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EXHIBIT 4.06(a)
MORTGAGE-BACKED
CREDIT AGREEMENT
THIS AGREEMENT, made as of the 29th day of November, 1996 between
COMERICA BANK, a Michigan banking corporation ("Bank"), and GENERAL HOST
CORPORATION, a New York corporation ("Host"), and FRANK'S NURSERY & CRAFTS,
INC., a Michigan corporation ("▇▇▇▇▇▇" called together with Host, the
"Borrowers").
WHEREAS, Borrowers have previously been party to a credit agreement
between Borrowers and Bank dated as of August 10, 1994, as amended ("Prior
Agreement") and a certain Mortgage, Deed of Trust and Security Agreement dated
as of September 1, 1988 among Borrowers, The Bank of New York, as Trustee, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as Individual Trustee ("Master Mortgage Agreement");
WHEREAS, Borrowers have requested the Bank to provide credit
facilities for the purposes of replacing credit facilities previously provided
them under the Prior Agreement and the Master Mortgage Agreement in the form of
a facility under which they may obtain trade letters of credit from time to
time in the aggregate face amount of Forty Million Dollars ($40,000,000) and
which provides, by way of a sublimit, availability for trade letters of credit
for direct loans and advances in aggregate amount outstanding not to exceed
Twenty Five Million Dollars ($25,000,000), and, by way of a sublimit to the
availability for direct loans and advances, for the issuance of standby letters
of credit for the accounts of Borrowers in aggregate face amount of up to Ten
Million Dollars ($10,000,000); and
WHEREAS, the Bank is willing to do so, but only on the terms and
conditions of this Agreement;
NOW, THEREFORE, IT IS AGREED:
1. DEFINITIONS
For the purposes of this Agreement the following terms (when
capitalized) will have the following meanings:
1.1 "Advance" shall mean a borrowing requested by either
Borrower and made by the Bank under this Agreement, (including any refunding or
conversion of such borrowings pursuant to Section 4.2 hereof).
1.2 "Applicable Interest Rate" shall mean the
Eurodollar-based Rate or the Prime-based Rate, as selected by a Borrower from
time to time or otherwise determined pursuant to the terms and conditions of
this Agreement.
1.3 "Appraisal" shall mean, for each parcel of Real
Property: (a) until December 31, 1996, a historical appraisal (not necessarily
ordered by or certified to Bank)
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provided by a Borrower to Bank and accepted by Bank on an interim basis on the
Closing Date; and (b) thereafter an appraisal certified to, and otherwise
satisfactory to Bank and in conformance with title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") 12 U.S.C.
3331 et seq. and the regulations promulgated pursuant thereto; provided,
however, with respect to the Real Property at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, it is agreed that, until December 31, 1996, there shall be
deemed to exist an Appraisal showing a fair market value thereof of One Million
Dollars ($1,000,000).
1.4 "Authorized Officer" shall mean any officer of either
Borrower designated, in the document required pursuant to Section 6.2(b)
hereof, to execute Documents and/or to transact business under this Agreement.
1.5 "Availability" shall mean, as of any date, a dollar
amount equal to: (a) the lesser of the Maximum Amount or the Collateral Amount,
minus (b) the sum of the aggregate principal amount of all Advances then
outstanding and the aggregate face amount of all Letters of Credit then issued
and outstanding.
1.6 "Borrower(s)" shall mean either or both of Host
and/or Frank's, as the context indicates; provided, however, that wherever used
with respect to an obligation or indebtedness owed to or to be paid to Bank,
such term shall mean Host and Frank's, jointly and severally.
1.7 "Business Day" shall mean any day on which commercial
banks are open for domestic business in Detroit and (when used in connection
with any provision regarding Eurodollar-based Loans) also a day on which
commercial banks are open for international business (including dealings in
dollar deposits in the interbank market) in Detroit and London.
1.8 "Closing Date" shall mean the date, on or before
November 29, 1996, on which the conditions of Section 6.1 hereof have been
satisfied.
1.9 "Closing Fee" shall mean a non-refundable
restructuring fee in the amount of Fifty Thousand Dollars $50,000 payable by
Borrower to Bank on the Closing Date.
1.10 "Collateral Amount" shall mean, as of any date of
determination thereof, a dollar amount equal to eighty percent (80%) of the
appraised value of Real Property in the Collateral Pool, as determined by Bank
from the relevant Appraisals.
1.11 "Collateral Pool" shall mean the Real Property for
which Bank has received Mortgages/Deeds of Trust, Title Insurance, Insurance
Policies, Surveys, Appraisals, and (commencing December 31, 1996) Environmental
Reports.
1.12 "Consolidated" shall mean, when used with reference
to any financial information (or when used as a part of any defined term or
statement pertaining to any financial condition) the accounts of Host and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
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1.13 "Debt to Capitalization Ratio" shall mean, as of the
date of any calculation thereof, a fraction: (i) the numerator is the sum of
Long Term Debt and current maturities of Long Term Debt; and (ii) the
denominator of which is the sum of Long Term Debt, current maturities of Long
Term Debt and Equity.
1.14 "Default" shall mean an event, occurrence or
circumstance which, with the giving of notice and/or passage of time, would
constitute an Event of Default.
1.15 "Documents" shall mean collectively, this Agreement,
the Note, any Letter of Credit Agreements, and any other documents, instruments
or agreements now or hereafter executed pursuant to or in connection with this
Agreement, the Note or any Letter of Credit Agreement.
1.16 "EBITDA" shall mean, as of the last day of any fiscal
quarter, for the four fiscal quarters immediately preceding any calculation
thereof, net income (before extraordinary items and discontinued items and the
provision for store closings and related costs shown on Host's income statement
for the period ending January 28, 1996) plus the aggregate amounts deducted in
determining net income for such period in respect of: (a) the provision for
taxes based on income; (b) interest expense; (c) depreciation and amortization;
and (d) net equity loss and write down of investment in an unconsolidated
affiliate as shown on Host's income statements for each of the four quarters
comprising the fiscal year ending January 28, 1996, all determined for Host and
its Subsidiaries, on a Consolidated basis in accordance with GAAP.
1.17 "Environmental Laws" shall mean the Relevant
Environmental Laws, as defined in the Mortgages/Deeds of Trust.
1.18 "Environmental Report" shall mean a Phase I
environmental audit and certification with respect to the relevant Real
Property: (a) which may be, until December 31, 1996, a historical environmental
audit (not necessarily addressed to Bank) provided by Borrowers to Bank on an
interim basis on the Closing Date; and (b) thereafter addressed to Bank, and
Bank's successors and assigns, in form and substance acceptable to Bank, and,
if recommended in such Phase I or otherwise determined to be reasonably
necessary by Bank upon review of such Phase I audit, a Phase II environmental
audit addressed to Bank, and Bank's successors and assigns, in form and
substance acceptable to Bank.
1.19 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, or any successor act or code.
1.20 "Equity" shall mean the total common stockholders
equity of Host and the Subsidiaries, determined on a Consolidated basis in
accordance with GAAP.
1.21 "Eurodollar-based Loan" shall mean an Advance which
bears interest at a rate based on the Eurodollar-based Rate.
1.22 "Eurodollar-based Rate" shall mean a per annum
interest rate equal to the Eurodollar Rate plus two and one-quarter percent
(2.25%).
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1.23 "Eurodollar Rate" shall mean:
(a) the per annum interest rate at which the
Bank's eurodollar lending office offers
deposits in eurodollars to prime banks in the
eurodollar market in an amount comparable to
the relevant Eurodollar-based Loan and for a
period equal to the Interest Period at
approximately 11:00 a.m. Detroit time two (2)
Business Days prior to the first day of such
Interest Period; divided by,
(b) a percentage (expressed as a decimal) equal
to one hundred percent (100%) minus that
percentage which is in effect on the date for
an Advance of a Eurodollar-based Loan, as
prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for
determining the maximum reserve requirements
for a member bank of the Federal Reserve
System with deposits exceeding five billion
dollars in respect of "Euro-currency
Liabilities" (or in respect of any other
category of liabilities which includes
deposits by reference to which the interest
rate on Eurodollar-based Loans is determined
or any category of extensions of credit or
other assets which includes loans by a
non-United States Eurodollar Lending Office
of such a bank to United States residents).
1.24 "Event of Default" shall mean the Events of Default
specified in Section 10.1 hereof.
1.25 "Fixed Charge Coverage Ratio" shall mean, as of the
date of any calculation thereof, a ratio, the numerator of which is EBITDA and
the denominator of which is Interest Expense.
1.26 "GAAP" shall mean generally accepted accounting
principles in the United States of America consistent with those used in
preparation of the financial statements referred to in Section 7.7 hereof.
1.27 "Indebtedness" shall mean, with respect to any
Person, without duplication, (i) all indebtedness of such Person for borrowed
money, (ii) the deferred purchase price of assets or services which in
accordance with GAAP would be shown on the liability side of the balance sheet
of such Person, (iii) the face amount of all standby letters of credit issued
for the account of such Person and, without duplication, all drafts drawn upon
letters of credit of any type, (iv) all obligations of a second person secured
by any lien on any property owned by such first Person, whether or not such
obligations have been assumed by such first Person, (v) all capitalized lease
obligations of such Person, (vi) all obligations of such Person under interest
rate agreements, and (vii) all obligations which have the economic effect of a
guaranty of Indebtedness of the types described in clauses (i) through (vi)
above, regardless of characterization; provided that Indebtedness shall not
include trade payables, accrued expenses (including the reserve for store
closings provided in the income statement for Host's fiscal year
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ended January 28, 1996), accrued dividends, accrued income taxes, warranty
reserves and deferred income taxes, to the extent arising in the ordinary
course of business.
1.28 "Insurance Policies" shall mean with respect to any
particular Real Estate, insurance policies satisfying the provisions of Section
8.8 hereof.
1.29 "Interest Expense" shall mean, as of the last day of
any fiscal quarter, for the four fiscal quarters immediately preceding any
calculation thereof, the interest expense of Host and the Subsidiaries, as
determined on its Consolidated statement of income in accordance with GAAP.
1.30 "Interest Period" shall mean an interest period for a
Eurodollar-based Loan of one (1) month or such shorter period as Bank may offer
at the request of a Borrower, provided however, that:
(a) any Interest Period which would otherwise end
on a day which is not a Business Day shall be
extended to the next succeeding Business Day
unless the next succeeding Business Day falls
in another calendar month, in which case,
such Interest Period shall end on the
immediately preceding Business Day;
(b) when an Interest Period begins on a day which
has no numerically corresponding day in the
calendar month during which such Interest
Period is to end, it shall end on the last
Business Day of such calendar month.
1.31 "Letter(s) of Credit" shall mean any standby or trade
letters of credit: (i) issued by Bank at the request of or for the account of a
Borrower pursuant to Article 3 hereof; or (ii) previously issued by Bank
pursuant to the Prior Agreement which remain outstanding as of the Closing
Date, excluding (in each) case any banker's acceptances or credits in the
nature of acceptances which have been or hereafter are discounted and/or
accepted by Bank for or at the request of a Borrower.
1.32 "Letter of Credit Agreement" shall mean, in respect
of each Letter of Credit, the application of a Borrower requesting Bank to
issue such Letter of Credit (including the terms and conditions on the reverse
side thereof or otherwise provided therein), in form and substance acceptable
to Bank and, with respect to all Letters of Credit, that certain Continuing
Letter of Credit Agreement dated as of February 28, 1994 between Borrowers and
Bank.
1.33 "Letter of Credit Fees" shall mean the fees payable
to Bank in connection with Letters of Credit pursuant to Section 3.3 hereof.
1.34 "Letter of Credit Maximum" shall mean, as of any
date: (a) with respect to Letters of Credit generally, Forty Million Dollars
($40,000,000) minus the aggregate principal amount of outstanding Advances; and
(b) with respect to Letters of Credit which are standby letters of credit, Ten
Million Dollars ($10,000,000).
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1.35 "Letter of Credit Obligation" shall mean the joint
and several obligation of the Borrowers under each Letter of Credit Agreement
to reimburse Bank for each payment made by Bank under the Letter of Credit
issued pursuant to such Letter of Credit Agreement, together with all other
sums, fees, charges and amounts which may be owing under such Letter of Credit
Agreement.
1.36 "Long Term Debt" shall mean Indebtedness of Host and
the Subsidiaries having a stated maturity later than one year from the date of
calculation thereof which under GAAP would not be included as a current
liability, provided, however, obligations in connection with Letters of Credit
shall not be included in any calculation of Long Term Debt hereunder.
1.37 "Maximum Amount" shall mean Forty Million Dollars
($40,000,000) or such lesser amount to which the Maximum Amount may be reduced
pursuant to Section 4.5 or 11.4 hereof.
1.38 "Mortgage/Deed of Trust" shall mean either a mortgage
or deed of trust in form satisfactory to Bank and conforming to the
requirements of laws of the jurisdiction of the Real Estate encumbered or to be
encumbered thereby.
1.39 "Note" shall mean the promissory note made jointly
and severally by the Borrowers in the form attached as Exhibit "A" evidencing
Advances to the Borrowers.
1.40 "Pension Plans" shall mean any pension plan as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which is or
has been maintained by or to which contributions are or have been made by Host,
any Subsidiary or any ERISA Affiliate.
1.41 "Permitted Liens" shall mean:
(a) Liens and encumbrances in favor of Bank;
(b) Liens for taxes, assessments or other
governmental charges incurred in the ordinary
course of business and for which no interest,
late charge or penalty is attaching or which
is being contested in good faith by
appropriate proceedings and, if requested by
Bank, bonded in an amount and manner
satisfactory to Bank;
(c) Liens, not delinquent, created by statute in
connection with worker's compensation,
unemployment insurance, social security and
similar statutory obligations;
(d) Liens of mechanics, materialmen, carriers,
warehousemen or other like statutory or
common law liens securing obligations
incurred in good faith in the ordinary course
of business that are not yet due and payable;
and
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(e) Encumbrances consisting of existing or future
zoning restrictions, existing recorded
rights-of-way, existing recorded easements,
existing recorded private restrictions or
existing or future public restrictions on the
use of Real Property, none of which
materially impairs the use of such property
in the operation of the business for which it
is used and none of which is violated in any
material respect by any existing or proposed
structure or land use.
1.42 "Prime Rate" shall mean the per annum interest rate
established by Bank as its prime rate for its borrowers as such rate may vary
from time to time, which rate is not necessarily the lowest rate on loans made
by Bank at any such time.
1.43 "Prime-based Loan" shall mean a Loan which bears
interest at the Prime Rate.
1.44 "Real Property" shall mean the real property of
Borrower described in Exhibit "B" hereto.
1.45 "Request for Loan" shall mean a request for an
Advance under the Note issued by a Borrower under this Agreement in the form
annexed hereto as Exhibit "C".
1.46 "Revolving Credit Facility Fee" shall mean the
facility fee payable to Bank pursuant to Section 2.4 hereof, in an amount equal
to five-eighths percent per annum multiplied by the Revolving Credit Maximum
from time to time in effect.
1.47 "Revolving Credit Maturity Date" shall mean June 30,
1997.
1.48 "Revolving Credit Maximum" shall mean, as of any date
Twenty Five Million Dollars ($25,000,000) or such lesser amount to which the
Revolving Credit Maximum may be reduced pursuant to Section 4.5 or 11.4 hereof.
1.49 "Survey" shall mean an as-built survey of the
relevant Real Property, prepared and certified to Bank and the provider of the
Title Insurance for the relevant Real Property by a registered (in the state
where the real estate is located) surveyor, made in accordance with the
"Minimum Standard Detail Requirements for Land Title Surveys" established by
the American Land Title Association and the American Congress on Surveying and
Mapping and conforming to all of Bank's requirements and otherwise in
accordance with any survey instructions provided by Bank's counsel.
1.50 "Subsidiaries" shall mean any other corporation,
association, joint stock company, or business trust of which more than fifty
percent (50%) of the outstanding voting stock is owned either directly or
indirectly by Host or one or more of its Subsidiaries or by Host and one or
more of its Subsidiaries.
1.51 "Tangible Net Worth" shall mean the total common
shareholder's equity of Host and the Subsidiaries, on a Consolidated basis,
together with the amounts, if any, of
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preferred stock which is classified as part of shareholder's equity, as
reflected on the most recent regularly prepared quarterly balance sheet of
Host, which balance sheet shall be prepared in accordance with GAAP, less: (a)
the amount of all assets classified as intangible assets (including, without
limitation, goodwill, trade-marks, trade names, patents, copyrights, franchises
and, to extent attributable to Host's 8% Convertible Unsecured Subordinated
Notes and 11.5% Senior Unsecured Notes outstanding as of the date of this
Agreement, unamortized debt discount and expenses); and (b) the aggregate
amount expended for all dividends, distributions, purchases, redemptions, other
acquisitions or retirements of capital stock subsequent to the date of such
balance sheet and up to the date of submission to Bank of the officer's
certificate for such fiscal quarter pursuant to Section 8.1(c) hereof, to the
extent not reflected on such balance sheet.
1.52 "Title Insurance" shall mean a mortgagee's policy of
title insurance issued by national title company approved by Bank, and shall
insure that Bank has a first lien mortgage encumbering marketable, fee simple
title to the property (including any appurtenant easements), free of the
possibility of any prior mechanic's or materialmen's liens, and that the
property is free and clear of all exceptions, other than those specifically
approved by Bank.
1.53 Financial Computations. Unless specifically
indicated to the contrary herein, all accounting computations and
determinations hereunder shall be calculated or determined in accordance with
GAAP.
2. THE INDEBTEDNESS: REVOLVING CREDIT
2.1 Revolving Credit Commitment. Subject to the terms
and conditions of this Agreement, the Bank agrees to lend to the Borrowers,
jointly and severally, at any time and from time to time from the Closing Date
until the Revolving Credit Maturity Date, and the Borrowers may jointly and
severally borrow, repay and reborrow sums outstanding from time to time not to
exceed the lesser of Revolving Credit Maximum or the Availability in effect on
the date for the Advance thereof. All of the Advances under this Section 2.1
shall be evidenced by the Note under which advances, repayments, and readvances
may be made, subject to the terms and conditions of this Agreement.
2.2 Type of Loan and Maturity. The Note, and all
principal and interest then outstanding thereunder, shall mature and become due
and payable in full on the Revolving Credit Maturity Date. Each Advance from
time to time outstanding hereunder shall be either a Prime-based Loan or a
Eurodollar-based Loan as either of the Borrowers may elect or as otherwise
applicable pursuant to the provisions hereof. The amount and date of each
Advance, its Applicable Interest Rate, and the amount and date of any repayment
shall be noted on Bank's records, which records will be presumed correct absent
manifest error.
2.3 Requests for Revolving Credit Loans. Either Borrower
may request an Advance by delivery to Bank of a Request for Loan executed by an
Authorized Officer and subject to the following:
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(a) each such Request for Loan shall set forth
the information required on the Request for
Loan form annexed hereto as Exhibit "C";
(b) each such Request for Loan shall be delivered
to Agent by 10:00 a.m. three (3) Business
Days prior to the proposed date of Advance,
except in the case of a Prime-based Loan, for
which the Request for Loan must be delivered
by 10:00 a.m. (Detroit time) on such proposed
date;
(c) the principal amount of such Advance, shall
be at least: (i) in the case of a Prime-based
Loan, One Million Dollars ($1,000,000); and
(ii) in the case of a Eurodollar-based Loan,
One Million Dollars ($1,000,000) or a greater
integral multiple of One Million Dollars
($1,000,000);
(d) the principal amount of the Advance
requested, (i) shall not exceed the
Availability, and (ii) when added to the
principal amount of all other Advances then
outstanding shall not exceed the Revolving
Credit Maximum minus the aggregate face
amount of outstanding Letters of Credit which
are standby letters of credit;
(e) each Request for Loan shall constitute a
certification by the Borrowers as of the date
thereof that all of the conditions set forth
in Section 6.2 hereof are satisfied as of the
date of such request and shall be satisfied
as of the date such Advance is requested.
2.4 Revolving Credit Facility Fee. From the Closing Date
to the Revolving Credit Maturity Date, the Borrowers jointly and severally
agree to pay to the Bank, quarterly in arrears, commencing December 31, 1996
and on the last day of each calendar quarter thereafter, and on the Revolving
Credit Maturity Date, the Revolving Credit Facility Fee.
2.5 Purpose of Revolving Credit Loans. An initial
Advance shall be made on the Note as of the Closing Date, in a principal amount
necessary (if any) to repay by replacement and renewal evidence, any
indebtedness then outstanding under the Borrowers' existing notes with Bank,
and such existing notes, and all obligations of Bank thereunder, shall be
automatically canceled and terminated. Thereafter, Advances shall be available
to and used by Borrowers for their general corporate purposes, provided,
however, that no proceeds of any Advances will be used for "buying",
"purchasing" or "carrying" any "margin stock" within the respective meanings of
those terms under Regulation U or G of the Federal Reserve Board as now or
hereafter in effect, or for any purpose which violates provisions of
regulations of the Federal Reserve Board.
3. LETTERS OF CREDIT
3.1 Letters of Credit. Subject to the terms and
conditions of this Agreement, Bank shall, at the request of a Borrower at any
time and from time to time from the Closing
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Date until the third (3rd) Business Day prior to the Revolving Credit Maturity
Date, issue Letters of Credit for the accounts of the Borrowers, in aggregate
amounts at any one time outstanding not to exceed the relevant Letter of Credit
Maximum. Each Letter of Credit shall provide an initial expiration date not
later than one (1) year from its date of issuance (subject to renewals) and
that it is available by drafts drawn at sight and presentation of documents.
3.2 Conditions to Issuance. No Letter of Credit shall be
issued pursuant to Section 3.1 hereof unless, as of the date the issuance of
such Letter of Credit is requested:
(a) the face amount of the Letter of Credit
requested: (i) does not exceed the
Availability and (ii) when added to the
undrawn face amount of the other outstanding
Letters of Credit will not exceed the
relevant Letter of Credit Maximum;
(b) the execution of the Letter of Credit
Agreement with respect to the Letter of
Credit requested will not violate the terms
and conditions of any contract, agreement or
other borrowing of either Borrower;
(c) the Borrowers shall have delivered to Bank,
prior to the requested date for issuance, the
Letter of Credit Agreement related thereto,
together with such other documents and
materials as may be required pursuant to the
terms thereof, and the terms of the proposed
Letter of Credit shall be satisfactory to
Bank;
(d) no order, judgment or decree of any court,
arbitrator or governmental authority shall
purport by its terms to enjoin or restrain
Bank from issuing the Letter of Credit, and
no law, rule, regulation, request or
directive (whether or not having the force of
law) of or from any governmental authority
shall prohibit or request that Bank refrain
from issuing the Letter of Credit requested
or letters of credit generally; and
(e) all of the conditions set forth in Section
6.2 hereof, and in the related Letter of
Credit Agreements, are satisfied as of the
date of such request and shall be satisfied
as of the date requested for issuance of such
Letter of Credit.
3.3 Letter of Credit Fees. Borrowers jointly and
severally agree to pay to Bank, Letter of Credit Fees: (i) upon the date of
issuance, in the case of Letters of Credit that are trade letters of credit, in
an amount equal to two and one-quarter percent (2.25%) on the face amount of
such Letter of Credit, and (ii) with respect to Letters of Credit which are
standby letters of credit, quarterly in arrears, an amount equal to two and
one-quarter percent (2.25%) per annum multiplied by the outstanding face amount
of such standby Letters of Credit outstanding during the quarterly period then
ended.
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3.4 Issuance Fees. In connection with the Letters of
Credit, the Borrowers will pay Bank, letter of credit issuance fees and
standard administration, payment and cancellation charges assessed by Bank, at
the times, in the amounts and on the terms customarily charged by Bank in
connection with the administration of and transactions involving its letters of
credit program.
4. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS
4.1 Interest. Advances hereunder shall bear interest
from the date thereof on the unpaid principal balance thereof from time to time
outstanding, at the Applicable Interest Rates, as selected by a Borrower or as
otherwise applicable pursuant to the provisions of this Agreement from time to
time. With respect to Prime-based Loans, interest shall be payable quarterly
on the last Business Day of each calendar quarter, commencing on the last
Business Day of the calendar quarter during which such Advance is made, and at
maturity. With respect to Eurodollar-based Loans, interest shall be payable on
the last day of each Interest Period applicable thereto. Notwithstanding the
foregoing, in the event and so long as an Event of Default shall exist, all
principal outstanding under the Note shall bear interest, payable on demand,
from the date of such Event of Default at a rate per annum equal to:
(a) in the case of a Prime-based Loan, three
percent (3%) above the Prime-based Rate; and
(b) in the case of a Eurodollar-based Loan, three
percent (3%) above the Eurodollar-based Rate
until the end of the then current Interest
Period, at which time such Eurodollar Loans
shall be automatically converted into
Prime-based Loans and bear interest at the
rate provided for in clause (a) above.
4.2 Conversion and Renewal of Loans. Providing that no
Event of Default shall have occurred and be continuing, the Borrowers may elect
to renew or convert any Advance into another type of Advance, provided that any
conversion of a Eurodollar-based Loan shall be made only on the last Business
Day of the Interest Period applicable to such Eurodollar-based Loan. If the
Borrowers desire to renew or convert an Advance, they shall give Bank not less
than three (3) Business Days' prior notice in the manner provided in Section
2.3 hereof, specifying the date of such renewal or conversion, the Advances to
be converted and the type of Advance elected. If with respect to any
Eurodollar-based Loan outstanding at any time the Bank does not receive notice
of the election from a Borrower not less than three (3) Business Days prior to
the last day of the Interest Period therefor, such Borrower shall be deemed to
have elected to convert such Eurodollar-based Loan to a Prime-based Loan at the
end of the then current Interest Period unless such Eurodollar-based Loan is
repaid upon the last day of such Interest Period.
4.3 Prepayments. At its option and upon two (2) Business
Days' prior written, telephonic or telegraphic notice to the Bank, the Borrower
may prepay advances in whole at any time or in part from time to time, without
premium or penalty but with accrued interest on the principal being prepaid to
the date of such prepayment, provided that: (a) each partial
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prepayment shall be in an amount not less than Five Hundred Thousand Dollars
($500,000) or greater integral multiple of One Hundred Thousand Dollars
($100,000); and (b) in the case of a Eurodollar-based Loan such prepayment may
only be on the last Business Day of the Interest Period with respect thereto,
or together with such additional amounts required with respect thereto pursuant
to Section 5.1 hereof.
4.4 Payment Procedure.
(a) All payments of principal of, or interest on
the Note, or of Revolving Credit Facility
Fees, or of Letter of Credit Obligations or
Letter of Credit Fees, shall be: (i) made
without setoff, deduction or counterclaim on
the date specified for payment under this
Agreement not later than 11:00 a.m. (Eastern
Standard Time) in immediately available funds
by Borrowers to Bank; and (ii) calculated on
the basis of a 360 day year for the actual
number of days elapsed.
(b) Whenever any payment to be made shall
otherwise be due on a day which is not a
Business Day, such payment shall be made
(except as specifically indicated to the
contrary herein) on the next succeeding
Business Day and such extension of time shall
be included in computing interest, if any, in
connection with such payment.
(c) Borrowers hereby irrevocably authorize and
direct Bank to debit their demand deposit
accounts with Bank and apply the proceeds of
such debit toward satisfaction of their
payment obligations under subsection (a)
above as and when such payment obligations
fall due.
4.5 Reductions or Terminations of Commitment. Upon at
least five (5) Business Days prior written notice to Bank, the Borrowers may
permanently reduce the Maximum Amount and/or the Revolving Credit Maximum in
whole or part, provided that:
(a) each partial reduction of the Maximum Amount
and/or the Revolving Credit Maximum shall be
in an amount equal to One Million Dollars
($1,000,000) or an integral multiple thereof;
(b) each reduction of the Revolving Credit
Maximum shall be accompanied by payment of
the Revolving Credit Facility Fee accrued on
the amount of the Revolving Credit Maximum so
reduced through the date of such reduction;
(c) in the case of a reduction of the Revolving
Credit Maximum: (i) Borrowers shall prepay
Advances in the amount by which the Advances
then outstanding plus the outstanding face
amounts of
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13
Letters of Credit which are standby letters
of credit would exceed the Revolving Credit
Maximum (as so reduced) together with
interest thereon to the date of prepayment
and any additional amount required therewith
pursuant to Section 5.1 hereof; and (ii) the
Revolving Credit Maximum as so reduced shall
not exceed the outstanding face amounts of
Letters of Credit which are standby letters
of credit; and
(d) in the case of reductions of the Maximum
Amount, the Maximum Amount as so reduced
shall not exceed the outstanding face amounts
of all Letters of Credit.
5. SPECIAL PROVISIONS FOR LOANS
5.1 Reimbursement of Prepayment Costs. As to any
Eurodollar-based Loan, if any prepayment thereof shall occur on any day other
than the last day of an Interest Period (whether pursuant to this Article, or
by acceleration, or otherwise), or if an Applicable Interest Rate shall be
changed during any Interest Period pursuant to this Article, the Borrowers
jointly and severally agree to reimburse Bank on demand for any costs incurred
by Bank as a result of the timing thereof including but not limited to any net
costs incurred in liquidating or employing deposits from third parties, upon
Bank's delivery to Borrowers of a certificate setting forth in reasonable
detail the basis for determining such costs, which certificate shall be
conclusively presumed correct save for manifest error.
5.2 Eurodollar Lending Office. For any Advance for which
the Applicable Interest Rate is the Eurodollar-based Rate, if Bank shall
designate a eurodollar lending office which maintains books separate from those
of the rest of Bank, Bank shall have the option of maintaining and carrying the
relevant advance on the books of such office.
5.3 Circumstances Affecting Eurodollar-based
Availability. If Bank determines that, by reason of circumstances affecting
the foreign exchange and interbank markets generally, deposits in eurodollars
in the applicable amounts are not being offered to Bank for an Interest Period,
then Bank shall forthwith give notice thereof to the Borrowers. Thereafter,
the obligation of Bank to make Eurodollar-based Loans, and the right of
Borrowers to convert an Advance to or refund an Advance as a Eurodollar-based
Loan shall be suspended until the Bank notifies Borrowers that such
circumstance no longer exists.
5.4 Laws Affecting Eurodollar-based Loan Availability.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its eurodollar lending
offices) with any request or directive (whether or not having the force of law)
of any such authority, shall make it unlawful or impossible for Bank to honor
its obligations hereunder to make or maintain any Advance with interest at the
Eurodollar-based Rate, Bank shall forthwith give notice thereof to Borrowers.
Thereafter: (a) the obligations to make Eurodollar-based Loans and the right of
Borrowers to convert an Advance or refund an Advance as a Eurodollar-based Loan
- 13 -
14
shall be suspended; and (b) if Bank may not lawfully continue to maintain a
Eurodollar-based Loan to the end of the then current Interest Period, the
Prime-based Rate shall be the Applicable Interest Rate for such
Eurodollar-based Loans for the remainder of such Interest Period.
5.5 Increased Costs. In the event that any change after
the date hereof in applicable law, treaty or governmental regulation, or in the
interpretation or application thereof, or compliance by Bank with any request
or directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority:
(a) shall subject Bank (or its eurodollar lending
office) to any tax, duty or other charge with
respect to any Advance or shall change the
basis of taxation of payments to Bank (or its
eurodollar lending office) of the principal
of or interest on any Advance or any other
amounts due under this Agreement (except for
changes in the rate of tax on the overall net
income or gross receipts of Bank or its
eurodollar lending office imposed by the
jurisdiction in which Bank's principal
executive office or eurodollar lending office
is located); or
(b) shall impose, modify or deem applicable any
reserve (including, without limitation, any
imposed by the Board of Governors of the
Federal Reserve System but excluding with
respect to any Eurodollar-based Loan any such
requirement included in an applicable
Eurodollar Reserve Requirement), special
deposit, or similar requirement against
assets of, deposits with or for the account
of, or credit extended by Bank (or its
eurodollar lending offices) or shall impose
on Bank (or its eurodollar lending offices)
or the foreign exchange and interbank markets
or other condition affecting any Advance or
any commitment of Bank under this Agreement;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any Advance or its commitments hereunder or to
reduce the amount or rate of return on any sum received or receivable by Bank
under this Agreement, or under the Note, or under any Letter of Credit
Agreement, then Bank may promptly notify Borrower of such fact and demand
compensation therefor and, Borrowers jointly and severally agree to pay to Bank
such additional amount or amounts as will compensate Bank for such increased
costs or reduced return within thirty (30) days of such notice; provided,
however: (i) that Borrowers shall not be obligated to reimburse Bank for
increased costs accruing or suffered earlier than five (5) Business Days prior
to Bank's notification to Borrower of the fact or expectation of such increased
costs; and (ii) to the extent doing so would eliminate or decrease Borrowers'
liability for increased costs hereunder, and to the extent that doing so would
not otherwise be disadvantageous to Bank, Bank will attempt to designate a
eurodollar lending office for which the tax, duty, reserve, deposit
requirement, or other circumstance giving rise to Bank's demand for increased
compensation, is not applicable. A certificate of the Bank demanding such
compensation setting forth in reasonable detail the basis for determining such
additional amount
- 14 -
15
or amounts necessary to compensate shall be conclusively presumed to be correct
save for manifest error.
6. CONDITIONS
6.1 Conditions Precedent To Initial Loans and Closing
Date.
The right of Borrowers to request the initial Advance
and Letters of Credit pursuant to this Agreement are subject to, and the
Closing Date of this Agreement shall be the date of, Borrowers' satisfaction of
the following conditions:
(a) Execution of Note and This Agreement.
Borrowers shall have executed and delivered
to Bank, the Note and this Agreement
(including all schedules, exhibits,
certificates, opinions, financial statements
and other documents to be delivered pursuant
hereto) and the Note, the Documents and this
Agreement shall be in full force and effect.
(b) Closing Fee. Borrowers shall have paid the
Closing Fee to Bank.
(c) No Default. No Default or Event of Default
shall have occurred and be continuing.
6.2 Conditions Precedent to All Loans. The obligation of
Bank to make Advances (including the initial Advance hereunder) and to issue
any Letter of Credit, shall be subject to the satisfaction of the following
conditions:
(a) Effectiveness. This Agreement shall have
become effective as provided in Section 6.1
above.
(b) Corporate Authority. Bank shall have
received: (i) certified copies of resolutions
of the Board of Directors or Executive
Committee of each of the Borrowers evidencing
approval of the borrowing hereunder and
execution and delivery of the Documents; (ii)
certified copies of each of the Borrower's
Certificates of Incorporation and Bylaws;
(iii) certificates of good standing from the
state of each of the Borrowers jurisdiction
of incorporation, and from each state in
which any Real Property is located; and (iv)
incumbency certificates for each of the
Borrowers.
(c) Collateral Documentation. Borrowers shall
have delivered to Bank, or caused to be
delivered to Bank: (i) executed
Mortgages/Deeds of Trust covering all of the
Real Property; (ii) Title Insurance,
Insurance Policies, Surveys, and Appraisals
for all Real Property to be included in the
Collateral Pool, and
- 15 -
16
(iii) at all times after December 31, 1996,
Environmental Reports for all Real Property
to be included in the Collateral Pool.
(d) Collateral Amount. The Collateral Amount
shall be not less than the Maximum Amount
then in effect.
(e) No Default; Representations and Warranties.
At the time of the making of such Advance, or
the issuance of such Letter of Credit, and
after giving effect thereto: (i) there shall
exist no Default or Event of Default; and
(ii) all representations and warranties
contained herein or in the other Documents
shall be true and correct in all material
respects, unless such representation and
warranty expressly indicates that it is being
made as of any other specific date.
(f) Opinions of Counsel. Legal opinions from
Borrower's legal counsel covering such
matters and otherwise in form and content
satisfactory to Bank.
(g) Enforceability of Documents. Both before and
after such Advance, the obligations of the
Borrowers in the Documents shall be valid,
binding and enforceable.
(h) Guaranty. On or before December 6, 1996,
Borrowers shall have caused to be delivered
to Bank, in form and content satisfactory to
Bank and supported by appropriate authorizing
resolutions, a joint and several guaranty
agreement of General Host Holding Corp., AMS
Industries, Inc., AMS Salt Industries, Inc.,
Bay Resources, Inc. and Nursery Distributors,
Inc., guarantying to Bank the payment and
performance of Borrowers' indebtedness and
obligations hereunder.
7. REPRESENTATIONS AND WARRANTIES
In order to induce Bank to enter into this Agreement and to
make Advances and issue Letters of Credit hereunder, the Borrowers represent
and warrant to Bank:
7.1 Corporate Status. Each of the Borrowers is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its organization; has the corporate or other organizational
power and authority and has obtained all requisite governmental licenses,
authorizations, consents and approvals necessary to own and operate its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, is duly qualified and is authorized to do
business in, and is in good standing in, all jurisdictions where by virtue of
the nature of its activities or extent of its properties it is required to be
so qualified.
- 16 -
17
7.2 Corporate Power and Authority; Business. Each of the
Borrowers has the corporate power and authority to execute, deliver and carry
out the terms and provisions of the Documents and have taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which they are parties. Each of them has duly executed and
delivered each Document and each such Document constitutes the legal, valid and
binding obligations, enforceable in accordance with its terms, except as such
enforceability 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, good faith and fair
dealing.
7.3 No Violation. Neither the execution, delivery or
performance by the Borrowers of the Documents, nor compliance with the terms
and provisions thereof, nor the consummation of the transactions contemplated
therein will result in a contravention of any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, or conflict or be inconsistent with or result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
upon any of the property or assets of either of them pursuant to the terms of,
any indenture, mortgage, deed of trust, material agreement or other instruments
to which any of them are parties.
7.4 Litigation. There are no actions, judgments, suits
or proceedings pending or threatened with respect to either of the Borrowers
that are likely to have a material adverse effect on the businesses or
financial condition of either of them.
7.5 Governmental Approvals, etc. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any third party or any foreign or domestic
governmental or public body or authority, or by any subdivision thereof, is
required to authorize or is required in connection with the execution, delivery
and performance of any Document or the transactions contemplated therein or the
legality, validity, binding effect or enforceability of any Document.
7.6 True and Complete Disclosure. All factual
information (taken as a whole) heretofore or contemporaneously furnished by or
on behalf of the Borrowers in writing to Bank for purposes of or in connection
with this Agreement or any transaction contemplated herein is, and all other
such factual information (taken as a whole) hereafter furnished to Bank will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading.
7.7 Financial Statements. The Company has heretofore
delivered to Bank the Consolidated balance sheet of Host and Consolidated
statements of operations, stockholders' equity and cash flow for the fiscal
year ended January 28, 1996 and the quarter ended August 11, 1996. All the
financial statements referred to in the preceding sentence were prepared in
accordance with GAAP, and fairly present in all material respects the
consolidated financial position of the Company and the results of its
operations and cash flows for the periods
- 17 -
18
covered thereby (subject, in the case of the quarterly statement mentioned
above, to normal year end adjustments).
7.8 Tax Returns and Payments. The Borrowers and the
Subsidiaries have each filed all tax returns required to be filed by them and
have paid all material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those contested in good
faith and for which adequate reserves have been established to the extent
required by GAAP.
7.9 ERISA. No events including, without limitation, any
"Reportable Event" or "Prohibited Transaction," as defined in ERISA, have
occurred in connection with any Pension Plan of either Borrower which might
reasonably be expected to constitute grounds for termination of such Pension
Plan or for the appointment of a trustee or administer of any such Pension
Plan, and such Pension Plan meets the minimum funding Standards of ERISA.
7.10 Subsidiaries. Host's only Subsidiaries as of the
Closing Date are listed on Exhibit "D" hereto and all of the outstanding
capital stock of such Subsidiaries are validly issued, fully paid and
nonassessable and owned beneficially and of record by Host or its immediate
parent, as shown on Exhibit "D".
7.11 Compliance with Laws, etc. The Borrowers are each in
compliance with all laws and regulations, including without limitation
Environmental Laws, in all jurisdictions in which they are presently doing
business.
7.12 Properties. The Borrowers have good and marketable
title to and beneficial ownership of all their respective material properties
owned by them, as reflected in the balance sheet for Host referred to in
Section 7.7 above, and hold all material licenses, certificates of occupancy or
operation and similar certificates and clearances of municipal and other
authorities necessary to own and operate their respective properties in the
manner and for the purposes currently operated by such party.
7.13 Environmental Protection. Except as disclosed on
Schedule 7.13 hereto:
(a) Borrowers and the Subsidiaries have all
material permits, licenses and other
authorizations which are required with
respect to the operation of their businesses
under any Environmental Law and each such
authorization is in full force and effect.
(b) Borrowers and the Subsidiaries are in
material compliance with the restrictions,
conditions, standards, prohibitions,
requirements, obligations, schedules and
timetables contained in any Environmental
Laws applicable to them and their assets,
operations and properties (including, without
limitation, compliance with standards,
schedules and timetables therein), including
without limitation those arising under the
Resource Conservation and Recovery Act of
1976, as amended, the Comprehensive
- 18 -
19
Environmental Response, Compensation and
Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act
of 1986 ("CERCLA"), the Federal Water
Pollution Control Act, the Federal Clean Air
Act, and the Toxic Substances Control Act.
(c) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice
of violation, investigation, proceeding,
notice or demand letter or request for
information pending or, to the knowledge of
Borrowers or any Subsidiary, threatened
against Borrowers or any Subsidiary under any
Environmental Law.
(d) Neither Borrowers nor any Subsidiary has
received notice that it has been identified
as a potentially responsible party under
CERCLA or any comparable state law nor has
Borrowers or any Subsidiary received any
notification that any hazardous substances or
any pollutant or contaminant, as defined in
CERCLA and its implementing regulations, or
any toxic substance, hazardous waste,
hazardous constituents, hazardous materials,
asbestos or asbestos containing materials,
petroleum, including crude oil and any
fractions thereof, or other wastes,
chemicals, substances or materials regulated
by any Environmental Laws (collectively
"Hazardous Materials") that it or any of
their respective predecessors in interest has
used, generated, stored, tested, handled,
transported or disposed of, has been found at
any site at which any governmental agency or
private party is conducting a remedial
investigation or other action pursuant to any
Environmental Law.
(e) To the best knowledge of Borrowers there have
been no releases (i.e., any past or present
releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or
dumping) of Hazardous Materials by Borrowers
or any Subsidiary on, upon, into or from any
of the real properties owned or operated by
them at any time. To the best knowledge of
Borrowers there has been no such releases on,
upon, under or into any such real property or
in the vicinity of any of such real property
that, through soil, surface water or
groundwater migration or contamination, may
be located on, in or under such real
properties.
(f) To the best knowledge of Borrowers, there is
no friable asbestos in, on, or at the
respective real properties or any facility or
equipment of Borrowers or any Subsidiary.
- 19 -
20
(g) To the best knowledge of Borrowers, no real
properties owned or operated by the Borrowers
or any Subsidiary is: (i) listed or proposed
for listing on the National Priorities List
under CERCLA; or (ii) listed in the
Comprehensive Environmental Response,
Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on
any comparable list maintained by any
governmental authority.
(h) To the best of Borrower's knowledge, there
are no past or present events, conditions,
circumstances, activities, practices,
incidents, actions or plans which may
interfere with or prevent compliance by
Borrowers or any Subsidiary with any
Environmental Law, or which may give rise to
any common law or legal liability, including,
without limitation, liability under CERCLA or
similar state, local or foreign laws, or
otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing or
notice of violation, study or investigation,
based on or related to the manufacture,
processing, distribution, use, generation,
treatment, storage, disposal, transport,
shipping or handling, or the emission,
discharge, release or threatened release into
the environment, of any pollutant,
contaminant, chemical or industrial, toxic or
hazardous substance or waste.
8. AFFIRMATIVE COVENANTS
Borrowers covenant and agree that for so long as this
Agreement is in effect and until the Advances together with interest, fees and
all other obligations incurred hereunder or under the Documents are paid in
full, and thereafter so long as any Letters of Credit or Letter of Credit
Obligations shall be outstanding:
8.1 Reporting Requirements Covenants. Borrowers will
furnish to Bank:
(a) as soon as available and in any event within
one hundred twenty (120) days after the close
of each fiscal year of Host, the Consolidated
balance sheets of Host and the Subsidiaries
as at the end of such fiscal year and the
related Consolidated statements of
operations, stockholders equity and cash
flows for such fiscal year, setting forth
comparative figures for the preceding fiscal
year, audited by independent certified public
accountants of recognized national standing
acceptable to Bank;
(b) as soon as available and in any event within
ninety (90) days after the end of each fiscal
quarter of Host, and within forty five (45)
days after the end of each month, the
Consolidated balance sheet of Host and its
Subsidiaries as of the end of such quarterly
or monthly period and the related
Consolidated statements of
- 20 -
21
operations and of stockholders' equity and
cash flows for the relevant period ended and
for the elapsed period of the fiscal year
ended with the last day of such period
certified by the chief financial officer of
Host;
(c) at the time of the delivery of the financial
statements provided for in Subsections 8.1(a)
and (b), a certificate of the chief financial
officer, controller, chief accounting officer
or other authorized officer of Host to the
effect that no Default or Event of Default
exists, or, if any Default or Event of
Default does exist, specifying the nature and
extent thereof, which certificate shall be
accompanied by a compliance certificate in a
form acceptable to Bank setting forth the
calculations required to establish whether
Host and the Subsidiaries were in compliance
with the covenants in this Agreement as at
the end of such fiscal period or year, as the
case may be;
(d) promptly upon any officer of a Borrower
obtaining knowledge of any condition or event
which constitutes a Default or Event of
Default, an officers' certificate specifying
the nature and period of existence of any
such condition or event, or specifying the
nature of such claimed Default or Event of
Default, and explaining the action Borrowers
have taken or proposes to take with respect
thereto; and
(e) with reasonable promptness, such other
material information and data with respect to
Borrowers or any Subsidiary, as from time to
time may be reasonably requested by Bank.
8.2 Books, Records and Inspections. Borrowers will, and
will cause each Subsidiary to, keep true books of records and accounts of all
their business transactions in accordance with GAAP and will, and will cause
each Subsidiary to, permit, upon reasonable prior notice by Bank, officers and
designated representatives of Bank to visit and inspect their properties or
assets, and to examine books of account, and to discuss their respective
affairs, finances and accounts with its and their officers and independent
accountants (in the presence of such officers), all at such reasonable times
and intervals as the Bank may request.
8.3 Maintenance of Property. Borrowers will exercise
commercially reasonable efforts to maintain or cause to be maintained in good
repair, working order and condition (subject to normal wear and tear) all Real
Property and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof and will maintain and renew as
necessary all material licenses, permits and other clearances necessary to use
and occupy such Real Properties.
8.4 Payment of Taxes. Borrowers will pay and discharge,
and will cause each Subsidiary to pay and discharge, all material taxes,
assessments and governmental charges or
- 21 -
22
levies imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which material penalties attach thereto,
and all lawful claims which, if unpaid, might become a lien or charge upon any
properties of Borrowers or any Subsidiary or cause a failure or forfeiture of
title thereto, except to the extent such taxes, assessments and charges are
being contested in good faith and adequate reserves therefore have been
established to the extent required by GAAP.
8.5 Compliance with Statutes, etc. Borrowers will, and
will cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property.
8.6 ERISA. Borrowers will each comply with all
requirements imposed by ERISA including, but not limited to, the minimum
funding requirements of the Pension Plans.
8.7 Environmental Events.
(a) The Borrowers will promptly give notice to
Bank upon becoming aware of any of the
following which could reasonably be expected
to result in any material liability under any
Environmental Law: (i) of any material
violation by a Borrower or any Subsidiary of
any Environmental Law; (ii) of any inquiry,
proceeding, investigation or other action,
including a request for information or a
notice of potential environmental liability
from any foreign, federal, state or local
environmental agency or board; or (iii) of
the discovery of the release of any Hazardous
Material at, on, under or from any of the
real properties owned or operated by a
Borrower or any Subsidiary or any facility or
equipment thereat in excess of reportable or
allowable standards or levels under any
Environmental Law, or in a manner and/or
amount.
(b) In the event of the presence of any Hazardous
Material on any of the real properties owned
or operated by a Borrower or any Subsidiary
which is in violation of, or which could
reasonably be expected to result in liability
under, any Environmental Law, take all
necessary steps to initiate and expeditiously
complete all remedial, corrective and other
action to mitigate and eliminate any such
adverse effect.
8.8 Insurance. Borrowers shall maintain in effect
general liability insurance of the types and in amounts customarily maintained
similar companies and property insurance on an "all risks" basis with a
replacement cost endorsement, covering Real Property against loss by fire,
flood (if in a flood zone), earthquakes (if in an earthquake zone), boiler and
machinery, and such other hazards, casualties and contingencies as are normally
and usually covered by extended coverage policies in effect in the locality
where the Real Property is situated and such other risks as may be specified by
Bank, from time to time, with St. ▇▇▇▇ Fire and Marine
- 22 -
23
Insurance Company and Federal Insurance Company or such other insurers as may
be acceptable to Bank, in no event less than the full replacement cost of the
buildings, structures and personalty located at or on the relevant Real
Property. All of such policies shall contain the standard mortgagee
endorsement, shall provide that loss proceeds shall be payable to Bank as
mortgagee, and shall be issued by insurers authorized to do business in the
state in which the Real Property is located. Each policy shall also include a
provision obligating the insurance company to give Bank thirty (30) days prior
written notice of cancellation, amendment or modification. If Borrowers fail
to maintain the Insurance Policies, Bank shall have the option to do so, and
Borrowers agree to repay Bank all amounts so expended by Bank upon demand, with
interest at the Applicable Interest Rate then in effect. Borrower hereby
appoints Bank or any employee or agent of Bank as Borrowers' attorney-in-fact,
which appointment is coupled with an interest and irrevocable, and authorizes
Bank or any employee or agent of Bank, on behalf of Borrowers, to adjust and
compromise any loss with respect to casualties to Real Property greater than
Fifty Thousand Dollars ($50,000) under said insurance and to endorse any check
or draft payable to Borrower in connection therewith.
9. NEGATIVE COVENANTS
Borrowers hereby covenant and agree that so long as this
Agreement is in effect and until the Advances together with interest, fees and
all other obligations incurred hereunder or under the Documents are paid in
full and thereafter so long as any Letter of Credit or Letter of Credit
Obligation shall be outstanding:
9.1 Changes in Business. Borrowers will not, and will
not permit any Subsidiary to, materially alter the character of its primary
businesses.
9.2 Indebtedness. Borrowers will not, and will not
permit any Subsidiary to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(a) pursuant to this Agreement;
(b) existing Indebtedness described on Schedule
9.2(b) hereof and any refinancings thereof;
(c) purchase money Indebtedness incurred to
financing the cost of acquisitions of fixed
assets not to exceed Fifteen Million Dollars
($15,000,000) at any time outstanding;
(d) unsecured Indebtedness not to exceed Ten
Million Dollars ($10,000,000) in aggregate
amount;
(e) intercompany Indebtedness of Host or a
wholly-owned Subsidiary to Host or a
wholly-owned Subsidiary; and
(f) mortgage financing secured by the properties
listed on Schedule 9.2(f) hereof.
- 23 -
24
9.3 Liens. Borrowers will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any lien or encumbrance
upon or with respect to any of their respective properties or assets, whether
now owned or hereafter acquired, or sell any such property or assets subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property or assets or assign any right to receive income, or file or permit the
filing of any financing statement under the UCC or any other similar notice of
lien under any similar recording or notice statute, except:
(a) Permitted Liens;
(b) liens on the assets presently securing
Indebtedness permitted under Section 9.2(b)
hereof, as security for any such present or
future indebtedness;
(c) purchase money security interests securing
Indebtedness permitted under Section 9.2(c)
hereof;
(d) liens upon Real Property released pursuant to
Section 11.4 hereof from the Mortgage/Deed of
Trust granted to Bank, for the purpose of a
refinancing of such Real Property; and
(e) liens on properties described on Schedule
9.2(f) securing indebtedness permitted under
Section 9.2(f) hereof.
9.4 Financial Covenants. Borrowers will not permit:
(a) the Fixed Charge Coverage Ratio, as of the
last day of any fiscal quarter, to be less
than 1.5 to 1.0.
(b) the Debt to Capitalization Ratio, as of the
last day of any fiscal quarter, to be greater
than seventy five percent (75%).
(c) Tangible Net Worth, as of the last day of any
fiscal quarter, to be less than Eighty
Million Dollars ($80,000,000).
(d) EBITDA, as of the last day of any fiscal
quarter, to be less than Thirty Million
Dollars ($30,000,000).
9.5 ERISA. Borrowers will not, and will not permit any
Subsidiary or ERISA Affiliate to:
(a) engage in any transaction in connection with
which any of them could be subject to either
a tax imposed by Section 4975(a) of the Code
or the corresponding civil penalty assessed
pursuant to Section 502(i) of ERISA;
- 24 -
25
(b) permit to exist any accumulated funding
deficiency, for which a waiver has not been
obtained from the Internal Revenue Service,
with respect to any Pension Plan;
(c) permit to exist any failure to make
contributions or any unfunded benefits
liability which creates, or with the passage
of time would create, a statutory lien or
requirement to provide security under ERISA
or the Code in favor of the PBGC or any
Pension Plan, Multiemployer Plan or other
entity;
(d) permit the sum of the amount of unfunded
benefit liabilities (determined in accordance
with Statement of Financial Accounting
Standards No. 35) under all Title IV Plans
(excluding each Title IV Plan with an amount
of unfunded benefit liabilities of zero or
less) to exceed One Million Dollars
($1,000,000) for a period in excess of twelve
(12) months; or
(e) fail to make any payment to any Multiemployer
Plan that any of them may be required to make
under such Multiemployer Plan, any agreement
relating to such Multiemployer Plan, or any
law pertaining thereto.
9.6 Merger/Consolidations/Disposal of Assets. Borrowers
shall not and shall not permit any Subsidiary to:
(a) merge or consolidate with any Person except
for a merger or consolidation of a Subsidiary
with or into another Subsidiary; or
(b) sell or dispose of any assets or properties
other than: (i) sales of inventory in the
ordinary course of business; (ii) other sales
or dispositions in any instance involving the
disposal of an asset or assets with a fair
market value not greater than Twenty Five
Thousand Dollars ($25,000); (iii) sales or
dispositions involving an asset or assets
with fair market values in excess of Twenty
Five Thousand Dollars ($25,000) occurring
during any period of twelve (12) consecutive
months commencing after the date of this
Agreement, involving properties with
aggregate fair market value not in excess of
Five Million Dollars ($5,000,000), and (iv)
sales of the properties listed on Schedule
9.2(f) hereof.
9.7 Contingent Obligations. Borrowers will not, and will
not permit any Subsidiary to, directly or indirectly, create or become liable
with respect to any obligation of another Person except: (a) guaranties
resulting from endorsement of negotiable instruments for collection in the
ordinary course of business; and (b) Borrowers' guaranties of Indebtedness of
one another.
- 25 -
26
9.8 Loans and Advances. Borrowers will not, and will not
permit any Subsidiary to, make loans or advances to or investments in any
Person, other than: (a) to a Person which is a wholly-owned Subsidiary; and (b)
to officers and key employees of a Borrower for the purpose financing purchases
of capital stock of General Host Corporation, in aggregate amount of any time
outstanding not to exceed Five Million Dollars ($5,000,000).
9.9 Dividends. Borrowers will not, and will not permit
any Subsidiary to declare or pay any dividend or distribution on their capital
stock, or purchase redeem or retire their outstanding capital stock.
10. DEFAULTS
10.1 Events of Default. Any of the following events is an
"Event of Default":
(a) non-payment, when due, of the principal or
interest under the Note, in accordance with
the terms hereof and thereof;
(b) default in the payment of any Letter of
Credit Obligation to be paid hereunder or
under any Letter of Credit Agreement, or any
other amount due and payable under this
Agreement or any other Document, and
continuation of such default for one (1)
Business Day after notice thereof to a
Borrower from Bank;
(c) default is made in the due observance or
performance of any terms, covenant or
agreement contained in Sections 8.1 or 8.8 or
Sections 9.1 through 9.9 of this Agreement;
(d) default is made in the due observance or
performance of any other term, covenant or
agreement contained in this Agreement or any
other Document and such default continues
unremedied for a period of thirty (30) days,
or the repudiation or purported revocation by
a Borrower of any of their respective
covenants or obligations under any Document
to which they are party;
(e) any representation or warranty made by a
Borrower herein or in any instrument
submitted pursuant hereto or by any other
party to the Documents proves to have been
untrue in any material respect when made or
deemed made;
(f) default in the payment of any other
obligation of Borrowers or either of them,
for borrowed money having a principal amount
in excess of Five Million Dollars
($5,000,000) in aggregate or in the
observance or performance of any term,
covenant or condition in any agreement or
instrument evidencing, securing or relating
to such indebtedness, and such default shall
be continued for a period
- 26 -
27
sufficient to permit acceleration of the
indebtedness prior to its expressed maturity;
(g) the rendering of any judgments for the
payment of money in excess of One Million
Dollars ($1,000,000) in the aggregate against
Borrower or any Subsidiaries, and such
judgments shall remain unpaid, unvacated, or
unstayed by appeal or otherwise on or before
three (3) Business Days prior to the earliest
date on which proceedings for the enforcement
thereof may be instituted under the
applicable rules or statutes of the
jurisdiction in which said judgments are
rendered;
(h) the occurrence of any "reportable event", as
defined in ERISA, which is determined by the
Pension Benefit Guaranty Corporation to
constitute grounds for termination of any
Pension Plan maintained by or on behalf of
such Person for the benefit of any of its
employees or for the appointment by the
appropriate United States District Court of a
trustee to administer such Pension Plan and
such reportable event is not corrected and
such determination is not revoked within
thirty (30) days after notice thereof has
been given to the plan administrator or such
Person; or the institution of proceedings by
the Pension Benefit Guaranty Corporation to
terminate any such Pension Plan or to appoint
a trustee to administer such Pension Plan; or
the appointment of a trustee by the
appropriate United States District Court to
administer any such Pension Plan or either
Borrower or any Subsidiary or any ERISA
Affiliate shall become liable to the PBGC or
any other party under Section 4062, 4063 or
4064 of ERISA with respect to any Pension
Plan or to any multiemployer plan under
Section 4021 et seq. of ERISA;
(i) if either Borrower or any Subsidiary shall
fail to pay its debts generally as such debts
become due in the ordinary course of
business;
(j) if a creditors' committee shall have been
appointed for the business of either Borrower
or any Subsidiary, or if any of them shall
have made a general assignment for the
benefit of creditors or shall have been
adjudicated bankrupt, or shall have filed a
voluntary petition in bankruptcy or for
reorganization or to effect a plan or
arrangement with creditors; or shall file an
answer to a creditor's petition or other
petition filed against it, admitting the
material allegations thereof for an
adjudication in bankruptcy or for
reorganization; or shall have a creditor's
petition or other petition filed against it
and such petition is not dismissed within
thirty (30) days of such filing; or shall
have applied for or permitted the
- 27 -
28
appointment of a receiver or trustee or
custodian for any of its property or assets;
or such receiver, trustee or custodian shall
have been appointed for any of its property
or assets or if an order shall be entered
approving any petition for reorganization of
either Borrower or any Subsidiary.
10.2 Exercise of Remedies. If an Event of Default has
occurred and is continuing hereunder:
(a) Bank's commitment to make Advances, and the
commitment to issue Letters of Credit
hereunder, shall immediately and
automatically terminate;
(b) Bank may, (i) declare the entire unpaid
balance of the indebtedness hereunder,
including the Note, immediately due and
payable, without presentment, notice or
demand, all of which are hereby expressly
waived by Borrowers and/or (ii) require the
payment by Borrowers, into a restricted
demand deposit account with Bank, of an
amount equal to the undrawn face amount of
any outstanding Letters of Credit as security
for Letter of Credit Obligations then
existing or thereafter arising;
(c) immediately and automatically upon the
occurrence of any Event of Default specified
in Subsection 10.1(j) above, and
notwithstanding the lack of any declaration
by Bank under preceding clause (b), the
entire unpaid principal of the Advances and
other indebtedness hereunder, including the
Note, shall become automatically due and
payable and Borrowers shall immediately and
automatically be required to pay an amount
equal to the undrawn face amount of any
outstanding Letters of Credit into a
restricted demand deposit account with Bank;
and
(d) Bank may collect and apply the proceeds of
any deposits of, or credit owing, either
Borrower toward satisfaction of the
Borrowers' liabilities and obligations to
Bank hereunder, and may exercise any other
remedy permitted by this Agreement, the
Documents or law.
11. MISCELLANEOUS
11.1 Law of Michigan; Submission to Jurisdiction. This
Agreement, the Note and Documents (other than the Mortgages/Deeds of Trust
encumbering Real Property situated outside of the State of Michigan) have been
delivered at Detroit, Michigan, and shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan. Whenever
possible each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be
- 28 -
29
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
Any legal action or proceeding with respect to this
Agreement or any other Document may be brought in the courts of the State of
Michigan or of the United States District Court for the Eastern District of
Michigan, and, by execution and delivery of this Agreement, each party hereto
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the non- exclusive jurisdiction of the aforesaid courts.
Borrowers further irrevocably consent to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to its address
for notices pursuant to Section 11.3 hereof, such service to become effective
three (3) Business Days after such mailing. Nothing herein shall affect the
right Bank to serve process in any other manner permitted by law.
Borrowers hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any proceedings
arising out of or in connection with this Agreement or any Document brought in
the courts referred to above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
11.2 Costs and Expenses. Borrowers jointly and severally
agree to pay all reasonable costs and expenses, including, by way of
description and not limitation, outside attorney fees and out-of-pocket
expenses, incurred by Bank in connection with the negotiation, documentation,
preparation and closing on the transactions contemplated hereunder and in
connection with any exercise or enforcement of its rights and prerogatives
hereunder and under the Documents. All costs, including attorney fees,
incurred by Bank in revising, protecting, exercising or enforcing any of its
rights hereunder and under the Documents, or otherwise incurred by Bank in
connection with an Event of Default or incurred by Bank in connection with the
enforcement hereof, including by way of description and not limitation, such
charges in any court or bankruptcy proceedings or arising out of any claim or
action by any person against Bank which would not have been asserted were it
not for Bank's relationship with Borrower hereunder or under the Documents,
shall also be paid by Borrower.
11.3 Notices. Except as otherwise provided herein, all
notices hereunder shall be sufficient if made in writing and delivered to the
mailing and delivery address of the respective parties indicated on the
signature pages to this Agreement, or transmitted to the facsimile or telex
numbers set forth on their respective signature pages to this Agreement. All
such notices shall be deemed received (i) two (2) Business Days after deposit
thereof in the mails, if given by mail, (ii) one (1) Business Day after deposit
with express courier service, or (iii) if by facsimile or telex transmission,
the Business Day of transmission if transmitted during customary business hours
of the addressee and, if not transmitted during such business hours, the
following Business Day, provided, however, that notices to the Agent shall not
be effective until actual receipt thereof.
- 29 -
30
11.4 Release of Real Property. Bank shall release from
its Mortgage any Real Property upon Borrowers' sale or refinancing thereof,
provided that: (i) no Event of Default exists hereunder; (ii) upon such release
the Collateral Amount for Real Property remaining in the Collateral Pool will
be not less than the Maximum Amount then in effect, and (iii) Borrowers shall
apply contemporaneously with such release, reduce the Maximum Amount in
accordance with Section 4.5 hereof in an amount equal to the net proceeds of
such sale or refinancing, or such lesser amount as Bank shall approve in
writing.
11.5 Insurance and Condemnation Proceeds. In the event that,
at the time that any insured casualty to any of the Real Property occurs or any
of the Real Property is taken or by eminent domain, or at the time of payment
of proceeds or compensation with respect to any such event, if (i) there shall
then exist a Default or Event of Default, or (ii) if such Real Property was
previously included in the Collateral Pool, the Collateral Amount reduced by an
amount equal to eighty percent (80%) of the appraised value of such Real
Property does not exceed the Maximum Amount then in effect, then Bank shall be
entitled to apply the proceeds of such casualty or taking, in its discretion,
to reduction of Indebtedness of Borrowers to Bank and the Maximum Amount shall
automatically be reduced by an amount equal to the greater of the proceeds of
such casualty or taking or the portion of the Collateral Amount previously
attributable to the affected Real Property. In the event that neither of the
circumstances described in clauses (i) or (ii) above exist either at the time
of the relevant casualty or taking, or at the time of payment of proceeds with
respect thereto, then Borrowers shall be entitled to receive such proceeds free
of any Lien in favor of Bank and, thereafter, the affected Real Property shall
not be included in the Collateral Pool.
11.6 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of Borrowers and Bank and their
respective successors and assigns, provided that the foregoing shall not
authorize any assignment by Borrowers of any of their rights or duties
hereunder.
11.7 Indulgence. No delay or failure of Bank in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege nor shall any single or partial exercise thereof preclude
any further exercise thereof, nor the exercise of any other right, power or
privilege. The rights of Bank hereunder are cumulative and are not exclusive
of any rights or remedies which Bank would otherwise have.
11.8 Counterparts. This Agreement may be executed in
several counterparts, and each executed copy shall constitute an original
instrument, but such counterparts shall together constitute but one and the
same instrument.
11.9 Jury Waiver. Each of the parties to this agreement
hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement, the
Documents or the transactions contemplated hereby or thereby.
- 30 -
31
WITNESS the due execution hereof as of the day and year first above
written.
GENERAL HOST CORPORATION COMERICA BANK
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Its: Vice President Its: Vice President
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. 3280
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇ Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
FRANK'S NURSERY & CRAFTS, INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Its: Vice President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
- 31 -
32
EXHIBIT "A"
MORTGAGE-BACKED NOTE
$25,000,000.00 Detroit, Michigan
November ______, 1996
FOR VALUE RECEIVED, General Host Corporation, a New York corporation,
and ▇▇▇▇▇▇ Nursery & Crafts, Inc., a Michigan corporation, jointly and
severally ("Borrowers"), promise to pay to Comerica Bank, a Michigan banking
corporation, in lawful money of the United States of America in immediately
available funds, the principal sum of Twenty Five Million Dollars ($25,000,000)
or so much of said sum as has been advanced and outstanding hereunder pursuant
to that certain Mortgage-Backed Credit Agreement of even date herewith between
the Borrowers and Bank ("Agreement") on the Revolving Credit Maturity Date.
Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Agreement.
Interest shall accrue on the unpaid principal balance of this Note from
time to time outstanding at the Applicable Interest Rates, as selected by the
Borrowers or as otherwise applicable pursuant to the provisions of the
Agreement; provided, however, that in the event and so long as an Event of
Default shall exist, interest shall accrue at the per annum rate equal to: (i)
in the case of a Prime-based Loan, 3% above the Prime-based Rate; and (ii) in
the case of a Eurodollar-based Loan, three percent (3%) above the
Eurodollar-based Rate until the end of the then current Interest Period, at
which time such Eurodollar Loans shall be automatically converted into
Prime-based Loans and bear interest at the rate provided for in clause (i)
above.
Interest shall be payable: (i) with respect to Prime-based Loans,
quarterly on the last Business Day of each calendar quarter; (ii) with respect
to Eurodollar-based Loans, on the last day of each Interest Period applicable
thereto. In computation of interest effect shall be given to any change in the
Prime-based Rate resulting from a change in the Prime Rate on the date of such
change in the Prime Rate.
This Note is a note under which advances, repayments and readvances may
be made from time to time, in accordance with the terms and conditions of the
Agreement, and may be accelerated or matured pursuant to the terms of the
Agreement, to which reference is hereby made.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on the schedule attached hereto and made
a part hereof, or on a continuation thereof which shall be attached hereto and
made a part hereof, or other-wise recorded by such holder in its internal
records; provided, however, that the failure of the holder hereof to make such
a notation or any error in such a notation shall not affect the obligations of
the Borrowers under this Note.
33
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
Borrowers acknowledge and agree that their obligations hereunder and
under the Agreement are joint and several obligations and may be enforced
against either or both of them severally, or both of them jointly,
notwithstanding the fact that an advance may be requested by, and the proceeds
thereof utilized by, either of the Borrowers. The Borrowers further hereby
waive presentment for payment, demand, protest and notice of protest and notice
of dishonor and nonpayment of this Note and agree that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note. Any transferees
of, or endorser, guarantor or surety paying this Note in full shall succeed to
all rights of Bank, and Bank shall be under no further responsibility for the
exercise thereof or the loan evidenced hereby.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
GENERAL HOST CORPORATION
By: ______________________________
Its: _____________________________
▇▇▇▇▇▇ NURSERY & CRAFTS, INC.
By: ______________________________
Its: _____________________________
-2-
34
TRANSACTIONS
ON
REVOLVING CREDIT NOTE
Amount of Outstanding
Type of Amount of Principal or Principal
Loan Made Loan Made Interest Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- --------- --------- --------- --------- -------
- 3 -
35
EXHIBIT "B"
TRANCHE ONE REAL ESTATE
Store 5 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 23 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 26 ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 27 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 28 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 30 ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 45 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 58 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 81 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 86 ▇▇▇▇ ▇▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 94 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 102 10901 Bustleton, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 105 ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 111 ▇▇▇▇ ▇▇▇▇ ▇▇.▇., ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 112 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 113 ▇▇▇▇ ▇.▇. ▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 118 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 119 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 120 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 151 ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 164 ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 178 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 179 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 188 ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 189 ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 199 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 202 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 213 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 240 ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 259 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 266 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 645 ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 648 ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 649 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. (▇▇▇. ▇), ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 652 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ (▇▇▇. ▇▇), ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TRANCHE TWO REAL ESTATE
Store 15 ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 29 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 85 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
36
Store 93 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 104 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 110 ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 117 ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 134 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
Store 141 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 181 ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 272 ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 286 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 605 ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 622 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 624 ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 625 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Store 638 ▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
37
EXHIBIT "C"
REQUEST FOR LOAN
A. REQUEST
The undersigned authorized officer of __________________(1), pursuant to
the terms of that certain Mortaged-Backed Credit Agreement dated November 27,
1996 ("Agreement") among Frank's Nursery & Crafts, Inc., General Host
Corporation and Comerica Bank ("Bank") hereby requests an Advance on
________________, 199___(2) in the amount of ___________________ Dollars
($____________)(3).
The Applicable Interest Rate for the Advance shall be _________________
(4).
B. APPLICATION OF PROCEEDS
1. the proceeds of this Advance shall be:
(a) applied to convert or renew the following outstanding
Advance:
Last Day of
Type of Advance Interest Period Principal Amount
--------------- --------------- ----------------
(b) deposited in the undersigned's account number
________________________ with __________________.
C. CERTIFICATION
The undersigned hereby certifies that all the conditions set forth in
the Agreement for the Advance requested hereby are satisfied and shall remain
satisfied as of the date for the Advance requested hereby.
___________________________
(1)Insert "General Host Corporation" or "▇▇▇▇▇▇ Nursery & Craft, Inc.", as
applicable.
(2)Insert date for Advance, which must be at least three (3) Business Days
after request, if request is for a Eurodollar Loan.
(3)Insert amount, which must be: (i) not less than $1,000,000, if a
Prime-based Loan; and (ii) a multiple of $1,000,000, if a Eurodollar-based
Loan.
(4)Insert "Prime-based Rate" or "Eurodollar-based Rate", as applicable.
38
D. DEFINED TERMS
Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Agreement.
Dated this _____ day of ________________, 199___.
______________________________________
By:___________________________________
Its:__________________________________
-2-
39
EXHIBIT "D"
GENERAL HOST CORPORATION AND SUBSIDIARIES
General Host Corporation
Frank's Nursery & Crafts, Inc.
Nursery Distributors, Inc.
General Host Holding Corporation
AMS Industries, Inc.
AMS Salt Industries, Inc.
Bay Resources, Inc.
SNG Acquisition Company, Inc.
40
SCHEDULE 7.13
The capitalized terms that are used (but not defined) in this Schedule
7.13 are used with the meanings given to them in the foregoing Mortgage-Backed
Credit Agreement ("the Credit Agreement") among Comerica Bank, General Host
Corporation and Frank's Nursery & Crafts, Inc.
NYDEC ORDER ON CONSENT - As reported on Schedule 7.13 to the Prior
Agreement, Frank's entered into an Order on Consent with the New York
Department of Environmental Conservation on May 11, 1994. The $100,000 fine
referred to in the Order on Consent has been paid, and the Order on Consent
remains in effect.
LITTLE GENERAL STORES - Host remains contractually liable for
environmental liabilities resulting from the operation of its former Little
General Stores Division. Host expects to receive reimbursement of a
substantial part of its costs from state-funded programs.
SOLVENTS RECOVERY SERVICE ("SRS") SITE, SOUTHINGTON, CT - This is a
federal superfund case in Connecticut that involves shipments of waste from a
former Host subsidiary, Allied Leather Corporation ("Allied"), to the SRS site.
However, in 1978, Allied and all of its subsidiaries (including Allied Kid
Corporation ("Kid")) were purchased, and their liabilities were assumed, by
▇▇▇▇▇ Leather Corporation ("▇▇▇▇▇"). Host believes that any liabilities
resulting from the acts of Allied are the responsibility of ▇▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ - This is a federal
superfund case in Connecticut that involves the alleged trans-shipment of waste
from the SRS Site to the Old Southington Landfill Site. There are no
allegations involving Host other than a general allegation that the waste of
dozens of companies were shipped from the SRS Site for ultimate disposal at the
Old Southington Landfill Site. As with the SRS Site, Host believes that
Allied's responsibility (if any) for the trans-shipments has been assumed by
▇▇▇▇▇.
▇▇▇▇▇▇ LANDFILL & ▇▇▇▇▇ LANDFILL - These are federal superfund sites in
New Jersey. In each case, Host is a third-party defendant to claims of numerous
parties who were the major contributors to the landfills. However, Host's only
connection to these landfills is alleged shipments of waste to the sites by
Kid. As with the SRS Site and the Old Southington Landfill Site, Host believes
that Kid's responsibility (if any) for the shipments to these sites has been
assumed by ▇▇▇▇▇.
MATTERS DISCLOSED IN ENVIRONMENTAL REPORTS - Other matters that may be
within the scope of Section 7.13 of the Credit Agreement and this Schedule 7.13
are, or will be, disclosed in the Environmental Reports.
41
SCHEDULE 9.2(b)
SCHEDULE OF INDEBTEDNESS
(Amounts are in thousands)
TOTAL
-----
SENIOR DEBT:
Comerica Bank $10,000
11 1/2% Senior Notes due 78,000
February 15, 2002
Metlife Capital Mortgage Financing due 10,290
September 1, 2005
Midland Loan Services Mortgage Financing due 676
April 1, 2006
Midland Loan Services Mortgage Financing due 2,535
November 1, 2005
Midland Loan Services Mortgage Financing due 16,465
February 1, 2006
Peoples Bank Mortgage Financing due 4,816
February 1, 2001
First Union National Bank Mortgage Financing due 3,762
May 1, 2006
First Union National Bank Mortgage Financing due 653
May 1, 2006
N.A.D. Realty Co. due August 17, 1999 560
Capital Leases 12,707
Standby Letters of Credit 8,102
SUBORDINATED DEBT:
8% Convertible Subordinated Notes due 65,000
February 15, 2002
42
SCHEDULE 9.3(b)
SCHEDULE OF LIENS
Blanket liens on real estate, fixtures and equipment on the following
stores:
YEAR YEAR
STORE OPENED STATE STORE OPENED STATE
-----------------------------------------------------------------------------------------------------
25 1969 Grand Rapids 156 1987 Michigan City
32 1971 Columbus 163 1986 Crystal Lake
33 1971 Grand Rapids 167 1986 Schaumburg
34 1971 Okemos 168 1986 ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 205 1987 Louisville
65 1981 Flint 208 1988 ▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Twp. 214 1988 ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. 219 1988 Columbus
88 1981 Waukegan 244 1990 ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 245 1990 ▇▇▇▇▇
92 1982 Clinton Twp. 265 1992 ▇▇. ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ 267 1992 South Bend
99 1984 Brookhaven 277 1993 Bloomfield
100 1984 Joliet 623 1985 ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 626 1985 Bricktown
103 1983 ▇▇▇▇ Rapids 628 1986 Bridgewater
106 1985 Libertyville 631 1985 Branford
107 1985 ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
135 1986 Bridgeton 633 1985 Southington
139 1986 St. ▇▇▇▇▇▇▇ 636 1986 ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 639 1987 Kingston
142 1986 Cincinnati 643 1987 East Hartford
-----------------------------------------------------------------------------------------------------
43
WITNESS the due execution hereof as of the day and year first above
written.
GENERAL HOST CORPORATION COMERICA BANK
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Its: Vice President Its: Vice President
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. 3280
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇ Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
FRANK'S NURSERY & CRAFTS, INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Its: Vice President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
-31-
44
SCHEDULE 9.2(f)
STORE # ADDRESS
610 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
601 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
644 ▇▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
646 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6400
6399
6401
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
West side of Filler Ave, ▇▇▇ ▇▇. ▇. ▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇