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Exhibit 10.2
AMENDMENT No. 2 and WAIVER, dated as of December 20,
1999 (this "Amendment"), to the Credit Agreement dated as of
December 24, 1997 (the "Credit Agreement"), as amended by
Amendment No. 1, dated as of April 15, 1998, among Frank's
Nursery & Crafts, Inc. (the "Borrower"), FNC Holdings Inc.
("Holdings"), formerly known as General Host Corporation, the
Lenders (as defined in the Credit Agreement), The Chase
Manhattan Bank, as administrative agent (in such capacity, the
"Administrative Agent") and collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, as
swingline lender (in such capacity, the "Swingline Lender")
and as an Issuing Bank (as defined in the Credit Agreement),
and Goldman Sachs Credit Partners, L.P., as documentation
agent.
A. Pursuant to the Credit Agreement, the Lenders, the Swingline Lender
and the Issuing Banks have extended credit to the Borrower and have agreed to
extend credit to the Borrower, in each case pursuant to the terms and subject to
the conditions set forth therein.
B. The Borrower and Holdings have requested that the Administrative
Agent and the Required Lenders (a) waive compliance to the extent set forth
herein with Sections 6.14 and 6.15 of the Credit Agreement for the current
fiscal quarter and (b) amend certain provisions of the Credit Agreement as set
forth herein.
C. The Administrative Agent and the Required Lenders are willing to
provide the waivers and to amend the Credit Agreement, in each case, pursuant to
the terms and subject to the conditions set forth herein.
D. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Limited Waiver of Section 6.14 of the Credit Agreement
(Leverage Ratio.) The Administrative Agent and the Required Lenders hereby waive
compliance by Holdings and the Borrower with the provisions of Section 6.14 of
the Credit Agreement on the last day of the four-fiscal-quarter period of
Holdings ending on or about November 7, 1999; provided; however, that Holdings
and the Borrower shall not permit the Leverage Ratio on such date to be in
excess of 6.25 to 1.00.
SECTION 2. Limited Waiver of Section 6.15 of the Credit Agreement
(Consolidated Net Cash Interest Expense Coverage Ratio). The Administrative
Agent and the Required Lenders hereby waive compliance by Holdings and the
Borrower with the provisions of Section 6.15 of the Credit Agreement on the last
day of the four-fiscal-quarter period of Holdings ending on or about November 7,
1999; provided, however, that Holdings and the Borrower shall not permit the
ratio of (i) Consolidated EBITDA to
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(ii) Consolidated Net Cash Interest Expense for the four-fiscal-quarter period
ending on such date to be less than 1.60 to 1.00.
SECTION 3. Amendments to Section 1.01 of the Credit Agreement (Defined
Terms). (a) The definition of the term "Applicable Rate" is hereby amended and
restated in its entirety to read as follows:
"Applicable Rate" means, (a) for any day with respect to any
ABR Loan (excluding Swingline Loans) or Eurodollar Loan that is a
Revolving Loan, or with respect to the commitment fees payable
hereunder in respect of the Revolving Commitments, as the case may be,
the applicable rate per annum set forth below under the caption "ABR
Spread--Revolving Loan", "Eurodollar Spread--Revolving Loan" or
"Commitment Fee Rate", as the case may be, based upon the Senior
Leverage Ratio as of the most recent determination date, provided that
until the third Business Day after the delivery to the Administrative
Agent, pursuant to Section 5.01 (b), of Holdings's and the Borrower's
consolidated financial statements for Holdings's and the Borrower's
first four full fiscal quarters commencing after the Effective Date,
the "Applicable Rate" with respect to any ABR Loan or Eurodollar Loan
that is a Revolving Loan shall be the applicable rate per annum set
forth below in Category 1; provided; further, that during the period
from and including the Second Amendment Effective Date until the third
Business Day after the delivery to the Administrative Agent, pursuant
to Section 5.01 (b), of Holdings's and the Borrower's consolidated
financial statements for Holdings's and the Borrower's fiscal quarter
ending on or about May 20, 2001, the "Applicable Rate" with respect to
any ABR Loan or Eurodollar Loan that is a Revolving Loan shall be the
applicable rate per annum set forth below in Category 1:
ABR Eurodollar
Spread-- Spread-- Commitment Fee
Senior Leverage Ratio: Revolving Loan Revolving Loan Rate
---------------------- -------------- -------------- ----
Category 1
Equal to or greater than 2.00 to 1.00 1.75% 2.75% 0.500%
Category 2
Less than 2.00 to 1.00 but equal to or greater 1.50% 2.50% 0.500%
than 1.75 to 1.00
Category 3
Less than 1.75 to 1.00 but equal to or greater 1.25% 2.25% 0.500%
than 1.50 to 1.00
Category 4
Less than 1.50 to 1.00 1.00% 2.00% 0.375%
and (b) for any day with respect to any ABR Loan or Eurodollar Loan
that is a Term Loan, or with respect to the commitment fees payable
hereunder in respect of the Term Commitments, as the case may be, the
applicable rate per annum set forth below under the caption "ABR
Spread--Term Loan", "Eurodollar Spread--Term Loan" or "Commitment Fee
Rate", as the case may be, based upon the Senior Leverage Ratio as of
the most recent determination date, provided that until the third
Business Day after the delivery to the Administrative Agent, pursuant
to Section 5.01 (b), of Holdings's and the Borrower's consolidated
financial statements for Holdings's and the Borrower's first four full
fiscal
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quarters commencing after the Effective Date, the "Applicable Rate"
with respect to any ABR Loan or Eurodollar Loan that is a Term Loan
shall be the applicable rate per annum set forth below in Category 1;
provided; further, that during the period from and including the Second
Amendment Effective Date until the third Business Day after the
delivery to the Administrative Agent, pursuant to Section 5.01 (b), of
Holdings's and the Borrower's consolidated financial statements for
Holdings's and the Borrower's fiscal quarter ending on or about May 20,
2001, the "Applicable Rate" with respect to any ABR Loan or Eurodollar
Loan that is a Term Loan shall be the applicable rate per annum set
forth below in Category 1:
ABR Eurodollar
Spread-- Spread-Term Commitment Fee
Senior Leverage Ratio: Term Loan Loan Rate
---------------------- --------- ---- ----
Category 1
Equal to or greater than 2.00 to 1.00 2.00% 3.00% 0.500%
Category 2
Less than 2.00 to 1.00 but equal to or greater 1.75% 2.75% 0.500%
than 1.75 to 1.00
Category 3
Less than 1.75 to 1.00 1.50% 2.50% 0.500%
For purposes of the foregoing, (a) the Senior Leverage Ratio
shall be determined as of the end of each fiscal quarter of Holdings's fiscal
year based upon Holdings's consolidated financial statements delivered pursuant
to Section 5.01 (a) or (b), and (b) each change in the Applicable Rate resulting
from a change in the Senior Leverage Ratio shall be effective during the period
commencing on and including the third day (such day, the "Applicable Rate
Determination Date") after the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change, provided
that the Senior Leverage Ratio shall be deemed to be in Category 1 if the
Borrower fails to deliver the consolidated financial statements required to be
delivered by it pursuant to Section 5.01 (a) or (b), during the period from the
expiration of the time for delivery thereof until such consolidated financial
statements are delivered.
(b) Section 1.01 of the Credit Agreement is hereby further
amended by inserting in the appropriate alphabetical order therein the
following:
"Inventory" shall have the meaning assigned to such term in
the Security Agreement.
"Second Amendment Effective Date" means December 20, 1999.
SECTION 4. Amendment to Section 2.11 of the Credit Agreement
(Prepayment of Loans). Section 2.11 of the Credit Agreement is hereby amended by
deleting clause (g) thereof and substituting therefor the following:
(g) The Borrower shall repay or prepay Revolving Borrowings
and shall refrain from making additional Revolving Borrowings to the
extent necessary in order that in each fiscal year of Holdings there
shall be a period of at least 30 consecutive days, which 30-day period
shall have ended on or before July 31 of such fiscal year, during which
no Revolving Borrowings shall be outstanding.
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SECTION 5. Amendment to Section 6.13 (Capital Expenditures.
Section 6.13 of the Credit Agreement is hereby amended by (a) deleting the table
set forth therein and substituting therefor the following:
Fiscal Year Amount
----------- ------
February 2, 1998--January 31, 1999 $22,000,000
February 1, 1999--January 30, 2000 $27,000,000
January 31, 2000--January 28, 2001 $17,500,000
January 29, 2001--January 27, 2002 $26,500,000
January 28, 2002--January 26, 2003 $28,000,000
January 27, 2003--January 25, 2004 $29,500,000
January 26, 2005--January 30, 2005 $31,000,000
and (b) by deleting the last sentence thereof and substituting therefor the
following:
The amount of permitted Capital Expenditures set forth above
in respect of any fiscal year other than the fiscal year ending on or
about January 28, 2001 shall be increased by the lesser of (a)(i) the
unused permitted Capital Expenditures for the immediately preceding
fiscal year less (ii) an amount equal to unused Capital Expenditures
carried forward to such preceding fiscal year and (b) $12,000,000. No
increase from the amount set forth in the table above shall be
permitted for the fiscal year ending on or about January 28, 2001.
SECTION 6. Amendment to Section 6.14 of the Credit Agreement
(Leverage Ratio). Section 6.14 of the Credit Agreement is hereby amended by
deleting the table set forth in clause (b) thereof and substituting therefor the
following:
Period Ratio
------ -----
May 23, 1999--August 15, 1999 5.00 to 1.00
August 16, 1999 --- November 7, 1999 6.25 to 1.00
November 8, 1999--January 30, 2000 7.80 to 1.00
January 31, 2000--May 21, 2000 7.30 to 1.00
May 22, 2000--August 13, 2000 7.10 to 1.00
August 14, 2000--November 5, 2000 6.50 to 1.00
November 6, 2000--January 28, 2001 5.90 to 1.00
January 29, 2001 --May 20, 2001 5.50 to 1.00
May 21, 2001 --August 12, 2001 5.50 to 1.00
August 13, 2001 --November 4, 2001 5.50 to 1.00
November 5, 2001 --January 27, 2002 4.75 to 1,00
January 28, 2002--May 19, 2002 4.25 to 1.00
May 20, 2002--August 11, 2002 4.25 to 1.00
August 12, 2002--November 3, 2002 4.00 to 1.00
November 4, 2002--January 26, 2003 3.50 to 1.00
January 27, 2003--January 25, 2004 3.00 to 1.00
January 26, 2004--thereafter 2.50 to 1.00
SECTION 7. Amendment to Section 6.15 of the Credit Agreement
(Consolidated Net Cash Interest Expense Coverage Ratio). Section 6.15 of the
Credit Agreement is hereby amended by deleting the table set forth in clause (b)
thereof and substituting therefor the following:
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Period Ratio
------ -----
January 31, 1999 1.75 to 1.00
May 23, 1999--August 15, 1999 2.10 to 1.00
August 16, 1999--November 7, 1999 1.60 to 1.00
November 8, 1999--January 30, 2000 1.30 to 1.00
January 31, 2000--May 21, 2000 1.40 to 1.00
May 22, 2000--August 13, 2000 1.50 to 1.00
August 14, 2000--November 5, 2000 1.60 to 1.00
November 6, 2000--January 28, 2001 1.70 to 1.00
January 29, 2001 --May 20, 2001 1.80 to 1.00
May 21, 2001 --August 12, 2001 1.80 to 1.00
August 13, 2001 --November 4, 2001 1.80 to 1.00
November 5, 2001 --January 27, 2002 2.00 to 1,00
January 28, 2002--May 19, 2002 2.25 to 1.00
May 20, 2002--August 11, 2002 2.25 to 1.00
August 12, 2002--November 3, 2002 2.50 to 1.00
November 4, 2002--January 26, 2003 2.50 to 1.00
January 27, 2003 --thereafter 3.00 to 1.00
SECTION 8. Amendment to Article VI (Negative Covenants).
Article VI of the Credit Agreement is hereby amended by adding thereto a new
Section 6.20 thereof as follows:
SECTION 6.20. Ratio of Inventory to Revolving Exposure.
Holdings and the Borrower will not permit the ratio of Inventory of the
Borrower and the Borrower Subsidiaries on a consolidated basis
(excluding Inventory subject to consensual Liens in favor of third
parties (provided that in the case of any such consensual Lien securing
obligations not greater than $250,000, Inventory will be excluded only
in the amount of the obligations so secured) or in which the Collateral
Agent, on behalf of the lenders, does not have a perfected security
interest prior to any other Lien that can be perfected by filing under
the Uniform Commercial Code) to the sum of the Revolving Exposures of
each of the Lenders on any date to be less than 1.25 to 1.00.
SECTION 9. Representations and Warranties. Each of Holdings
and the Borrower represents and warrants to the Administrative Agent and to each
of the Lenders that:
(a) This Amendment has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding
in equity or at law, and an implied covenant of good faith and fair
dealing.
(b) Before and after giving effect to this Amendment, the
representations and warranties set forth in Article III of the Credit
Agreement are true and correct in all material respects on and as of
the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties are, to such extent, true and correct in
all material respects as of such earlier date.
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(c) After giving effect to this Amendment, no Default has
occurred and is continuing.
SECTION 10. Fees. In consideration of the agreements of the
Required Lenders contained in Sections 1 through 8 of this Amendment, the
Borrower agrees to pay to the Administrative Agent, for the account of each
Lender that delivers an executed counterpart of this Amendment prior to 5:00
p.m., New York City time, on December 20, 1999, an amendment fee (an "Amendment
Fee") in an amount equal to 0.25% of the sum of (i) the aggregate unpaid
principal amount Term Loans made by such Lender as of December 20, 1999 and (ii)
of such Lender's Revolving Commitment in effect on December 20, 1999.
SECTION 11. Conditions to Effectiveness. This Amendment shall
become effective as of the date first above written when (a) the representations
and warranties set forth in Section 9 hereof are true and correct and (b) the
Administrative Agent shall have received (i) counterparts of this Amendment
that, when taken together, bear the signatures of Holdings, the Borrower and the
Required Lenders and (ii) the Amendment Fees.
SECTION 12. Effect of this Amendment. Except as expressly set
forth herein, this Amendment shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or the
Administrative Agent under the Credit Agreement or any other Loan Document and
shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect. Nothing herein shall
be deemed to entitle the Borrower or Holdings to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances. After the date
hereof, any reference to the Credit Agreement shall mean the Credit Agreement as
amended hereby. This Amendment shall constitute a Loan Document for all purposes
under the Credit Agreement and the other Loan Documents.
SECTION 13. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. 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. Delivery of any executed counterpart of a signature page of
this Amendment by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof.
SECTION 15. Expenses. The Borrower agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
FRANK'S NURSERY & CRAFTS, INC., as
Borrower,
by /s/ Larry T. Lakin
---------------------------------
Name: Larry T. Lakin
Title: Vice Chairman and CFO
FNC HOLDINGS INC.,
by /s/ Larry T. Lakin
---------------------------------
Name: Larry T. Lakin
Title: Vice Chairman and CFO
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
by /s/ Neil R. Boylan
---------------------------------
Name: Neil R. Boylan
Title: Managing Director
GOLDMAN SACHS CREDIT PARTNERS, L.P.,
by /s/ Elizabeth Fischer
---------------------------------
Name: Elizabeth Fischer
Title: Authorized Signatory
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SIGNATURE PAGE TO AMENDMENT
NO. 2 AND WAIVER DATED AS OF
DECEMBER 20,1999, TO THE CREDIT
AGREEMENT DATED AS OF DECEMBER
24,1997, AMONG FRANK'S NURSERY &
CRAFTS, INC., FNC HOLDINGS INC.
(F/K/A GENERAL HOST CORPORATION),
THE LENDERS PARTY THERETO, THE
CHASE MANHATTAN BANK, AS
ADMINISTRATIVE AGENT,
COLLATERAL AGENT, SWINGLINE
LENDER, and ISSUING BANK, and
GOLDMAN SACHS CREDIT PARTNERS,
L.P., AS DOCUMENTATION AGENT
Name of Institution IBJ Whitehall Bank & Trust Co.
---------------------------------------
by /s/ Patricia G. McCormack
----------------------------------------
Name: Patricia G. McCormack
Title: Director
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SIGNATURE PAGE TO AMENDMENT
NO. 2 AND WAIVER DATED AS OF
DECEMBER 20,1999, TO THE CREDIT
AGREEMENT DATED AS OF DECEMBER
24,1997, AMONG FRANK'S NURSERY &
CRAFTS, INC., FNC HOLDINGS INC.
(F/K/A GENERAL HOST CORPORATION),
THE LENDERS PARTY THERETO, THE
CHASE MANHATTAN BANK, AS
ADMINISTRATIVE AGENT,
COLLATERAL AGENT, SWINGLINE
LENDER, and ISSUING BANK, and
GOLDMAN SACHS CREDIT PARTNERS,
L.P., AS DOCUMENTATION AGENT
Name of Institution SPS Swaps
---------------------------------------
by /s/ Anna Maria Beissel
----------------------------------------
Name: Anna Maria Beissel
Title: Vice President
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SIGNATURE PAGE TO AMENDMENT
NO. 2 AND WAIVER DATED AS OF
DECEMBER 20,1999, TO THE CREDIT
AGREEMENT DATED AS OF DECEMBER
24,1997, AMONG FRANK'S NURSERY &
CRAFTS, INC., FNC HOLDINGS INC.
(F/K/A GENERAL HOST CORPORATION),
THE LENDERS PARTY THERETO, THE
CHASE MANHATTAN BANK, AS
ADMINISTRATIVE AGENT,
COLLATERAL AGENT, SWINGLINE
LENDER, and ISSUING BANK, and
GOLDMAN SACHS CREDIT PARTNERS,
L.P., AS DOCUMENTATION AGENT
Name of Institution Transamerica Business Credit Corporation
----------------------------------------
by /s/ Perry Vavoules
----------------------------------------
Name: Perry Vavoules
Title: Senior Vice President