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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended December 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 1-4596
GROW GROUP, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-1665588
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Park Avenue, New York, New York 10166
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 599-4400
---------------------------
Not Applicable
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------- ---------
The number of shares of Common Stock, $.10 par value per share,
outstanding as of February 1, 1995 was 16,102,713.
Page 1 of 43 pages
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INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
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<S> <C> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheet 3
(Unaudited) - December 31, 1994 and
June 30, 1994
Consolidated Condensed Statement of 4
Operations (Unaudited) - Six Months
and Three Months Ended December 31, 1994
and December 31, 1993
Consolidated Condensed Statement of 5
Cash Flows (Unaudited) - Six Months
Ended December 31, 1994 and
December 31, 1993
Notes to Consolidated Condensed 6
Financial Statements (Unaudited)
Item 2. Management's Discussion and 7
Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
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PART I: FINANCIAL INFORMATION
GROW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
<TABLE>
<CAPTION>
SHEET (UNAUDITED) December June
31, 30,
ASSETS 1994 1994
---------------------------
CURRENT ASSETS (In thousands)
<S> <C> <C>
Cash and cash equivalents $ 6,955 $ 38,816
Accounts receivable less allowances
of $4,263 and $3,667 64,557 69,622
Inventories, at lower of cost or market:
Finished and in-process products 64,857 48,490
Materials, containers and supplies 17,160 14,413
--------------------------
82,017 62,903
Prepaid expenses and other current
assets 16,728 16,052
--------------------------
Total current assets 170,257 187,393
PROPERTY, PLANT AND EQUIPMENT, at cost 134,286 99,331
Less allowance for depreciation 51,605 48,524
--------------------------
82,681 50,807
OTHER ASSETS 24,829 9,721
--------------------------
TOTAL ASSETS $277,767 $247,921
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 33,186 $ 37,532
Accrued expenses 36,542 29,036
Income taxes 4,901 10,180
Dividend payable 1,127 1,128
Current installments on long-term debt 3,215 2,270
--------------------------
Total current liabilities 78,971 80,146
DEFERRED INCOME TAXES AND OTHER LIABILITIES 27,941 28,178
LONG-TERM DEBT 28,861 914
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share:
Authorized 50,000,000 shares;
issued 16,271,831 shares 1,627 1,627
Less treasury stock at cost
(165,993 and 168,493 shares) (1,344) (1,345)
Paid-in-capital 123,432 123,428
Equity adjustments (51) (49)
Deferred compensation (2,761) (2,907)
Retained earnings 21,091 17,929
--------------------------
141,994 138,683
--------------------------
TOTAL LIABILITIES AND $277,767 $247,921
STOCKHOLDERS' EQUITY ==========================
</TABLE>
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GROW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(In thousands except per share data)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December 31 December 31
------------------ -------------------
1994 1993 1994 1993
------------------ -------------------
<S> <C>
Revenues $246,239 $197,386 $120,066 $93,458
Costs and expenses:
Cost of products sold 157,300 124,699 77,554 59,066
Research and development 2,986 2,313 1,522 1,148
Storage and delivery 8,705 7,837 4,343 3,960
Selling and administrative 66,893 52,202 33,736 25,964
Interest expense 1,164 448 700 222
Corporate interest income (208) (483) (57) (204)
Unusual Item 60 60
-------- -------- -------- --------
Total costs and expenses 236,900 187,016 117,858 90,156
-------- -------- -------- --------
Income before income taxes 9,339 10,370 2,208 3,302
Income taxes (3,922) (4,355) (927) (1,386)
-------- -------- -------- --------
Net Income $ 5,417 $ 6,015 $ 1,281 $ 1,916
======== ======== ======== ========
Net income per common and
common equivalent share $.34 $.37 $.08 $.12
========== ========== ========== ==========
Average number of shares 16,148,000 16,085,000 16,137,000 16,091,000
========== ========== ========== ==========
Cash dividends per share
(common) $.14 $.14 $.07 $.07
========== ========== =========== ==========
</TABLE>
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GROW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31
----------------------
1994 1993
----------------------
(In thousands)
<S> <C> <C>
Operating Activities
Net income $ 5,417 $ 6,015
Adjustments to reconcile net income
to net cash provided (used)
by operating activities:
Depreciation, amortization and
provision for doubtful accounts 4,615 4,575
Changes in operating assets and
liabilities-net (9,590) (10,839)
Other (339) 184
---------------------
Net cash provided (used) by
operating activities 103 (65)
Investing Activities
Purchase of property, plant and
equipment - net of disposals (3,219) (2,480)
Acquisition of Sinclair (1994) and
Zynolyte (1993) (55,387) (16,300)
---------------------
Net cash used by
investing activities (58,606) (18,780)
Financing Activities
Proceeds from borrowing/payments of
debt - net 28,892 (4,912)
Proceeds from issuance of common stock 5 623
Cash dividends (2,255) (2,293)
---------------------
Net cash provided (used) by
financing activities 26,642 (6,582)
---------------------
(Decrease) in cash and
cash equivalents (31,861) (25,427)
Cash and cash equivalents at beginning
of period 38,816 56,015
---------------------
Cash and cash equivalents at end
of period $ 6,955 $30,588
=====================
</TABLE>
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
a. The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month and six
month periods ended December 31, 1994 are not necessarily indicative of the
results that may be expected for the year ending June 30, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
June 30, 1994.
b. Effective August 2, 1993, the Company purchased all of the outstanding
capital stock of Zynolyte Products Company ("Zynolyte") for $16,300,000 in
cash. Zynolyte is a producer of aerosol and specialty brush-applied paint
products. Its annual revenues were approximately $27 million for the year
ended January 31, 1993.
c. Effective August 1, 1994, the Company acquired substantially all of
the assets and assumed certain liabilities of Sinclair Paint Company
("Sinclair"), a division of Insilco Corporation, for approximately $55 million
in cash. Sinclair's revenues for calendar year 1993 amounted to approximately
$95 million. The transaction resulted in approximately $15 million in cost in
excess of net assets acquired which is being amortized over 40 years. In
connection with the acquisition, the Company's revolving loan facility, with
Chemical Bank as agent, was increased from $40 million to $60 million and $26
million was borrowed thereunder. During the quarter ended December 31, 1994,
the revolving loan facility was increased to $75 million and Wells Fargo Bank
became a participant.
d. On November 16, 1994, the Company announced the execution of a letter
of intent to acquire Manhattan Products, Inc., a manufacturer of household
products with annual revenues of approximately $22 million. The Company has
also executed a letter of intent in connection with a small acquisition in
Spain.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Quarter and Six Months Ended December 31, 1994
Compared to Quarter and Six Months Ended December 31, 1993
Results of Operations
Consolidated revenues increased $48,853,000 for the six months and
$26,608,000 for the quarter. The increases were primarily the result of
including the revenues of Sinclair Paint Company ("Sinclair") acquired
effective August 1, 1994. Revenues of the Company's operations exclusive of
Sinclair increased nominally (1.8% for the six months and 1.7% for the
quarter).
Revenues of the coatings and chemicals segment increased 29.0% in the
six months and 31.9% in the second quarter with Sinclair accounting for over
95% of such increases. Revenues from Architectural Paint operations, other
than Sinclair, increased 4.4% in the six months and 4.3% in the quarter. The
increases were principally the result of higher sales of sundries and increases
in company-operated stores offset by lower royalty income. Geographically,
sales were stronger for the Company's Devoe & Raynolds operation which sells
east of the Rocky Mountains and softer in California and Hawaii where Ameritone
Paint Company operates. Automotive Division revenues decreased 9.2% in the six
months and 12.2% in the quarter primarily on lower unit volume. Devoe Coatings
Company Division (maintenance and marine products) revenues declined by 5.2% in
the six months and 10.3% in the quarter. A decline in revenues of this
Division of 7.0% for the six months and 4.1% in the quarter was related for the
most part to the absence of "supply and apply" business caused by the
completion during 1994 of a major bridge project in Rhode Island. Decreased
volume from operations in the highly competitive European market had a negative
impact in both the six months and the second quarter.
Revenues of the Consumer and Professional Products segment increased
5.1% in the six months and 12.7% in the quarter. Higher unit volume in sales
to club stores (including new products introduced to this market in the second
quarter) and higher unit volume for the Consumer Division in each of the first
two quarters of fiscal 1995 were offset somewhat by lower sales of Professional
Products and competitive price reductions.
Cost of Products Sold: Consolidated gross profit as a percentage of
revenues decreased slightly from 36.8% to 36.1% for the six months and from
36.8% to 35.4% for the quarter. The impact of including Sinclair (which
operates at somewhat higher gross profit margins than some of the Company's
other operations) had the effect of increasing the gross profit percentage by
6/10 of one percentage point for the six months and 7/10 of one percentage
point for the quarter. This was offset by lower margins in the Consumer and
Professional Products
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Group and the Automotive Division. The reduction in the gross margin
percentage of the Consumer and Professional Products Group (3.1 percentage
points for the six months and 3.6 percentage points for the quarter) was
related principally to competitive price reductions and raw material cost
increases. This operation has implemented selling price increases to go into
effect for the second half of fiscal 1995. The Automotive Division also
experienced raw material cost increases. Architectural Paint operations have
been and are expected to continue to experience selective raw material cost
increases. Selling price increases have been implemented and further action
will be taken in the second half of fiscal 1995 to maintain gross margin
percentages.
Storage and Delivery: The increases for the six months and the
quarter are primarily the result of including Sinclair along with a change in
the mix of shipments in the Consumer and Professional Products Group.
Selling, General and Administrative: The increases of $14,691,000 for
the six months and $7,772,000 for the quarter were primarily the result of
including Sinclair ($14,099,000 for the six months and $7,955,000 for the
quarter) in the current periods. However, significant product introduction
costs for Foam & Fresh(TM) were absorbed by the Consumer and Professional
Products Group and the Architectural Paint operations absorbed the costs of a
store relocation in Honolulu, higher store operating costs due to opening new
locations (including the acquisition of 5 Havco Paint stores in the Tampa area)
and product development costs related to Aquanamel(TM) and Devlok(TM).
Expenditures related to the start-up of the Consumer Paint Division,
legal expenses regarding a case won by a jury verdict and costs incurred on the
aborted proposed acquisition of Martin Paint were expensed during the six
months. The absence of such expenses would have resulted in lower SG&A expense
reflecting lower environmental costs - See Environmental Matters.
Interest Expense and Corporate Interest Income: The net increase in
these items was primarily the result of increased borrowings and the use of
cash balances for the acquisition of Sinclair. Interest rate increases by the
Federal Reserve also contributed to the net increase.
Environmental Matters: The Company continues to incur and accrue
costs related to compliance with environmental laws. The provision for such
costs amounted to $502,000 for the six months and $280,000 for the quarter
ended December 31, 1994 compared to $1,611,000 for the prior year's six months
and $1,176,000 for the prior year's quarter. The Company periodically reviews
its estimates of and accrues appropriate amounts for costs of compliance with
environmental laws and the cleanup of various sites, including sites as to
which governmental agencies have designated the Company (or have indicated a
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possibility of designating the Company) a potentially responsible party. (See
the Company's Annual Report on Form 10-K for the year ended June 30, 1994).
The provisions for environmental costs for the periods ended December 31, 1994
are not necessarily indicative of future costs.
Where a minimum cost or a reasonable estimate of the total costs of
cleanup or compliance has been established, the applicable amount has been
accrued. The related accrued liability totalled $10,709,000 as of December 31,
1994. In many instances, estimates cannot be made of the total costs of cleanup
or compliance, the Company's share, if any, of such costs, nor the timing
thereof; accordingly, the Company is unable to predict the effect thereof on
future results of operations. In the event of one or more adverse
determinations in any annual or interim period, the impact on results of
operations for those periods could be material. However, based upon the
Company's present belief as to its relative involvement at these sites, other
viable entities' responsibilities for cleanup, potential insurance coverage and
the extended period over which any costs would be incurred, the Company
presently believes that these matters will not have a material adverse effect
on the Company's consolidated financial position.
LIQUIDITY:
During the six months, the Company's net income, adjusted for
depreciation, amortization and provision for doubtful accounts, contributed
$10,032,000 to cash flow. Changes in operating assets and liabilities and
other items used $9,929,000 in cash flow. The changes in all balance sheet
categories were primarily the result of the acquisition of Sinclair and normal
seasonal patterns.
The acquisition of the assets of Sinclair Paint Company for
$55,387,000 in cash and net purchases of fixed assets of $3,319,000 resulted in
a use of cash for investing activities of $58,606,000.
In connection with the acquisition of Sinclair, and for working
capital, the Company borrowed $28 million under its revolving credit line
(which has a current interest rate of approximately 8 1/8%). After giving
effect to cash dividends paid of $2,255,000 and other minor items, net cash
provided by financing activities was $26,642,000.
The Company has a credit facility expiring in March 1996 with four
banks to borrow, at prime (or, at the Company's option, LIBOR plus 2%) up to
$75 million less the amount of outstanding letters of credit ($13,693,000 at
December 31, 1994). The line of credit is in the process of being extended
through March 31, 1997 and the entire credit facility is expected to be
renegotiated in the near future. Future short-term and long-term liquidity
requirements, including amounts required for acquisitions, are expected to be
satisfied from cash flow from operations, borrowings from banks or other
lenders and/or equity sources.
9
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PART II
OTHER INFORMATION
Item 5. Other Information.
On December 7, 1994, the Company entered into
Amendment No. 3 to the Credit Agreement dated as of March 31,
1993 among the Company, Grow Group Insurance, Ltd., Cello
Corp., Sinclair-Ameritone Paint Corporation and Zynolyte
Products Company, wholly-owned subsidiaries of the Company,
and Chemical Bank New Jersey, N.A., Fleet Bank, PNC Bank,
Kentucky, Inc., Wells Fargo Bank, N.A. and Chemical Bank
(collectively, the "Banks"), pursuant to which the Banks
increased the Company's credit facility to $75,000,000, with
the maximum amount of the revolving credit loans permitted
thereunder being equal to $75,000,000 less the amount of
outstanding letters of credit under the facility. Reference
is made to the Company's Current Reports on Form 8-K dated
(date of earliest event reported) March 31, 1993 and August 3,
1994 for further information concerning this credit facility.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
4.1 Amendment No. 3, dated December 7, 1994, to the
Credit Agreement dated as of March 31, 1993, by and
among the Company, Grow Group Insurance, Ltd., Cello
Corp., Sinclair-Ameritone Paint Corporation, Zynolyte
Products Company, Chemical Bank New Jersey, N.A.,
Fleet Bank, PNC Bank, Kentucky, Inc., Wells Fargo
Bank, N.A. and Chemical Bank.
27. Financial Data Schedule.
(b) Reports on Form 8-K:
There were no Reports on Form 8-K filed by the Company
during the quarter ended December 31, 1994.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GROW GROUP, INC.
Date: February 13, 1995 By: /s/ R. Banks
-------------------------
Russell Banks, President
(Chief Executive Officer)
By: /s/ Frank V. Esser
-------------------------
Frank V. Esser, Treasurer
(Chief Financial and Chief
Accounting Officer)
11
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EXHIBIT INDEX
4.1 Amendment No. 3, dated December 7, 1994, to the Credit
Agreement dated as of March 31, 1993, by and among the
Company, Grow Group Insurance, Ltd., Cello Corp., Sinclair -
Ameritone Paint Company, Chemical Bank New Jersey, N.A., Fleet
Bank, PNC Bank, Kentucky, Inc., Wells Fargo Bank, N.A., and
Chemical Bank.
27. Financial Data Schedule.
12
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EXHIBIT 4.1
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This Amendment No. 3 ("Amendment No. 3") dated December 7, 1994 to the
Credit Agreement dated as of March 31, 1993, as amended by Amendment No. 1
thereto dated August 6, 1993 and Waiver, Consent and Amendment No. 2 thereto
dated August 3, 1994 is made by and among GROW GROUP, INC., a New York
corporation (the "Borrower"), GROW GROUP INSURANCE, LTD., a Bermuda corporation
("Grow Insurance"), CELLO CORP., a Maryland corporation ("Cello"),
SINCLAIR-AMERITONE PAINT CORPORATION, a California corporation (f/k/a SINCLAIR
ACQUISITION CORP. and f/k/a AMERITONE PAINT CORPORATION) ("Ameritone"),
ZYNOLYTE PRODUCTS COMPANY, a California corporation ("Zynolyte"), CHEMICAL BANK
NEW JERSEY, N.A., a national banking association ("Chemical" or the "Agent"),
FLEET BANK, a New York banking corporation ("Fleet"), PNC BANK, KENTUCKY, INC.,
a Kentucky banking corporation ("PNC"), WELLS FARGO BANK, N.A., a national
banking association ("Wells Fargo"; Chemical, Fleet, PNC and Wells Fargo
sometimes herein each called a "Bank" and collectively, the "Banks") and
CHEMICAL BANK, a New York banking corporation (the "Issuing Bank").
W I T N E S S E T H:
SECTION 1. Recitals.
This Amendment No. 3 is made in contemplation of the following matters:
1.1. The Borrower, Grow Insurance, the Banks (except Wells Fargo) and
the Issuing Bank have entered into a certain Credit Agreement dated as of March
31, 1993. That original agreement was amended by Amendment No. 1 thereto dated
August 6, 1993 and Waiver,
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Consent and Amendment No. 2 thereto dated August 3, 1994 (the original
agreement, as amended by said Amendment No. 1 and Waiver, Consent and Amendment
No. 2, being herein called the "Existing Credit Agreement"). Terms defined in
the Existing Credit Agreement are used herein as therein defined unless
otherwise defined herein.
1.2. Wells Fargo wishes to become a Bank under the Existing Credit
Agreement and the other Loan Documents. The Borrower, the Banks and the
Issuing Bank have agreed to amend the Existing Credit Agreement and the other
Loan Documents to effect such addition.
1.3. The Borrower has requested, and the Banks have agreed, to
increase the amount of the Aggregate Revolving Credit Commitments from $60
million to $75 million, the proceeds of such increase to be used by the
Borrower for legal and proper corporate purposes, and to amend the Existing
Credit Agreement and the other Loan Documents to reflect such increase. The
Banks have agreed to increase such Aggregate Revolving Credit Commitments on
the terms provided herein and on the further condition that the Borrower
execute and deliver to the Banks amended and restated revolving credit notes,
in the aggregate amount of the increased Aggregate Revolving Credit
Commitments, in the forms of Exhibits L-1A, L-2A, L-3A and L-4A hereto.
1.4. It is a condition precedent to the Banks' agreement to enter
into this Amendment No. 3 that the maximum amount of the Amendment Fee provided
in Section 14.1(d) of the Existing Credit Agreement shall be increased from
$15,000 to $18,750 and the Borrower has agreed to such increase on the terms
provided herein.
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1.5. The Borrower has requested the Banks and the Issuing Bank to
enter into this Amendment No. 3 and the Banks and the Issuing Bank have agreed
to enter into this Amendment No. 3 for the foregoing purposes.
SECTION 2. Amendments.
2.1. The Existing Credit Agreement and each of the other Loan
Documents are hereby amended such that each and every reference to the terms
"Bank" or "Banks" in the Existing Credit Agreement and each of the other Loan
Documents shall include Wells Fargo Bank, N.A., and the preamble of each of the
Collateral Documents shall be deemed to include Wells Fargo Bank, N.A. Upon
the effectiveness of this Amendment No. 3, Wells Fargo Bank, N.A. shall become
a Bank under the Existing Credit Agreement and the other Loan Documents with
all the rights and duties of a Bank thereunder and will perform in accordance
with their terms all the obligations which by the terms of the Existing Credit
Agreement and the other Loan Documents are required to be performed by it as a
Bank.
2.2. Defined Terms. The defined terms "Aggregate Revolving Credit
Commitments" and "Bank" and "Banks" in Section 1.1 of the Existing Credit
Agreement shall be, and hereby are, amended in their entirety to read as
follows:
"Aggregate Revolving Credit Commitments" shall mean, at any
time, the amount by which Seventy-Five Million Dollars ($75,000,000)
(or such lesser amount which may be in effect after giving effect to
any voluntary or mandatory reduction pursuant to Section 2.8) exceeds
the amount of all outstanding Letters of Credit and Existing Letters
of Credit at such time."
"Bank" or "Banks" shall mean either Chemical, Fleet,
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PNC or Wells Fargo, as the context may require, or Chemical, Fleet,
PNC and Wells Fargo collectively."
2.3. New Defined Terms. New defined terms "Amendment No. 3",
"December 7, 1994 Amended and Restated Revolving Credit Note", "December 7,
1994 Amended and Restated Revolving Credit Notes" and "Wells Fargo" shall be,
and hereby are, added to Section 1.1 of the Existing Credit Agreement to read
as follows:
"Amendment No. 3" shall mean that certain Amendment
No. 3 dated December 7, 1994, by and among the Borrower, Grow
Insurance, Cello Corp., Ameritone, Zynolyte Products Company,
the Banks and the Issuing Bank."
"December 7, 1994 Amended and Restated Revolving
Credit Note" and "December 7, 1994 Amended and Restated
Revolving Credit Notes" shall have the meanings set forth in
Section 2.3".
"Wells Fargo" shall mean Wells Fargo Bank, N.A.,
a national banking association."
2.4. December 7, 1994 Amended and Restated Revolving Credit Notes.
The defined terms "Amended and Restated Revolving Credit Note" and "Amended and
Restated Revolving Credit Notes" in Section 1.1 of the Existing Credit
Agreement shall be, and hereby are, deleted and of no further force and effect,
and each and every reference to "Amended and Restated Revolving Credit Note"
and "Amended and Restated Revolving Credit Notes" in the Existing Credit
Agreement and the other Loan Documents shall be replaced with "December 7, 1994
Amended and Restated Revolving Credit Note" and "December 7, 1994 Amended and
Restated Revolving Credit Notes", respectively, except to the extent that the
context may otherwise require.
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2.5. Section 2.3. Section 2.3(b) of the Existing Credit Agreement
shall be, and hereby is, amended in its entirety to read as follows:
"(b) On the effective date of Amendment No. 3, subject to the
terms and conditions hereafter set forth, the Borrower will issue to
each Bank, and Chemical, PNC and Fleet will accept in substitution and
exchange for (but not in payment of) its original Amended and Restated
Revolving Credit Note, an amended and restated revolving credit note
(each a "December 7, 1994 Amended and Restated Revolving Credit Note"
and collectively, the "December 7, 1994 Amended and Restated Revolving
Credit Notes") in the principal amount of each Bank's Commitment. The
December 7, 1994 Amended and Restated Revolving Credit Notes shall be
substantially in the forms attached to Amendment No. 3 as Exhibits
L-1A, L-2A, L-3A and L-4A. Each December 7, 1994 Amended and Restated
Revolving Credit Note shall be dated the effective date of Amendment
No. 3. Simultaneously, with the execution and delivery by the
Borrower to each Bank of its December 7, 1994 Amended and Restated
Revolving Credit Note dated the effective date of Amendment No. 3,
payable to such Bank's order, Chemical, Fleet and PNC will return to
the Borrower its original Amended and Restated Revolving Credit Note
marked "Superseded".
2.6. Section 3.2(b). Section 3.2(b) of the Existing Credit Agreement
shall be, and hereby is, amended in its entirety to read as follows:
"(b) Each of Fleet and PNC (i) shall be deemed to have
purchased on the Effective Date from Chemical, as the purchaser of a
one hundred percent participation in each Existing Letter of Credit
from the Issuing Bank, a subparticipation in such Existing Letter of
Credit according to such Bank's Pro Rata Share, and (ii) Wells Fargo
shall be deemed to have purchased on the effective date of Amendment
No. 3 from Chemical, Fleet and PNC, as the purchasers, collectively,
of a one hundred percent participation and subparticipation in each
Existing Letter of Credit from the Issuing Bank, a subparticipation in
such Existing Letter of Credit according to such Bank's Pro Rata
Share; and (iii) PNC, Fleet and Wells Fargo shall, upon the issuance
of a Letter of Credit on or after the effective date of Amendment No.
3 and the purchase by Chemical of a one hundred percent participation
therein from the Issuing Bank, be deemed to have purchased from
Chemical a subparticipation in each such Letter of Credit according to
such Bank's Pro Rata Share".
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2.7. Section 12.1. Section 12.1 of the Existing Credit Agreement
shall be, and hereby is, amended to provide that any notice required to be
delivered to the Banks shall also be delivered to:
"Wells Fargo Bank, N.A.
420 Montgomery Street
Ninth Floor (MAC #0101-091)
San Francisco, California 94104
Telecopy: (415) 421-1352
Attention: Mr. Lenny Mason
Assistant Vice President."
and
(until December 31, 1994)
Wells Fargo Corporate Services, Inc.
Corporate Banking Division
450 Park Avenue
Suite 1401
New York, New York 10022
Telecopy: (212) 750-3989
Attention: Mr. Richard T. Clapp
Senior Vice President."
(after December 31, 1994)
"Wells Fargo Corporate Services, Inc.
Corporate Banking Division
31 Hillside Avenue
Madison, New Jersey 07940
Telecopy: (201) 514-5975
Attention: Mr. Richard T. Clapp
Senior Vice President."
2.8. Section 14.1(d). Section 14.1(d) of the Existing Credit
Agreement shall be, and hereby is, amended in its entirety to read as follows:
"(d) The Borrower shall pay to the Agent a fee in the
amount of $18,750 for the ratable benefit of the Banks, or
such lesser amount as the Agent and the Borrower shall
reasonably agree from time to time (exclusive of reasonable
legal fees)
6
<PAGE> 8
for each amendment (except for any amendment to SECTION 8.9,
8.10, 8.11, 8.12 or 9.15 made pursuant to SECTION 1.2) made to
this Agreement (the "Amendment Fee"), payable at the time any
such amendment becomes effective."
2.9. Exhibits; Schedules. Exhibit J-1 to the Existing Credit
Agreement shall be, and it hereby is, amended to read in its entirety in the
form of Exhibit J-1A hereto, Exhibits L-1, L-2 and L-3 to the Existing Credit
Agreement, shall be, and hereby are, deleted and of no further force and
effect, and each and every reference to Exhibits L-1, L-2 and L-3 in the
Existing Credit Agreement shall be, and hereby is, replaced with Exhibits L-1A,
L-2A, L-3A and L-4A hereto, collectively.
SECTION 3. Waiver.
The Banks hereby waive their right to payment of any Amendment Fee to
which they may be entitled pursuant to Section 14.1(d) of the Existing Credit
Agreement in connection with the execution and delivery of this Amendment
No. 3.
SECTION 4. Representations and Warranties.
(a) Except as provided in Section 5(a) of Amendment No. 2,
the Borrower hereby represents and warrants that each representation and
warranty by the Borrower set forth in Article V of the Existing Credit
Agreement is true and correct on and as of the date of this Amendment No. 3 as
though made by the Borrower on and as of such date.
(b) Except as provided in Section 5(b) of Amendment No.
2, each Corporate Guarantor hereby represents and warrants that each
representation and warranty by the Corporate Guarantors set forth in
7
<PAGE> 9
Section 5 of the Subsidiaries' Guaranty is true and correct on and as of the
date of this Amendment No. 3 as though made by such Corporate Guarantors on and
as of such date.
SECTION 5. Reaffirmations.
(a) The Borrower and Grow Insurance each hereby restates
and reaffirms the provisions of the Credit Agreement (as heretofore and hereby
amended), confirms its absolute and unconditional obligations thereunder and
expressly acknowledges and agrees that its obligations thereunder continue in
full force and effect from and after the date hereof. The Borrower hereby
restates and reaffirms the provisions of the Parent Guaranty, the Pledge
Agreement and the Borrower Security Agreement (as heretofore and hereby
amended), confirms its absolute and unconditional guaranty and pledge (of the
stock of Cello, Ameritone and Zynolyte) and grant of security interests and
other obligations thereunder, and expressly acknowledges and agrees that its
guaranty, pledge and grant of security interests and other obligations
thereunder continue in full force and effect from and after the date hereof.
Cello, Ameritone and Zynolyte each hereby restates and reaffirms the provisions
of the Subsidiaries' Guaranty and the Corporate Guarantors' Security Agreement
(as heretofore and hereby amended), confirms its absolute and unconditional
guaranty and grant of security interests and other obligations thereunder, and
expressly acknowledges and agrees that its guaranty and grant of security
interests and other obligations thereunder continue in full force and effect
from and after the date hereof.
8
<PAGE> 10
(b) The Borrower expressly acknowledges that the
execution of this Amendment No. 3 or any actions taken by the Borrower, the
Banks, or the Issuing Bank in connection therewith shall not be deemed a
release or waiver of any of the Borrower's obligations pursuant to the Parent
Guaranty.
(c) Each of the Corporate Guarantors expressly
acknowledges that the execution of this Amendment No. 3 or any actions taken by
the Corporate Guarantors, the Banks or the Issuing Bank in connection therewith
shall not be deemed a release or waiver of any of the Corporate Guarantors'
obligations pursuant to the Subsidiaries' Guaranty. The Corporate Guarantors
hereby further confirm that the Obligations pursuant to the Subsidiaries'
Guaranty shall expressly include any amount by which the Aggregate Revolving
Credit Commitments are increased by this Amendment No. 3.
SECTION 6. General.
This Amendment No. 3 is made pursuant to Section 14.1 of the Existing
Credit Agreement, Section 8 of the Subsidiaries' Guaranty and Section 12 of the
Corporate Guarantors' Security Agreement, and the Borrower, Grow Insurance, the
Corporate Guarantors, the Banks and the Issuing Bank acknowledge that all
provisions of the Existing Credit Agreement and the other Loan Documents, as
amended or waived hereby, are and shall remain, in full force and effect, and
nothing herein contained shall be deemed a waiver of, or impair the
effectiveness or enforceability of, any other terms or conditions of the
Existing Credit Agreement or any of the other Loan Documents except as
expressly stated herein. From and after the date of this Amendment
9
<PAGE> 11
No. 3, each and every reference in any of the Loan Documents to the Credit
Agreement or any other Loan Document is hereby amended to mean the Existing
Credit Agreement or such other Loan Document as heretofore amended and as
amended by this Amendment No. 3. Nothing in Amendment No. 1, Amendment No. 2
or Amendment No. 3 shall be deemed to constitute the Borrower, Grow Insurance,
Cello, Ameritone or Zynolyte a party to, or to make the respective Person
obligated under, or to require the consent or signature of the respective
Person for, any amendment, supplement, consent or waiver with respect to, any
of the Credit Agreement, Parent Guaranty, Pledge Agreement, Borrower Security
Agreement, Subsidiaries' Guaranty or Corporate Guarantors' Security Agreement,
unless the particular Person was a party to the particular Loan Document on the
Closing Date (or, as to Zynolyte, except for the Subsidiaries' Guaranty and
Corporate Guarantors' Security Agreement, as to which it is a guarantor,
pledgor and obligor as fully as though an original party thereto).
SECTION 7. Effectiveness.
Anything in this Amendment No. 3 to the contrary notwithstanding, this
Amendment No. 3 shall become effective when, and only when: (i) it shall have
been signed and delivered on behalf of all of the parties hereto; (ii) the
Banks shall have received the executed December 7, 1994 Amended and Restated
Revolving Credit Notes in the form of Exhibits L-1A, L-2A, L-3A and L-4A
hereto; and (iii) the Banks and the Issuing Bank shall have received an opinion
of Parker Chapin
10
<PAGE> 12
Flattau & Klimpl, counsel for the Borrower, addressed to the Banks, dated the
date of Amendment No. 3, in form and substance satisfactory to the Banks.
SECTION 8. Expenses of the Agent, the Banks and the Issuing Bank.
Pursuant to Section 16.3 of the Existing Credit Agreement, the Borrower shall
pay on demand to the Agent, the Banks and the Issuing Bank, the reasonable
out-of-pocket expenses of the Agent, each Bank and the Issuing Bank, including,
but not limited to the reasonable fees and expenses of Special Counsel and
counsel for each Bank and the Issuing Bank.
SECTION 9. Counterparts.
This Amendment No. 3 may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute one
agreement. It shall not be necessary in making proof of this Amendment No. 3
or of any document required to be executed and delivered in connection herewith
or therewith to produce or account for more than one counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 3 to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
GROW GROUP, INC.
By:
-----------------------------------
GROW GROUP INSURANCE, LTD.
By:
-----------------------------------
11
<PAGE> 13
CELLO CORP.
By:
-----------------------------------
SINCLAIR-AMERITONE PAINT CORPORATION
(f/k/a Sinclair Acquisition Corp. and
f/k/a Ameritone Paint Corporation)
By:
-----------------------------------
ZYNOLYTE PRODUCTS COMPANY
By:
-----------------------------------
CHEMICAL BANK NEW JERSEY, N.A.
By:
-----------------------------------
FLEET BANK
By:
-----------------------------------
PNC BANK, KENTUCKY, INC.
By:
-----------------------------------
WELLS FARGO BANK, N.A.
By:
-----------------------------------
CHEMICAL BANK
By:
-----------------------------------
12
<PAGE> 14
Exhibit J-1
SCHEDULE OF COMMITMENTS
<TABLE>
<CAPTION>
Commitment Pro Rata
Bank Amount Share
- - ---- ---------- --------
<S> <C> <C>
Chemical Bank New Jersey, NA $30,000,000 40%
Fleet Bank $15,000,000 20%
PNC Bank, Kentucky, Inc. $20,000,000 26.67%
Wells Fargo Bank, N.A. $10,000,000 13.33%
----------- ------
Total $75,000,000 100%
</TABLE>
13
<PAGE> 15
DECEMBER 7, 1994
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$20,000,000 New York, New York
December 7, 1994
GROW GROUP, INC., a corporation organized under the laws of
the State of New York (the "Borrower"), for value received, hereby promises to
pay to the order of PNC BANK, KENTUCKY, INC., a Kentucky banking corporation
(the "Bank") at the office of Chemical Bank New Jersey, N.A., East 36 Midland
Avenue, Paramus, New Jersey 07652, on March 31, 1996, in lawful money of the
United States of America and in immediately available funds, the principal sum
of TWENTY MILLION DOLLARS ($20,000,000), or such lesser unpaid principal amount
as shall be outstanding hereunder, together with interest from the date hereof
on the unpaid principal balance of this amended and restated revolving credit
note (the "December 7, 1994 Amended and Restated Revolving Credit Note"),
payable on the dates and at the rate or rates provided for in the Credit
Agreement, dated as of March 31, 1993, by and among the Borrower, Grow Group
Insurance, Ltd., the Bank, Chemical Bank New Jersey, N.A., Fleet Bank, Wells
Fargo Bank, N.A. and Chemical Bank, as amended by Amendment No. 1 thereto dated
August 6, 1993, Amendment No. 2 thereto dated August 3, 1994 and Amendment No.
3 thereto dated December 7, 1994, as the same may be further amended from time
to time (the "Agreement"). In no event shall the interest rate payable hereon
exceed the maximum rate of interest permitted by law. Capitalized terms used
herein which are defined in the Agreement shall have the meanings therein
defined.
The holder of this December 7, 1994 Amended and Restated
Revolving Credit Note is authorized to record, pursuant to Section 2.3 of the
Agreement, the date and principal amount of each Revolving Credit Loan made by
the Bank and each payment or prepayment of principal made by the Borrower with
respect thereto on the schedule annexed hereto and constituting a part hereof,
or on a continuation thereof which shall be attached hereto and made a part
hereof, which endorsement shall constitute presumptive evidence of the accuracy
of the information endorsed, provided that the failure of the Bank to make such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Agreement. The aggregate unpaid principal amount of all
Revolving Credit Loans set forth in such schedule shall be presumptive evidence
of the principal amount owing and unpaid on this December 7, 1994 Amended and
Restated Revolving Credit Note. The Bank may attach one or more continuations
to such schedule as and when required.
This December 7, 1994 Amended and Restated Revolving Credit
Note is one of the December 7, 1994 Amended and Restated Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is subject to
the terms of the Agreement. The principal of this December 7, 1994 Amended and
Restated Revolving Credit Note is prepayable in the amounts and under the
circumstances, and its maturity is subject to acceleration upon the terms, set
forth in the
<PAGE> 16
Agreement. Except as otherwise provided in the Agreement, if any
payment on this December 7, 1994 Amended and Restated Revolving Credit Note
becomes due and payable on a day which is not a Business Day, the Maturity
thereof shall be extended to the next Business Day, and interest shall be
payable at the rate or rates specified in the Agreement during such extension
period.
Presentment for payment, demand, notice of dishonor, protest,
notice of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this December 7, 1994 Amended and
Restated Revolving Credit Note are hereby waived except as specifically
otherwise provided in Section 10.2 of the Agreement.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this December 7, 1994 Amended
and Restated Revolving Credit Note shall become or may be declared to be,
immediately due and payable, all as and to the extent provided in the
Agreement. This December 7, 1994 Amended and Restated Revolving Credit Note is
entitled to the benefits of the Collateral Documents which are referred to in
the Agreement. Reference is made to each of the foregoing instruments for a
description of the Collateral provided thereby and the rights of the Bank
thereunder and in respect of such Collateral.
This December 7, 1994 Amended and Restated Revolving Credit
Note shall be construed and enforceable in accordance with, and be governed by
the internal laws of, the State of New Jersey without regard to principles of
conflict of laws.
This December 7, 1994 Amended and Restated Revolving Credit
Note may not be changed orally, but only by an instrument in writing executed
pursuant to the provisions of Article XIV of the Agreement.
GROW GROUP, INC.
By:
------------------------------
Name:
-----------------------------
Title:
---------------------------
2
<PAGE> 17
REVOLVING CREDIT LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<S> <C> <C> <C> <C>
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Loan or Prepaid Amount Made By
- - -------------------------------------------------------------
</TABLE>
3
<PAGE> 18
<TABLE>
<S> <C>
STATE OF )
: ss.:
COUNTY OF )
</TABLE>
BE IT REMEMBERED, that on this day of December, 1994, before me,
the subscriber, an officer duly authorized pursuant to law to take
acknowledgments for use in the State of New York, personally appeared
,
who, I am satisfied is the person who executed the within Instrument as the
of Grow Group, Inc., the corporation named therein, and I having first made
known to him the contents thereof, he did thereupon acknowledge that the said
Instrument made by the said corporation and sealed with its corporate seal and
delivered by him as such officer, is the voluntary act and deed of such
corporation, made by virtue of authority from its Board of Directors, for the
uses and purposes therein expressed.
----------------------------
4
<PAGE> 19
DECEMBER 7, 1994
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$10,000,000 New York, New York
December 7, 1994
GROW GROUP, INC., a corporation organized under the laws of
the State of New York (the "Borrower"), for value received, hereby promises to
pay to the order of WELLS FARGO BANK, N.A., a national banking association (the
"Bank") at the office of Chemical Bank New Jersey, N.A., East 36 Midland
Avenue, Paramus, New Jersey 07652, on March 31, 1996, in lawful money of the
United States of America and in immediately available funds, the principal sum
of TEN MILLION DOLLARS ($10,000,000), or such lesser unpaid principal amount as
shall be outstanding hereunder, together with interest from the date hereof on
the unpaid principal balance of this amended and restated revolving credit note
(the "December 7, 1994 Amended and Restated Revolving Credit Note"), payable on
the dates and at the rate or rates provided for in the Credit Agreement, dated
as of March 31, 1993, by and among the Borrower, Grow Group Insurance, Ltd.,
the Bank, Chemical Bank New Jersey, N.A., PNC Bank, Kentucky, Inc., Fleet Bank
and Chemical Bank, as amended by Amendment No. 1 thereto dated August 6, 1993,
Amendment No. 2 thereto dated August 3, 1994 and Amendment No. 3 thereto dated
December 7, 1994, as the same may be further amended from time to time (the
"Agreement"). In no event shall the interest rate payable hereon exceed the
maximum rate of interest permitted by law. Capitalized terms used herein which
are defined in the Agreement shall have the meanings therein defined.
The holder of this December 7, 1994 Amended and Restated
Revolving Credit Note is authorized to record, pursuant to Section 2.3 of the
Agreement, the date and principal amount of each Revolving Credit Loan made by
the Bank and each payment or prepayment of principal made by the Borrower with
respect thereto on the schedule annexed hereto and constituting a part hereof,
or on a continuation thereof which shall be attached hereto and made a part
hereof, which endorsement shall constitute presumptive evidence of the accuracy
of the information endorsed, provided that the failure of the Bank to make such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Agreement. The aggregate unpaid principal amount of all
Revolving Credit Loans set forth in such schedule shall be presumptive evidence
of the principal amount owing and unpaid on this December 7, 1994 Amended and
Restated Revolving Credit Note. The Bank may attach one or more continuations
to such schedule as and when required.
<PAGE> 20
This December 7, 1994 Amended and Restated Revolving Credit
Note is one of the December 7, 1994 Amended and Restated Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is subject to
the terms of the Agreement. The principal of this December 7, 1994 Amended and
Restated Revolving Credit Note is prepayable in the amounts and under the
circumstances, and its maturity is subject to acceleration upon the terms, set
forth in the Agreement. Except as otherwise provided in the Agreement, if any
payment on this December 7, 1994 Amended and Restated Revolving Credit Note
becomes due and payable on a day which is not a Business Day, the Maturity
thereof shall be extended to the next Business Day, and interest shall be
payable at the rate or rates specified in the Agreement during such extension
period.
Presentment for payment, demand, notice of dishonor, protest,
notice of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this December 7, 1994 Amended and
Restated Revolving Credit Note are hereby waived except as specifically
otherwise provided in Section 10.2 of the Agreement.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this December 7, 1994 Amended
and Restated Revolving Credit Note shall become or may be declared to be,
immediately due and payable, all as and to the extent provided in the
Agreement. This December 7, 1994 Amended and Restated Revolving Credit Note is
entitled to the benefits of the Collateral Documents which are referred to in
the Agreement. Reference is made to each of the foregoing instruments for a
description of the Collateral provided thereby and the rights of the Bank
thereunder and in respect of such Collateral.
This December 7, 1994 Amended and Restated Revolving Credit
Note shall be construed and enforceable in accordance with, and be governed by
the internal laws of, the State of New Jersey without regard to principles of
conflict of laws.
This December 7, 1994 Amended and Restated Revolving Credit
Note may not be changed orally, but only by an instrument in writing executed
pursuant to the provisions of Article XIV of the Agreement.
GROW GROUP, INC.
By:
------------------------------
Name:
-----------------------------
Title:
---------------------------
2
<PAGE> 21
REVOLVING CREDIT LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<S> <C> <C> <C> <C>
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Loan or Prepaid Amount Made By
- - -------------------------------------------------------------
</TABLE>
3
<PAGE> 22
<TABLE>
<S> <C>
STATE OF )
: ss.:
COUNTY OF )
</TABLE>
BE IT REMEMBERED, that on this day of December, 1994,
before me, the subscriber, an officer duly authorized pursuant to law to take
acknowledgments for use in the State of New York, personally appeared
,
who, I am satisfied is the person who executed the within Instrument as the
of Grow Group, Inc., the corporation named therein, and I having first made
known to him the contents thereof, he did thereupon acknowledge that the said
Instrument made by the said corporation and sealed with its corporate seal and
delivered by him as such officer, is the voluntary act and deed of such
corporation, made by virtue of authority from its Board of Directors, for the
uses and purposes therein expressed.
----------------------------
4
<PAGE> 23
DECEMBER 7, 1994
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$30,000,000 New York, New York
December 7, 1994
GROW GROUP, INC., a corporation organized under the laws of
the State of New York (the "Borrower"), for value received, hereby promises to
pay to the order of CHEMICAL BANK NEW JERSEY, N.A., a national banking
association (the "Bank") at the office of the Bank, East 36 Midland Avenue,
Paramus, New Jersey 07652, on March 31, 1996, in lawful money of the United
States of America and in immediately available funds, the principal sum of
THIRTY MILLION DOLLARS ($30,000,000), or such lesser unpaid principal amount as
shall be outstanding hereunder, together with interest from the date hereof on
the unpaid principal balance of this amended and restated revolving credit note
(the "December 7, 1994 Amended and Restated Revolving Credit Note"), payable on
the dates and at the rate or rates provided for in the Credit Agreement, dated
as of March 31, 1993, by and among the Borrower, Grow Group Insurance, Ltd.,
the Bank, Fleet Bank, PNC Bank, Kentucky, Inc., Wells Fargo Bank, N.A. and
Chemical Bank, as amended by Amendment No. 1 thereto dated August 6, 1993,
Amendment No. 2 thereto dated August 3, 1994 and Amendment No. 3 thereto dated
December 7, 1994, as the same may be further amended from time to time (the
"Agreement"). In no event shall the interest rate payable hereon exceed the
maximum rate of interest permitted by law. Capitalized terms used herein which
are defined in the Agreement shall have the meanings therein defined.
The holder of this December 7, 1994 Amended and Restated
Revolving Credit Note is authorized to record, pursuant to Section 2.3 of the
Agreement, the date and principal amount of each Revolving Credit Loan made by
the Bank and each payment or prepayment of principal made by the Borrower with
respect thereto on the schedule annexed hereto and constituting a part hereof,
or on a continuation thereof which shall be attached hereto and made a part
hereof, which endorsement shall constitute presumptive evidence of the accuracy
of the information endorsed, provided that the failure of the Bank to make such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Agreement. The aggregate unpaid principal amount of all
Revolving Credit Loans set forth in such schedule shall be presumptive evidence
of the principal amount owing and unpaid on this December 7, 1994 Amended and
Restated Revolving Credit Note. The Bank may attach one or more continuations
to such schedule as and when required.
1
<PAGE> 24
This December 7, 1994 Amended and Restated Revolving Credit
Note is one of the December 7, 1994 Amended and Restated Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is subject to
the terms of the Agreement. The principal of this December 7, 1994 Amended and
Restated Revolving Credit Note is prepayable in the amounts and under the
circumstances, and its maturity is subject to acceleration upon the terms, set
forth in the Agreement. Except as otherwise provided in the Agreement, if any
payment on this December 7, 1994 Amended and Restated Revolving Credit Note
becomes due and payable on a day which is not a Business Day, the Maturity
thereof shall be extended to the next Business Day, and interest shall be
payable at the rate or rates specified in the Agreement during such extension
period.
Presentment for payment, demand, notice of dishonor, protest,
notice of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this December 7, 1994 Amended and
Restated Revolving Credit Note are hereby waived except as specifically
otherwise provided in Section 10.2 of the Agreement.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this December 7, 1994 Amended
and Restated Revolving Credit Note shall become or may be declared to be,
immediately due and payable, all as and to the extent provided in the
Agreement. This December 7, 1994 Amended and Restated Revolving Credit Note is
entitled to the benefits of the Collateral Documents which are referred to in
the Agreement. Reference is made to each of the foregoing instruments for a
description of the Collateral provided thereby and the rights of the Bank
thereunder and in respect of such Collateral.
This December 7, 1994 Amended and Restated Revolving Credit
Note shall be construed and enforceable in accordance with, and be governed by
the internal laws of, the State of New Jersey without regard to principles of
conflict of laws.
This December 7, 1994 Amended and Restated Revolving Credit
Note may not be changed orally, but only by an instrument in writing executed
pursuant to the provisions of Article XIV of the Agreement.
GROW GROUP, INC.
By:
------------------------------
Name:
-----------------------------
Title:
---------------------------
2
<PAGE> 25
REVOLVING CREDIT LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<S> <C> <C> <C> <C>
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Loan or Prepaid Amount Made By
- - -------------------------------------------------------------
</TABLE>
3
<PAGE> 26
<TABLE>
<S> <C>
STATE OF )
: ss.:
COUNTY OF )
</TABLE>
BE IT REMEMBERED, that on this day of December, 1994,
before me, the subscriber, an officer duly authorized pursuant to law to take
acknowledgments for use in the State of New York, personally appeared
,
who, I am satisfied is the person who executed the within Instrument as the
of Grow Group, Inc., the corporation named therein, and I having first made
known to him the contents thereof, he did thereupon acknowledge that the said
Instrument made by the said corporation and sealed with its corporate seal and
delivered by him as such officer, is the voluntary act and deed of such
corporation, made by virtue of authority from its Board of Directors, for the
uses and purposes therein expressed.
----------------------------
4
<PAGE> 27
DECEMBER 7, 1994
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$15,000,000 New York, New York
December 7, 1994
GROW GROUP, INC., a corporation organized under the laws of
the State of New York (the "Borrower"), for value received, hereby promises to
pay to the order of FLEET BANK, a New York banking corporation (the "Bank") at
the office of Chemical Bank New Jersey, N.A., East 36 Midland Avenue, Paramus,
New Jersey 07652, on March 31, 1996, in lawful money of the United States of
America and in immediately available funds, the principal sum of FIFTEEN
MILLION DOLLARS ($15,000,000), or such lesser unpaid principal amount as shall
be outstanding hereunder, together with interest from the date hereof on the
unpaid principal balance of this amended and restated revolving credit note
(the "December 7, 1994 Amended and Restated Revolving Credit Note"), payable on
the dates and at the rate or rates provided for in the Credit Agreement, dated
as of March 31, 1993, by and among the Borrower, Grow Group Insurance, Ltd.,
the Bank, Chemical Bank New Jersey, N.A., PNC Bank, Kentucky, Inc., Wells Fargo
Bank, N.A. and Chemical Bank, as amended by Amendment No. 1 thereto dated
August 6, 1993, Amendment No. 2 thereto dated August 3, 1994 and Amendment No.
3 thereto dated December 7, 1994, as the same may be further amended from time
to time (the "Agreement"). In no event shall the interest rate payable hereon
exceed the maximum rate of interest permitted by law. Capitalized terms used
herein which are defined in the Agreement shall have the meanings therein
defined.
The holder of this December 7, 1994 Amended and Restated
Revolving Credit Note is authorized to record, pursuant to Section 2.3 of the
Agreement, the date and principal amount of each Revolving Credit Loan made by
the Bank and each payment or prepayment of principal made by the Borrower with
respect thereto on the schedule annexed hereto and constituting a part hereof,
or on a continuation thereof which shall be attached hereto and made a part
hereof, which endorsement shall constitute presumptive evidence of the accuracy
of the information endorsed, provided that the failure of the Bank to make such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Agreement. The aggregate unpaid principal amount of all
Revolving Credit Loans set forth in such schedule shall be presumptive evidence
of the principal amount owing and unpaid on this December 7, 1994 Amended and
Restated Revolving Credit Note. The Bank may attach one or more continuations
to such schedule as and when required.
<PAGE> 28
This December 7, 1994 Amended and Restated Revolving Credit
Note is one of the December 7, 1994 Amended and Restated Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is subject to
the terms of the Agreement. The principal of this December 7, 1994 Amended and
Restated Revolving Credit Note is prepayable in the amounts and under the
circumstances, and its maturity is subject to acceleration upon the terms, set
forth in the Agreement. Except as otherwise provided in the Agreement, if any
payment on this December 7, 1994 Amended and Restated Revolving Credit Note
becomes due and payable on a day which is not a Business Day, the Maturity
thereof shall be extended to the next Business Day, and interest shall be
payable at the rate or rates specified in the Agreement during such extension
period.
Presentment for payment, demand, notice of dishonor, protest,
notice of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this December 7, 1994 Amended and
Restated Revolving Credit Note are hereby waived except as specifically
otherwise provided in Section 10.2 of the Agreement.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this December 7, 1994 Amended
and Restated Revolving Credit Note shall become or may be declared to be,
immediately due and payable, all as and to the extent provided in the
Agreement. This December 7, 1994 Amended and Restated Revolving Credit Note is
entitled to the benefits of the Collateral Documents which are referred to in
the Agreement. Reference is made to each of the foregoing instruments for a
description of the Collateral provided thereby and the rights of the Bank
thereunder and in respect of such Collateral.
This December 7, 1994 Amended and Restated Revolving Credit
Note shall be construed and enforceable in accordance with, and be governed by
the internal laws of, the State of New Jersey without regard to principles of
conflict of laws.
This December 7, 1994 Amended and Restated Revolving Credit
Note may not be changed orally, but only by an instrument in writing executed
pursuant to the provisions of Article XIV of the Agreement.
GROW GROUP, INC.
By:
------------------------------
Name:
-----------------------------
Title:
---------------------------
2
<PAGE> 29
REVOLVING CREDIT LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<S> <C> <C> <C> <C>
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Loan or Prepaid Amount Made By
- - -------------------------------------------------------------
</TABLE>
3
<PAGE> 30
<TABLE>
<S> <C>
STATE OF )
: ss.:
0COUNTY OF )
</TABLE>
BE IT REMEMBERED, that on this day of December, 1994,
before me, the subscriber, an officer duly authorized pursuant to law to take
acknowledgments for use in the State of New York, personally appeared
,
who, I am satisfied is the person who executed the within Instrument as the
of Grow Group, Inc., the corporation named therein, and I having first made
known to him the contents thereof, he did thereupon acknowledge that the said
Instrument made by the said corporation and sealed with its corporate seal and
delivered by him as such officer, is the voluntary act and deed of such
corporation, made by virtue of authority from its Board of Directors, for the
uses and purposes therein expressed.
----------------------------
4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 6,955,000
<SECURITIES> 0
<RECEIVABLES> 68,820,000
<ALLOWANCES> 4,263,000
<INVENTORY> 82,017,000
<CURRENT-ASSETS> 170,257,000
<PP&E> 134,286,000
<DEPRECIATION> 51,605,000
<TOTAL-ASSETS> 277,767,000
<CURRENT-LIABILITIES> 78,971,000
<BONDS> 0
<COMMON> 1,627,000
0
0
<OTHER-SE> 140,367,000
<TOTAL-LIABILITY-AND-EQUITY> 277,767,000
<SALES> 246,239,000
<TOTAL-REVENUES> 246,239,000
<CGS> 157,300,000
<TOTAL-COSTS> 236,900,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 783,000
<INTEREST-EXPENSE> 1,164,000
<INCOME-PRETAX> 9,339,000
<INCOME-TAX> 3,922,000
<INCOME-CONTINUING> 5,417,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,417,000
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
