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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 QUARTERLY PERIOD ENDED DECEMBER 28, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-9031
SUNBELT NURSERY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1932993
(State of incorporation) (I.R.S. Employer Identification No.)
32382 Del Obispo Street, San Juan Capistrano, California 92675
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 714/248-3811
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 and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
As of February 16, 1998, the Registrant had 8,500,000 common shares, $.01
par value, outstanding.
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<PAGE>
Sunbelt Nursery Group, Inc.
Index to Quarterly Report on Form 10-Q
<TABLE>
<CAPTION>
<S> <C>
Part I. Financial Information Page
- ------------------------------ ----
Consolidated Statement of Operations for the Three and Six Months
Ended December 28, 1997 and December 29, 1996.................................3
Consolidated Balance Sheet as of December 28, 1997 and
June 29, 1997.................................................................4
Consolidated Statement of Cash Flows for the Six Months
Ended December 28, 1997 and December 29, 1996.................................5
Notes to Consolidated Financial Statements........................................6
Management's Discussion and Analysis of Results of
Operations and Financial Condition...........................................11
Part II. Other Information
- ---------------------------
Legal Proceedings................................................................12
Exhibits.........................................................................13
Signatures.......................................................................18
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Sunbelt Nursery Group, Inc.
Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 28, December 29, December 28, December 29,
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 16,360 $ 23,412 $ 29,094 $ 41,655
Cost of goods sold 9,021 13,559 16,180 24,656
-------------- -------------- -------------- --------------
Gross profit 7,339 9,853 12,914 16,999
General, administrative and
selling expense 8,656 11,055 16,525 20,755
Depreciation and amortization 294 617 672 1,291
Interest / other income 0 (30) (3) (760)
Interest expense 148 277 273 539
-------------- -------------- -------------- --------------
Loss before provision for income taxes (1,759) (2,066) (4,543) (4,826)
Provision for income taxes - - - -
-------------- -------------- -------------- --------------
Net loss ($ 1,759) ($ 2,066) ($ 4,543) ($ 4,826)
============== ============== ============== ==============
FAS 128 "Earnings Per Share"
Net loss per share - Basic ($ 0.21) ($ 0.24) ($ 0.53) ($ 0.57)
============== ============== ============== ==============
Average common shares outstanding 8,500 8,500 8,500 8,500
============== ============== ============== ==============
Net loss per share - Diluted ($ 0.21) ($ 0.24) ($ 0.53) ($ 0.57)
============== ============== ============== ==============
Average common shares outstanding 8,500 8,500 8,500 8,500
Series A Preferred Stock - - - -
Subordinated Lender Warrants - - - -
-------------- -------------- -------------- --------------
Total potential common shares outstanding 8,500 8,500 8,500 8,500
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
Sunbelt Nursery Group, Inc.
Consolidated Balance Sheet
(unaudited, in thousands)
<TABLE>
<CAPTION>
December 28, June 29,
1997 1997
----------- -----------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $190 $1,838
Cash - restricted 153 154
Accounts receivable, net 361 261
Inventories 11,729 14,088
Other current assets 565 611
----------- -----------
Total current assets 13,009 16,952
----------- -----------
Property and equipment, at cost 21,949 22,426
Less accumulated depreciation 18,280 17,847
----------- -----------
Net property and equipment 3,669 4,579
Other assets 25 66
----------- -----------
Total assets $16,703 $ 21,597
=========== ===========
Liabilities and Shareholders' Deficit
- -------------------------------------
Current liabilities:
Notes payable $0 $0
Accounts payable 9,699 11,098
Accrued compensation 1,915 1,473
Current portion of long-term debt and capital leases 4,681 3,190
Other current liabilities 4,433 5,063
----------- -----------
Total current liabilities 20,728 20,824
Long-term debt and capital leases 1,192 1,366
Reserve for store closings 437 543
Other long-term liabilities 1,266 1,266
----------- -----------
Total liabilities 23,623 23,999
----------- -----------
Shareholders' deficit:
Common stock, $.01 par value, 25 million shares
authorized, 8,500,000 issued and outstanding 85 85
Additional paid-in capital 45,151 45,151
Retained deficit (52,156) (47,613)
Subscriptions receivable from officer 0 (25)
----------- -----------
Total shareholders' deficit (6,920) (2,402)
=========== ===========
Total liabilities and shareholders' deficit $16,703 $ 21,597
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
Sunbelt Nursery Group, Inc.
Consolidated Statement of Cash Flows
(unaudited, in thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 28, December 29,
1997 1996
--------------- ---------------
<S> <C> <C>
Operating activities:
Net loss ($4,545) ($4,826)
Adjustments to reconcile net loss to cash
used for operating activities:
Depreciation and amortization 672 1,291
Gain on sale of fixed assets (1) (626)
Payment of store closing costs included in
provision for store closings (106) (86)
Changes in operating assets and liabilities:
Inventories 2,359 4,232
Accounts receivable and other assets (238) 265
Accounts payable (1,399) 154
Accrued compensation 442 (195)
Other liabilities (597) 1,082
-------------- --------------
Net cash used for operating activities (3,411) 1,291
-------------- --------------
Investing activities:
Net sale of property and equipment 478 1,302
-------------- --------------
Net cash provided by investing activities 478 1,302
-------------- --------------
Financing activities:
Additions to line of credit 33,634 44,180
Principal payments on line of credit and
capital lease obligations (32,350) (46,710)
Restricted cash for outstanding letters of credit 1 (712)
-------------- --------------
Net cash provided by (used for) financing activities 1,285 (3,242)
-------------- --------------
Decrease in cash and cash equivalents (1,648) (649)
Cash and cash equivalents at beginning of period 1,838 2,058
-------------- --------------
Cash and cash equivalents at end of period $190 $1,409
============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
Sunbelt Nursery Group, Inc.
Notes To Consolidated Financial Statements
(unaudited)
Note 1. Basis of Financial Statements
- --------------------------------------
Sunbelt Nursery Group, Inc. (the "Company") is a specialty retailer of
nursery and garden products with 60 stores operating under three prominent
retail trade names: Wolfe Nursery in Texas, Nurseryland Garden Centers in
California, and Tip Top Nurseries in Arizona. No single customer accounts for
more than 10% of sales.
The accompanying unaudited consolidated financial statements should be read
in conjunction with the Company's Annual Report on Form 10-K for the year ended
June 29, 1997. These statements include adjustments which, in the opinion of
management, are necessary to present fairly the Company's financial position as
of December 28, 1997 and December 29, 1996, and its results of operations and
cash flow for the periods then ended. All such adjustments are of a normal
recurring nature. The results of operations for the interim periods ended
December 28, 1997 and December 29, 1996 are not indicative of the results to be
expected for the fiscal year due to the highly seasonal nature of the nursery
industry.
Note 2. Liquidity and Operating Losses
- ---------------------------------------
The Company entered into a Loan and Security Agreement for a $12.0 million
revolving credit facility with a bank (the "Bank") on October 14, 1994. The
proceeds of this credit facility, along with cash on hand, were used to retire
the indebtedness approximating $11.6 million owed pursuant to that certain
credit facilities agreement dated April 28, 1993 between the Company and Pier 1
Imports. This revolving credit facility matured on October 14, 1997 and was
extended by agreement of the parties on a week-by-week basis thereafter while
the Company attempted to arrange refinancing. As of December 28, 1997,
indebtedness owed pursuant to this revolving credit facility approximated $4.2
million. As such, the outstanding balance at December 28, 1997 has been
classified as current in the accompanying December 28, 1997 consolidated balance
sheet.
On January 7, 1998, the Company announced that it had completed
agreements to refinance the Company's outstanding credit facility and to provide
the Company with an additional cash infusion of $2 million, consisting of
$700,000 in subordinated debt and $1,300,000 of convertible preferred stock.
Paragon Capital LLC ("Paragon") of Boston Massachusetts has agreed to
loan to the Company's operating subsidiaries (Wolfe Nursery, Inc., Tip Top
Nurseries, Inc., and Nurseryland Garden Centers, Inc.) a total of $5,000,000
under a revolving credit facility secured by a first priority lien on the assets
of the Company and its operating subsidiaries. A portion of the loan proceeds,
approximately $4,200,000 was immediately used to pay off the Company's existing
revolving credit facility with the Bank which facility matured on October 14,
1997 and had been extended by the Bank on a week-by-week basis thereafter. As a
condition to the Paragon revolving credit facility (the "Revolving Credit
Facility").
The Revolving Credit Facility has an aggregate credit limit amount of
$5,000,000 subject to a seasonal overline which may increase the aggregate
credit limit to $6,500,000. The unpaid principal balance of the Revolving Credit
Facility shall bear interest, until repaid (calculated based upon a 360-day year
and actual days elapsed), at the aggregate of the base rate, announced from time
to time by Norwest Bank Minnesota National Association or its successor
("Base"), plus one (1%) percent per annum up to $5 million in borrowings and two
(2%) percent per annum over Base for borrowings in excess of $5 million, but in
no event less than eight (8%) percent per annum or in excess of the maximum rate
permitted by applicable law. The revolving credit facility is intended to be, a
continuing agreement and shall remain in full force and effect for an initial
term ending on November 30, 2002, and thereafter for successive twelve-month
periods ("renewal term") provided, however, that either party may terminate such
revolving credit facility agreement as of the end of the initial term or any
subsequent
6
<PAGE>
renewal term by giving the other party notice to terminate in writing at least
sixty (60) days prior to the ended of any such period.
Timothy Duoos - Chairman of the Board, President and Chief Executive
Officer of the Company, Healthy American Products, Inc. (an affiliate of Rodney
Burwell, also a member of the Company's Board of Directors), and John Tastad,
(collectively, the "Purchasers") purchased a total of 1,300,000 shares of Series
A Cumulative Convertible Preferred Stock, $.01 par value, (the "Series A
Preferred Stock") for an aggregate purchase price of $1,300,000 in cash. The
holders of the Series A Preferred Stock are entitled to receive a seven percent
(7%) annual cash dividend thereon, which dividend is cumulative, if unpaid. The
Series A Preferred Stock may be converted to shares of Common Stock at the
Market Price defined in the Certificate of Designations (being the average daily
sales price of the Common Stock for the ten (10) trading days following the
closing of the Series A Preferred Stock Agreement). Holders of the Series A
Preferred Stock are entitled to a liquidation preference over holders of the
Company's Common Stock and are also entitled to the same voting rights as the
holders of the Common Stock, being one vote per share on all matters submitted
to holders of the Common Stock.
Contemporaneous with the purchase and sale of the Series A Preferred
Stock, Mr. Tastad and Healthy American Products, Inc. (collectively, the
"Subordinated Lenders") loaned to the Company a total of $700,000, secured by
liens against the Company's assets subordinate to the liens of Paragon (the
"Subordinated Notes"). Pursuant to the Subordinated Notes, the Company agreed to
pay to the Subordinated Lenders interest in the amount of twelve percent (12%)
per annum, payable monthly for a period of sixty (60) months, at which time the
entire principal balance of the Subordinated Notes shall become due.
Additionally, the Company has agreed to issue to the Subordinated Lenders
warrants (the "Warrants") to purchase up to 231,000 shares of the Company's
Common Stock at a purchase price equal to $1.00 per share. The Warrants expire
on November 30, 2002. The Warrants may be exercised at any time prior to their
expiration by the holder of the Subordinated Notes. The holders of the Warrants
are entitled to piggy-back registration rights in the event the Company should
file a registration statement under the Securities Act of 1933 covering its
Common Stock. Mr. Tastad has the right to demand the Company to prepay the
$500,000 principal balance due Mr. Tastad under his Subordinated Note, provided
that Paragon consents to such prepayment and advances the funds to the Company.
Paragon has indicated in writing its consent to such prepayment in the future,
provided that Mr. Tastad personally guarantees the amount of the prepayment and
provides collateral acceptable to Paragon securing his guaranty. The
Subordinated Notes and Warrant Agreements between the Company and the
Subordinated Lenders are incorporated herein.
Effective as of July 31, 1995, the Company restructured thirteen
subleases and other guarantees of leases with Pier 1 Imports (the "Agreement of
Settlement"). The Agreement of Settlement provided for six-month lease terms
that initially ended on December 31, 1995. The leases were renewable at Pier 1
Imports' option in six-month intervals through June 30, 1998, after which the
Company would have to consent to any further extensions. Under the Agreement of
Settlement, the Company was released from any obligation to purchase any of the
Pier 1 properties. As of September 28, 1997, the Company was no longer obligated
to Pier 1 Imports under these subleases as the properties had been sold to third
parties, closed or Pier 1 Imports did not exercise their option to renew the
lease term for an additional six months and thus the Company vacated the
properties. As Pier 1 Imports did not exercise their option to renew the lease
term on certain of these subleases the Company has no future minimum lease
obligations associated with these properties as of December 28, 1997.
The Agreement of Settlement fixed a claim against the Company in favor
of Pier 1 Imports in the amount of $14.7 million comprised of two components --
an earn-out claim for $8.0 million (the "Earn-out Claim") and the
7
<PAGE>
Sunbelt Nursery Group, Inc.
Notes To Consolidated Financial Statements
(continued)
remaining portion of the claim (the "Residual Claim"). The Earn-out Claim is
evidenced by a promissory note. The Residual Claim is a contingent, non-interest
bearing claim payable only in the event of non-performance under the Agreement
of Settlement. Both the Earn-out Claim and the Residual Claim are secured up to
a $6.0 million maximum by substantially all of the Company's assets, subordinate
to the rights of the Bank. Debt service obligations with respect to the Earn-out
Claim are determined by a formula indexed to and contingent upon future
operating cash flows of the Company, as described below. To the extent the
formula requires debt service payments, they are to be made in annual
installments, beginning May 10, 1996. Each annual payment ("Cash Flow Payment")
will be in an amount equal to the sum of 10% of the first $2.0 million of the
Company's operating cash flow and 40% of the Company's operating cash flow in
excess of $2.0 million. Operating cash flow is based upon the Company's prior
fiscal year results and is calculated in accordance with the Agreement of
Settlement. The obligation to make debt service payments that are measured based
on cash flow are also subject to certain maximum and minimum limitations on debt
service coverage, EBITDA, availability of borrowings pursuant to revolving
credit facilities, accounts payable levels and accrued liability levels. Any
Cash Flow Payment not payable due to the limitations listed above accrues and
becomes payable the following May 10th. However, such payments remain subject to
certain maximum and minimum limitations, as discussed above. The Earn-out Claim
could have been satisfied by aggregate payments of $2.0 million by May 1, 1996,
$4.0 million by May 1, 1997, or $6.0 million by May 1, 1998. The Earn-out Claim
bears interest only in the event a formula-based required debt service payment
becomes delinquent. During any such interest-bearing period, interest shall
accrue as follows: (i) 18% per annum on the amount of Cash Flow Payment not
otherwise paid and (ii) 10% per annum on the aggregate amount of unpaid Earn-out
Claim less the aggregate unpaid Cash Flow Payments. Any accrued interest is
payable out of subsequent Cash Flow Payments. The Residual Claim will be fully
discharged by the satisfaction of the Earn-out Claim and the termination,
without liability to Pier 1 Imports, of the subleases and other leases
guaranteed by Pier 1 Imports.
To reflect the Agreement of Settlement (i) property and equipment,
representing previously capitalized leases with a net book value of $20.5
million was removed from the Company's consolidated balance sheet; (ii) the
related capitalized lease obligation of $22.8 million due Pier 1 Imports was
removed from the consolidated balance sheet and; (iii) the fair value of the
indexed Earn-out Claim for the settlement obligation to Pier 1 Imports of $2.0
million, representing the optional payment the Company initially believed it had
the ability and intention to make on May 1, 1996 to satisfy the Earn-out Claim
in full was recognized during fiscal 1996. The resulting difference of $213,000
was reported as a deferred gain which will be recognized once all obligations to
Pier 1 have been settled or transferred to the recorded Earn-out Claim
obligation to account for any increases in the contingent payment obligation.
The Company was unable to meet certain minimum financial requirements
pursuant to the Agreement of Settlement and the Loan Agreement. Due to covenants
in the Loan Agreement the Company was prohibited from satisfying the Earn-out
Claim with a prepayment of $2.0 million on May 1, 1996. As a result of the
Company's inability to make this prepayment, the estimated $2.0 million present
value of the Earn-out Claim was recorded as a long-term liability in the
accompanying consolidated balance sheets.
On January 31, 1997, the Company and Pier 1 agreed to proposed
modifications to the terms of the Agreement of Settlement (the "Note
Modification Agreement") which provided the Company with the opportunity to
modify the terms of the existing $8.0 million Earn-out Claim for total
consideration of $2.0 million, which was comprised of $200,000 in cash payable
on March 3, 1997 and $1.8 million in notes. Certain terms of the Note
Modification Agreement were not fulfilled and as a result the Earn-out Claim and
Agreement of Settlement remain unmodified and in full force and effect.
As of December 28, 1997, the Company remains unable to meet certain minimum
financial requirements pursuant to the Agreement of Settlement and the Loan
Agreement. In addition, the Company estimates that it will not be able to meet
these requirements in the near future. As such, the Company reviewed its
assumptions used in estimating the present value of future cash flow payments to
Pier 1 to satisfy the Earn-out Claim and determined that the estimated present
value at December 28, 1997 approximates $1.0 million. Thus, the estimated $1.0
million present value of the Earn-out Claim is recorded as a long-term liability
in the accompanying consolidated balance sheet at December 28, 1997. In
addition, a $1.0 million gain on the revaluation of the Pier 1 Earn-out Claim
was recognized in the fiscal 1997 consolidated statement of operations.
8
<PAGE>
Sunbelt Nursery Group, Inc.
Notes To Consolidated Financial Statements
(continued)
OPERATING LOSSES
The Company has operating losses for the six months ended December 28, 1997
and for the fiscal years ended June 29, 1997, January 28, 1996 and January 29,
1995. In addition, at December 28, 1997, the Company has a working capital
deficit and a net capital deficiency. All of the above raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty. During fiscal 1997 and the six
months ended December 28, 1997, management has addressed these issues as well as
others in an attempt to return the Company to profitability. These actions
included the following:
. Accelerating the closing of underperforming stores;
. Continuing emphasis on improving gross margins;
. Entertaining negotiations with numerous landlords to achieve lower
store occupancy costs;
. Introducing changes in product mix, new philosophies on product set
and display, improving product quality and pricing, and use and timing
of advertising mediums;
. Implementing reductions in store operating expenses, including
payroll, by reorganizing store management and by modification of the
Company's bonus program;
. Identifying further reductions of general and administrative expenses;
and,
. Seeking the most appropriate additional financing sources based upon
the Company's financial results, financial condition, and the lending
environment; however, there can be no assurance that the Company will
be able to obtain additional financing.
Management has taken certain additional actions that will be applicable to
future periods in an effort to increase sales, improve the Company's liquidity
and return the Company to profitability. These actions include, but are not
limited to, the following:
. Negotiations to further reduce or redefine lease and long-term debt
agreements;
. Comprehensive training programs designed to promote consistent
execution at the store level and, specifically, to ensure that
excellent guest service is achieved by all associates, through
video-taped instructions, store and district manager training
sessions, and cashier and key personnel training;
. Enhanced vigilance to maintain product quality standards with a heavy
emphasis on rejecting inferior products at the loading dock;
. Implementing an inventory control philosophy of maintaining
increasingly lower inventory levels for stock replenishment as the
spring season ends which will (a) decrease the use of markdowns and
increase margins, and (b) make funds available which previously had
been assigned to inventory in the off-seasons;
. Review of all advertising items to eliminate unnecessary or non-impact
price reductions;
. Elimination of corporate staff resulting from decentralization of key
functions such as merchandising and advertising; and,
. Continued review of underperforming stores and analysis of potential
new store locations, if new funding sources can be successfully
identified.
9
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Sunbelt Nursery Group, Inc.
Notes To Consolidated Financial Statements
(continued)
Management expects these plans to improve cash flow and improve the
Company's operating performance. However, there can be no assurance that such
operational improvements will be achieved, and, if not, the Company may be
required to close additional stores, liquidate inventories, sell certain assets
or take other measures to meet working capital needs and preserve capital.
Note 3. Cash - restricted
- --------------------------
As of December 28, 1997, the Company had restricted cash of $153,000
established to segregate proceeds from the sale of properties per the Loan
Agreement.
Note 4. Income Taxes
- ---------------------
No provision for income taxes has been recognized in the accompanying
financial statements, as management does not currently expect the Company to
have taxable income during the applicable tax year.
Note 5. Litigation And Other Contingencies
- -------------------------------------------
LITIGATION - The Company, the Company's Chief Executive Officer (the
"CEO"), a company owned by the CEO, and General Host Corporation (a former 49.5%
shareholder of the Company) are defendants in a suit filed by a brokerage firm
(the "Plaintiffs") with regard to breach of contract of an agreement the
Plaintiffs had with the Company to raise financing. The Plaintiffs allege that
they are due payment under the agreement. They also allege that the Company's
CEO and/or the company owned by the CEO along with defendant General Host
Corporation intentionally interfered with the agreement between the Plaintiffs
and the Company. The Plaintiffs seek $700,000 in actual damages against the
Company under the agreement and an unspecified amount for quantum meruit as well
as attorney's fees. The Company believes that it proceeded properly under the
agreement and accordingly denies that any payments are due to the Plaintiffs.
The Company is vigorously defending itself against any claims by the Plaintiffs.
There are various claims, lawsuits, investigations and pending actions
against the Company and its subsidiaries incidental to the operations of its
business. Liability, if any, associated with these matters is not determinable
at December 28, 1997. While settlement of these lawsuits may impact the
Company's results of operations and liquidity in the year of settlement or
resolution, it is the opinion of management that the ultimate resolution of such
litigation will not have a material adverse effect on the Company's financial
position.
ENVIRONMENTAL CONTINGENCIES - In connection with a possible sale-leaseback
transaction, which was not completed, the Company authorized a third party to
undertake environmental assessments of two owned, non-retail properties during
fiscal 1995. The results indicated potential contamination at the two sites. The
extent and nature of the contamination is not clear. It is also not clear
whether the Company has an obligation to remediate whatever contamination is
ultimately found to exist. If an obligation does exist, it is not presently
possible to estimate the potential range of costs involved.
OTHER CONTINGENCIES - In August 1996, the Company recorded a gain of
$710,000 from the sale of operating assets. Concurrent with the sale of certain
stores during this period, the Company assigned to the purchaser the leases on
two stores and, as a result, the Company remains secondarily liable as a
guarantor. These non-cancelable leases expire in October 1999 and December 2003
and the remaining undiscounted non-cancelable minimum lease commitments due as
of December 28, 1997 are approximately $499,000.
Note 6. Accounting Changes
- ---------------------------
In February 1997, the Financial Accounting Standards Board issued FAS 128,
"Earnings Per Share". This statement requires interim and annual presentation
of "basic" and "diluted" earnings per share (EPS) by all entities that have
issued common stock or potential common stock if those securities trade in a
public market. The objective of basic EPS is to measure the performance of an
entity over the reporting period. The objective of diluted EPS is to measure the
performance of an entity over the reporting period while giving effect to all
dilutive potential common shares that were outstanding during the period. This
statement also requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation. The Company has adopted this statement in the current Form 10-Q for
the second quarter ending December 28, 1997 at which time the prior period EPS
data presented is restated to conform with the provisions of this statement.
Such adoption has no impact on the Company's previous presentation of earnings
per share as basic and diluted EPS computed pursuant to FAS 128 did not differ
from the net income (loss) per share as presented.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
With the exception of historical information, the matters discussed herein
are forward-looking statements that involve risks and uncertainties including,
but not limited to, economic conditions, weather conditions in the Company's
market areas, interest rate fluctuations, product demand, competitors'
merchandise mix, service and pricing, availability of merchandise, the
regulatory and trade environment, real estate market fluctuations and other
risks indicated in filing, with the Securities and Exchange Commission.
Results of Operations
- ---------------------
During the quarter and six months ended December 28, 1997, the Company lost
$1.7 million and $4.5 million, respectively, which is comparable to the same
period in the prior year. While sales for the six months were down from those
achieved last year, approximately $4.4 million of this sales decline was
attributed to the stores the Company closed or sold during fiscal 1997. The
companies improvement in operating results is primarily due to improved gross
margins and reduced operating expenses.
Gross margins improved from 42.1% to 45.3% and 39.2% to 43.8% during the
second quarter and six months ended December 28, 1997. This improvement is
substantially due to the Company's operational improvements at the store level
as well as the elimination of the less profitable stores included in the
comparative period in fiscal 1997. Same store sales for the first six months of
fiscal 1998 decreased by 15.1% compared to the same period in fiscal 1996
reflecting unseasonable weather in all markets and increased competitive
pressures in certain markets.
General, administrative and selling expenses for the three and six month
periods ended December 28, 1997 were down 21.6% or $2.4 million and 17.1% or
$3.5 million, respectively, primarily resulting from the reduction in the number
of stores operated by the company as well as the ongoing efforts of the
Company's reductions in general and administrative expenses. The Company's
decentralization of management has begun to have the desired effect of reducing
administrative expenditures and enhancing store operations.
Other significant improvements realized during the first and second quarter
include a 52% reduction in depreciation and amortization due to the numerous
store closings, and a 47% reduction in the Company's interest expense when
compared to the same period last year. Management's efforts to reduce its
inventory investment and the related costs to carry this investment, when
combined with the reduction in the number of stores, accounts for the majority
of the reduction in interest expense.
Liquidity and Capital Resources
- -------------------------------
During the six months, $3.4 million cash was used for operations. Investing
activities provided $0.5 million in cash and the Company borrowed a net of $1.3
million on an asset based revolving loan from a bank.
LIQUIDITY - See Note 2 of the Consolidated Financial Statement.
11
<PAGE>
The Company, like most owners of computer software, will be required to
modify portions of its software so that it will function properly in the year
2000 A.D. Preliminary estimates of the total costs to be incurred prior to 2000
range from $15,000 to $50,000. Maintenance or modification costs will be
expensed as incurred, while the costs of new software will be capitalized and
amortized over the software's useful life.
Part II. Other Information
Item 1. Legal Proceedings
-----------------
See Note 5 to the Consolidated Financial Statements.
12
<PAGE>
Item 6. Exhibits
--------
Exhibit Description
- ------- -----------
<TABLE>
<CAPTION>
<C> <S> <C>
3.1 Restated Certificate of Incorporation Incorporated by reference to Exhibit 3.1 to
the Company's Registration Statement on Form
S-1 (Reg. No. 33-42292)(the "Registration
Statement"), filed August 16, 1991
3.2 By-Laws Incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement
4.0 Certificate of Designations, Preferences and Incorporated by reference to Exhibit 4.0 to
Rights of Series A Cumulative Convertible the Company's Report on Form 8-K, filed
Preferred Stock. January 23, 1998
10.1 Form of Post-Employment Consulting Agreement Incorporated by reference to Exhibit 10.3 of
with executive officers the Company's Registration Statement
10.2 Form of Indemnity Agreement with directors Incorporated by reference to Exhibit 10.4 to
and executive officers the Company's Registration Statement
10.3 Management Bonus Plan Incorporated by reference to Exhibit 10.5 to
the Company's Annual Report on Form 10-K, for
the fiscal year ended January 31, 1993
10.4 1991 Stock Option Plan Incorporated by reference to Exhibit 10.6 to
Amendment No. 1 to the Company's Registration
Statement, filed September 25, 1991 (the
"Amended Registration Statement")
10.5 Executive Officers' Medical Plan Incorporated by reference to Exhibit 10.10 to
the Company's Registration Statement
10.6 Executive Officers' Financial Planning Plan Incorporated by reference to Exhibit 10.11 to
the Company's Registration Statement
10.7 Credit Facilities Agreement between the Incorporated by reference to Exhibit 10.12 to
Company and Pier 1 Imports the Company's Registration Statement
10.8 Extension Agreement dated April 25, 1994 Incorporated by reference to Exhibit 10.14 to
between the Company and Pier-SNG, Inc. relating the Company's Report on Form 8-K, filed April
to the Credit Facility Agreement between the 28, 1994
Company and Pier 1 Imports
10.9 Waiver Agreement dated May 13, 1994 between Incorporated by reference to Exhibit 10.15 to
the Company and Pier 1 Imports and Pier-SNG, the Company's Annual Report on Form 10-K for
Inc. relating to the Credit Facility the fiscal year ended January 31, 1994
Agreement between the Company and Pier 1
Imports
</TABLE>
13
<PAGE>
Exhibit Description
- ------- -----------
<TABLE>
<CAPTION>
<C> <S> <C>
10.10 Loan and Security Agreement dated October 14, Incorporated by reference to Exhibit 10.19 to
1994, among Wolfe Nursery, Inc., Tip Top the Company's Report on Form 10-Q for the nine
Nurseries, Inc., Nurseryland Garden Centers, months ended October 31, 1994
Inc. as Borrowers, the Registrant, Sunbelt
Nursery Holdings, Inc. and Sunbelt Management
Services, Inc., as Guarantors, and American
National Bank and Trust Company of Chicago
(the "Loan and Security Agreement")
10.11 Qualified Stock Option Agreement dated Incorporated by reference to Exhibit 10.11 to
October 18, 1994 with an Executive Officer the Company's Report on Form 10-K for the
fiscal year ended January 31, 1995, filed May
15, 1995
10.12 Amended and Restated Credit Facilities Incorporated by reference to Exhibit 10.11 to
Agreement dated October 14, 1994 between the the Company's Report on Form 10-K for the
Company and Pier 1 Imports, Inc. fiscal year ended January 31, 1995, filed May
15, 1995
10.13 Nonqualified Stock Option Agreement dated Incorporated by reference to Exhibit 10.13 to
March 6, 1995 with non-employee Directors the Company's Report on Form 10-K for the
fiscal year ended January 31, 1995, filed May
15, 1995
10.14 First Amendment and Waiver dated April 7, Incorporated by reference to Exhibit 10.14 to
1995 to the Loan and Security Agreement the Company's Report on Form 10-K for the
fiscal year ended January 31, 1995, filed May
15, 1995
10.15 Agreement of Settlement dated July 31, 1995 Incorporated by reference to Exhibit 10.15 to
between Pier Lease, Pier 1 Imports and the Company's Report on Form 10K/A-2 for the
Sunbelt Nursery Group, and Timothy R. Duoos fiscal year ended January 31, 1995, filed
August 11, 1995
10.16 Security Agreement dated July 31, 1995, by Incorporated by reference to Exhibit 10.16 to
Sunbelt Nursery Group, Inc. and Wolfe the Company's Report on Form 10-K/A-2 for the
Nursery, Inc. for the benefit of Pier 1 fiscal year ended January 31, 1995, filed
Imports, Inc., identified as Exhibit A to the August 11, 1995
Agreement of Settlement
10.17 Lease Guaranty Indemnification Agreement Incorporated by reference to Exhibit 10.17 to
dated July 31, 1995, by Sunbelt Nursery the Company's Report on Form 10-K/A-2 for the
Group, Inc. and Wolfe Nursery, Inc. for the fiscal year ended January 31, 1995, filed
benefit of Pier 1 Imports, Inc., identified August 11, 1995
as Exhibit C to the Agreement of Settlement
</TABLE>
14
<PAGE>
Exhibit Description
- ------- -----------
<TABLE>
<CAPTION>
<C> <S> <C>
10.18 Environmental Indemnity dated July 31, 1995 Incorporated by reference to Exhibit 10.18 to
by Sunbelt Nursery Group, Inc. and Wolfe the Company's Report on Form 10-K/A-2 for the
Nursery, Inc. for the benefit of Pier 1 fiscal year ended January 31, 1995, filed
Imports, Inc., identified as Exhibit D to the August 11, 1995
Agreement of Settlement
10.19 Duoos Indemnification Agreement dated July Incorporated by reference to Exhibit 10.19 to
31, 1995 by Timothy R. Duoos for the benefit the Company's Report on Form 10-K/A-2 for the
of Pier 1 Imports, Inc., identified as fiscal year ended January 31, 1995, filed
Exhibit E to the Agreement of Settlement August 11, 1995
10.20 Sublease Guaranty dated July 31, 1995, Incorporated by reference to Exhibit 10.20 to
between Sunbelt Nursery Group, Inc. and Pier the Company's Report on Form 10-K/A-2 for the
Lease, Inc. identified as Exhibit G to the fiscal year ended January 31, 1995, filed
Agreement of Settlement August 11, 1995
10.21 Promissory Note dated July 31, 1995, in the Incorporated by reference to Exhibit 10.21 to
principal amount of $8,000,000 by Sunbelt the Company's Report on Form 10-K/A-2 for the
Nursery Group, Inc. for the benefit of Pier 1 fiscal year ended January 31, 1995, filed
Imports, Inc. identified as Exhibit H to the August 11, 1995
Agreement of Settlement
10.22 Note Guaranty dated July 31, 1995, by Wolfe Incorporated by reference to Exhibit 10.22 to
Nursery, Inc. for the benefit of Pier 1 the Company's Report on Form 10-K/A-2 for the
Imports, Inc., identified as Exhibit I to the fiscal year ended January 31, 1995, filed
Agreement of Settlement August 11, 1995
10.23 Second Amendment, Waiverand Consent dated Incorporated by reference to Exhibit 10.23 to
July 31, 1995 to the Loan and Security the Company's Report on Form 10-K/A-2 for the
Agreement fiscal year ended January 31, 1995, filed
August 11, 1995
10.24 Third Amendment dated February 14, 1996 to Incorporated by reference to Exhibit 10.24 to
the Loan and Security Agreement the Company's Annual Report on Form 10-K, for
the fiscal year ended January 28, 1996, filed
May 10, 1996
10.25 Fourth Amendment and Waiver dated May 9, 1996 Incorporated by reference to Exhibit 10.25 to
to the Loan and Security Agreement the Company's Annual Report on Form 10-K, for
the fiscal year ended January 28, 1996, filed
May 10, 1996
10.26 Fifth Amendment and Waiver dated October 24, Incorporated by reference to Exhibit 10.26 to
1996 to the Loan and Security Agreement the Company's Report on Form 10-Q for the
three months ended September 29,1996, fileD
November 13, 1996
10.27 Note Modification Agreement dated January 31, Incorporated by reference to Exhibit 10.27 to
1997 among Pier 1 Imports, Inc., Sunbelt the Company's Report of Form 10-Q for the six
Nursery Group, Inc., Wolfe Nursery, Inc., and months ended December 29, 1996, filed February
Timothy R. Duoos 12, 1997
</TABLE>
15
<PAGE>
Exhibit Description
- ------- -----------
<TABLE>
<C> <S> <C>
10.28 Sixth Amendment and Waiver dated February Incorporated by reference to Exhibit 10.28 to
11, 1997 to the Loan and Security Agreement the Company's Report of Form 10-Q for the six
months ended December 29, 1996, filed February
12, 1997
10.29 Seventh Amendment and Waiver dated May 12, Incorporated by reference to Exhibit 10.29 to
1997 to the Loan and Security Agreement the Company's Report of Form 10-K for the year
ended June 29, 1997, filed October 10, 1997
10.30 Eighth Amendment and Waiver dated June 23, Incorporated by reference to Exhibit 10.30 to
1997 to the Loan and Security Agreement the Company's Report of Form 10-K for the year
ended June 29, 1997, filed October 10, 1997
10.31 Ninth Amendment and Waiver dated October 13, Incorporated by reference to Exhibit 10.31 to
1997 to the Loan and Security Agreement the Company's Report of Form 10-Q for the
three months ended September 28, 1997, filed
November 11, 1997
10.32 Tenth Amendment and Waiver dated October 31, Incorporated by reference to Exhibit 10.32 to
1997 to the Loan and Security Agreement the Company's Report of Form 10-Q for the
three months ended September 28, 1997, filed
November 11, 1997
10.33 Eleventh Amendment and Waiver dated November Filed herewith
21, 1997 to the Loan and Security Agreement
10.34 Twelfth Amendment and Waiver dated November Filed herewith
30, 1997 to the Loan and Security Agreement
10.35 Thirteenth Amendment and Waiver dated Filed herewith
December 15, 1997 to the Loan and Security
Agreement
10.36 Fourteenth Amendment and Waiver dated Filed herewith
December 22, 1997 to the Loan and Security
Agreement
10.37 Loan and Security Agreement between Paragon Incorporated by reference to Exhibit 10.1 to
Capital, LLC and Wolfe Nursery, Inc. dated the Company's Report on Form 8-K, filed
December 12, 1997 (without exhibits). January 23, 1998
10.38 Loan and Security Agreement between Paragon Incorporated by reference to Exhibit 10.2 to
Capital, LLC and Tip Top Nurseries, Inc. the Company's Report on Form 8-K, filed
dated December 17, 1997 (without exhibits). January 23, 1998
10.39 Loan and Security Agreement between Paragon Incorporated by reference to Exhibit 10.3 to
Capital, LLC and Nurseryland Garden Centers, the Company's Report on Form 8-K, filed
Inc. dated December 17, 1997 (without January 23, 1998
exhibits).
</TABLE>
16
<PAGE>
Exhibit Description
- ------- -----------
<TABLE>
<CAPTION>
<C> <S> <C>
10.40 Series A Cumulative Convertible Preferred Incorporated by reference to Exhibit 10.4 to
Stock Purchase Agreement among the Company, the Company's Report on Form 8-K, filed
Mr. Timothy Duoos, Mr. John Tastad and January 23, 1998
Healthy American Products, Inc. dated
December 30, 1997 (without exhibits).
10.41 Warrant Agreement between the Company and Incorporated by reference to Exhibit 10.5 to
Healthy American Products, Inc. dated the Company's Report on Form 8-K, filed
December 17, 1997. January 23, 1998
10.42 Warrant Agreement between the Company and Incorporated by reference to Exhibit 10.6 to
John Tastad dated December 17, 1997. the Company's Report on Form 8-K, filed
January 23, 1998
10.43 Subordinated Secured Promissory Note in the Incorporated by reference to Exhibit 10.7 to
principal amount of $200,000 payable to the Company's Report on Form 8-K, filed
Healthy American Products, Inc. January 23, 1998
10.44 Subordinated Secured Promissory Note in the Incorporated by reference to Exhibit 10.8 to
principal amount of $500,000 payable to John the Company's Report on Form 8-K, filed
Tastad. January 23, 1998
21 Subsidiaries of the Company Incorporated by reference to Exhibit 22 to the
Company's Annual Report on Form 10-K, for the
fiscal year ended January 31, 1993
27 Financial Data Schedule Filed herewith
</TABLE>
17
<PAGE>
Sunbelt Nursery Group, Inc.
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.
Sunbelt Nursery Group, Inc.
---------------------------
(Registrant)
Date: February 16, 1998 /s/Thomas R. Hoekstra
---------------------
Thomas R. Hoekstra
Chief Financial Officer
18
<PAGE>
EXHIBIT 10.33
ELEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Eleventh Amendment to Loan and Security Agreement, dated as of
November 21, 1997 (this "Amendment"), is by and among Wolfe Nursery, Inc., a
Delaware corporation, Tip Top Nurseries, Inc., an Arizona corporation,
Nurseryland Garden Centers, Inc., a California corporation, as borrowers
(collectively, the "Borrowers"), Sunbelt Nursery Group, Inc., a Delaware
corporation, Sunbelt Nursery Holdings, Inc., an Arizona corporation, Sunbelt
Management Services, Inc., a Delaware corporation, as guarantors (collectively,
the "Guarantors" and, together with the Borrowers, the "Loan Parties"), and
American National Bank and Trust Company of Chicago, a national banking
association, as lender (the "Lender"). Capitalized terms used in this Amendment
and not otherwise defined have the meanings assigned to such terms in the Loan
Agreement (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Loan Parties and the Lender are parties to the Loan and
Security Agreement dated as of October 14, 1994 (as such agreement has been or
may be amended, modified, restated or supplemented from time to time, the "Loan
Agreement");
WHEREAS, the Loan Parties and the Lender desire to amend the Loan
Agreement to extend the maturity date of the Loan Agreement to November 30,
1997, all on the terms and subject to the conditions of this Amendment;
NOW, THEREFORE, in consideration of the foregoing recitals, the
actions contemplated therein and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties to this Amendment
agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
On the date this Amendment becomes effective, after completion by the
Loan Parties of the conditions set forth in Section 3 of this Amendment (the
"Closing Date"), Section 1.1 of the Loan Agreement is amended by deleting the
definition of "Maturity Date" in its entirety and replacing it as follows:
"Maturity Date" shall mean November 30, 1997.
<PAGE>
SECTION 2. REPRESENTATION AND WARRANTIES
To induce the Lender to enter into this Amendment and to extend
further credit under the Loan Agreement, as amended by this Amendment, each Loan
Party severally represents and warrants to the Lender that:
2.1 Due Authorization, Etc. The execution, delivery and performance
by such Loan Party of this Amendment are within its corporate powers, have been
duly authorized by all necessary corporate action, have received all necessary
governmental, regulatory or other approvals (if any are required), and do not
and will not contravene or conflict with any provision of (i) any law, (ii) any
judgment, decree or order, or (iii) such Loan Party's Certificate of
Incorporation or By-Laws, and do not and will not contravene or conflict with,
or cause any lien to arise under any provision of any agreement or instrument
binding upon such Loan Party or upon any of its property. This Amendment and the
Loan Agreement, as amended by this Amendment, are the legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms.
2.2 No Default, Etc. As of the Closing Date, (i) no Event of Default
or Default under the Loan Agreement, as amended by this Amendment, has occurred
and is continuing or will result from the amendments set forth in this Amendment
and (ii) the representations and warranties of such Loan Party contained in the
Loan Agreement are true and correct.
SECTION 3. CONDITIONS TO EFFECTIVENESS
The obligation of the Lender to make the amendments contemplated by
this Amendment and the effectiveness thereof, are subject to the following:
3.1 Representations and Warranties. The representations and
warranties of the Loan Parties contained in this Amendment are true and correct
as of the Closing Date.
3.2 Documents. The Lender has received all of the following, each
duly executed and dated as of the Closing Date (or such other date as is
satisfactory to the Lender) in form and substance satisfactory to the Lender:
-2-
<PAGE>
(A) Eleventh Amendment. This Amendment;
------------------
(B) Resolutions. Resolutions of the Board of Directors of each
-----------
Loan Party authorizing or ratifying the execution, delivery and
performance of this Amendment;
(C) Consents, Etc. Certified copies of all documents evidencing
-------------
any necessary corporate action, consents and governmental approvals, if
any, with respect to this Amendment or any other document provided for
under this Amendment; and
(D) Other. Such other documents as the Lender may reasonably
-----
request.
SECTION 4. MISCELLANEOUS
-------------
4.1 Captions. The recitals to this Amendment (except for
--------
definitions) and the section captions used in this Amendment are for convenience
only, and do not affect the construction of this Amendment.
4.2 Governing Law; Severability. THIS AMENDMENT IS A CONTACT MADE
---------------------------
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Wherever possible, each provision of this Amendment
must be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment is prohibited by or
invalid under such law, such provision is only ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Amendment.
4.3 Counterparts. This Amendment may be executed in any number of
------------
counterparts and by the different parties on separate counterparts, and each
such counterpart is deemed to be an original, but all such counterparts together
constitute but one and the same Amendment.
4.4 Successors and Assigns. This Amendment is binding upon each
----------------------
Loan Party and the Lender and their respective successors and assigns, and
inures to the sole benefit of each Loan Party and the Lender and their
successors and assigns. The Loan Parties have no right to assign their
respective rights or delegate their respective duties under this Amendment.
-3-
<PAGE>
4.5 References. From and after the Closing Date, each reference in
----------
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," or
words like import, and each reference in any Financing Agreement to the Loan
Agreement or to any term, condition or provision contained "thereunder,"
"thereof," "therein," or words of like import, mean and are a reference to the
Loan Agreement (or such term, condition or provision, as applicable) as amended,
supplemented or otherwise modified by this Amendment.
4.6 Continued Effectiveness. Notwithstanding anything contained
-----------------------
in this Amendment, the terms of this Amendment are not intended to and do not
serve to effect a novation as to the Loan Agreement. The parties to this
Amendment expressly do not intend to extinguish the Loan Agreement. Instead, it
is the express intention of the parties to this Amendment to reaffirm the
indebtedness created by and secured under the Loan Agreement. The Loan
Agreement, as amended by this Amendment, remains in full force and effect.
4.7 Costs, Expenses and Taxes. Each Loan Party affirms and
-------------------------
acknowledges that Section 10.2 and Section 10.3 of the Loan Agreement applies to
this Amendment and the transactions and agreements and documents contemplated
under this Amendment.
4.8 Guarantors Reaffirmation. Each of the Guarantors acknowledges
------------------------
that it has read this Amendment and consents to this Amendment and agrees that
its Guaranty of the Guaranteed Obligations (as defined in such Guaranty)
contains in full force and effect, is valid and enforceable and is not impaired
or otherwise affected by the execution of this Amendment or any other document
or instrument delivered in connection with this Amendment.
* * * * *
-4-
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above
written.
WOLFE NURSERY, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
TIP TOP NURSERIES, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
NURSERYLAND GARDEN CENTERS, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
SUNBELT NURSERY GROUP, INC.,
as a Guarantor
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
<PAGE>
SUNBELT NURSERY HOLDINGS, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
----------------------------
Name: TIMOTHY R.DUOOS
Title: PRESIDENT
SUNBELT MANAGEMENT SERVICES, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
-------------------------------
Name: TIMOTHY R. DUOOS
Title: PRESIDENT
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: /s/ DENNIS E. HARRISON
-------------------------------
Name: DENNIS E. HARRISON
Title: SENIOR VICE PRESIDENT
Timothy R. Duoos, guarantor under the Guaranty dated as of October 14, 1994
(the "Duoos Guaranty") made in favor of the Lender, acknowledges that he has
--------------
read this Amendment referenced herein and consents to this Amendment and agrees
that his guarantee of the Guaranteed Obligations (as defined in the Duoos
Guaranty) continues in full force and effect, is valid and enforceable and is
not impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection with this Amendment.
/s/ Timothy R. Duoos
----------------------------------
Timothy R. Duoos
<PAGE>
EXHIBIT 10.34
TWELFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Twelfth Amendment to Loan and Security Agreement, dated as of November
30, 1997 (this "Amendment"), is by and among Wolfe Nursery, Inc., a Delaware
corporation, Tip Top Nurseries, Inc., an Arizona corporation, Nurseryland
Garden Centers, Inc., a California corporation, as borrowers (collectively, the
"Borrowers"), Sunbelt Nursery Group, Inc., a Delaware corporation, Sunbelt
Nursery Holdings, Inc., an Arizona corporation, Sunbelt Management Services,
Inc., a Delaware corporation, as guarantors (collectively, the "Guarantors"
and, together with the Borrowers, the "Loan Parties"), and American National
Bank and Trust Company of Chicago, a national banking association, as lender
(the "Lender"). Capitalized terms used in this Amendment and not otherwise
defined have the meanings assigned to such terms in the Loan Agreement (as
defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Loan Parties and the Lender are parties to the Loan and
Security Agreement dated as of October 14, 1994 (as such agreement has been or
may be amended, modified, restated or supplemented from time to time, the "Loan
Agreement");
WHEREAS, the Loan Parties and the Lender desire to amend the Loan Agreement
to extend the maturity date of the Loan Agreement to December 15, 1997, all on
the terms and subject to the conditions of this Amendment;
NOW, THEREFORE, in consideration of the foregoing recitals, the actions
contemplated therein and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties to this Amendment agree as
follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
On the date this Amendment becomes effective, after completion by the Loan
Parties of the conditions set forth in Section 3 of this Amendment (the "Closing
Date"), Section 1.1 of the Loan Agreement is amended by deleting the definition
of "Maturity Date" in its entirety and replacing it as follows:
"Maturity Date" shall mean December 15, 1997.
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lender to enter into this Amendment and to extend further
credit under Loan Agreement, as amended by this Amendment, each Loan Party
severally represents and warrants to the Lender that:
2.1 Due Authorization, Etc. The execution, delivery and performance by
-----------------------
such Loan Party of this Amendment are within its corporate powers, have bee duly
authorized by all necessary corporate action, have received all necessary
governmental, regulatory or other approvals (if any are required), and do not
and will not contravene or conflict with any provision of (i) any law, (ii) any
judgement, decree or order, or (iii) such Loan Party's Certificate of
Incorporation or By-Laws, and do not and will not contravene or conflict with,
or cause any lien to arise under any provision of any agreement or instrument
binding upon such Loan Party or upon any of its property. This Amendment and the
Loan Agreement, as amended by this Amendment, are the legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms.
2.2 No Default, Etc. As of the Closing Date, (i) no Event of Default or
----------------
Default under the Loan Agreement, as amended by this amendment, has occurred and
is continuing or will result from the amendments set forth in this Amendment and
(ii) the representations and warranties of such Loan Party contained in the Loan
Agreement are true and correct.
SECTION 3. CONDITIONS TO EFFECTIVENESS
---------------------------
The obligation of the Lender to make the amendments contemplated by this
Amendment and the effectiveness thereof, are subject to the following:
3.1 Representations and Warranties. The representations and warranties
-------------------------------
of the Loan Parties contained in this Amendment are true and correct as of the
Closing Date.
3.2 Documents. The Lender has received all of the following, each duly
---------
executed and dated as of the Closing Date (of such other date as is satisfactory
to the Lender) in form and substance satisfactory to the Lender:
-2-
<PAGE>
(A) Twelfth Amendment. This Amendment;
-----------------
(B) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party authorizing or ratifying the execution, delivery and performance of this
Amendment;
(C) Consents. Etc. Certified copies of all documents evidencing any
-------------
necessary corporate action, consents and governmental approvals, if any, with
respect to this Amendment or any other document provided for under this
Amendment; and
(D) Other. Such other documents as the Lender may reasonably request.
-----
SECTION 4. MISCELLANEOUS
-------------
4.1 Captions. The recitals to this Amendment (except for definitions)
--------
and the section captions used in this Amendment are for convenience only, and do
not affect the construction of this Amendment.
4.2 Governing Law; Severability. THIS AMENDMENT IS A CONTRACT MADE
---------------------------
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Wherever possible, each provision of this Amendment
must be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Amendment is prohibited by or invalid under
such law, such provision is only ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.
4.3 Counterparts. This Amendment may be executed in any number of
------------
counterparts and by the different parties on separate counterparts, and each
such counterpart is deemed to be an original, but all such counterparts together
constitute but one and the same Amendment.
4.4 Successors and Assigns. This Amendment is binding upon each Loan
----------------------
Party and the Lender and their respective successors and assigns, and inures to
the sole benefit of each Loan Party and the Lender and their successors and
assigns. The Loan Parties have no right to assign their respective rights or
delegate their respective duties under this Amendment.
-3-
<PAGE>
4.5 References. From and after the Closing Date, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of
like import, and each reference in any Financing Agreement to the Loan Agreement
or to any term, condition or provision contained "thereunder"," "thereof,"
"therein," or words of like import, mean and are a reference to the Loan
Agreement (or such term, condition or provision, as applicable) as amended,
supplemented or otherwise modified by this Amendment.
4.6 Continued Effectiveness. Notwithstanding anything contained in this
Amendment, the terms of this Amendment are not intended to and do not serve to
effect a novation as to the Loan Agreement. The parties to this Amendment
expressly do not intend to extinguish the Loan Agreement. Instead, it is the
express intention of the parties to this Amendment to reaffirm the indebtedness
created by and secured under the Loan Agreement. The Loan Agreement, as amended
by this Amendment, remains in full force and effect.
4.7 Costs, Expenses and Taxes. Each Loan Party affirms and acknowledges
that Section 10.2 and Section 10.3 of the Loan Agreement applies to this
Amendment and the transactions and agreements and documents contemplated under
this Amendment.
4.8 Guarantors Reaffirmation. Each of the Guarantors acknowledges that it
has read this Amendment and consents to this Amendment and agrees that its
Guaranty of the Guaranteed Obligations (as defined in such Guaranty) continues
in full force and effect, is valid and enforceable and is not impaired or
otherwise affected by the execution of this Amendment or any other document or
instrument delivered in connection with this Amendment.
* * * * *
-4-
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above
written.
WOLFE NURSERY, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
TIP TOP NURSERIES, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
NURSERYLAND GARDEN CENTERS, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
SUNBELT NURSERY GROUP, INC.,
as a Guarantor
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
<PAGE>
SUNBELT NURSERY HOLDINGS, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
----------------------------
Name: TIMOTHY R.DUOOS
Title: PRESIDENT
SUNBELT MANAGEMENT SERVICES, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
-------------------------------
Name: TIMOTHY R. DUOOS
Title: PRESIDENT
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: /s/ DENNIS E. HARRISON
-------------------------------
Name: DENNIS E. HARRISON
Title: SENIOR VICE PRESIDENT
Timothy R. Duoos, guarantor under the Guaranty dated as of October 14, 1994
(the "Duoos Guaranty") made in favor of the Lender, acknowledges that he has
--------------
read this Amendment referenced herein and consents to this Amendment and agrees
that his guarantee of the Guaranteed Obligations (as defined in the Duoos
Guaranty) continues in full force and effect, is valid and enforceable and is
not impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection with this Amendment.
/s/ Timothy R. Duoos
----------------------------------
Timothy R. Duoos
<PAGE>
EXHIBIT 10.35
THIRTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Thirteenth Amendment to Loan and Security Agreement, dated as of
December 15, 1997 (this "Amendment"), is by an among Wolfe Nursery, Inc., a
Delaware corporation, Tip Top Nurseries, Inc., an Arizona corporation,
Nurseryland Garden Centers, Inc., a California corporation , as borrowers
(collectively, the "Borrowers"), Sunbelt Nursery Group, Inc., a Delaware
corporation, Sunbelt Nursery Holdings, Inc., an Arizona corporation, Sunbelt
Management Services, Inc., a Delaware corporation, as guarantors (collectively,
the "Guarantors" and, together with the Borrowers, the "Loan Parties"), and
American National Bank and Trust Company of Chicago, a national banking
association, as lender (the "Lender"). Capitalized terms used in this Amendment
and not otherwise defined have the meanings assigned to such terms in the Loan
Agreement (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Loan Parties and the Lender are parties to the Loan and
Security Agreement dated as of October 14, 1994 (as such agreement has been or
may be amended, modified, restated or supplemented from time to time, the "Loan
Agreement");
WHEREAS, the Loan Parties and the Lender desire to amend the Loan Agreement
to extend the maturity date of the Loan Agreement to December 22, 1997, all on
the terms and subject to the conditions of this Amendment;
NOW, THEREFORE, in consideration of the foregoing recitals, the actions
contemplated therein and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties to this Amendment agree as
follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
On the date this Amendment becomes effective, after completion by the Loan
Parties of the conditions set forth in Section 3 of this Amendment (the "Closing
Date"), Section 1.1 of the Loan Agreement is amended by deleting the definition
of "Maturity Date" in its entirety and replacing it as follows:
"Maturity Date" shall mean December 22, 1997.
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lender to enter into this Amendment and to extend further
credit under the Loan Agreement, as amended by this Amendment, each Loan Party
severally represents and warrants to the Lender that:
2.1 Due Authorization, Etc. The execution, delivery and performance by
-----------------------
such Loan Party of this Amendment are within its corporate powers, have been
duly authorized by all necessary corporate action, have received all necessary
governmental, regulatory or other approvals (if any are required), and do not
and will not contravene or conflict with any provision of (i) any law, (ii) any
judgment, decree or order, or (iii) such Loan Party's Certificate of
Incorporation or By-Laws, and do not and will not contravene or conflict with,
or cause any lien to arise under any provision of any agreement or instrument
binding upon such Loan Party or upon any of its property. This Amendment and the
Loan Agreement, as amended by this Amendment, are the legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms.
2.2 No Default, Etc. As of the Closing Date, (i) no Event of Default or
----------------
Default under the Loan Agreement, as amended by this Amendment, has occurred and
is continuing or will result from the amendments set forth in this Amendment and
(ii) the representations and warranties of such Loan Party contained in the Loan
Agreement are true and correct.
SECTION 3. CONDITIONS TO EFFECTIVENESS
---------------------------
The obligation of the Lender to make the amendments contemplated by this
Amendment and the effectiveness thereof, are subject to the following:
3.1 Representations and Warranties. The representations and warranties
-------------------------------
of the Loan Parties contained in this Amendment are true and correct as of the
Closing Date.
3.2 Documents. The Lender has received all of the following, each duly
----------
executed and dated as of the Closing Date (or such other date as is satisfactory
to the Lender) in form and substance satisfactory to the Lender:
-2-
<PAGE>
(A) Thirteenth Amendment. This Amendment;
--------------------
(B) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party authorizing or ratifying the execution, delivery and performance of this
Amendment;
(C) Consents, Etc. Certified copies of all documents evidencing any
--------------
necessary corporate action, consents and governmental approvals, if any, with
respect to this Amendment or any other document provided for under this
Amendment; and
(D) Other. Such other documents as the Lender may reasonably request.
-----
SECTION 4. MISCELLANEOUS
-------------
4.1 Captions. The recitals to this Amendment (except for definitions)
--------
and the section captions used in this Amendment are for convenience only, and do
not affect the construction of this Amendment.
4.2 Governing Law; Severability. THIS AMENDMENT IS A CONTRACT MADE
---------------------------
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Wherever possible, each provision of this Amendment
must be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Amendment is prohibited by or invalid under
such law, such provision is only ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.
4.3 Counterparts. This Amendment may be executed in any number of
------------
counterparts and by the different parties on separate counterparts, and each
such counterpart is deemed to be an original, but all such counterparts together
constitute but one and the same Amendment.
4.4 Successors and Assigns. This Amendment is binding upon each Loan
----------------------
Party and the Lender and their respective successors and assigns, and inures to
the sole benefit of each Loan Party and the Lender and their successors and
assigns. The Loan Parties have no right to assign their respective duties under
this Amendment.
-3-
<PAGE>
4.5 References. From and after the Closing Date, each reference in
-----------
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," or
words of like import, and each reference in any Financing Agreement to the Loan
Agreement or to any term, condition or provision contained "thereunder,"
"thereof," "therein," or words of like import, mean and are a reference to the
Loan Agreement (or such term, condition or provision, as applicable) as amended,
supplemented or other wised modified by the Amendment.
4.6 Continued Effectiveness. Notwithstanding anything contained in
------------------------
this Amendment, the terms of this Amendment are not intended to and do not serve
to effect a novation as to the Loan Agreement. The parties to this Amendment
expressly do no intend to extinguish the Loan Agreement. Instead, it is the
express intention of the parties to this Amendment to reaffirm the indebtedness
created by and secured under the Loan Agreement. The Loan Agreement, as amended
by this Amendment, remains in full force and effect.
4.7 Cost, Expenses and Taxes. Each Loan Party affirms and
-------------------------
acknowledges that Section 10.2 and Section 10.3 of the Loan Agreement applies to
this Amendment and the transactions and agreements and documents contemplated
under this Amendment.
4.8 Guarantors Reaffirmation. Each of the Guarantors acknowledges
that it has read this Amendment and consents to this Amendment and agrees that
its Guaranty of the Guaranteed Obligations (as defined in such Guaranty)
continues in full force and effect, is valid and enforceable and is not impaired
or otherwise affected by the execution of this Amendment or any other document
or instrument delivered in connection with this Amendment.
* * * * *
-4-
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above
written.
WOLFE NURSERY, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
TIP TOP NURSERIES, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
NURSERYLAND GARDEN CENTERS, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
SUNBELT NURSERY GROUP, INC.,
as a Guarantor
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
<PAGE>
SUNBELT NURSERY HOLDINGS, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
----------------------------
Name: TIMOTHY R.DUOOS
Title: PRESIDENT
SUNBELT MANAGEMENT SERVICES, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
-------------------------------
Name: TIMOTHY R. DUOOS
Title: PRESIDENT
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: /s/ DENNIS E. HARRISON
-------------------------------
Name: DENNIS E. HARRISON
Title: SENIOR VICE PRESIDENT
Timothy R. Duoos, guarantor under the Guaranty dated as of October 14, 1994
(the "Duoos Guaranty") made in favor of the Lender, acknowledges that he has
--------------
read this Amendment referenced herein and consents to this Amendment and agrees
that his guarantee of the Guaranteed Obligations (as defined in the Duoos
Guaranty) continues in full force and effect, is valid and enforceable and is
not impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection with this Amendment.
/s/ Timothy R. Duoos
----------------------------------
Timothy R. Duoos
<PAGE>
EXHIBIT 10.36
FOURTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Fourteenth Amendment to Loan and Security Agreement, dated as of
December 22, 1997 (this "Amendment"), is by and among Wolfe Nursery, Inc., a
Delaware corporation, Tip Top Nurseries, Inc., an Arizona corporation,
Nurseryland Garden Centers, Inc., a California corporation, as borrowers
(collectively, the "Borrowers"), Sunbelt Nursery Group, Inc., a Delaware
corporation, Sunbelt Nursery Holdings, Inc., an Arizona corporation, Sunbelt
Management Services, Inc., a Delaware corporation, as guarantors (collectively,
the "Guarantors" and, together with the Borrowers, the "Loan Parties"), and
American National Bank and Trust Company of Chicago, a national banking
association, as lender (the "Lender"). Capitalized terms used in this Amendment
and not otherwise defined have the meanings assigned to such terms in the Loan
Agreement (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Loan Parties and the Lender are parties to the Loan and
Security Agreement dated as of October 14, 1994 (as such agreement has been or
may be amended, modified, restated or supplemented from time to time, the "Loan
Agreement");
WHEREAS, the Loan Parties and the Lender desire to amend the Loan
Agreement to extend the maturity date of the Loan Agreement to December 29,
1997, all on the terms and subject to the conditions of this Amendment;
WHEREAS, the Loan Parties and the Lender desire to amend the Loan
Agreement to reduce the Maximum Revolving Facility to $4,500,000;
NOW, THEREFORE, in consideration of the foregoing recitals, the
actions contemplated therein and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties to this Amendment
agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
On the date this Amendment becomes effective, after completion by the
Loan Parties of the conditions set forth in Section 3 of this Amendment (the
"Closing Date"), the Loan
<PAGE>
Agreement is amended, effective as of December 22, 1997 as follows:
1.1 Section 1.1 of the Loan Agreement is amended by deleting the
-----------
definition of "Maturity Date" in its entirety and replacing it as follows:
-------------
"Maturity Date" shall mean December 29, 1997.
-------------
1.2 Section 1.1 is further amended by deleting the definition of
-----------
"Maximum Revolving Facility" in its entirety and replacing it as follows:
--------------------------
"Maximum Revolving Facility" shall mean the maximum amount which
--------------------------
Lender has agreed to consider as a ceiling on the aggregate outstanding
principal balance of loans to be made to all of the Borrowers pursuant to
subsection 2.1(A) of this Agreement. The Maximum Revolving Facility shall be
$4,500,000.
SECTION 2. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lender to enter into this Amendment and to extend
further credit under the Loan Agreement, as amended by this Amendment, each
Loan Party severally represents and warrants to the Lender that:
2.1 Due Authorization, Etc. The execution, delivery and performance
-----------------------
by such Loan Party of this Amendment are within its corporate powers, have been
duly authorized by all necessary corporate action, have received all necessary
governmental, regulatory or other approvals (if any are required), and do not
and will not contravene or conflict with any provision of (i) any law, (ii) any
judgment, decree or order, or (iii) such Loan Party's Certificate of
Incorporation or By-Laws, and do not and will not contravene or conflict with,
or cause any lien to arise under any provision of any agreement or instrument
binding upon such Loan Party or upon any of its property. This Amendment and the
Loan Agreement, as amended by this Amendment, are the legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms.
2.2 No Default, Etc. As of the Closing Date, (i) no Event of Default
----------------
or Default under the Loan Agreement, as amended by this Amendment, has occurred
and is continuing or will result
-2-
<PAGE>
from the amendments set forth in this Amendment and (ii) the representations and
warranties of such Loan Party contained in the Loan Agreement are true and
correct.
SECTION 3. CONDITIONS TO EFFECTIVENESS
---------------------------
The obligation of the Lender to make the amendments contemplated by
this Amendment and the effectiveness thereof, are subject to the following:
3.1 Representations and Warranties. The representations and
------------------------------
warranties of the Loan Parties contained in this Amendment are true and correct
as of the Closing Date.
3.2 Documents. The Lender has received all of the following, each
---------
duly executed and dated as of the Closing Date (or such other date as is
satisfactory to the Lender) in form and substance satisfactory to the Lender:
(A) Fourteenth Amendment. This Amendment;
--------------------
(B) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party authorizing or ratifying the execution, delivery and performance of
this Amendment;
(C) Consents, Etc. Certified copies of all documents evidencing any
-------------
necessary corporate action, consents and governmental approvals, if any,
with respect to this Amendment or any other document provided for under
this Amendment; and
(D) Other. Such other documents as the Lender may reasonable request.
-----
SECTION 4. MISCELLANEOUS
-------------
4.1 Captions. The recitals to this Amendment (except for definitions)
--------
and the section captions used in this Amendment are for convenience only, and do
not affect the construction of this Amendment.
4.2 Governing Law; Severability. THIS AMENDMENT IS A CONTRACT MADE
---------------------------
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Wherever possible, each provision of this Amendment
must be
-3-
<PAGE>
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Amendment is prohibited by or invalid under such
law, such provision is only ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions the remaining
provisions of this Amendment.
4.3 Counterparts. This Amendment may be executed in any number of
------------
counterparts and by the different parties on separate counterparts, and each
such counterpart is deemed to be an original, but all such counterparts together
constitute but one and the same Amendment.
4.4 Successors and Assigns. This Amendment is binding upon each Loan Party
----------------------
and the Lender and their respective successors and assigns, and inures to the
sole benefit of each Loan Party and the Lender and their successors and assigns.
The Loan Parties have no right to assign their respective rights or delegate
their respective duties under this Amendment.
4.5 References. From and after the Closing Date, each reference in the
----------
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of
like import, and each reference in any Financing Agreement to the Loan Agreement
or to any term, condition or provision contained "thereunder," "thereof,"
"therein," or words of like import, mean and are a reference to the Loan
Agreement or such term, condition or provision, as applicable) as amended,
supplemented or otherwise modified by this Amendment.
4.6 Continued Effectiveness. Notwithstanding anything contained in this
-----------------------
Amendment, the terms of this Amendment are not intended to and do not serve to
effect a novation as to the Loan Agreement. The parties to this Amendment
expressly do not intend to extinguish the Loan Agreement. Instead, it is the
express intention of the parties to this Amendment to reaffirm the indebtedness
created by and secured under the Loan Agreement. The Loan Agreement, as amended
by this Amendment, remains in full force and effect.
4.7 Costs, Expenses and Taxes. Each Loan party affirms and acknowledges
-------------------------
that Section 10.2 and Section 10.3 of the Loan Agreement applies to this
Amendment and the transactions and agreements and documents contemplated under
this Amendment.
-4-
<PAGE>
4.8 Guarantors Reaffirmation. Each of the Guarantors acknowledges that
-------------------------
it has read this Amendment and consents to this Amendment and agrees that its
Guaranty of the Guaranteed Obligations (as defined in such Guaranty) continues
in full force and effect, is valid and enforceable as is not impaired or
otherwise affected by the execution of this Amendment or any other document or
instrument delivered in connection with this Amendment.
* * * * *
-5-
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above
written.
WOLFE NURSERY, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
TIP TOP NURSERIES, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
NURSERYLAND GARDEN CENTERS, INC.,
as a Borrower
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
SUNBELT NURSERY GROUP, INC.,
as a Guarantor
By: /s/ Timothy R. Duoos
---------------------------
Name: Timothy R. Duoos
Title: President
<PAGE>
SUNBELT NURSERY HOLDINGS, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
----------------------------
Name: TIMOTHY R.DUOOS
Title: PRESIDENT
SUNBELT MANAGEMENT SERVICES, INC.,
as a Guarantor
By: /s/ TIMOTHY R. DUOOS
-------------------------------
Name: TIMOTHY R. DUOOS
Title: PRESIDENT
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: /s/ DENNIS E. HARRISON
-------------------------------
Name: DENNIS E. HARRISON
Title: SENIOR VICE PRESIDENT
Timothy R. Duoos, guarantor under the Guaranty dated as of October 14, 1994
(the "Duoos Guaranty") made in favor of the Lender, acknowledges that he has
--------------
read this Amendment referenced herein and consents to this Amendment and agrees
that his guarantee of the Guaranteed Obligations (as defined in the Duoos
Guaranty) continues in full force and effect, is valid and enforceable and is
not impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection with this Amendment.
/s/ Timothy R. Duoos
----------------------------------
Timothy R. Duoos
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-START> JUN-30-1997
<PERIOD-END> DEC-28-1997
<CASH> 343
<SECURITIES> 0
<RECEIVABLES> 504
<ALLOWANCES> (132)
<INVENTORY> 11,729
<CURRENT-ASSETS> 13,009
<PP&E> 21,949
<DEPRECIATION> (18,280)
<TOTAL-ASSETS> 16,703
<CURRENT-LIABILITIES> 20,728
<BONDS> 0
0
0
<COMMON> 85
<OTHER-SE> (6,920)
<TOTAL-LIABILITY-AND-EQUITY> 16,703
<SALES> 16,360
<TOTAL-REVENUES> 16,360
<CGS> 9,021
<TOTAL-COSTS> 9,021
<OTHER-EXPENSES> 8,950
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148
<INCOME-PRETAX> (1,759)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,759)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,759)
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> (0.21)
</TABLE>
