LIMITED WAIVER TOLOAN AND SECURITY AGREEMENT

 

 

This LIMITED WAIVER TO LOAN AND SECURITY AGREEMENT (this “Waiver”) dated as of May 29, 2007 is by and among Hines Nurseries, Inc., a California corporation, the parties hereto as lenders (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined) and Bank of America, N.A., in its capacity as agent for Lenders (in such capacity, “Agent”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement (defined below).

 

R E C I T A L S:

WHEREAS, Borrower, the Agent and the Lenders have entered into that certain Loan and Security Agreement dated as of January 18, 2007 (as amended, the “Loan Agreement”); and

 

WHEREAS, Borrower, Agent and Lenders have agreed to extend the date for providing audited financial statements and waive certain Events of Default upon the terms and conditions contained herein;

 

NOW, THEREFORE, in consideration of the premises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

Section 1    Limited Waiver to the Loan Agreement. Borrower acknowledges that certain Events of Default exist (or may arise) under Section 11.1 of the Loan Agreement as a result of (a) Borrower’s failure to deliver annual audited financial statements for the year ending December 31, 2006 as required by that certain Limited Waiver to Loan and Security Agreement dated as of April 30, 2007 among the parties hereto, (b) Borrower’s failure to provide notice of default under the Indenture for failure to provide the audited financial statements for the year ending December 31, 2006 and unaudited financial statements for the fiscal quarter ending March 31, 2007 (and related public filings) as required by Section 10.1.3(c) of the Loan Agreement and (c) the Borrower’s restatement of its 2004 audited financial statements as described on the schedule dated April 27, 2007 and previously delivered by the Borrower to the Required Lenders which restatement may be material and a breach of the representation made in Section 9.1.8 of the Loan Agreement (collectively, the “Events of Default”). Immediately upon the satisfaction of each of the conditions precedent set forth in Section 2 below, the Agent and Required Lenders hereby waive the Events of Default; provided, that Borrower shall (x) deliver such audited financial statements for the fiscal year ending December 31, 2006 required by Section 10.1.2 of the Loan Agreement (together with any other financial information and documents required to be delivered in connection with such financial statements) and (y) deliver the audited financial statements for the year ending December 31, 2006 and unaudited financial statements for the fiscal quarter ending March 31, 2007 (and all related public filings) required by the Indenture and cure any related defaults thereunder, in each case under clauses (x) and (y) by no later than June 28, 2007, the failure of which shall cause such waiver to be terminated and result in such Events of Default continuing to exist under the Loan Agreement. The foregoing is a limited waiver and shall not constitute a waiver of any other Default or Event of Default that may exist or arise or constitute a waiver or modification to any other term or condition set forth in the Loan Agreement.

 

Section 2    Conditions to Effectiveness. The effectiveness of the waiver set forth in Section 1 above is subject to the satisfaction of each of the following conditions:

 

(a)    Agent shall have received a duly executed counterpart of this Waiver from Borrower and the Required Lenders; and

 

(b)    Agent shall have received a reaffirmation from Parent of its Guaranty.

 

Section 3    Representations, Warranties and Covenants. Borrower represents, warrants and covenants to Agent and Lenders, upon the effectiveness of this Waiver that:

 

(a)    No Default; etc. No Default or Event of Default has occurred and is continuing after giving effect to this Waiver or would result from the execution or delivery of this Waiver or the consummation of the transactions contemplated hereby.

 

(b)    Corporate Power and Authority; Authorization. Borrower has the power and authority to execute and deliver this Waiver.

 

(c)    Execution and Delivery. Borrower has duly executed and delivered this Waiver.

 

(d)    Enforceability. This Waiver constitutes the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ right generally, and by general principles of equity.

 

Section 4    Miscellaneous.

 

(a)    Effect; Ratification. Borrower acknowledges that all of the reasonable legal expenses incurred by Agent in connection herewith shall be reimbursable under Section 3.4 of the Loan Agreement. The waiver set forth herein is effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document or (ii) prejudice any right or rights that any Lender may now have or may have in the future under or in connection with any Loan Document. This Waiver shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended are hereby ratified and confirmed and shall remain in full force and effect.

 

(b)    Counterparts; etc. This Waiver may be executed in any number of counterparts, each such counterpart constituting an original but all together one and the same instrument. Delivery of an executed counterpart of this Waiver by fax shall have the same force and effect as the delivery of an original executed counterpart of this Waiver. Any party delivering an executed counterpart of this Waiver by fax shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of this Waiver.

 

(c)    Governing Law. This Waiver shall be deemed a Loan Document and shall be governed by, and construed and interpreted in accordance with the internal laws of the State of New York but excluding any principles of conflicts of law.

 

(d)    Reaffirmation. Parent hereby reaffirms all of its obligations as a guarantor of the Obligations pursuant to its Guaranty dated as of January 18, 2007.

 

[Signature Pages Follow]

 

IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused this Limited Waiver to Loan and Security Agreement to be duly executed as of the day and year first above written.