Exhibit 10.2
FIFTH AMENDMENT
TO CREDIT AND SECURITY AGREEMENT
FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT, dated as of
January 21, 2004 (the "Amendment"), among FRANK'S NURSERY & CRAFTS, INC., a
Delaware corporation ("Borrower"), and KIMCO CAPITAL CORP., as lender
("Lender"):
W I T N E S S E T H:
WHEREAS, Borrower and Lender are parties to that certain
Credit and Security Agreement, dated as of May 20, 2002, (as amended by that
certain First Amendment and Waiver to Credit and Security Agreement, dated as of
January 23, 2003, that certain Second Amendment to Credit and Security
Agreement, dated as of July 7, 2003, that certain Third Amendment to Credit and
Security Agreement, dated as of October 30, 2003, and that certain Fourth
Amendment to Credit and Security Agreement, dated as of January 16, 2004, and as
the same may be further amended, modified or supplemented from time to time, the
"Credit Agreement"); and
WHEREAS, Borrower has requested that Lender commit to extend
Revolving Credit Loans which, when added to the Revolving Credit Loans currently
outstanding under the Credit Agreement, would exceed the Revolving Credit
Commitment by $25,000,000;
WHEREAS, in consideration of the foregoing, Borrower has
agreed to grant to Lender valid, binding, perfected and enforceable liens and
security interests in the Supplemental Collateral (as defined herein); and
WHEREAS, the parties have agreed, subject to and upon the
terms and conditions set forth herein, to amend the Credit Agreement as set
forth herein in order to provide for such additional Revolving Credit Loans and
for such liens and security interests;
NOW, THEREFORE, for good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed to such terms in
the Credit Agreement, as amended hereby.
2. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the Fifth Amendment Effective Date, hereby amended as follows:
(i) Section 1.2(c) is hereby amended and restated in its entirety as
follows:
"(c) The Lender agrees upon the terms and subject to the conditions
herein set forth, to make available to Borrower, commencing on the
Fifth Amendment Effective Date and ending on the Overline Credit
Termination Date, Revolving Credit Loans (each an "Overline Revolving
Credit Loan" and collectively, the "Overline Revolving Credit Loans")
in an aggregate amount not to exceed $25,000,000. Subject to the
foregoing and within the foregoing limits, Borrower may borrow, repay
(and subject to the provisions of Sections 1.8 and 1.9 of the Credit
Agreement, prepay) and reborrow Overline Revolving Credit Loans from
time to time prior to the Overline Credit Termination Date, subject to
the terms, provisions and limitations set forth herein. The Overline
Revolving Credit Loans shall be made without regard to whether, after
giving effect thereto, the aggregate principal amount of the Revolving
Credit Loans outstanding at such time exceeds the Revolving Credit
Commitment; provided, however, that the Revolving Credit Loans
outstanding after giving effect to an Overline Revolving Credit Loan
shall in no event exceed the Revolving Credit Commitment by more than
$25,000,000 and shall in no event exceed the Revolving Credit
Commitment by more than $22,000,000 unless (i) such excess is required
by the Borrower's Financing Projections, and (ii) either (A) Lender
shall have received, as partial prepayment of the then outstanding
Obligations, Huntington Sale Proceeds in an aggregate amount of not
less than $4,850,000, or (B) Lender shall have received, as partial
prepayment of the then outstanding Obligations, Huntington Sale
Proceeds in an aggregate amount of less than $4,850,000, in which case
Borrower's commitment to make Overline Revolving Credit Loans shall be
reduced by the difference between $4,850,000 and the Huntington Sale
Proceeds actually received by Lender. Notwithstanding anything in this
Agreement to the contrary (including, without limitation, the
provisions of Section 1.4(c)), upon the occurrence of the Overline
Credit Termination Date, all Overline Revolving Credit Loans
outstanding at such time shall immediately become due and payable and
Borrower shall permanently repay all such Overline Revolving Credit
Loans as of such date, together with all accrued and unpaid interest
due on such Loans, and the commitment of Lender to provide Overline
Revolving Credit Loans pursuant to this Section 1.2(c) shall
permanently terminate. All Overline Revolving Credit Loans shall
constitute Revolving Credit Loans as such term is used in this Credit
Agreement, and the Overline Revolving Credit Loans and all amounts due
in connection therewith (including, without limitation, interest
thereon) shall constitute Obligations under this Credit Agreement and
shall be secured by the Collateral and the Non-Realty Collateral to the
same extent as all other Obligations hereunder.";
(ii) Section 1.9(a) is hereby amended and restated in its entirety as
follows:
"(a) If at any time the sum of the aggregate principal amount of all
Revolving Credit Loans outstanding shall exceed the Revolving Credit
Commitment by more than the amount of the Overline Revolving Credit
Loans permitted under section 1.2(c) at such time, Borrower will
immediately prepay such Revolving Credit Loans to the extent necessary
to eliminate such excess.";
(iii) Section 1.14 is hereby amended and restated in its entirety as
follows:
The Loans shall be used to finance Borrower's obligations under the
Plan of Reorganization, to pay Fees and other expenses incurred in connection
with this Credit Agreement and for general corporate purposes in accordance with
the provisions of this Credit Agreement; provided, that the Overline Revolving
Credit Loans may only be used to fund expenditures in accordance with the
Financing Projections.
(iv) Section 7.1(a)(i) is hereby amended and restated in its entirety
as follows:
"(i) if to Lender:
KIMCO CAPITAL CORP.
c/o Kimco Realty Corporation
3333 New Hyde Park Drive
New Hyde Park, NY 11042
Attn: Mr. Ray Edwards
With a courtesy copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Scott K. Charles
Facsimile No.: (212) 403-1109
E-mail: skcharles@wlrk.com"
(v) Section 8.1(a) is hereby amended by inserting the following
language prior to the period at the end thereof:
"and (iii) from and after the Fifth Amendment Effective Date, a
security interest in the Supplemental Collateral and the proceeds
thereof".
(vi) Section 9 is hereby amended by (a) inserting the following new
definitions in appropriate alphabetical order:
""Fifth Amendment" shall mean that certain Fifth
Amendment to Credit and Security Agreement, dated
as of
January 21, 2004, among the Borrower and the Lender
and the Borrower."
""Fifth Amendment Effective Date" shall have the
meaning given to such term in the Fifth Amendment."
""Financing Projections" shall mean financing
projections prepared by the Borrower with the
assistance of Abacus Advisors, LLC, and acceptable
to the Lender in its sole discretion, as the same
may be amended from time to time with the prior
approval of the Lender in its sole discretion."
""Huntington Sale Proceeds" shall mean the gross
sale price of the real property located at 1081
East Jericho Turnpike, Huntington, NY, less the sum
of (a) all obligations of the Borrower secured by a
senior, valid, binding, enforceable and perfected
mortgage on such real property, and (b) all fees
owing from Borrower to any real estate broker on
account of such sale, together with all other
customary closing adjustments to such gross sale
price actually paid by Borrower (but excluding
Borrower's attorney fees)."
""Non-Realty Collateral" shall mean the Inventory
Collateral and the Supplemental Collateral
collectively."
""Supplemental Collateral" shall mean all of the
personal property of the Borrower other than the
Inventory Collateral, including without limitation
all accounts, all general intangibles (including,
without limitation, all intellectual property), all
goods (excepting the Inventory Collateral and
including, without limitation, equipment and
fixtures), all chattel paper (including, without
limitation, all tangible and electronic chattel
paper), all instruments (including, without
limitation, all promissory notes), all documents,
all deposit accounts, all letters of credit and
banker's acceptances (and all similar instruments),
all letter-of-credit rights, all supporting
obligations, all present and future rights and
remedies in respect of accounts and other
collateral hereunder, all investment property
(including, without limitation, securities, whether
or not certificated, securities accounts, commodity
contracts or commodity accounts), all monies, all
commercial tort claims, all records, and all
products and proceeds of the foregoing; it being
understood that terms of art used in this
definition of Supplemental Collateral shall have
the meanings ascribed to them in the UCC."
and
(b) amending and restating the definition of "Overline Credit Termination Date"
in its entirety so as to read as follows:
""Overline Credit Termination Date" shall mean the
earlier to occur of (x) May 20, 2005 and (y) the
date on which the Revolving Credit Commitment shall
terminate in accordance with Section 1.7 or Article
6 hereof."
(vii) Subject to the following sentence, from and after the Fifth
Amendment Effective Date, each and every reference in the Credit Agreement (as
in effect prior to the Fifth Amendment Effective Date) to "Inventory Collateral"
shall be deleted and replaced with the phrase "Non-Realty Collateral." The
following references in the Credit Agreement to "Inventory Collateral" shall
remain unamended following the Fifth Amendment Effective Date:
a) all references to "Inventory Collateral" in section 4.16 of
the Credit Agreement (including the heading thereto); and
b) all references to "Inventory Collateral" in section 8.1(a)
of the Credit Agreement.
(viii) Subject to the following sentence, from and after the Fifth
Amendment Effective Date, each and every reference in the Credit Agreement (as
in effect prior to the Fifth Amendment Effective Date) to the phrase "from and
after the First Amendment Effective Date" shall be deleted and replaced with the
phrase "from and after the First Amendment Effective Date or the Fifth Amendment
Effective Date, as applicable." The following references in the Credit Agreement
to the phrase "from and after the First Amendment Effective Date" shall remain
unamended following the Fifth Amendment Effective Date:
a) all references to the phrase "from and after the First
Amendment Effective Date" in section 4.16 of the Credit Agreement; and
b) all references to the phrase "from and after the First
Amendment Effective Date" in section 8.1(a) of the Credit Agreement.
3. Further Security Interests; Further Assurances. In
consideration for the Overline Revolving Credit Loans and the other
consideration provided for in this Amendment, as security for the due and
punctual payment of the Obligations (including the Overline Revolving Credit
Loans provided for in this Amendment and including interest accruing on and
after the filing of any petition in bankruptcy or of reorganization of Borrower,
whether or not post filing interest is allowed in such proceeding):
(i) Borrower hereby grants, mortgages, pledges, assigns, transfers,
sets over, conveys and delivers to Lender, from and after the Fifth Amendment
Effective Date, a lien and security interest in the Supplemental Collateral and
the proceeds thereof;
(ii) Borrower hereby agrees to grant, mortgage, pledge, assign,
transfer, set over, convey and deliver to Lender, promptly upon the request of
Lender, a security interest in and lien upon all right, title and interest of
the Borrower in any all real property, owned or leased, in which Borrower may at
any time hereafter acquire or have an interest; and
(iii) Borrower agrees that at any time and from time to time, at
Borrower's expense, Borrower will promptly execute and deliver all further
instruments and documents, and take all further action that Lender may
reasonably request, in order to perfect and protect the security interests
granted in respect of the Obligations or to enable Lender to exercise and
enforce its rights, powers and remedies with respect to the Collateral, the
Inventory Collateral, the Supplemental Collateral and any other collateral that
may secure the Obligations in the future.
4. Representations and Warranties. Borrower represents and
warrants to, and agrees with, Lender that:
(i) Borrower has the corporate power and authority to (x) execute,
deliver and perform, as applicable, its obligations under this Amendment and any
other documents contemplated hereby or thereby to which it is or will be a party
and (y) grant to Lender a lien and security interest in the Supplemental
Collateral;
(ii) the execution, delivery and performance of this Amendment, the
grant to Lender of the liens and security interest in the Supplemental
Collateral as contemplated by this Amendment and the other Fundamental Documents
(as amended) to which it is or will be a party (a) have been duly authorized by
all necessary corporate action on the part of Borrower, (b) will not constitute
a violation of any provision of any Applicable Law or any order of any
Governmental Authority applicable to Borrower or any of its properties or
assets, (c) will not violate any provision of the Certificate of Incorporation,
By-Laws, or any other organizational document of, or other similar instrument to
which Borrower is a party or by which Borrower or any of its properties or
assets are bound or to which Borrower is subject, (d) upon amendment of the
Intercreditor Agreement, will not be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, or create
any right to terminate, any indenture, agreement, bond, note, mortgage, deed of
trust, or other instrument to which Borrower is a party or by which Borrower or
any of its properties or assets are bound or to which Borrower is subject and
(e) will not result in the creation or imposition of (or the obligation to
create or impose) any Lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of Borrower other than pursuant to the Credit
Agreement (as amended) or the other Fundamental Documents (as amended);
(iii) upon its execution and delivery by Borrower, this Amendment and
each Fundamental Document amended pursuant hereto shall constitute or continue
to
constitute the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity, irrespective of
whether such enforceability is considered in a proceeding at law or in equity;
(iv) Borrower has good and marketable title to the Supplemental
Collateral and such property is free and clear of Liens, except Permitted Liens
(as defined in the Credit Agreement, as amended hereby);
(v) as of the Fifth Amendment Effective Date, there are no outstanding
Defaults or Events of Default under the Credit Agreement;
(vi) Borrower is not in violation of any Applicable Law (including,
without limitation, any Environmental Law) or any restrictions of record or
agreements affecting the Collateral, the Inventory Collateral or the
Supplemental Collateral, except for violations which in the aggregate could not
reasonably be expected to have a Material Adverse Effect;
(vii) The Overline Revolving Credit Loans and all obligations related
thereto constitute Obligations under the Credit Agreement and the other
Fundamental Documents, including, without limitation, the Security Documents;
and
(vi) All representations and warranties set forth in the Credit
Agreement and the other Fundamental Documents, including as set forth in Article
2 of the Credit Agreement, are true and correct in all material respects on and
as of the Fifth Amendment Effective Date with the same effect as if made on and
as of such date, except to the extent such representations and warranties
expressly relate to an earlier date.
5. Conditions to Effectiveness. This Amendment shall become
effective on the date (the "Fifth Amendment Effective Date") upon which Lender
notifies Borrower that it is satisfied that each of the following conditions
have been met:
(i) Lender shall have received an executed counterpart of this
Amendment bearing the signature of Borrower;
(ii) Borrower shall have delivered to Lender the Financing
Projections;
(iii) Borrower shall have delivered to Lender such other
documents and information as Lender may reasonably request, including,
without limitation, Security Documents relating to the Supplemental
Collateral provided for herein (including, without limitation, such UCC
amendments and UCC financing statements as requested by Lender which,
when filed, will modify or supplement the UCC financing statements
previously filed pursuant to the Credit Agreement and create in favor
of Lender a perfected lien and security interest in the Supplemental
Collateral);
(iv) Lender's counsel shall be satisfied that either (a) the
execution of this Amendment and incurrence of by Borrower of the
Overline Revolving Credit Loans and other Obligations hereunder in no
way constitutes an event of default or an event which with the giving
of notice or the passage of time, or both, would constitute an event of
default under the Congress Credit Agreement or any other agreement,
instrument or document executed in connection with the Working Capital
Facility, or (b) Congress shall have waived any such event;
(v) Borrower and Congress shall have executed waivers (and/or
amendments), in form and substance acceptable to Lender's counsel, in
respect of (and/or relating to) all presently existing and all
reasonably foreseeable defaults under the Working Capital Facility;
(vi) Lender, Congress and Borrower shall have entered into an
amendment to the Intercreditor Agreement in form and substance
substantially similar to Exhibit A hereto;
(vii) Borrower shall have paid to Lender the Overline
Commitment Fee (as defined below);
(viii) Lender shall have received the written opinion of a)
Honigman Miller Schwartz and Cohn, LLP, counsel to Borrower, dated the
Fifth Amendment Effective Date and addressed to Lender with respect to
such matters relating to this Amendment as may be requested by Lender
and its counsel, which opinion shall be in form and substance
satisfactory to Lender and its counsel, and b) Borrower's in-house
counsel, dated the Fifth Amendment Effective Date and addressed to
Lender with respect to such matters relating to this Amendment, the
Credit Agreement and the Fundamental Documents as may be requested by
Lender and its counsel, which opinion shall be in form and substance
satisfactory to Lender and its counsel;
(ix) The Lender shall have received reimbursement or other
payment of all reasonable legal fees and expenses of Lender (including,
without limitation, the fees and disbursements of Wachtell, Lipton,
Rosen & Katz), incurred in connection with the negotiation,
preparation, execution and delivery of this Amendment and all other
documents to be delivered in connection herewith, it being understood
and agreed that the obligations of Borrower set forth in Section 7.4 of
the Credit Agreement shall extend to the negotiation, preparation,
execution and delivery of this Amendment and all other documents to be
delivered herewith;
(x) The representations and warranties set forth herein and in
Article 2 of the Credit Agreement and in any other Fundamental
Documents then in existence shall be true and correct in all material
respects, and no Default or Event of Default shall have occurred and be
continuing;
(xi) Lender shall have received a closing certificate signed
by an Authorized Officer of Borrower, substantially in the form of
Exhibit B hereto;
(xii) Lender shall have received a certificate of the
appropriate official of the state of organization of Borrower
certifying as to the subsistence in good standing of, and the payment
of taxes by, the Borrower;
(xiii) Lender shall have received (A) copies of the articles
of incorporation and bylaws of Borrower, the former certified as of a
recent date by the appropriate governmental official, (B) signature and
incumbency certificates of the officers of the Borrower executing this
Amendment and any other documents signed by a representative of
Borrower and delivered herewith; (C) resolutions of the board of
directors of Borrower approving and authorizing the execution, delivery
and performance of the Credit Agreement, as amended hereby, certified
as of the Fifth Amendment Effective Date by Borrower's secretary or
assistant secretary as being in full force and effect without
modification or amendment; and
(x) Borrower shall have executed and delivered to Lender's
counsel one or more amendments to the Mortgages as requested by Lender,
which amendments shall be in form and substance consistent with the
terms of this Amendment and satisfactory to Lender, and such other
documents, agreements and instruments as may be required by Lender.
6. Commitment Fee. Borrower hereby agrees that it shall pay to
Lender, on or prior to the Fifth Amendment Effective Date, a commitment fee
equal to 2.0% of the maximum aggregate amount of the Overline Revolving Credit
Loans (the "Overline Commitment Fee"). Such fee shall be non-refundable and
shall be fully earned upon the Fifth Amendment Effective Date.
7. Limitations. This Amendment shall be limited precisely as
written and shall not be deemed (a) to be a consent granted pursuant to, or a
waiver or modification of any other term or condition of the Credit Agreement or
any of the instruments or agreements referred to therein or (b) to prejudice any
right or rights which Lender may now have or have in the future under or in
connection with the Credit Agreement or any of the instruments or agreements
referred to therein. Whenever the Credit Agreement is referred to in the Credit
Agreement or any of the instruments, agreements or other documents or papers
executed or delivered in connection therewith, such reference shall be deemed to
mean the Credit Agreement as modified by this Amendment.
8. Counterparts. This Amendment may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument. A facsimile signature shall serve as the functional equivalent of a
manual executed signature for all purposes.
9. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflicts of law principles thereof.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to Credit and Security Agreement to be duly executed as of the day and
the year first written.
BORROWER:
FRANK'S NURSERY & CRAFTS, INC.
By: /s/ Michael D. McBride
--------------------------------------
Name: Michael D. McBride
Title: Vice President Legal and Secretary
LENDER:
KIMCO CAPITAL CORP.
By: /s/ Raymond Edwards
--------------------------------------
Name: Raymond Edwards
Title: