<PAGE>

                                                                    EXHIBIT 10.2

                               AMENDMENT NO. 5 TO
                           LOAN AND SECURITY AGREEMENT

            This Amendment No. 5 ("Amendment No. 5") is dated as of the 29th day
of June, 2004 and is by and among Congress Financial Corporation (Central), as
Agent (the "Agent") for the lenders from time to time party to the Loan
Agreement (as defined below) (the "Lenders") and as a Lender and Frank's Nursery
& Crafts, Inc. ("Borrower").

                              W I T N E S S E T H:

            WHEREAS, Agent, Lenders and Borrower are parties to that certain
Loan and Security Agreement, dated as of May 20, 2002, as amended (the "Loan
Agreement"; all capitalized terms used herein, unless otherwise defined herein,
shall have the meanings ascribed to them in the Loan Agreement), pursuant to
which Lenders agreed to provide certain loans and other financial accommodations
to Borrower;

            WHEREAS, Borrower and Kimco Capital Corp. ("Kimco") are parties to
that certain Credit and Security Agreement, dated as of May 20, 2002, as amended
(the "Kimco Credit Agreement");

            WHEREAS, Borrower, Agent and Lenders have also agreed to amend the
Loan Agreement in certain respects;

            WHEREAS, in consideration for Agent and Lenders agreeing to the
foregoing amendments, Borrower has agreed to grant liens to Agent, on behalf of
the Lenders, on certain parcels of real property owned by Borrower on which
Borrower has previously granted liens to Kimco pursuant to the Kimco Credit
Agreement;

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

            1. Consent. In reliance upon the representations and warranties of
the Borrower set forth in Section 5 below, and subject to the satisfaction of
the conditions set forth in Section 6 below, Agent and Lenders hereby (i)
consent to the execution and delivery of that certain Sixth Amendment to Kimco
Credit Agreement dated June 29, 2004, in the form of Exhibit A hereto, and (ii)
agree that compliance with Section 9.18(a) of the Loan Agreement with respect to
the period ending on the last day of the fourth Accounting Period of the fiscal
year of Borrower ending 2005 shall not be measured for any purpose.

            2. Amendments to Loan Agreement. The Loan Agreement is hereby
amended as follows:

<PAGE>

            (a) Section 1.67 of the Loan Agreement is amended and restated in
its entirety as follows:

            1.67. "Kimco Documents" shall mean the Credit and Security Agreement
      dated as of May 20, 2002, as amended, by and between Borrower and Kimco
      (the "Kimco Credit Agreement"), and the Fundamental Documents (as such
      term is defined in the Kimco Credit Agreement).

            (b) Section 1.97 of the Loan Agreement is amended and restated in
its entirety as follows:

            1.97. "Real Estate Reserve" shall mean an amount equal to $0;
      provided, that the "Real Estate Reserve" shall mean an amount equal to
      $4,000,000 if (i) Kimco fails to provide Overline Revolving Credit Loans
      (as defined in the Kimco Credit Agreement) to Borrower in an amount equal
      to $40,000,000 pursuant to the Sixth Amendment to Kimco Credit Agreement
      dated June 29, 2004 or (ii) on or before July 31, 2004 (A) Borrower fails
      to have executed and delivered to Agent mortgages and deeds of trust, in
      form and substance satisfactory to the Agent, to grant to Agent, on behalf
      of the Lenders, a lien on each of the three parcels of real property owned
      by Borrower and set forth on Schedule 5.1(A) hereto and (B) Agent and
      Kimco fail to enter into an intercreditor and marshalling agreement
      satisfactory to Agent pursuant to which Kimco agrees to a satisfactory
      marshalling arrangement with respect to the real properties set forth on
      Schedule 5.1(A) and Agent agrees that its liens and security interests on
      such real properties are junior and subordinate to Kimco's liens and
      security interests on such properties in the same manner that Kimco's
      liens and security interests on Borrower's current assets are junior and
      subordinate to Agent's liens and security interests.

            (c) Section 2.2(d) of the Loan Agreement is amended by amending and
restating clause (iii)(A) contained therein as follows:

            (A) if the proposed Letter of Credit Accommodation is for the
      purpose of purchasing Eligible Inventory and the documents of title with
      respect thereto are consigned to the issuer, the sum of (1) the percentage
      equal to one hundred (100%) percent minus the then applicable percentage
      with respect to Eligible Inventory set forth in the definition of the term
      Borrowing Base multiplied by the Cost of such Eligible Inventory (provided
      that with respect to Current Christmas Decoration Inventory, at any time
      in which the Applicable Current Christmas Advance Rate is zero percent
      (0%), the percentage under this clause 2.2(d)(iii)(A)(1) shall be the
      percentage equal to one hundred (100%) percent minus the product of
      eighty-five (85%) percent multiplied by the Net Recovery Rate for such
      Current Christmas Decoration Inventory), plus (2) freight, taxes, duty and
      other amounts which Agent estimates must be paid in connection with such
      Inventory upon arrival and for delivery to one of

                                      -2-
<PAGE>

      Borrower's locations for Eligible Inventory within the United States of
      America; and

            (d) Section 5.1 of the Loan Agreement is amended by amending and
restating the last sentence thereof in its entirety as follows:

            Notwithstanding the foregoing, the Collateral shall not include (i)
      the Kimco Collateral or (ii) the Equipment and fixtures located on the
      real property described on Schedule 5.1, except that the Collateral shall
      include the real property set forth on Schedule 5.1(A) hereto and the
      Equipment and fixtures located on such real property.

            (e) Section 9.18(a) of the Loan Agreement is amended and restated in
its entirety as follows:

            (a) For each period below, Borrower shall maintain EBITDA of at
      least the amount set forth opposite such period:

<TABLE>
<CAPTION>
                       Period                                    Amount
                       ------                                    ------
<S>                                                          <C>
The period of 7 Accounting Periods ending on the
last day of the seventh Accounting Period of the
fiscal year of Borrower ending in 2005                        $ 5,362,000

The period of 10 Accounting Periods ending on the
last day of the tenth Accounting Period of the
fiscal year of Borrower ending in 2005                       ($ 9,653,000)

The period of 13 Accounting Periods ending on the
last day of the fiscal year of Borrower ending in
2005                                                         ($14,996,000)

The period of 13 Accounting Periods ending on the
last day of the fourth Accounting Period of the
fiscal year of Borrower ending in 2006                       ($ 8,538,000)
</TABLE>

            (f) A new Schedule 5.1(A) shall be added to the Loan Agreement in
the form set forth as Schedule 5.1(A) attached hereto.

            3. Other Agreements. Until such time as the Obligations have been
paid in full, Borrower hereby agrees to retain the consulting services of Abacus
Advisors or another advisor reasonably acceptable to the Required Lenders.
Borrower hereby agrees that the failure by Borrower to satisfy the foregoing
agreement shall constitute an Event of Default.

                                      -3-
<PAGE>

            4. References. Agent, Lenders and Borrower hereby agree that all
references to the Loan Agreement which are contained in any of the other
Financing Agreements shall refer to the Loan Agreement as amended by this
Amendment No. 5, as such may be amended and supplemented from time to time
hereafter.

            5. Representations and Warranties. To induce Agent and Lenders to
enter into this Amendment No. 5, Borrower hereby represents and warrants to
Agent and Lenders that:

            (a) The execution, delivery and performance by Borrower of this
Amendment No. 5 and each of the other agreements, instruments and documents
contemplated hereby are within its corporate power, have been duly authorized by
all necessary corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not contravene or
conflict with any provision of law applicable to Borrower, the articles of
incorporation and by-laws of Borrower, any order, judgment or decree of any
court or governmental agency, or any agreement, instrument or document binding
upon Borrower or any of its property;

            (b) Each of the Loan Agreement and the other Financing Agreements,
as amended by this Amendment No. 5, are the legal, valid and binding obligation
of Borrower enforceable against Borrower in accordance with its terms, except as
the enforcement thereof may be subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditor's rights generally, and (ii) general principles of equity;

            (c) The representations and warranties contained in the Loan
Agreement and the other Financing Agreements are true and accurate as of the
date hereof with the same force and effect as if such had been made on and as of
the date hereof; and

            (d) Borrower has performed all of its obligations under the Loan
Agreement and the Financing Agreements to be performed by it on or before the
date hereof and as of the date hereof, Borrower is in compliance with all
applicable terms and provisions of the Loan Agreement and each of the Financing
Agreements to be observed and performed by it and no event of default or other
event which upon notice or lapse of time or both would constitute an event of
default has occurred (other than the matters waived in Section 1 above).

            6. Conditions to Effectiveness. This Amendment No. 5 shall be
effective upon (i) the delivery by Borrower to Agent of a fully executed copy of
this Amendment No. 5, (ii) the consent of Kimco to the liens in favor of Agent
on the real property listed on Schedule 5.1(A) of the Loan Agreement, and (iii)
receipt by Agent of an amendment fee in the amount of $125,000.

            7. Counterparts. This Amendment No. 5 may be executed in any number
of counterparts and by the different parties on separate counterparts, and each
such

                                      -4-
<PAGE>

counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Amendment No. 5.

            8. Continued Effectiveness. Except as specifically set forth herein,
the Loan Agreement and each of the Financing Agreements shall continue in full
force and effect according to its terms.

            9. Costs and Expenses; Amendment Fee. Borrower hereby agrees that
all expenses incurred by Agent and Lenders in connection with the preparation,
negotiation and closing of the transactions contemplated hereby, including
without limitation reasonable attorneys' fees and expenses, shall be part of the
Obligations. Borrower agrees to pay to Agent, for the benefit of Lenders, an
amendment fee in the amount of $125,000 on the date hereof.

            10. Release.

            (a) In consideration of the agreements of Agent and Lenders
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Borrower, on behalf of itself and
its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Agent
and Lenders, and their successors and assigns, and their present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents and other representatives (Agent, each
Lender and all such other Persons being hereinafter referred to collectively as
the "Releasees" and individually as a "Releasee"), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a "Claim" and collectively, "Claims")
of every name and nature, known or unknown, suspected or unsuspected, both at
law and in equity, which Borrower or any of its successors, assigns, or other
legal representatives may now or hereafter own, hold, have or claim to have
against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Amendment No. 5, including, without
limitation, for or on account of, or in relation to, or in any way in connection
with any of the Loan Agreement, or any of the other Financing Agreements or
transactions thereunder or related thereto.

            (b) Borrower understands, acknowledges and agrees that the release
set forth above may be pleaded as a full and complete defense and may be used as
a basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release.

            (c) Borrower agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.

                            [Signature page follows]

                                      -5-
<PAGE>

            IN WITNESS WHEREOF, this Amendment No. 5 has been executed as of the
day and year first written above.

                                       FRANK'S NURSERY & CRAFTS, INC., as
                                       Borrower

                                       By: /s/ Michael McBride
                                           -------------------
                                           Michael McBride
                                           Vice President


                                       CONGRESS FINANCIAL CORPORATION
                                       (CENTRAL), as Agent and Lender

                                       By: /s/ Steve Linderman
                                           -------------------
                                           Steve Linderman
                                           Senior Vice President
<PAGE>

                                 SCHEDULE 5.1(A)

<TABLE>
<CAPTION>
                                                                                       ZIP
STORE #         STORE ADDRESS                        CITY                   STATE      CODE    COUNTY
<S>         <C>                                    <C>                      <C>        <C>     <C>
   88       720 N. Green Bay Rd.,                  Waukegan                   IL       60087    Lake
   90       2999 E. Lincoln Hwy.                   Merrillville               IN       46410    Lake
  297       2051 N. Rte. 83                        Round Lake Beach           IL       60046    Lake
</TABLE>