Waiver Agreement Regarding Financial Covenants under Credit Agreement among Hines Nurseries, Inc., Hines SGUS Inc., and Lenders (October 13, 2005)
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This agreement is a waiver between Hines Nurseries, Inc., Hines SGUS Inc., several financial institutions, and Deutsche Bank Trust Company Americas as agent. It temporarily waives certain financial covenant requirements in the parties' existing credit agreement for the third quarter of 2005, provided that a specific asset sale is completed by November 30, 2005, for at least $40 million. The agreement also reduces the total revolving loan commitments from $145 million to $120 million. All other terms of the original credit agreement remain in effect.
EX-10.2 2 hines_10qex10-2.txt WAIVER RE: FINANCIAL COVENTANTS - 10/13/05 EXHIBIT 10.2 WAIVER REGARDING FINANCIAL COVENANTS This WAIVER (this "WAIVER") is dated as of October 13, 2005, and entered into by and among HINES NURSERIES, INC., a California corporation ("COMPANY"), and HINES SGUS INC., a Nevada corporation ("HINES SGUS" and, together with Company, individually a "BORROWER" and collectively the "BORROWERS"), the financial institutions party hereto, and DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent for Lenders (in such capacity, "AGENT"), and, for purposes of Section 6 hereof, the Guarantors, and is made with reference to that certain Credit Agreement dated as of September 30, 2003, as amended by a First Amendment to Credit Agreement dated as of June 30, 2005 (as so amended, the "CREDIT AGREEMENT"), by and among Borrowers, the financial institutions party thereto (each individually referred to herein as a "LENDER" and collectively as "LENDERS"), and the Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITALS WHEREAS, Borrowers have requested Lenders to waive compliance with Sections 8.1(a) and 8.1(b) of the Credit Agreement for the third Fiscal Quarter in Fiscal Year 2005 and Lenders are prepared to waive such compliance subject to Borrowers' compliance with the terms and conditions set forth in this Waiver; WHEREAS, Borrowers have advised Lenders that they wish to reduce the aggregate Revolving Loan Commitments from $145,000,000 to $120,000,000, such reduction to reduce the Revolving Loan Commitment of each Lender proportionately to its Proportionate Share; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. NOTICE OF REDUCTION OF REVOLVING LOAN COMMITMENTS AND WAIVER A. NOTICE OF COMMITMENT REDUCTION. The Borrowers hereby irrevocably notify Agent that, effective upon the earlier to occur of the consummation of the Farm A Sale or the repayment in full of the Term Loan, the Borrowers hereby reduce the aggregate Revolving Loan Commitments to $120,000,000, such Revolving Loan Commitment reduction to reduce the Revolving Loan Commitment of each Lender proportionately to its Proportionate Share. B. WAIVER. Subject to the terms and conditions set forth herein and in reliance on the representations and warranties of Borrowers herein contained, Lenders hereby waive compliance with the provisions of Sections 8.1(a) and 8.1(b) of the Credit Agreement for the third Fiscal Quarter in Fiscal Year 2005; PROVIDED that the Farm A Sale shall be consummated by no later than November 30, 2005, for Net Asset Sale Proceeds of not less than $40,000,000. SECTION 2. LIMITATION OF WAIVER Without limiting the generality of the provisions of Section 11.10 of the Credit Agreement, the waiver set forth above shall be limited precisely as written and relates solely to the noncompliance by Borrowers with the provisions of Sections 8.1(a) and 8.1(b)of the Credit Agreement in the manner and to the extent described above, and nothing in this Waiver shall be deemed to: (a) constitute a waiver of compliance by Borrowers with respect to (i) Sections 8.1(a) and 8.1(b) of the Credit Agreement in any other instance or (ii) any other term, provision or condition of the Credit Agreement or any other instrument or agreement referred to therein (whether in connection with the Farm A Sale or otherwise); or (b) prejudice any right or remedy that Agent or any Lender may now have (except to the extent such right or remedy was based upon existing defaults that will not exist after giving effect to this Waiver) 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 Credit Documents shall remain in full force and effect and in all other respects are hereby ratified and confirmed. SECTION 3. REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Waiver, Borrowers hereby represent and warrant that after giving effect to this Waiver: (a) as of the date hereof, there exists no Default or Event of Default under the Credit Agreement; (b) all representations and warranties contained in the Credit Agreement and the other Credit Documents are true, correct and complete in all material respects on and as of the date hereof 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; and (c) as of the date hereof, Borrowers have performed all agreements to be performed by Borrowers as set forth in the Credit Agreement. SECTION 4. COUNTERPARTS; EFFECTIVENESS This Waiver may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single -2- counterpart so that all signature pages are physically attached to the same document. This Waiver shall become effective as of the date hereof upon the execution of counterparts hereof by Borrowers and Guarantors and by Lenders constituting Majority Lenders and receipt by Borrowers and Agent of written or telephonic notification of such execution and authorization of delivery thereof. SECTION 5. GOVERNING LAW THIS WAIVER 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. SECTION 6. ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS Each Guarantor hereby acknowledges that it has read this Waiver and consents to the terms thereof and further hereby confirms and agrees that, notwithstanding the effectiveness of this Waiver, the obligations of Guarantor under the Holdings Guaranty and the Subsidiary Guaranty, as the case may be, shall not be impaired or affected and the Holdings Guaranty and the Subsidiary Guaranty, as the case may be, is, and shall continue to be, in full force and effect and is hereby confirmed and ratified in all respects. -3- IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BORROWERS: HINES NURSERIES, INC., as Borrower and Funds Administrator By: /s/ CLAUDIA M. PIEROPAN Title: Chief Financial Officer HINES SGUS, INC., as Borrower By: /s/ CLAUDIA M. PIEROPAN Title: Chief Financial Officer GUARANTORS: HINES HORTICULTURE, INC., as Guarantor By: /s/ CLAUDIA M. PIEROPAN Title: Chief Financial Officer HINES FERTILIZER INC., as Guarantor By: /s/ CLAUDIA M. PIEROPAN Title: Chief Financial Officer -4- LENDERS: DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent and Lender By: /S/ ALBERT FISCHETTI Name: Albert Fischetti Title: Director THE CIT GROUP/BUSINESS CREDIT, INC., as Lender By: /S/ DAVID ROTHBERG Name: David Rothberg Title: Vice President BANK OF AMERICA, N.A., as Lender By: /S/ JASON RILEY Name: Jason Riley Title: Vice President GMAC COMMERCIAL FINANCE LLC, as Lender By: /S/ DAVID GRABOSKY Name: David Grabosky Title: Vice President HARRIS, N.A., as Lender By: /S/ ROBERT WOLOHAN Name: Robert Wolohan Title: Vice President -5- LA SALLE BUSINESS CREDIT, LLC, as Lender By: /S/ MITCHELL J. TARVID Name: Mitchell J. Tarvid Title: First Vice President NATIONAL CITY BANK, as Lender By: /S/ TOM GURBACH Name: Tom Gurbach Title: Vice President PNC BANK, NATIONAL ASSOCIATION, as Lender By: /S/ GREGORY J. HALL Name: Gregory J. Hall Title: Vice President WELLS FARGO BANK, N.A., as Lender By: /S/ DAVID G. JAMES Name: David G. James Title: Vice President WEBSTER BUSINESS CREDIT CORPORATION, as Lender By: /S/ CHRISTOPHER HILL Name: Christopher Hill Title: Vice President -6-