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EXHIBIT 10.13
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is dated April 7, 1998, between
MARINEMAX, INC., a Delaware corporation ("Company"), and NATIONSCREDIT
DISTRIBUTION FINANCE, INC., a North Carolina corporation with its principal
place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000
("Lender").
WITNESSETH:
WHEREAS, Company has requested a credit facility up to $105,000,000
from Lender, and Lender has agreed to provide such facility on the terms set
forth herein;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
"Account" means accounts, receivables, chattel paper and other rights
to payment arising from the sale or lease of goods or provision of services in
the ordinary course of business, including all amounts payable by, and rights
and claims against, any manufacturer or vendor of Inventory, such as volume
purchase discounts, advertising rebates, price protection, warranty work,
incentives and credits.
"Advance" means an advance made by Lender to Company pursuant to
Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"Approved Vendor" means a manufacturer or vendor that is (a) requested
by Company to Lender, in writing, for establishment of a direct floorplan
funding arrangement under this Agreement, and (b) approved by Lender.
"Borrowing Base" means the sum of the following for Company and its
Subsidiaries, determined on a consolidated basis: (a) the lesser of $105,000,000
or the sum of (i) 100% of the cost (including freight charges) of Eligible New
Inventory that is aged less than 366 days from date of delivery to Company or
its Subsidiary, plus (ii) 90% of the cost (including freight charges) of
Eligible New Inventory that is aged more than 365 days, but not more than 730
days, from date of delivery to Company or its Subsidiary, (b) the lesser of
$25,000,000 or the sum of (i) 80% of NADA Wholesale Value of Eligible Used
Inventory that has been held by Company or its Subsidiaries for not more than
180 days, plus (ii) 72% of the NADA Wholesale Value of Eligible Used Inventory
that has been held by Company or its Subsidiaries for more than 180 days, but
not more than 365 days, (c) the lesser of $15,000,000 or 75% of the cost
(excluding freight charges) of Eligible Parts Inventory, plus (d) the lesser of
$25,000,000 or 80% of the net book value of Eligible Accounts.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
A hereto (as modified with the consent of Lender from time to time), in form and
detail satisfactory to Lender.
"Business Day" means a day of the year on which banks are open for
business in Atlanta, Georgia.
"Capital Lease" means any capital lease or sublease, as defined in
accordance with GAAP.
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"Change in Control" means an acquisition by any person or entity of
more than 5.0% of the beneficial ownership of the voting stock of Company,
except acquisitions (a) effected as part of the IPO, (b) by Xxxxxxx Xxxxxxx,
Xxxxx XxxXxxxx, Xxxxxxx X. XxXxxx, Xx., Xxxxx Xxxxxxxx, Xxxxxxx X. XxXxxxx, or
any of their family members or trusts, (c) by Brunswick Corporation, or any of
its Subsidiaries, or (d) consummated after receipt of Lender's prior written
consent, which shall not be unreasonably withheld.
"Collateral" has the meaning set forth in Section 4.01 hereof.
"Committed Advance" means an unfunded approval that has been issued to
an Approved Vendor by Lender, pursuant to which Lender commits to fund Company's
or its Subsidiary's obligations under a purchase order submitted by Company or
the Subsidiary to such Approved Vendor.
"Commitment" means $105,000,000.
"Company" means MarineMax, Inc., a Delaware corporation.
"Compliance Certificate" means a certificate of an officer of Company
acceptable to Lender, and in form and substance satisfactory to Lender, (a)
certifying that such officer has no knowledge that a material Default or
material Event of Default has occurred and is continuing, or if a material
Default or material Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action being taken or proposed to be taken with
respect thereto, and (b) setting forth detailed calculations with respect to the
covenants described in Section 6.01(a), (b) and (c) hereof.
"Consolidated Collateral" means the following assets of Company and its
Subsidiaries, whether now owned or hereafter acquired and wherever located: (a)
all Accounts; (b) all Inventory; (c) all other goods, equipment, fixtures and
furniture; and (d) all insurance policies and proceeds relating to the
foregoing; all books and records relating to the foregoing; and all proceeds and
products of the foregoing.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or obligation of another in any manner, whether
directly or indirectly, including without limitation any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or any security for the payment of
thereof, (b) to purchase Property or services for the purpose of assuring the
owner of such Debt of its payment, or (c) to maintain the solvency, working
capital, equity, cash flow, fixed charge or other coverage ratio, or any other
financial condition of the primary obligor so as to enable the primary obligor
to pay any Debt or to comply with any agreement relating to any Debt or
obligation.
"Current Ratio" means the ratio, calculated for Company and its
Subsidiaries on a consolidated basis, of (a) cash plus accounts receivable plus
inventory plus prepaid expenses, as defined in accordance with GAAP, to (b)
current liabilities determined in accordance with GAAP.
"Debt" means all obligations, contingent or otherwise, which in
accordance with GAAP should be classified on the balance sheet as
liabilities,and in any event including Capital Leases, Contingent Liabilities
that are required to be disclosed and quantified in notes to financial
statements in accordance with GAAP, and liabilities secured by any Lien on any
Property, regardless of whether such secured liability is with or without
recourse.
"Default" means any event specified in Section 7.01 hereof, for which
any requirement for the giving of notice or lapse of time has not yet been
satisfied.
"Eligible Account" means an Account of Company or its Subsidiaries
that:
(a) constitutes amounts payable by a vendor or manufacturer of
Inventory for returns, volume purchase discounts, advertising
rebates, price protection, warranty work, incentives, credits
or similar items, or is any other Account approved by Lender
from time to time;
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(b) is subject to a perfected, first priority Lien in favor of
Lender, free from any other Lien;
(c) has not remained unpaid more than 90 days, and can be
confirmed with the vendor or manufacturer by Lender;
(d) when aggregated with all other Accounts payable by the Account
obligor (excluding Brunswick Corporation and its
Subsidiaries), does not exceed 5% of total Accounts, unless
Lender has specifically approved the concentration level for
such obligor;
(e) is not owing by an Account obligor located or otherwise
resident outside the United States;
(f) is not payable by an Account obligor who has suspended
business, has made an assignment for the benefit of creditors,
is insolvent, or is the subject of a voluntary or involuntary
proceeding under any bankruptcy law or other law for the
relief of debtors;
(g) is not subject to any material condition, contingency,
allowance, defense, dispute, off-set or counterclaim; and
(h) otherwise constitutes collateral reasonably acceptable to
Lender for borrowing purposes.
"Eligible New Inventory" means Inventory of Company or its Subsidiaries
that (a) is subject to a perfected, first priority Lien in favor of Lender, free
from any other Lien other than those acceptable to Lender in its sole
discretion, (b) is located at Company's or its Subsidiaries' facilities, or was
delivered to a retail purchaser within the last six business days, or was
delivered within the last 10 business days under a purchase agreement for a
lease transaction, (c) does not constitute Used Inventory or Eligible Parts
Inventory, and (d) otherwise constitutes collateral reasonably acceptable to
Lender for borrowing purposes.
"Eligible Parts Inventory" means Inventory of Company or its
Subsidiaries that (a) consists of parts and accessories for boats and trailers,
(b) is subject to a perfected, first priority Lien in favor of Lender, free from
any other Lien other than those acceptable to Lender in its sole discretion, (b)
is located at any of Company's or its Subsidiaries' facilities, (c) does not
constitute Eligible New Inventory or Used Inventory, and (d) otherwise
constitutes collateral reasonably acceptable to Lender for borrowing purposes.
"Eligible Used Inventory" means Used Inventory that (a) is subject to a
perfected, first priority Lien in favor of Lender, free from any other Lien
other than those acceptable to Lender in its sole discretion, (b) is located on
Company's or its Subsidiaries' facilities, or was delivered to a retail
purchaser within the last six business days, or was delivered within the last 10
business days under a purchase agreement for a lease transaction, (c) does not
constitute Eligible New Inventory or Eligible Parts Inventory, and (d) otherwise
constitutes collateral reasonably acceptable to Lender for borrowing purposes.
"Environmental Law" means any Law or other authorization or requirement
of any Governmental Body relating to actual or threatened emissions, discharges
or releases of pollutants, contaminants, or hazardous or toxic materials, or
otherwise relating to pollution or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"Event of Default" means any of the events specified in Section 7.01 of
this Agreement, provided any requirement for the giving of notice or lapse of
time has been satisfied.
"Fixed Charges Coverage Ratio" means the ratio, calculated for Company
and its Subsidiaries on a consolidated basis, of (a) pre-tax net income plus
interest expense, to (b) interest expense plus amounts paid or scheduled to be
paid on funded debt (excluding revolving loans owing hereunder) and Capital
Leases, all determined in accordance with GAAP. This ratio shall be measured for
the most recent 12 month period (determined during the first fiscal year on an
annualized basis from the date of the IPO).
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
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"Governmental Body" means any governmental official, or state,
commonwealth, federal, foreign, territorial, or other court or governmental
body, including any subdivision, agency, department, commission, board, bureau
or instrumentality.
"Guaranties" means the guaranties delivered to Lender by Guarantors, as
amended or modified from time to time with Lender's written consent.
"Guarantor" means any of the Individual Guarantors (unless they have
been released pursuant to Section 6.01(d) hereof) or Subsidiary Guarantors.
"Hazardous Materials" means any substances or materials subject to any
Environmental Law, including without limitation materials listed in 49 C.F.R.
Section 172.101, hazardous waste as defined in the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.., the Resource
Conservation Recovery Act, 42 U.S.C. Section 6901 et seq. or the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.., explosive or
radioactive materials, hazardous or toxic wastes or substances, petroleum or
petroleum distillates, asbestos or material containing asbestos, or any other
materials or substances designated as hazardous or toxic under any federal,
state or local Law.
"Individual Guarantors" means Xxxxxxx X. Xxxxxxx, Xxxxx X. XxxXxxxx,
Xx., Xxxxxxx X. XxXxxx, Xx., Xxxxx Xxxxxxxx and Xxxxxxx X. XxXxxxx, Xx., until
their guaranties are released pursuant to Section 6.01(d) hereof.
"Interest Payment Date" means the 15th day of each calendar month,
commencing April 15, 1998.
"Inventory" means inventory and goods held for sale or lease in the
ordinary course of business, raw materials, work in process, and materials used
or consumed in the business; returned and repossessed goods; replacements and
substitutions therefor; and parts, additions and accessions relating thereto.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any acquisition of, or beneficial interest in, partnership or
membership interests, capital stock or other securities of any Person, or any
advance or capital contribution to or other investment in any Person (except
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business).
"IPO" means an initial public offering of Company's common stock that,
when aggregated with any amounts contributed by Brunswick Corporation, results
in at least $50,000,000 of net proceeds contributed to Company.
"Law" means any law, regulation, order or decree of any Governmental
Body.
"Lender" means NationsCredit Distribution Finance, Inc., a North
Carolina corporation.
"Leverage Ratio" means the ratio, calculated for Company and its
Subsidiaries on a consolidated basis, of total liabilities determined in
accordance with GAAP, to Tangible Net Worth.
"LIBOR" means the 90 day London Interbank Offered Rate published in the
Eastern Edition of the Wall Street Journal on the last business day of Lender's
accounting month, effective for the next accounting month.
"License" means any license, permit or other authorization by any
Governmental Body or third Person necessary or appropriate for Company or any of
its Subsidiaries to own or operate their businesses or Properties.
"Lien" means any security interest, lien, pledge, encumbrance, charge
or adverse claim of any kind, including without limitation any agreement to give
or not to give any lien, or any conditional sale or other title retention
agreement.
"Litigation" means any proceeding, claim or investigation by or before
any Governmental Body.
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"Loan Papers" means this Agreement, the Guaranties, and all financing
statements, certificates, instruments and agreements delivered by any Person
hereunder, as they are modified or extended in accordance with their terms.
"Material Adverse Change" means a material and adverse change in
Company's and its Subsidiaries' financial condition, Properties or business
operations, taken as a whole.
"NADA Wholesale Value" means the wholesale value published in the most
recent NADA Small Boat Appraisal Guide, but if no wholesale value is available
for the boat in such guide, then it shall be the wholesale value published in
the most recent BUC Used Boat Price Guide.
"Operating Lease" means any operating lease or sublease, as defined in
accordance with GAAP.
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, trust, Governmental Body, association, unincorporated
organization or other entity.
"Plan" means any single employer plan, multiple employer plan or
multi-employer plan, within the meaning of ERISA, established by Company or any
of its Subsidiaries, or otherwise maintained at any time for any of Company's
and its Subsidiaries' employees.
"Property" means all types of real, personal, tangible or intangible
property.
"Retail Paper" means chattel paper and other instruments arising from
Company's or any of its Subsidiaries' sale or lease of goods or provision of
services in the ordinary course of business.
"Rights" means rights, remedies, powers and privileges.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities (including Contingent Liabilities) of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (d) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute an unreasonably
small capital.
"Subsidiary" means, as to any Person, any corporation or limited
liability company at least 50% of whose securities having ordinary voting power
(other than securities having such power only by reason of happening of a
contingency) are owned by such Person, or one or more Subsidiaries of that
Person, or a combination thereof.
"Subsidiary Guarantor" means each Subsidiary of Company that has
delivered a guaranty to Lender of Company's obligations hereunder.
"Tangible Net Worth" means, calculated for Company and its Subsidiaries
on a consolidated basis, shareholders' equity determined in accordance with
GAAP, minus items treated as intangibles under GAAP, amounts owing by any
employee, officer or other affiliate, and any other asset that cannot be
identified as tangible to Lender's satisfaction.
"Taxes" means all taxes, assessments, fees or other charges imposed by
any Law or Governmental Body.
"Termination Date" means April 1, 01.
"Used Inventory" means Inventory of Company or its Subsidiaries that
has been (a) previously sold at retail, (b) registered, documented or titled in
any state or jurisdiction, (c) purchased or acquired by Company or its
Subsidiaries from a source other than the manufacturer, or (d) held by Company
or its Subsidiaries for more than
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two years (and in the case of Inventory covered by this clause (d), then Company
and its Subsidiaries shall be deemed to have held such Inventory as "Used
Inventory" only from such two year date onward).
ARTICLE II
ADVANCES
2.01. ADVANCES.
(a) Lender shall, subject to the terms and conditions set forth herein,
make Advances to Company from time to time until the Termination Date, to fund
Company's and its Subsidiaries' acquisition of Inventory and for general working
capital and operational purposes. Company may borrow, repay and reborrow in
accordance with this Agreement. In no event may total outstanding Advances, plus
all Committed Advances, exceed the Commitment.
(b) Company may use the proceeds of Advances to fund its and its
Subsidiaries' acquisition of Inventory, for its and its Subsidiaries' working
capital purposes and for other purposes satisfactory to Lender. No more than
$10,000,000 (unless real estate is pledged to Lender's satisfaction) may be
outstanding at any time for Advances used by Company for other working capital
purposes.
(c) Lender will send Company statements from time to time listing the
amount of each Advance. If Company does not agree with a statement, it must
immediately notify Lender in writing of the objections. Company's failure to
notify Lender of an objection within 10 business days shall constitute an
acceptance of the statement.
(d) In lieu of a promissory note or other instrument evidencing the
indebtedness hereunder, Lender will maintain records reflecting Company's
outstanding indebtedness. Failure to make notation of any Advance, however, will
not affect the obligations of Company. Entries in such records will be presumed
correct, absent manifest error.
2.02. MAKING ADVANCES. Company shall notify Lender at least one
Business Day prior to any proposed Advance; such notification may be oral, but
must be confirmed by telecopy or in writing by the date of the Advance. An
Approved Vendor may contact Lender directly for approvals constituting Committed
Advances, and Lender will disburse the proceeds of Advances under such approvals
directly to the vendor. Other Advances will be disbursed to Company to an
account or address specified by it. Lender may assume that the proceeds of
Advances are being used by Company to acquire Inventory, unless Company notifies
Lender to the contrary at the time that the Advance is being made. Each date of
borrowing must be a Business Day.
2.03. PREPAYMENT AND REPAYMENT OF ADVANCES.
(a) Company may terminate the Commitment, upon 30 days prior written
notice to Lender, and on the date specified for termination of the Commitment,
all outstanding Advances, accrued interest and charges, and other amounts owing
to Lender will be due and payable in full.
(b) Any Advance used to pay the settlement fee under Company's
settlement agreement with Brunswick Corporation will be due and payable 180 days
after the Advance is made. At Company's request, and with Lender's approval,
such Advance may be converted to a term loan on its due date, with the rates and
terms to be mutually agreed upon at such time. On the Termination Date, Company
shall repay all outstanding Advances, accrued interest and charges, and all
other amounts owing to Lender.
(c) In no event may the amount of outstanding Advances used for the
acquisition of Inventory (including Committed Advances for which Company has
received the applicable Inventory) exceed the current Borrowing Base.
Concurrently with delivery of each Borrowing Base Certificate hereunder, Company
shall repay a principal amount of Advances equal to any such excess.
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2.04. INTEREST ON ADVANCES. Advances shall bear interest at a per annum
rate equal to LIBOR plus 1.25%. Accrued interest is due and payable on each
Interest Payment Date. During the existence of an Event of Default, at the
option of Lender, amounts owing hereunder shall bear interest at a per annum
rate equal to LIBOR plus 4.25%, due and payable on demand.
2.05. COMPUTATIONS AND MANNER OF PAYMENTS. Interest will be calculated
on a simple interest basis for a year of 360 days, based on actual days elapsed.
If any payment is due on a date that is not a Business Day, the due date will be
extended to the next Business Day. Lender may, at any time and without notice to
Company, apply monies received in payment of Company's obligations in such order
of application as Lender shall determine. All payments shall be made in United
States dollars and without set-off, counterclaim or other defense. Company
specifically agrees that it will not delay payment of any obligations to Lender,
or assert any defense or set-off with respect to said obligations, on account of
a dispute between Company or one of its Subsidiaries and the vendor or
manufacturer of any Inventory.
ARTICLE III
CONDITIONS PRECEDENT
3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to fulfillment of the following conditions precedent:
(a) Lender shall be satisfied, in its sole discretion, with Company's
and each Guarantor's financial condition, Properties, business, affairs or
prospects as of the effective date.
(b) Company shall have executed and delivered to Lender all of
Company's Loan Papers, in form and substance satisfactory to Lender. Each
Guarantor shall have delivered his or its Guaranty, in form and substance
satisfactory to Lender.
(c) Company and its Subsidiaries shall have delivered such financing
statements and lien filings as Lender shall request to record and perfect the
Liens granted to Lender under the Loan Papers. Lender shall have received such
UCC and Lien search reports as it shall deem appropriate to evidence that its
Liens on the Consolidated Collateral are first priority Liens, subject only to
other Liens acceptable to Lender in its sole discretion.
(d) Lender shall have received a certificate of a duly authorized
officer of Company, certifying that (i) no Default or Event of Default exists,
(ii) the representations and warranties set forth in Article V hereof are true
and correct in all material respects, (iii) Company has complied with all
agreements and conditions to be complied with by it under the Loan Papers by
such date, (iv) the attached copies of the settlement agreement with and related
promissory note in favor of Brunswick Corporation are true and complete, without
amendment, and are in full force and effect, and (v) an attached copy of
Company's Form S-1 Registration Statement is true and complete, without
amendment except as shown, and reflects all filings made with the Securities and
Exchange Commission in connection with Company's IPO.
(e) Lender shall have received a certificate of the secretary or
member, as applicable, of each of Company and its Subsidiaries, certifying (i)
that attached copies of its articles of incorporation, bylaws or other
organizational documents are true and complete, and in full force and effect,
without amendment except as shown, (ii) that an attached copy of resolutions
authorizing execution and delivery of the Loan Papers is true and complete, and
that such resolutions are in full force and effect, were duly adopted, have not
been amended, modified, or revoked, and constitute all resolutions adopted with
respect to this loan transaction, and (iii) to the incumbency, name and
signature of each officer or representative authorized to sign the Loan Papers
on behalf of the entity. Lender may conclusively rely on this certificate until
it is otherwise notified by Company in writing.
(f) Lender shall have received an opinion of counsel to Company and
Guarantors (i) that Company has full power and authority to execute and deliver
its Loan Papers; (ii) that the Loan Papers constitute the legal,
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valid and binding respective obligations of Company and Guarantors, enforceable
in accordance with their terms; and (iii) as to such other matters, and
otherwise in form and substance, satisfactory to Lender.
(g) Lender shall have received evidence of insurance as required under
Sections 4.03 and 6.09 hereof. Lender shall have received a copy of Company's
settlement agreement with Brunswick Corporation, providing for a waiver of the
change of control provisions with respect to the merger of the founding
dealerships.
(h) The merger of the founding dealerships into wholly-owned
Subsidiaries of Company shall have been completed without material deviation
from the pro-forma financial statements previously delivered to Lender.
(i) Lender shall have received copies of all appraisals and
environmental assessments that have been performed with respect to Company's and
its Subsidiaries' real estate, and such appraisals and environmental assessments
shall be in form and substance satisfactory to Lender.
(j) Lender shall have received evidence satisfactory to it that Company
and each of its Subsidiaries is duly organized, validly existing and in good
standing in its jurisdiction of organization, and is duly qualified and in good
standing in all other appropriate jurisdictions.
(k) All proceedings of Company and its Subsidiaries taken in connection
with the transactions contemplated hereby, and all documents incidental thereto,
shall be satisfactory in form and substance to Lender. Lender shall have
received copies of all documents or other evidence that it may reasonably
request in connection with such transactions.
3.02. REQUESTS FOR ADVANCES. Each request for an Advance and each
funding of an Advance by Lender (including the disbursement of an Advance
directly to an Approved Vendor) shall constitute a representation by Company
that on each of the dates of the request and funding, the following are true:
(a) the representations and warranties contained in Article V
hereof are true and correct in all material respects on such
date, as though made on and as of such date, and
(b) no event has occurred or exists, or would result from such
Advance, that could constitute a Default or Event of Default.
Lender may condition any Advance upon Lender's receipt, in form and substance
acceptable to it, of such other information as it may deem necessary or
appropriate. Notwithstanding the foregoing, even if the foregoing conditions are
not satisfied on the applicable disbursement date, Lender may fund a Committed
Advance that was committed when such conditions were satisfied, without being
deemed to have waived any conditions precedent nor to have established any
course of dealing.
ARTICLE IV
SECURITY INTEREST
4.01. SECURITY INTERESTS IN COLLATERAL. As security for all present and
future obligations of Company and its Subsidiaries to Lender, whether or not
arising under this Agreement, and of whatever kind, now due or to become due,
absolute or contingent, joint or several, Company hereby grants to Lender a
continuing security interest and Lien on the following assets of Company,
whether now owned or hereafter acquired and wherever located (collectively,
"Collateral"):
(a) all of Company's Accounts;
(b) all of Company's Inventory;
(c) all of Company's other goods, equipment, fixtures and
furniture; and
(d) all insurance policies and proceeds relating to the foregoing;
all books and records relating to the foregoing; and all
proceeds and products of the foregoing.
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4.02. DUTIES RELATING TO COLLATERAL. So long as this Agreement is in
effect or any amounts are owing to Lender, Company agrees that it shall, and
shall cause each of its Subsidiaries to:
(a) Keep accurate and complete records of the Consolidated Collateral;
keep all books and records relating to the Consolidated Collateral at Company's
address specified under or pursuant to Section 8.02 hereof; and provide at least
30 days advance written notice to Lender of any change in the location of any
such books and records;
(b) Promptly report and pay all Taxes and other charges against the
Consolidated Collateral; maintain a perfected, first priority Lien in favor of
Lender in the Consolidated Collateral, subject only to other Liens permitted
hereunder; and discharge all other Liens that from time to time attach to or are
asserted against the Consolidated Collateral;
(c) Pay all transportation and storage charges on the Consolidated
Collateral; and pay all rents and other amounts, if any, for the use of premises
on which any of the Consolidated Collateral is kept; and
(d) Take all actions appropriate for the collection and enforcement of
Accounts, and for the perfection of any liens securing Accounts; permit Lender
upon reasonable request to contact Account obligors to verify information
provided by Company or its Subsidiaries, and assist Lender in such verification
process; and after a Default or Event of Default, not adjust, settle or
compromise the amount, payment or performance of any obligations relating to
Accounts, without the prior consent of Lender.
4.03. INSURANCE OF COLLATERAL. Company shall, and shall cause each of
its Subsidiaries to, keep all Inventory insured for full value against all
insurable risks, on terms and with insurers reasonably acceptable to Lender, and
with Lender as the loss payee, assignee or additional insured, as appropriate.
Company shall provide notice to Lender in writing at least 10 days before
changing or canceling any policy. Each policy shall require the insurer to give
not less than 30 days prior written notice to Lender of cancellation, and shall
provide that Lender's interest will not be impaired by any act or neglect of
Company, its Subsidiaries or any other Person nor by any use of the premises for
purposes more hazardous than are permitted by the policy.
4.04. FURTHER ASSURANCES. Company shall, and shall cause its
Subsidiaries to, execute such financing statements and other instruments and
agreements, and shall take such actions, as Lender shall request from time to
time to evidence or perfect any Lien granted under the Loan Papers. Unless
prohibited by Law, Company authorizes Lender to execute and file any financing
statement or other instrument or agreement on behalf of Company or its
Subsidiaries for the foregoing purposes. The parties agree that a copy of this
Agreement, any Guaranty of a Subsidiary Guarantor, or any financing statement
may be filed as a financing statement in any appropriate jurisdiction, to the
extent permitted by Law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Company represents and warrants that the following are true and
correct:
5.01. ORGANIZATION AND QUALIFICATION. Each of Company and its
Subsidiaries is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of its state of
organization. Each of Company and its Subsidiaries is qualified to do business
in all jurisdictions where the nature of its business or Properties require such
qualification. Each Subsidiary of Company is listed on Exhibit C hereto.
5.02. DUE AUTHORIZATION; VALIDITY. The Board of Directors of Company
has duly authorized the execution, delivery and performance of its Loan Papers.
No consent of any shareholders of Company is required as a prerequisite to the
validity and enforceability of its Loan Papers. Company has full legal right,
power and authority to execute, deliver and perform under its Loan Papers. Such
Loan Papers constitute the legal, valid and binding obligations of Company,
enforceable in accordance with their terms (subject as to enforcement of
remedies
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to any applicable bankruptcy, reorganization, moratorium, or similar Laws or
principles of equity affecting creditors' rights generally).
5.03. GUARANTIES. Each Subsidiary Guarantor has full legal right,
power and authority to execute, deliver and perform under its Loan Papers. The
Board of Directors or members of each Subsidiary Guarantor have duly authorized
the execution, delivery and performance of its Loan Papers. No consent of any
shareholders or members of a Subsidiary Guarantor is required as a prerequisite
to the validity and enforceability of its Loan Papers. Each Guarantor's Loan
Papers constitute the legal, valid and binding obligation of such Guarantor,
enforceable in accordance with their terms(subject as to enforcement of remedies
to any applicable bankruptcy, reorganization, moratorium, or similar Laws or
principles of equity affecting creditors' rights generally).
5.04. CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution or
delivery of any Loan Papers, and performance thereunder, do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien on any Properties of Company or any Subsidiary Guarantor under, or require
any consent, approval or action by or notice to any Governmental Body or other
Person (other than consents already obtained) pursuant to, the articles of
incorporation, bylaws or other organizational documents of Company or any
Subsidiary Guarantor, or any Law or material agreement to which Company, any
Subsidiary Guarantor or any of their Properties is subject.
5.05. FINANCIAL STATEMENTS. The financial statements of Company and its
Subsidiaries delivered to Lender fairly present Company's and its Subsidiaries'
results of operation, and Company's and its Subsidiaries financial conditions as
of the dates and for the periods shown, all in accordance with GAAP. Company's
financial statements (and notes thereto) reflect all material liabilities,
direct and contingent, of Company and its Subsidiaries that are required to be
disclosed in accordance with GAAP. None of Company and its Subsidiaries has
material Contingent Liabilities, liabilities for Taxes, forward or long-term
commitments, or unrealized or anticipated losses from any unfavorable
commitments that are not reflected in such financial statements. Each of Company
and its Subsidiaries is Solvent. To the best of Company's knowledge, each
Individual Guarantor, at the time of execution and delivery of his Guaranty, is
Solvent.
5.06. LITIGATION. Except as disclosed to Lender, there is no Litigation
pending or, to the best of Company's knowledge, threatened against Company or
any of its Subsidiaries on the date hereof that involves a claim for damages or
reasonably expected potential liability of $500,000 or more. There is no pending
or, to the best of Company's knowledge, threatened Litigation against Company or
any of its Subsidiaries that could result in a Material Adverse Change.
5.07. LAWS REGULATING INCURRENCE OF DEBT. No proceeds of any Advance
will be used directly or indirectly to acquire any securities, without the prior
written consent of Lender. No Advance will be used to purchase or carry margin
stock (as defined in applicable Federal Reserve regulations), nor to extend
credit to others to do so. None of Company or its Subsidiaries is subject to
regulation under any Law that prohibits or restricts its incurrence of Debt in
any material respect.
5.08. LICENSES, TITLE TO PROPERTIES, ETC. Each of Company and its
Subsidiaries possesses all material Licenses and is not in violation thereof in
any material respect. Each of Company and its Subsidiaries has full power,
authority and legal right to own and operate its Properties, and to conduct its
business. Each of Company and its Subsidiaries has good and indefeasible title
(fee or leasehold, as applicable) to its Properties, subject to no Lien of any
kind, except as permitted hereunder. None of Company and its Subsidiaries is in
violation of its articles of incorporation, bylaws or other organizational
documents, any award of any arbitrator, or any Law or material agreement to
which Company, any of its Subsidiaries or any of their Properties is subject. No
business or Property of Company or its Subsidiaries is affected by any strike,
lock-out or other labor dispute, material casualty, earthquake, embargo or act
of God. No event or circumstance has occurred or exists that constitutes or
could reasonably be expected to constitute a violation of, or breach or default
under, Company's settlement agreement with Brunswick Corporation.
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5.09. OUTSTANDING DEBT AND LIENS. Company and its Subsidiaries have no
outstanding Debt, Contingent Liabilities or Liens, except as expressly permitted
hereunder.
5.10. TAXES. Each of Company and its Subsidiaries has filed all Tax
returns and reports which are required to be filed, and has paid all Taxes, to
the extent due and payable. All Tax liabilities of Company and its Subsidiaries
are adequately provided for on their books (including interest and penalties)
and adequate reserves have been established therefor in accordance with GAAP.
Except as disclosed to Lender, no taxing authority has notified Company or any
of its Subsidiaries of any material deficiency in a Tax return nor asserted any
material Tax liability in excess of that already paid.
5.11. EMPLOYEE BENEFITS. All employee benefits are provided in
accordance with all applicable Laws. Each Plan satisfies the minimum funding
standards under all applicable laws, and has no accumulated deficiency. None of
Company or its Subsidiaries has incurred any withdrawal liability nor engaged in
any prohibited transaction with respect to a Plan. None of Company or its
Subsidiaries has failed to make any payment to a Plan as required under
applicable laws, and no reportable event (as defined under ERISA) has occurred.
None of Company or its Subsidiaries has received any notice from any
Governmental Body or administrator of any potential termination of a Plan, and
no circumstance or event exists that could constitute grounds for the
termination of or appointment of a trustee to administer any Plan.
5.12. ENVIRONMENTAL LAWS. Company has delivered to Lender copies of all
environmental studies and reports conducted or received by Company or its
Subsidiaries in connection with any of their Properties. All Licenses have been
obtained or filed that are required under any Environmental Laws, unless the
failure to obtain or file same could not result in a Material Adverse Change. No
Hazardous Materials are generated or produced at or in connection with any
Properties or operations of Company or its Subsidiaries, and no Hazardous
Materials in any material amounts are released onto any Properties of Company or
its Subsidiaries.
5.13. DISCLOSURE. None of Company and its Subsidiaries has made a
material misstatement of fact, or failed to disclose any fact necessary to make
the facts disclosed not misleading, to Lender during the course of application
for and negotiation of this Agreement or otherwise in connection with any
transactions contemplated hereby. There is nothing known to Company or its
Subsidiaries that could materially adversely affect Company's or any of its
Subsidiaries' financial condition, Properties or business operations, or that
could result in a Material Adverse Change, which is not set forth herein or in
notices hereafter delivered to Lender.
ARTICLE VI
COVENANTS
So long as this Agreement is in effect or any amounts are owing to
Lender, Company agrees as follows:
6.01. FINANCIAL COVENANTS; GUARANTIES.
(a) Company shall maintain a Current Ratio of at least 1.20 to 1
at all times following completion of the IPO.
(b) Company shall maintain a Leverage Ratio of not more than 2.75 to 1
at the end of each month ending on or after completion of the IPO.
(c) Company shall maintain an Fixed Charges Coverage Ratio of at
least 1.0 to 1 at the end of each month.
(d) Prior to consummation of an IPO satisfying the next sentence,
Company shall cause each principal of any dealership acquired by or merged into
or consolidated with Company or any of its Subsidiaries to deliver to Lender a
guaranty in form and substance satisfactory to Lender, within 15 days following
the acquisition, merger or consolidation. Lender shall release all Guaranties of
Individual Guarantors upon Company's completion of an IPO without material
deviation from the pro-forma financial statements delivered to Lender prior to
the date hereof.
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6.02. DEBT; OPERATING LEASES. Company shall not, and shall not permit
any of its Subsidiaries to, incur, assume or be liable in any manner for any
Debt, except (a) Debt under the Loan Papers, (b) existing Debt shown on Exhibit
B hereto, (c) Capital Leases and Debt incurred to acquire equipment used in
Company's or the Subsidiary's business (including refinancings thereof), in an
amount not to exceed $1,000,000 in the aggregate at any time, (d) Debt incurred,
assumed or otherwise owing by Company its Subsidiaries in connection with an
acquisition or merger, as approved by Lender in its reasonable discretion, (e)
other Debt subordinated to repayment of amounts owing hereunder on terms
satisfactory to Lender, and otherwise acceptable to Lender in its sole
discretion, and (f) trade payables incurred and paid in the ordinary course of
business. Company and its Subsidiaries shall not enter into or be party to
Operating Leases requiring total rental payments during any fiscal year in
excess of $2,000,000 in the aggregate.
6.03. CONTINGENT LIABILITIES. Company shall not, and shall not permit
any of its Subsidiaries to, incur, assume or be liable in any manner for any
Contingent Liabilities, except (a) those resulting from the endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
Contingent Liabilities of Company and its Subsidiaries relating to Debt secured
solely by real property of Company and its Subsidiaries, and in existence on the
date hereof, (c) existing Contingent Liabilities shown on Exhibit B hereto, (d)
Contingent Liabilities of Company created in connection with an acquisition or
merger, as approved by Lender in its reasonable discretion, and (e) Contingent
Liabilities of Company for obligations of its direct or indirect wholly-owned
Subsidiaries.
6.04. LIENS. Company shall not, and shall not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any of its Properties,
except (a) Liens hereunder, (b) Liens on real estate securing existing Debt, as
shown on Exhibit B hereof, (c) Liens effected by or relating to Capital Leases
or other Debt permitted under Section 6.02(c) hereof, encumbering only the
assets leased thereunder or acquired with proceeds thereof, (d) Liens
satisfactory to Lender securing Debt or Contingent Liabilities permitted under
Section 6.02(d) or (e) hereof, or Section 6.03(b) hereof, and (e) Tax,
mechanics' and materialmen's Liens relating to amounts that are not yet due and
payable, or that are being contested in good faith by appropriate proceedings,
for which adequate reserves have been established.
6.05. AMENDMENT OF ORGANIZATIONAL DOCUMENTS; IPO. Company shall not,
and shall not permit any of its Subsidiaries to, amend or modify, or permit the
amendment or modification of, its articles of incorporation, bylaws or other
organizational documents in any material respect, without the prior written
consent of Lender (which will not be unreasonably withheld). The IPO shall be
completed not later than September 30, 1998, without material deviation from the
financial statements delivered to Lender prior to the date hereof, and otherwise
on terms reasonably satisfactory to Lender.
6.06. LAWS, LICENSES AND MATERIAL AGREEMENTS.
(a) Company shall, and shall cause its Subsidiaries to, obtain and
comply in all material respects with all applicable Laws and Licenses. Company
and its Subsidiaries shall maintain all Plans such that the representation and
warranty in Section 5.11 hereof is true at all times.
(b) Company shall, and shall cause its Subsidiaries to, maintain and
comply in all material respects with all material agreements necessary or
appropriate for their businesses and Properties, other than defaults arising
under due on sale clauses in mortgages and deeds of trust securing the Debt
shown on Exhibit B hereto. Company shall comply with its settlement agreement
with Brunswick Corporation in all material respects. Company shall not take any
action or suffer to exist any circumstance that could violate, or constitute a
breach under or grounds for termination of, such agreement.
6.07. DISPOSITION OF ASSETS. Company shall not, and shall not permit
any of its Subsidiaries to, sell, transfer, encumber or lease any of their
assets, except (a) sales or leases of Inventory in the ordinary course of
business, (b) dispositions of obsolete or useless assets, (c) transfers of
Inventory between wholly-owned Subsidiaries of Company, and (d) dispositions of
Retail Paper in the ordinary course of business. Upon any sale of
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Retail Paper by Company or any of its Subsidiaries in the ordinary course of
business, Lender's Liens in such Retail Paper shall be automatically released,
without any further action by Lender.
6.08. MERGERS; INVESTMENTS; BUSINESS. Company shall not, and shall not
permit any Subsidiary of Company to, merge into, consolidate with or make any
Investment in any Person, permit any other Person to merge into or consolidate
with it, or form or acquire any new Subsidiary, without Lender's prior written
consent (which shall not be unreasonably withheld), except mergers or
consolidations of a wholly-owned Subsidiary of Company with or into Company or
another wholly-owned Subsidiary. Lender expressly acknowledges that it is
Company's growth strategy to pursue strategic acquisitions that are beneficial
to its business. Within 15 days after Company's acquisition or formation of any
direct or indirect Subsidiary hereafter, Company shall deliver to Lender a
revised Exhibit C hereto, and shall cause the new Subsidiary to deliver a
Guaranty and Lien filings in form and substance satisfactory to Lender. None of
Company and its Subsidiaries shall change the nature of its business as now
conducted.
6.09. INSURANCE. Except as otherwise required by Section 4.03 hereof,
Company shall, and shall cause each Subsidiary to, (a) keep its insurable
Properties adequately insured at all times by financially sound and reputable
insurers to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies similarly
situated and in the same or similar businesses, (b) maintain in full force and
effect public liability and workers compensation insurance, in amounts customary
for such similar companies to cover normal risks, by insurers satisfactory to
Lender, and (c) maintain such other insurance as may be required by Law or
reasonably requested by Lender. Company shall deliver evidence of renewal of
each insurance policy on or before the date of its expiration, and from time to
time shall deliver to Lender, upon demand, evidence of the maintenance of such
insurance. Company shall promptly deliver to Lender copies of all reports
provided to insurers by Company or any of its Subsidiaries.
6.10. INSPECTION RIGHTS. Company shall, and shall cause its
Subsidiaries to, permit Lender, upon reasonable notice and during normal
business hours, to examine and make copies of and abstracts from any of their
books and records, to inspect their Properties and to discuss their affairs with
any of their directors, officers, managerial employees or accountants, all as
Lender may reasonably request.
6.11. RECORDS; CHANGES IN GAAP; YEAR 2000 COMPATIBILITY. Company shall,
and shall cause its Subsidiaries to, keep adequate books and records in
conformity with GAAP. Company shall not change its fiscal year nor change, or
permit any of its Subsidiaries to change, its method of financial accounting
except in accordance with GAAP. In connection with any change in accounting
methods resulting from a change in GAAP, Company and Lender shall make
appropriate alterations to the covenants set forth in Section 6.01 hereof,
reflecting such change. Company shall take all action necessary to assure that
its and its Subsidiaries' computer-based systems are able to operate and
effectively process data having dates on or after January 1, 2000.
6.12. REPORTING REQUIREMENTS. Company shall furnish to Lender:
(a) By the 15th day of each month, a Borrowing Base Certificate
prepared on a consolidated basis for Company and its Subsidiaries as of the
close of business for the preceding month and accompanied by detailed Inventory,
accounts payable aging and receivable aging reports, in form and substance
satisfactory to Lender and certified as true and complete by an officer of
Company;
(b) As soon as available and in any event within 20 days after the
end of each month, a balance sheet and statement of income of Company and its
Subsidiaries for such month and for the portion of the fiscal year ending with
such month, prepared on a consolidated basis in accordance with GAAP in
reasonable detail, and certified by an officer of Company (in a manner
satisfactory to Lender) as fairly presenting the financial condition and results
of operations of Company and its Subsidiaries, together with a Compliance
Certificate;
(c) As soon as available and in any event within 120 days after
the end of each fiscal year of Company, an audited balance sheet and statements
of income and cash flows of Company and its Subsidiaries for such fiscal year,
prepared on a consolidated basis in accordance with GAAP in reasonable detail
and accompanied
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by an unqualified opinion of independent certified public accountants acceptable
to Lender, together with a Compliance Certificate;
(d) Promptly upon receipt thereof, copies of all material reports
or letters submitted to Company or any of its Subsidiaries by any auditors or
accountants in connection with any annual, interim or special audit;
(e) As soon as possible but at least 60 days prior to the
commencement of each fiscal year, a monthly business plan of Company and its
Subsidiaries for such year, including a projected balance sheet and income
statements, accompanied by a statement of assumptions and certified by an
officer of Company in a manner acceptable to Lender;
(f) Promptly upon the filing thereof, copies of all filings made
by Company or any of its Subsidiaries with the Securities and Exchange
Commission;
(g) As soon as possible and in any event within five Business Days
after knowledge thereof by an officer of Company or any of its Subsidiaries, a
notice of the occurrence of any material Default or material Event of Default,
setting forth the details thereof, and the action being taken or proposed to be
taken with respect thereto;
(h) As soon as possible and in any event within five Business
Days, notice of any Litigation pending or threatened against Company or any of
its Subsidiaries which, if determined adversely, could result in damages in
excess of $500,000 or more or any other Material Adverse Change, together with a
statement of an officer of Company describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto;
(i) Promptly after filing or receipt thereof, copies of all
reports and notices that Company or any of its Subsidiaries furnishes to or
receives from any holders of any Debt or Contingent Liability relating to a
material breach, default or event of default thereunder, or otherwise relating
to any event or circumstance that could result in a material Default or material
Event of Default; and
(j) Promptly upon request, such information concerning the
Borrowing Base, Accounts, Inventory, Company's, its Subsidiaries' or any
Individual Guarantor's financial condition, Properties, business, affairs or
prospects, and other matters, as Lender may from time to time reasonably
request.
6.13. TRANSACTIONS WITH AFFILIATES. Except as permitted herein, Company
shall not, and shall not permit any of its Subsidiaries to, enter into or be
party to a transaction with an Affiliate (except Company or a direct or indirect
wholly-owned Subsidiary of Company), except on terms no less favorable than
could be obtained on an arm's-length basis with a Person that is not an
Affiliate. Company shall not, and shall not permit any of its Subsidiaries to,
make any loans or advances to any of its officers, shareholders or other
Affiliates (except a direct or indirect wholly-owned Subsidiary of Company),
except advances made for customary travel expenses incurred in the conduct of
Company's business. Company shall not, and shall not permit any of its
Subsidiaries to, make any loans or advances to any Subsidiary of Company, unless
such Subsidiary is directly or indirectly wholly-owned by Company and has
executed a Guaranty and Lien filings in favor of Lender, in form and substance
satisfactory to Lender.
ARTICLE VII
EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT. Each of the following shall be an "Event of
Default" hereunder, if the same shall occur for any reason whatsoever, whether
voluntary or involuntary, by operation of Law or otherwise:
(a) Company shall fail to pay any principal owing hereunder when
due; or Company or any Guarantor shall fail to pay any interest or other amounts
payable under any Loan Papers within 15 days after the due date therefor;
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(b) Any material representation or warranty of Company or any
Guarantor made in connection with this Agreement or any transactions
contemplated hereby shall be incorrect or misleading in any material respect
when given;
(c) Company or any Guarantor shall fail to perform or observe any
other term or covenant contained in any of their respective Loan Papers, and
such default shall not be cured within 30 days after the earlier of knowledge
thereof by an officer of Company or such Guarantor, as applicable, or after
written notice of the default is delivered by Lender to Company, but if the
default is subject to cure and the cure is being diligently pursued by
appropriate means at the end of such 30 days, then Company or Guarantor, as
applicable, shall have an additional 30 days thereafter to complete the cure;
(d) Any provision of any Loan Papers shall, for any reason, not be
valid and binding on Company or any Guarantor; any Guarantor shall not have had
full legal right, power and capacity to execute, deliver and perform under his
or its Guaranty, when such Guaranty was delivered to Lender; any Guarantor shall
not have been Solvent when he or it delivered his or its Guaranty to Lender; any
Guarantor shall revoke, terminate or repudiate his or its Guaranty, or any
Guaranty shall, for any reason, not be valid and binding on the applicable
Guarantor, except due to the Guaranty's release pursuant to Section 6.01(d)
hereof; or any breach, default or event of default shall occur or exist under
any Loan Papers after any applicable grace period;
(e) Any of the following shall occur: (i) Company or any Guarantor
shall make an assignment for the benefit of creditors, be insolvent or unable to
pay its debts as they come due, cease doing business as a going concern or cease
to be Solvent; (ii) Company or any Guarantor shall petition any Governmental
Body for the appointment of a trustee, receiver or liquidator of it or any of
its assets, or shall commence any proceedings under any bankruptcy,
reorganization, insolvency, moratorium, liquidation or other debtor relief Laws;
(iii) any petition shall be filed, or any such proceedings shall be commenced,
against Company or any Guarantor under any such Laws and the same is not
dismissed or otherwise discharged within 90 days, or an order, judgment or
decree shall be entered approving such petition or appointing any trustee,
receiver or liquidator for Company or any Guarantor, or any of their assets; or
(iv) any final order, judgment or decree shall be entered decreeing Company's or
any Guarantor's dissolution, split-up or divestiture of assets;
(f) Any lender(s) under any of the real estate Debt shown on
Exhibit B hereto shall declare such Debt due and payable prior to its stated
maturity as a result of breach of a due-on-sale clause, and such action shall
result in a Material Adverse Change; Company or any of its Subsidiaries shall
fail to make any payment when due with respect to any other Debt or Contingent
Liability of $500,000 or more in the aggregate, and such failure shall continue
after any applicable grace period; Company or any of its Subsidiaries shall fail
to observe any term or condition of any agreement relating to any other Debt or
Contingent Liability of $500,000 or more in the aggregate, and such failure
shall continue after any applicable grace period; or any such other Debt or
Contingent Liability shall be declared to be due and payable, or required to be
prepaid, prior to the stated maturity thereof;
(g) Company and its Subsidiaries shall have any final judgment(s)
outstanding against them for the payment of $1,000,000 or more in excess of
insurance, and such judgment(s) shall remain unstayed and unpaid for over 30
days;
(h) There shall be an issuance of an order of attachment against
Company, any of its Subsidiaries or any material portion of their Properties, or
there shall be damage to or destruction of a substantial part of Company's or
any of its Subsidiaries' assets that is not covered by insurance;
(i) Any investigation or proceeding shall be instituted against
Company or any of its Subsidiaries under or with respect to any Environmental
Laws that could reasonably be expected to result in any penalty, fine,
remediation costs or other damages of $1,000,000 or more in excess of insurance;
(j) Company shall have any material change in its management,
without prior consent of Lender, or there shall be a Change in Control; or
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(k) Lender shall determine that there has been a Material Adverse
Change.
7.02. REMEDIES UPON DEFAULT. If an Event of Default described in
Section 7.01(e) hereof shall occur with respect to Company, all amounts owing to
Lender shall, to the extent permitted by applicable Law, become immediately due
and payable without any action by Lender, and without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind, all of which are hereby waived to the fullest extent permitted by
Law. If any other Event of Default shall occur and be continuing, Lender may do
any one or more of the following from time to time:
(a) Declare all Advances, interest and other amounts owing to
Lender immediately due and payable, whereupon they shall be due and payable
without diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby waived to the
fullest extent permitted by Law;
(b) Terminate or reduce the Commitment; and/or
(c) Exercise any other Rights afforded under any agreement, by
Law, at equity or otherwise, including those Rights of a secured party under the
Uniform Commercial Code in effect in any jurisdiction where the Collateral is
kept. Such Rights shall include the right to cancel any Committed Advances, to
direct Company to return any Inventory to a vendor or manufacturer thereof for
credit or refund, to enter any of Company's premises with or without legal
process, but without force, and/or to take possession of and remove Collateral,
and books and records relating to Collateral. At Lender's request during an
Event of Default, Company will assemble, prepare for removal and make available
to Lender at a place to be designated by Lender which is reasonably convenient
to both parties such items of Collateral as Lender may from time to time
request. During the continuance of an Event of Default, Lender may take control
of any funds generated by the Collateral, notify Account obligors to make
payment to an account or location designated by Lender, and in Lender's name or
Company's name, demand, collect, receipt for, settle, compromise, xxx for,
repossess, accept returns of, foreclose or realize upon any Collateral,
including without limitation Accounts and related instruments and security
therefor. Company waives any and all rights that it may have to a notice prior
to seizure by Lender of any Collateral. Ten days written notice of a public sale
date or the date after which a private sale may occur shall be a reasonable
notice. Lender shall not be chargeable with responsibility for the accuracy or
validity of any document or for the existence or value of any Collateral, and
shall not be liable for failure to collect any amounts owing on an Account or
instrument. Company waives all relief from all appraisement, valuation,
deficiency or exemption laws now in force or hereafter enacted. LENDER SHALL NOT
BE LIABLE FOR ANY ACT OR OMISSION OF ITS OFFICERS, AGENTS OR EMPLOYEES, ABSENT
GROSS NEGLIGENCE OR WILFUL MISCONDUCT.
7.03. POWER OF ATTORNEY. Company hereby irrevocably appoints Lender,
including any officer or employee of Lender as Lender may designate, as
Company's true and lawful attorney-in-fact with power of substitution to do the
following acts on behalf of Company during the continuance of any Event of
Default: to prepare, execute and deliver in the name of Company security
instruments, financing statements, lien filings and certificates of title
relating to Collateral; to endorse Company's name upon any notes, checks,
drafts, money orders and other forms of instruments made payable to Company and
relating to Collateral; and generally to perform all acts and do all things
necessary and proper in connection with the transactions contemplated hereby or
in discharge of the powers hereby conferred, including the making of affidavits
and the acknowledgment of instruments as fully as if done by Company. The
foregoing powers are coupled with an interest and shall be irrevocable, as long
as the Commitment or any obligations of Company to Lender remain outstanding.
7.04. CUMULATIVE RIGHTS. All Rights available to Lender under the Loan
Papers shall be cumulative of and in addition to all other Rights under any
other agreement, at Law or in equity. The acceptance by Lender at any time and
from time to time of partial payment of any amount owing under any Loan Papers
shall not be deemed to be a waiver of any Event of Default then xxxxxxxx.Xx
waiver by Lender of an Event of Default shall be deemed to be a waiver of any
Event of Default other than such Event of Default. No delay or omission by
Lender in exercising any Right under the Loan Papers shall impair such Right or
be construed as a waiver thereof or an acquiescence therein, nor shall any
single or partial exercise of any Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
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7.05. PERFORMANCE BY LENDER; EXPENDITURES. Should any covenant of
Company fail to be performed in accordance with the terms of the Loan Papers,
Lender may, at its option, attempt to perform such covenant on behalf of
Company. It is expressly understood, however, that Lender does not assume and
shall never have any liability or responsibility for the performance of any
obligations of Company. Any amounts expended or incurred by Lender in the
performance of any such act or in the enforcement of this Agreement (including
reasonable attorneys' fees) shall constitute part of the obligations secured
hereunder, will bear interest at the default rate hereunder and will be payable
upon demand.
7.06. CONTROL. None of the provisions hereof shall be deemed to give
Lender any right to exercise control over the affairs and/or management of
Company or any of its Subsidiaries, which the parties agree is retained by
Company and its Subsidiaries.
ARTICLE VIII
MISCELLANEOUS
8.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of any Loan Papers, nor consent to any departure by Company or any Guarantor
therefrom, shall be effective unless the same shall be in writing and signed by
Lender, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8.02. NOTICES. Unless otherwise provided herein, all notices, demands
and other communications under the Loan Papers shall be in writing and shall be
personally delivered, sent by telecopy or telex (answerback received), or sent
by certified mail, postage prepaid, to the following addresses:
(a) If to Company or any of its Subsidiaries:
MarineMax, Inc.
00000 X.X. 00 Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx XxXxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxx
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx
Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Fax: (000) 000-0000
(b) If to Lender:
NationsCredit Distribution Finance, Inc.
0000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Marine Group Operations Manager
Fax: (000) 000-0000
Or to such other address as any party shall hereafter designate in
written notice to the other party. All notices, demands and other communications
will be effective when so personally delivered or sent by telecopy or telex, or
five days after being so mailed; provided, however, that notices to Lender
pursuant to Article II hereof shall only be effective when received.
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8.03. PARTIES IN INTEREST. The Loan Papers shall bind and inure to the
benefit of the parties hereto, and their successors and assigns. Lender may from
time to time assign its rights or obligations hereunder, but Company may not
assign or transfer its rights or obligations hereunder (whether voluntarily or
by operation of Law), without the prior written consent of Lender.
8.04. COSTS, EXPENSES AND TAXES. Company agrees to pay on demand (a)
all costs and expenses (including reasonable attorneys' fees) of Lender in
connection with any extension, modification, waiver or release of any Loan
Papers, and (b) all costs and expenses of Lender incurred in any work-out or
enforcement of any Loan Papers, including reasonable attorneys' fees and the
costs and expenses of environmental or other consultants. Company shall pay any
stamp, debt, recordation, withholding and other Taxes payable in connection with
any Loan Papers or payments thereunder (other than Taxes on the overall net
income of Lender), and agrees to save Lender harmless from and against all
liabilities relating to any Taxes. All payments by Company shall be made free
and clear of and without deduction for any Taxes of any nature now or hereafter
existing.
8.05. INDEMNIFICATION BY COMPANY. COMPANY AGREES TO INDEMNIFY, DEFEND
AND HOLD HARMLESS LENDER, ITS AFFILIATES, AND ALL OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS, ATTORNEYS AND ASSIGNS, FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST
ANY OF THEM IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN PAPERS, ANY
TRANSACTION RELATED HERETO OR THERETO, OR ANY ACT, OMISSION OR TRANSACTION OF
COMPANY, ANY GUARANTOR OR ANY OF THEIR AFFILIATES, OR ANY OF THEIR
DIRECTORS,OFFICERS, AGENTS, EMPLOYEES OR REPRESENTATIVES; PROVIDED, HOWEVER,
THAT COMPANY SHALL NOT INDEMNIFY, DEFEND AND HOLD HARMLESS ANY INDEMNIFIED
PERSON FOR LOSSES OR DAMAGES THAT COMPANY PROVES WERE CAUSED BY SUCH PERSON'S
WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR OTHER NEGLIGENCE. LENDER SHALL NOT BE
LIABLE TO COMPANY OR ANY GUARANTOR FOR ANY CONSEQUENTIAL DAMAGES. This indemnity
shall survive repayment of Company's obligations to Lender.
8.06. HAZARDOUS WASTE INDEMNIFICATION. Company shall indemnify and hold
harmless Lender, its Affiliates, and all of their directors, officers,
employees, representatives, agents, successors, attorneys and assigns, from and
against any loss, damage, cost, expense or liability directly or indirectly
arising out of or attributable to the use, generation, manufacture, treatment,
production, storage, release, threatened release, discharge, disposal or
presence of any Hazardous Materials on, under or about Company's or any
Guarantor's property or operations or property leased to Company or any
Guarantor, including but not limited to attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). This
indemnity shall survive repayment of Company's obligations to Lender.
8.07. DISCLAIMER OF WARRANTY. COMPANY ACKNOWLEDGES THAT LENDER HAS MADE
NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO ANY INVENTORY OR OTHER
CONSOLIDATED COLLATERAL, INCLUDING ANY WARRANTY OF MERCHANTABILITY. COMPANY
IRREVOCABLY WAIVES ANY CLAIMS AGAINST LENDER WITH RESPECT TO THE INVENTORY AND
OTHER CONSOLIDATED COLLATERAL WHETHER FOR BREACH OF WARRANTY OR OTHERWISE. Any
such claims shall not alter, diminish or otherwise impair Company's or any
Guarantor's liabilities or obligations to Lender under the Loan Papers. Lender
does not assume any obligations of Company or its Subsidiaries relating to the
Inventory, any Accounts, any contract obligations, or any other obligations or
duties arising from the Consolidated Collateral.
8.08. RATE PROVISION. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall Company or any Guarantor be obligated to
pay any amount in excess of the maximum amount of interest permitted under
applicable Law. If from any circumstance Lender shall ever receive anything of
value deemed excess interest under applicable Law, an
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amount equal to such excess shall be applied to the reduction of the principal
amount of outstanding Advances and any remainder shall be refunded to the payor.
8.09. SEVERABILITY; COUNTERPARTS. If any provision of any Loan Papers
is held to be illegal, invalid or unenforceable under present or future Laws
during the term thereof, such provision shall be fully severable, and the Loan
Papers shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof. This Agreement and
the other Loan Papers may be executed in any number of counterparts.
8.10. GOVERNING LAW. This Agreement and the other Loan Papers shall be
governed by and construed in accordance with the laws of the State of Georgia.
The state and federal courts located in Atlanta, Georgia, including the U.S.
District Court for the Northern District of Georgia, shall have jurisdiction to
determine any claim or dispute pertaining to this Agreement. The parties
expressly submit and consent to such jurisdiction, and waive any claim of
inconvenient forum.
8.11. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS
OF ANY FORUM STATE, THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS OR
ANY RELATED MATTERS.
8.12. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Loan and Security Agreement is executed as of
the date first set forth above.
MARINEMAX, INC.
By /s/ Xxxxxxx X. XxXxxx
-------------------------------------
Title:
NATIONSCREDIT DISTRIBUTION FINANCE, INC.
By /s/ C. Xxxxxx Xxxxxxxx
-------------------------------------
Title:
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