidiary Security Agreement, the Domestic Subsidiary Pledge Agreement, a
Domestic Subsidiary Trademark Security Agreement, and a Domestic Subsidiary
Patent Security Agreement pursuant to which Sun Gro has (i) guarantied the
Obligations and (ii) created liens in favor of Agent on certain Collateral to
secure the Obligations and to secure the obligations of Sun Gro under the
Domestic Subsidiary Guaranty. Sun Gro Canada is a party to the Canadian
Subsidiary Security Agreement and the Canadian Subsidiary Pledge Agreement
pursuant to which Company has created liens in favor of Agent on certain
Collateral to secure the Obligations. Holdings is a party to the Holdings
Guaranty and the Holdings Pledge Agreement pursuant to which Holdings has (i)
guarantied the Obligations and (ii) pledged certain 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".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as such
terms are defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Borrowers now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Seventh 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
17
Loan Document shall be deemed to require the consent of such Credit Support
Party to any future amendments to the Credit Agreement.
SECTION 7. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Seventh Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached
18
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document. This
Amendment (other than the provisions of Sections 1, 2 and 3 hereof, the
effectiveness of which is governed by Section 4 hereof) shall become effective
upon the execution of a counterpart hereof by each Lender and each of the other
parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
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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 HORTICULTURE, INC.
(formerly known as Xxxxx Nurseries Inc.)
By: _______________________________
Title: ____________________________
SUN GRO HORTICULTURE INC.
By: _______________________________
Title: ____________________________
SUN GRO HORTICULTURE CANADA LTD.
By: _______________________________
Title: ____________________________
XXXXX HOLDINGS, INC.,
(formerly known as Xxxxx Horticulture Inc.)
(for purposes of Section 6 only) as a Credit
Support Party
By: _______________________________
Title: ____________________________
S-1
LENDERS:
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: ____________________________
XXXXXX TRUST AND SAVINGS BANK,
as a Domestic Lender
By: _______________________________
Title: ____________________________
FLEET BANK OF MASSACHUSETTS, N.A.,
as a Domestic Lender and Canadian Lender
By: _______________________________
Title: ____________________________
S-2
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: ____________________________
XXXXX FARGO BANK, N.A.,
as a Domestic Lender and Canadian Lender
By: _______________________________
Title: ____________________________
BANK OF MONTREAL,
as a Canadian Lender
By: _______________________________
Title: ____________________________
S-3