EXHIBIT 99(d)(4)
FORBEARANCE AGREEMENT AND AMENDMENT TO LOAN AGREEMENTS
THIS FORBEARANCE AGREEMENT AND AMENDMENT TO LOAN AGREEMENTS
("Agreement") is made as of the 10th day of November, 2004, by and among (i)
Xxxxxx Boats & Motors, Inc. ("Xxxxxx") and the other Persons signatory hereto as
Borrowers under either or both Loan Agreements (as defined below) (together with
Xxxxxx, collectively, the "Borrowers"), (ii) the Persons signatory hereto as
Guarantors in connection with either or both Loan Agreements ("Guarantors" and
together with the Borrowers, collectively, the "Loan Parties"), (iii) GE
Commercial Distribution Finance Corporation, as successor in interest to
Deutsche Financial Services Corporation, as lender under the GE Loan Agreement
(as defined below), and (iv) Transamerica Commercial Finance Corporation, as
lender ("TCFC") under the TCFC Loan Agreement. GE Commercial Distribution
Finance Corporation and TCFC have merged, and will hereinafter be referred to as
"GECDF" or "Lender."
RECITALS
A. Lender, Xxxxxx and the other Persons signatory thereto as
Borrowers (collectively, the "GE Borrowers") are parties to that certain Amended
and Restated Loan and Security Agreement dated as of December 10, 2001 (as the
same has been or may be further amended, restated, supplemented or otherwise
modified from time to time, the "GE Loan Agreement"), pursuant to which, among
other things, Lender has agreed, subject to the terms and conditions set forth
in the GE Loan Agreement, to make revolving loans, floorplan inventory loans and
other financial accommodations to the GE Borrowers.
B. Lender, Xxxxxx and the other Persons signatory thereto as
Borrowers (collectively, the "TCFC Borrowers") are parties to that certain Loan
Agreement dated as of January 28, 2000 (as the same has been or may be further
amended, restated, supplemented or otherwise modified from time to time, the
"TCFC Loan Agreement"), pursuant to which, among other things, Lender has
agreed, subject to the terms and conditions set forth in the TCFC Loan
Agreement, to make revolving loans and other financial accommodations to the
TCFC Borrowers. The GE Loan Agreement and the TCFC Loan Agreement shall be
collectively referred to as the "Loan Agreements," and the Loan Documents (as
defined in the GE Loan Agreement) and the Loan Documents (as defined in the TCFC
Loan Agreement) shall be collectively referred to as the "Loan Documents."
C. All of the Obligations (as defined in the GE Loan
Agreement) and the Liabilities (as defined in the TCFC Loan Agreement) are
cross-collaterialized and secured by first priority liens on all, or
substantially all, of the personal and real property of the Loan Parties
(subject to specified permitted liens as provided in the Loan Agreements) (all
of the Loan Parties' respective personal and real property securing the
Obligations and Liabilities under the Loan Agreements, collectively, the
"Collateral").
D. Certain Defaults (as defined in the GE Loan Agreement) and
Events of Default (as defined in the TCFC Loan Agreement), in each case, as
described in Exhibit A attached hereto (the "Specified Defaults"), have occurred
and are continuing, including, without limitation, the Borrower's failure to pay
the Obligations and the Liabilities under the Loan Agreements by the October 31,
2004 Termination Date under, and as defined in, each Loan Agreement. As a result
of these ongoing Defaults and Events of Default, the Lender has no further
obligation to make any revolving loans, inventory floorplan loans or other
financial accommodations under either Loan Agreement to any Borrower, and is
entitled to exercise any and all default-related rights and remedies under the
Loan Documents and applicable law. In addition, as a result of the occurrence of
the Termination Date, all of the Obligations and Liabilities under the Loan
Agreements are due and payable.
E. Concurrently herewith, Xxxxxx and TMRC, L.L.P. ("TMRC"), an
affiliate of Tracker Marine L.L.C. ("Tracker"), have entered into that certain
Agreement and Plan of Merger in the form attached hereto as Exhibit B (the
"Merger Agreement" and the merger transaction contemplated therein, the
"Merger") pursuant to which, and subject to the terms and conditions set forth
therein, TMRC would merge into Xxxxxx (the surviving entity in the Merger, the
"Surviving Corporation") by no later than March 4, 2005. The Surviving
Corporation would be owned and controlled directly or indirectly by Tracker.
Pursuant to the Loan Agreements, Xxxxxx cannot consummate the merger without the
prior written consent of Lender. In addition, as provided in the Merger
Agreement, the consummation of the Merger is conditioned upon Lender's agreement
to restructure its credit facilities in certain respects and to provide certain
other accommodations. Lender and Tracker have and will continue to engage in
discussions concerning the terms of a restructuring of these credit facilities
and other possible accommodations, although no agreement has been reached to
date.
F. Subject to the terms and conditions of this Agreement, the
Loan Parties and the Lender have agreed, among other things, that (i) for a
specified time period ending no later than the earlier of the (x) consummation
of the Merger, or (y) January 15, 2005, Lender will forbear from exercising
certain default-related rights and remedies against the Loan Parties and will
provide certain financing to the Borrowers, (ii) the Lender will consent to the
execution and delivery of the Merger Agreement (but not to the consummation of
the Merger or to any restructuring of the credit facilities or to any other
accommodations), (iii) Loan Parties will comply with certain covenants set forth
herein, including a timeline for completing the Merger, and (iv) the Loan
Agreements will be amended in certain respects.
NOW, THEREFORE, in consideration of the foregoing, the
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENTS. Subject to the occurrence of the
Effective Date pursuant to Section 19 hereof:
(a) The definition of "Prime Rate" in Section 1 of the GE Loan
Agreement is hereby amended by adding the following at the end of such
definition:
"Notwithstanding the foregoing, for the month of February 1, 2005,
and each month thereafter, the term "Prime Rate", as applied to all then
outstanding Loans (including any Loans made prior to February 1, 2005)
shall mean a fluctuating interest rate per annum equal to the Prime Rate
published in the "Money Rates" column of the Wall Street Journal on the
first Business Day of such month that the Federal Reserve Bank of Chicago
is open for the transaction of business."
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(b) The applicable provisions of each of the Loan Agreements are
hereby amended to provide that effective as of the Effective Date, the
non-default rate of interest to be charged in respect of all Obligations
under the GE Loan Agreement and all Liabilities under the TCFC Loan
Agreement shall be the lesser of (i) the effective non-default rate of
interest that would otherwise apply under the applicable Loan Agreement as
of the applicable date of determination, or (ii) the effective non-default
rate of interest charged as of the applicable date of determination with
respect to the loan obligations outstanding pursuant to that certain
Agreement for Wholesale Financing between TMBC, LLC and Lender dated July
2003. The parties hereto agree and acknowledge that as a result of certain
logistical complexities, the foregoing change in the applicable interest
rate may not be reflected in Lender's monthly billing statements to
Borrowers, and that to the extent the interest charges reflected in any
monthly billing statement differ from the correct amount, then the
Borrowers or the Lender, as the case may be, shall pay such differential
by means of an interest rebate or credit on or before the twentieth day
after the end of the applicable month.
SECTION 2. CONFIRMATION BY BORROWERS AND OTHER LOAN PARTIES OF OBLIGATIONS AND
LIABILITIES, LENDER'S LIENS AND SPECIFIED DEFAULTS.
(a) The Borrowers and the other Loan Parties hereby
acknowledge and agree that as of close of business on November 8, 2004, the
aggregate amount of the principal balance of the outstanding Obligations under
the GE Loan Agreement and the Liabilities under the TCFC Loan Agreement included
at least the following amounts:
GE Loan Agreement:
Revolving Credit Loans $1,736,425.51
Floorplan Inventory Loans
(including Open Approvals) $19,010,528.71
Total Principal Amount of
Obligations under GE Loan
Agreement $20,746,954.22
TCFC Loan Agreement:
Revolving Loans $11,846,490.29
Open Approvals $168,960.64
Total Principal Amount
of Liabilities under TCFC Loan
Agreement $12,015,450.93
The foregoing amounts do not include all of the interest, fees, expenses, and
other amounts which are chargeable or otherwise reimbursable under any or all of
the Loan Agreements and the other Loan Documents. All of the Obligations and
Liabilities are currently due and payable, and none of the Borrowers and the
other Loan Parties has any rights of offset, defenses, claims or counterclaims
with respect to (i) any of the Obligations and Liabilities or their guaranty
obligations with respect thereto, (ii) any of the Loan Documents, or (iii) or
any of the rights, powers, privileges, remedies, benefits and protections
provided to the Lender under any or all of the Loan Documents and/or applicable
law.
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SECTION 3. ACKNOWLEDGMENT OF SPECIFIED DEFAULTS; FORBEARANCE.
(a) Each of the Borrowers and the other Loan Parties agrees
and acknowledges that (i) each of the Specified Defaults constitutes a material
Default under the GE Loan Agreement and an Event of Default under the TCFC Loan
Agreement that has occurred and is continuing, (ii) each Specified Default is
incurable and is not subject to any grace or cure period, and (iii) except for
the Specified Defaults, no other Defaults and Events of Default under the
applicable Loan Agreements have occurred and remain continuing as of the date
hereof. Except as provided in Sections 3(b) and (c) below, from and after the
Effective Date, each Specified Default (i) relieves Lender from any obligation
to extend any revolving loans or floorplan inventory loans or provide other
financial accommodations under either Loan Agreement or any other Loan Documents
(including consenting to any Loan Party's use of cash collateral), and (ii)
permits Lender to, among other things, (A) suspend or terminate any commitment
to provide revolving loans or floorplan inventory loans or make other extensions
of credit under any or all of the Loan Agreement and the other Loan Documents
(all of which financing commitments terminated no later than the October 31,
2004 Termination Date), (B) institute the default rate of interest with respect
to any or all of the Obligations and Liabilities, (C) commence any legal or
other action to collect any or all of the Obligations and Liabilities from any
or all of the Borrowers and the other Loan Parties and/or any Collateral or any
other property (collectively, "Other Collateral") as to which any other Person
(other than a Loan Party) granted Lender a security interest as security for any
or all of the Obligations and Liabilities or any guaranty thereof, (D) foreclose
or otherwise realize on any or all of the Collateral and the Other Collateral,
and/or appropriate, set-off and apply to the payment of any or all of the
Obligations and Liabilities, any or all of the Collateral and the Other
Collateral, and/or (E) take any other enforcement action or otherwise exercise
any or all rights and remedies provided for by any or all of the Loan Agreements
and other Loan Documents or applicable law. Each of the Borrowers and the other
Loan Parties hereby acknowledges and agrees that the Lender has not waived, and
does not intend to waive any Specified Defaults or any other existing or future
Defaults or Events of Default, and nothing contained herein or the transactions
contemplated hereby shall be deemed to constitute any such waiver.
(b) Subject to the occurrence of the Effective Date pursuant
to Section 19 hereof, the Lender agrees that until the expiration of the
"Forbearance Period" (as hereinafter defined), it will temporarily forbear from
the exercise of its default-related remedies against any and all of the
Borrowers and other Loan Parties solely with respect to the Specified Defaults;
provided, however, (i) Lender shall be entitled as provided in the Loan
Agreements, to continue to charge the default rate of interest in respect of all
Obligations and Liabilities, (ii) the Borrowers and the other Loan Parties shall
comply during the Forbearance Period with all limitations, restrictions or
prohibitions that would otherwise be effective or applicable under the either
Loan Agreement or any of the other Loan Documents, during the continuance of any
Events of Default (including the Specified Defaults) (including, without
limitation, any limitations, restrictions or prohibitions against payments by
(w) Borrowers, (x) any other Loan Parties, (y) any Affiliate thereof (as
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defined in either Loan Agreement) or (z) any direct or indirect owner of an
equity interest in any or all of the Borrowers, the other Loan Parties or any
Affiliate thereof), and (iii) nothing herein (x) shall restrict, impair or
otherwise affect Lender's rights and remedies under any agreements (including,
without limitation, any and all Subordinated Debt Documents (as defined in the
GE Loan Agreement) and the Subordination Agreements (as defined in the TCFC Loan
Agreement) containing subordination provisions in favor of Lender (including,
without limitation, any rights or remedies available to Lender as a result of
the occurrence or continuation of the Specified Defaults) or (y) shall amend or
modify any provision thereof. As used herein, "Forbearance Period" means the
period beginning on the date hereof and ending on the earlier to occur of (the
occurrence of clause (i), (ii) or (iii) below, a "Termination Event" and the
time of such occurrence, the "Termination Date"): (i) the date on which Lender
delivers to Xxxxxx a notice terminating the Forbearance Period, which notice may
be delivered at any time upon or after the occurrence of any Forbearance
Default, (ii) January 15, 2005 (the "Outer Forbearance Date"), or (iii) the
consummation of the Merger. As used herein, "Forbearance Default" means (A) the
occurrence of any Default (as defined in the GE Loan Agreement) or any Event of
Default (as defined in the TCFC Loan Agreement) other than the Specified
Defaults, (B) the failure of any Borrower or any other Loan Party to comply
timely with any term, condition, or covenant set forth in this Agreement, (C)
the failure of any representation or warranty made by any Borrower or any other
Loan Party under or in connection with this Agreement to be true and complete in
all material respects as of the date when made or any other breach of any such
representation or warranty in any material respect, (D) any occurrence, event or
change in facts or circumstances occurring on or after the Effective Date that
would have a Material Adverse Change (as defined in either Loan Agreement) on
any Borrower or any other Loan Party or any of their respective financial
conditions, businesses, prospects or assets, (E) (I) any breach by Xxxxxx or any
other Loan Party of any provision of the Merger Agreement or any other
agreement, instrument or document executed in connection therewith, (II) any
failure by Xxxxxx or TRMC to satisfy any condition precedent to the
effectiveness of the Merger Agreement or any other agreement, instrument or
document executed in connection therewith, (III) any termination or purported
termination by any party thereto of the Merger Agreement, or (IV) any other
failure of the Merger Agreement to remain in full force and effect at any time,
(F) any breach by Tracker of any of the provisions of that certain letter
agreement dated on or about the date hereof between Tracker and Lender (the
"Tracker Letter Agreement"), including, without limitation, any failure by
Tracker to fund any working capital shortfall of Xxxxxx pursuant to Section 7 of
the Tracker Letter Agreement, or (G) any determination made by Lender in its
sole discretion at any time that Lender, Xxxxxx and Tracker (or its affiliate,
TMRC) have failed or are unable to reach agreement on the terms for
restructuring the credit facilities under the Loan Documents or on any other
matters referenced in Section 6.03(g) of the Merger Agreement. Any Forbearance
Default shall constitute an immediate Default under the GE Loan Agreement and an
immediate Event of Default under the TCFC Loan Agreement.
(c) Subject to the occurrence of the Effective Date pursuant
to Section 19 hereof, and without limiting the generality of Section 3(b)
hereof, notwithstanding the pendency of any Specified Default but subject to the
terms and conditions of the Loan Documents (after giving effect to the
provisions of this Agreement), during the period from and including the date
hereof until the occurrence of a Termination Event, Lender agrees to make
Revolving Credit Loans and Floorplan Inventory Loans under the GE Loan
Agreement, and Revolving Loans under the TCFC Loan Agreement in accordance with
the provisions of the applicable Loan Documents (after giving effect to the
provisions of this Agreement), and the following additional terms and
conditions:
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(i) The aggregate outstanding amount of Obligations and
Liabilities at any time shall not exceed $33,000,000.
(ii) During the Forbearance Period, the "Borrowing Base" under
the TCFC Loan Agreement shall mean the sum of the following
from time to time, less any reserves as Lender in its sole
discretion elects: (i) 100% of Borrowers' then existing
Eligible Inventory A2; plus (iii) 92% of Borrowers' then
existing Eligible Inventory B1; plus (iv) 92% of Borrowers'
then existing Eligible Inventory B2; plus (v) the lesser of
(A) $250,000 or (B) 75% of Borrowers' then existing Eligible
Inventory C1; plus (vi) 75% of Borrowers' then existing
Eligible Inventory C2; plus (vii) 95% of Borrowers' then
existing Eligible Inventory D; plus (viii) 90% of Borrowers'
then existing Eligible Inventory E; plus (ix) 75% of the NADA
"low wholesale" value of Borrowers' then existing Eligible
Inventory F; plus (x) the lesser of (A) 50% of the Borrowers'
then existing Eligible Inventory G or (B) $712,000; plus (xi)
80% of Borrowers' then existing Eligible Accounts Receivable
(all of the foregoing capitalized terms used in this clause
(ii) having the meanings given such terms in the TCFC Loan
Agreement).
(iii) During the Forbearance Period, the advance rates
referenced in the definitions of Eligible Used Inventory and
Eligible Parts in the GE Loan Agreement shall be as follows:
(A) Eligible Used Inventory-(1) 70 % for such
Eligible Used Inventory which is less than 365 days old,
limited to a maximum of $1,023,000 of availability from
this class of Inventory, and (2) 30% for such Eligible
Used Inventory which is more than 365 days old but less
than 540 days old; and
(B) Eligible Parts-the lesser of $977,000 of
availability from this class of Inventory or 29% of such
Eligible Parts.
(iv) In addition to any other restrictions on the issuance of
Open Approvals, during the Forbearance Period, Lender will not
issue any new Open Approvals if the (x) sum of such new Open
Approvals and all other Open Approvals then outstanding exceed
(y) the aggregate amount of proceeds remitted to Lender during
the Forbearance Period for application to the Floorplan
Inventory Loans and not reborrowed.
Lender's foregoing agreement to provide additional extensions of credit does not
constitute an amendment of the "Termination Date" under either Loan Agreement.
(d) Lender has not waived (and by entering into this
Agreement, has not waived), and has no intention of waiving any Specified
Defaults or any other existing or future Defaults or Events of Default, and
Lender has not agreed to forbear with respect to any of its rights or remedies
concerning any existing or future Defaults or Events of Default, other than,
during the Forbearance Period, the Specified Defaults, solely to the extent
expressly set forth herein.
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(e) Subject to Section 3(b) hereof, Lender reserves the right,
in its sole discretion, to exercise any or all of its rights and remedies under
the Loan Agreements and the other Loan Documents as a result of any existing or
future Defaults or Events of Default, and Lender has not waived any such rights
or remedies, and nothing in this Agreement, and no delay on Lender's party in
exercising any such rights or remedies, constitutes or should be construed as a
waiver of any such rights and remedies.
(f) Upon a Termination Event, Lender's agreement hereunder to
forbear from exercising its default-related remedies shall immediately
terminate, and its agreement to continue to provide extensions of credit to
Borrowers pursuant to Section 3(b) hereof shall immediately terminate, in each
case, without the requirement of any demand, presentment, protest, or notice of
any kind, all of which each of the Borrowers and the other Loan Parties waives.
Each of the Borrowers and the other Loan Parties agrees that Lender may at any
time thereafter proceed to exercise any and all of its rights and remedies under
any or all of the Loan Agreements and other Loan Documents and/or applicable
law, including, without limitation, its rights and remedies in connection with
the Specified Defaults. Without limiting the generality of the foregoing, upon
the occurrence of a Termination Event, Lender may, in its sole discretion and
without the requirement of any demand, presentment, protest, or notice of any
kind, (i) suspend or terminate any commitment to provide revolving loans,
floorplan inventory loans or other extensions of credit under any or all of the
Loan Agreements and other Loan Documents, (ii) institute the default rate of
interest with respect to any or all of the Obligations and Liabilities, (iii)
commence any legal or other action to collect any or all of the Obligations and
Liabilities from any Borrower, any other Loan Party and/or any Collateral or
Other Collateral, (iv) foreclose or otherwise realize on any or all of the
Collateral and Other Collateral, and/or appropriate, setoff and apply to the
payment of any or all of the Obligations and Liabilities, any or all of the
Collateral and Other Collateral or any of the proceeds thereof, and (v) take any
other enforcement action or otherwise exercise any or all rights and remedies
provided for by any or all of the Loan Agreements and other Loan Documents
and/or applicable law, all of which rights and remedies are fully reserved by
Lender.
(g) Any agreement by Lender to extend the Forbearance Period
must be set forth in writing and signed by its authorized officers. Each of the
Borrowers and the other Loan Parties acknowledges that Lender has not made any
assurances concerning any possibility of an extension of the Forbearance Period
and that Lender may decline in its sole discretion to extend the Forbearance
Period.
(h) Each of the Borrowers and the other Loan Parties agrees
and acknowledges that any revolving loan, floorplan inventory loan or other
financial accommodation (including, without limitation, consent to usage of cash
collateral) which Lender makes on or after the date hereof has been made by
Lender in reliance upon, and is consideration for, among other things, the
general releases, covenants not to xxx and indemnities contained in Section 4
and the other covenants and agreements of Borrowers and the other Loan Parties
hereunder.
(i) Notwithstanding anything to the contrary herein, the
parties hereto agree and acknowledge that the Lender is entitled in its sole
discretion at any time to charge the default rate of interest in respect of the
Obligations and Liabilities effective at any time determined by Lender in its
sole discretion from and after the period beginning on the first date any
Default or Event of Default (including any Specified Default) first occurred
(including all or any portion of the Forbearance Period).
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SECTION 4. GENERAL RELEASE, COVENANT NOT TO XXX; INDEMNITY.
(a) In consideration of, among other things, Lender's
execution and delivery of this Agreement, and the other agreements of Lender
contained herein and for other good and valuable consideration, each of the
Borrowers and the other Loan Parties, on behalf of itself and its successors and
assigns and other legal representatives (collectively, "Releasors"), hereby
forever agrees and covenants not to xxx or prosecute against any Releasee (as
defined below) and hereby forever waives, releases and discharges to the fullest
extent permitted by law, each Releasee (as defined below) from, any and all
claims (including, without limitation, crossclaims, counterclaims, rights of
set-off and recoupment), causes of action, demands, suits, costs, expenses and
damages (collectively, the "Claims"), that such Releasor now has or hereafter
may have, of whatsoever nature and kind, whether known or unknown, whether now
existing or hereafter arising, whether arising at law or in equity, against any
or all of Lender in any capacity and its Affiliates, shareholders and
"controlling persons" (within the meaning of the federal securities laws), and
their respective predecessors, successors and assigns and each and all of the
officers, directors, employees, agents, attorneys and other representatives of
each of the foregoing (collectively, the "Releasees"), based in whole or in part
on facts, whether or not now known, existing on or before the execution of this
Agreement, that relate to, arise out of or otherwise are in connection with (i)
any aspect of the business, operations, assets, properties, affairs or any other
aspect of any Borrower or any other Loan Party, (ii) any aspect of the dealings
or relationships between or among any or all of the Borrowers and the other Loan
Parties and their Affiliates, on the one hand, and any or all of the Releasees,
on the other hand, (iii) any aspect of the dealings or relationships between or
among any or all of Tracker and its Affiliates, on the one hand, and any or all
of the Releasees, on the other hand, but only to the extent such dealings or
relationships relate to any aspect of any Borrower or any other Loan Party, or
(iv) any or all of the Loan Documents or any transactions contemplated thereby
or any acts or omissions in connection therewith. The receipt by any Borrower or
any other Loan Party of any revolving loans, floorplan inventory loans or other
financial accommodations made by Lender after the date hereof shall constitute a
ratification, adoption, and confirmation by each of the Borrowers and the other
Loan Parties of the foregoing general release of, and covenant not to xxx in
respect of, all Claims against any Releasee which are based in whole or in part
on facts, whether or not now known or unknown, existing on or prior to the date
of receipt of any such revolving loans, floorplan inventory loans or other
financial accommodations. In entering into this Agreement, the Borrowers and the
other Loan Parties have consulted with, and been represented by, legal counsel
and expressly disclaim any reliance on any representations, acts or omissions by
any of the Releasees and hereby agree and acknowledge that the validity and
effectiveness of the release set forth above do not depend in any way on any
such representations, acts and/or omissions or the accuracy, completeness or
validity hereof. The provisions of this Section 4 shall survive the termination
of the Loan Agreements and the other Loan Documents and payment in full of the
Obligations and Liabilities.
(b) Each of Borrowers and the other Loan Parties hereby agrees
that it shall be jointly and severally obligated to indemnify and hold the
Releasees harmless with respect to any and all liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever incurred by the Releasees, or any of them,
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whether direct, indirect or consequential, as a result of or arising from or
relating to any proceeding by, or on behalf of any Person, including, without
limitation, the respective officers, directors, agents, trustees, creditors,
partners or shareholders of Borrowers and the other Loan Parties, whether
threatened or initiated, in respect of any claim for legal or equitable remedy
under any statue, regulation or common law principle arising from or in
connection with the negotiation, preparation, execution, delivery, performance,
administration and enforcement of this Agreement or any other document executed
in connection herewith. Without limiting the foregoing, each of the Borrowers
and the other Loan Parties acknowledges and agrees that in the event any
Borrower, any other Loan Party or any other Releasor asserts any Claim against
any Releasee that is released hereby or is the subject of the foregoing covenant
not to xxx, the Borrowers and other Loan Parties are jointly and severally
liable to pay to such Releasee, in addition to such other damages as such
Releasee may sustain thereby, all attorneys' fees and costs incurred by such
Releasee in connection with the assertion of such Claim. The foregoing indemnity
shall survive the termination of the Loan Agreements and the other Loan
Documents and the payment in full of the Obligations and Liabilities.
(c) To the extent that, notwithstanding the choice of law
provisions in this Agreement and the other Loan Documents, California law is
deemed to apply to the release, covenant not to xxx and indemnification
provisions herein, the Borrowers and the other Loan Parties warrant, represent
and agree that they are fully aware of California Civil Code Section 1542, which
provides as follows:
SEC. 1542. GENERAL RELEASE. A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR.
The Borrowers and the other Loan Parties hereby expressly waive the provisions
of California Civil Code Section 1542, and any rights they may have to invoke
the provisions of that statute now or in the future with respect to the Claims
being released pursuant to Section 4(a) hereof. In connection with the foregoing
waiver and relinquishment, the Borrowers and the other Loan Parties acknowledge
that they are aware that they or their attorneys or others may hereafter
discover claims or facts in addition to or different from those which the
parties now know or believe to exist with respect to the subject matter of the
Claims being released hereunder, but that it is nevertheless the intention of
the Borrowers and the other Loan Parties to fully, finally and forever settle,
release, waive and discharge all of the Claims which are being released pursuant
to Section 4(a) hereof. The release given herein shall remain in effect as a
full and complete general release, notwithstanding the discovery or existence of
any such additional or different claims or facts.
(d) Each of the Borrowers and other Loan Parties understands,
acknowledges and agrees that the releases and covenants not to xxx 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
or covenant not to xxx.
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(e) Each of the Borrowers and other Loan Parties jointly and
severally represent, warrant and agree that the Releasors have not previously
assigned, transferred, hypothecated, or purported to assign, transfer or
hypothecate, any Claim or portion thereof which is released or is the subject to
a covenant not to xxx pursuant to this Section 4 hereof to another Person that
is not a signatory of this Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWERS AND THE OTHER
LOAN PARTIES.
To induce Lender to execute and deliver this Agreement, each
of the Borrowers and the other Loan Parties jointly and severally represents,
warrants and covenants that:
(a) (i) The execution, delivery and performance by each of the
Borrowers and the other Loan Parties of this Agreement and all documents and
instruments delivered in connection herewith and/or the Loan Agreements and all
other Loan Documents have been duly authorized, and (ii) this Agreement and all
documents and instruments delivered in connection herewith and/or the Loan
Agreements and all other Loan Documents are legal, valid and binding obligations
of each of the Borrowers and the other Loan Parties enforceable against each of
the Borrowers and the other Loan Parties in accordance with their respective
terms, except as the enforcement thereof may be subject to (x) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and (y) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law);
(b) After taking into account the Specified Defaults, each of
the representations and warranties contained in the Loan Agreements and the
other Loan Documents is true and correct on and as of the date hereof as if made
on the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date, and each of the agreements and covenants in the Loan Agreements and the
other Loan Documents is hereby reaffirmed with the same force and effect as if
each were separately stated herein and made as of the date hereof;
(c) Neither the execution, delivery and performance of this
Agreement and all documents and instruments delivered in connection herewith nor
the consummation of the transactions contemplated hereby or thereby does or
shall contravene, result in a breach of, or violate (i) any provision of any
Borrower's or other Loan Party's corporate charter, bylaws, operating agreement,
partnership agreement or other governing documents, (ii) any law or regulation,
or any order or decree of any court or government instrumentality, or (iii) any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which any Borrower or any other Loan Party is a party or by which any Borrower
or any other Loan Party or any of its property is bound;
(d) Lender's liens and security interests in the Collateral
and the Other Collateral continue to be valid, binding, enforceable and
perfected first-priority liens and security interests which secure the
Obligations and Liabilities (subject only to any liens or security interests
expressly permitted under the Loan Documents), and no tax or judgment liens are
currently of record against any Borrower or any other Loan Party; and
10
(e) The recitals to this Agreement are true and correct.
SECTION 6. COVENANTS; ACKNOWLEDGMENTS.
(a) The Borrowers and the other Loan Parties shall use their
best efforts to document, obtain all required consents and approvals, and
consummate on or before the Outer Forbearance Date, the Merger on terms and
conditions acceptable to Lender in its sole discretion. Without limiting the
foregoing, the Borrowers and the other Loan Parties shall comply with the
following covenants in connection with their pursuit of the Merger:
(i) On or before November 22, 2004, Xxxxxx shall have filed a
Preliminary Proxy Statement (as defined in the Merger
Agreement) with the SEC and at all times shall diligently seek
SEC clearance of same and promptly prepare any amendments to
the Preliminary Proxy Statement or the Schedule 13E-3 required
in response to any comments of the SEC.
(ii) Xxxxxx shall use its best efforts at all times to obtain
SEC clearance of the Preliminary Proxy Statement and the
Schedule 13E-3, and to make any amendments or modifications
thereto in order to obtain such clearance, and Xxxxxx shall
obtain SEC clearance of the Preliminary Proxy Statement and
the Schedule 13E-3, in each case as the same may be amended,
no later than January 2, 2005.
(iii) On or before the fifth Business Day after obtaining SEC
clearance, Xxxxxx shall have mailed the Proxy Statement (as
defined in the Merger Agreement) to its shareholders
(iv) Xxxxxx shall have convened the Shareholders' Meeting (as
defined in the Merger Agreement) on or before January 12,
2005, and shall have obtained at or before such meeting all
shareholder approvals necessary to consummate the Merger.
In addition, the Borrowers and the other Loan Parties (i) shall comply with the
provisions of the Merger Agreement and each of the other agreements, instruments
and documents entered into in connection therewith, (ii) shall cause each
condition precedent set forth therein to be satisfied on or before the
applicable deadline set forth therein, and (iii) shall cause the Merger
Agreement and all such other agreements, instruments and documents to remain in
full force and effect at all times.
(b) The Loan Parties shall comply with the following financial
covenants:
(i) The Loan Parties shall maintain a ratio of (x) Debt minus
Subordinated Debt to (y) Tangible Net Worth plus Subordinated
Debt (as each of the foregoing terms are defined in the GE
Loan Agreement) of not more than (A) 7.00 to 1 as of October
31, 2004, (B) 8.60 to 1 as of November 30, 2004, and (C) 11.25
to 1 as of December 31, 2004; provided, however, that in the
event Tracker makes Tracker Loans (as defined in the Tracker
Side Letter) in November, 2004, in an aggregate principal
amount in excess of $1,000,000, then the foregoing monthly
maximum leverage ratio for November 30, 2004, shall be
automatically increased to reflect the lesser of (i) such
excess amount of Tracker Loans or (ii) 250,000. In addition,
the calculation of Tangible Net Worth as of December 31, 2004,
shall exclude all one-time or extraordinary charges,
adjustments or write-downs, to the extent that such charges,
adjustments or write-downs are non-cash expenditures, and have
been deducted in determining consolidated net income (or loss)
for the fiscal year ended September 30, 2004.
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(ii) The Loan Parties shall maintain at all times Minimum Cash
on Hand of at least $500,000. As used herein, the term
"Minimum Cash on Hand" shall mean the aggregate amount of the
Loan Parties' unrestricted cash balances as set forth on, and
calculated in accordance with the methodology used for
calculating such cash balances in, the Loan Parties' weekly
report captioned "Cash Flow Estimates for Xxxxxx Marine"
(hereinafter referred to as the "Weekly Cash Flow Report)."
For avoidance of doubt, Minimum Cash on Hand as of the first
Business Day of each week shall refer to the amount in the
actual rolling cash balance as of the end of the prior week
specified in the Weekly Cash Flow Report (provided that such
reported amount is calculated based on the same methodology
historically used by the Loan Parties in preparing that
report).
(iii) The Loan Parties shall not permit their negative
consolidated Adjusted EBITDA (as defined below) for the
following months to be greater (i.e., a higher negative
amount) than the following amounts: (I) ($1,305,000) for the
month of October, 2004, (II) ($1,009,000) for the month of
November, 2005, and (III) ($1,013,000) for the month of
December, 2004. As used herein, the term "Adjusted EBITDA"
shall mean for any period, (a) the Loan Parties' consolidated
net income for such period as determined in accordance with
GAAP, plus (b) the sum of the amount of interest, taxes and
depreciation and amortization charges deducted in determining
consolidated net income (or loss) for such period, minus (c)
the sum of all one-time or extraordinary charges, adjustments
or write-downs, to the extent that such charges, adjustments
or write-downs are non-cash expenditures, and have been
deducted in determining consolidated net income (or loss) for
such period.
(c) In addition to the reporting requirements set forth in the
Loan Documents, the Loan Parties shall provide the following additional reports:
(i) On or before Monday of each week (beginning with November
15, 2004), Loan Parties shall deliver to Lender their Cash
Flow Report (in the same form as historically provided to
Lender), which report shall, among other things, calculate
(based on the same methodology previously used in preparing
such report) (a) the aggregate unrestricted cash balances of
the Loan Parties as of the immediately preceding Friday, and
(b) the budgeted rolling cash balance for such prior week as
well as (c) the budgeted rolling cash balance for the
following 13 weeks, and shall refer to such amount as the
"Minimum Cash on Hand."
(ii) On or before December 10, 2004, and the tenth calendar
day of each subsequent month, the Loan Parties shall provide
to Lender a report, in form and substance satisfactory to
Lender, setting forth in reasonable detail, the calculation of
the Loan Parties' consolidated Adjusted EBITDA and
consolidated ratio of Debt minus Subordinated Debt to Tangible
Net Worth plus Subordinated Debt for the immediately preceding
calendar month.
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(d) In the event the Loan Parties' Minimum Cash on Hand is
less than $500,000 at any time, the Loan Parties shall obtain a loan from
Tracker in the amount of such shortfall pursuant to the Tracker Letter Agreement
no later than the third day after such shortfall occurred.
(e) Without limiting the Lender's rights under the Loan
Documents, the Borrowers and the other Loan Parties hereby agree to (i) give
Lender and its Representatives (as defined below) reasonable access during
normal business hours to the offices, properties, officers, employees,
accountants, auditors, counsel and other representatives, books and records of
Borrowers and the other Loan Parties, (ii) furnish to Lender and its
Representatives such financial, operating and property related data and other
information as such Persons reasonably request, and (iii) instruct each
Borrower's and each other Loan Party's Representatives to cooperate reasonably
with Lender and its Representatives in their investigation of Borrowers' and the
other Loan Parties' respective businesses (including, without limitation, the
Borrowers' and other Loan Parties' historical and projected financial and
operating performance, their liquidity, their financial statements, trends in
their industry, the proposed Merger, any restructuring or other strategic
alternatives and any other matter relating to any or all of the Loan Parties or
the Obligations or Liabilities). "Representatives" shall mean, with respect to
any Person, such Person's employees, agents, representatives and financing
sources, and any investment banker, financial advisor, accountant, legal
counsel, agent, representative or expert retained by or acting on behalf such
Person. Without limiting the generality of the foregoing, Borrowers and the
other Loan Parties hereby agree and acknowledge that (i) the Lender (or its
counsel) shall be entitled in its sole discretion pursuant to the Loan Documents
to retain any consultants (as determined by Lender or its counsel)
(collectively, the "Lender's Consultants") to review, analyze and make
recommendations with respect to, the Loan Parties' historical and projected
financial and operating performance, their liquidity, their financial
statements, trends in their industry, the proposed Merger or any restructuring
or other strategic alternatives and any other matter relating to any or all of
the Loan Parties or the Obligations or Liabilities, (ii) the Borrowers and the
other Loan Parties shall be jointly and severally liable to pay or reimburse
Lender upon demand for the reasonable fees, costs and expenses of any such
Lender's Consultants, and such reimbursement obligation shall constitute part of
the Obligations and Liabilities and shall be secured by the Collateral. The
Borrowers and the other Loan Parties hereby agree and acknowledge that all of
Lenders' Consultant's analyses, conclusions, reports and other work product are
confidential and covered by the attorney work product privilege and the common
interest privilege and consequently are exempt from disclosure to any of the
Borrowers or the other Loan Parties or to any other third parties. The Borrowers
and the other Loan Parties hereby further agree and acknowledge that the
confidentiality of Lender's Consultant's analyses, conclusions, reports and
other work product and the applicability of the attorney work product privilege
and common interest privilege shall not in any way be waived to the extent the
Lender elects in its sole discretion to disclose to any Borrower or any other
Loan Party or any other third party all or any portion of any of Lender's
Consultant's analyses, conclusions, reports and other work product.
(f) The Lender and its Representatives shall also be entitled,
at such reasonable times during normal business hours and as often as may be
reasonably requested, to discuss with
13
Xxxxxxxxx & Company LLC and any other financial advisors, consultants or
investment bankers retained by any or all of the Loan Parties to assist them in
connection with the Merger and/or to render a fairness opinion with respect
thereto (the "Borrowers' Financial Advisors") and the Borrowers and the other
Loan Parties hereby irrevocably authorize and direct Borrowers' Financial
Advisors to discuss with the Lender and its Representatives, any matter
concerning (i) the affairs, finances and business of any Borrower or other Loan
Party, (ii) any aspect of the potential Merger (including, without limitation,
the Borrowers' Financial Advisors' strategy for effectuating any such Merger,
the Borrower's Financial Advisors' opinions concerning the value of any of the
assets and/or stock of the Borrowers and/or other Loan Parties, and the status
of any negotiations concerning any aspect of a potential Merger or other
transaction or restructuring involving any or all of the Borrowers and the other
Loan Parties). In addition, the Borrowers and the other Loan Parties hereby
irrevocably authorize and direct Borrowers' Financial Advisors (i) to provide to
the Lender and its Representatives (at the same time such materials are provided
to any or all of the Borrowers and the other Loan Parties) copies of all
documents, analyses, reports and other work product prepared by Borrowers'
Financial Advisors with any material developments relating to the proposed
Merger, any Acquisition Proposal (as defined in the Merger Agreement), any
Superior Proposal (as defined in the Merger Agreement) or any other transaction
or restructuring involving any or all of the Borrowers and the other Loan
Parties, and (ii) communicate directly with the Lender and/or its
Representatives concerning any and all aspects of the proposed Merger or any
other transaction or restructuring involving any or all of the Borrowers and the
other Loan Parties (which communications may be outside the presence of the
Borrowers and the other Loan Parties).
(g) The Borrowers and the other Loan Parties hereby
irrevocably (i) authorize the Lender and its Representatives to communicate
directly with any or all of Tracker and its Affiliates and their respective
Representatives (collectively, the "Tracker Parties"), in or outside the
presence of any or all of the Loan Parties or their respective Representatives
(including the Borrowers' Financial Advisors), concerning any subject matter
whatsoever, including, without limitation, any matter relating to the proposed
Merger or any other transaction or restructuring involving any or all of the
Borrowers and the other Loan Parties, or any restructuring or modification of
the Liabilities and Obligations or the Loan Documents in connection with the
Merger or such other transaction or restructuring involving any or all of the
Borrowers and the other Loan Parties, (ii) authorize Lender and the Tracker
Parties in their sole respective discretion to enter into any agreements
relating to any subject matter, and (iii) release and waive, and covenant not to
xxx in respect of, any and all Claims against any and all of Lender and its
Representatives directly or indirectly relating to any such communications or
agreements. Lender hereby consents to any disclosure by Tracker to any Loan
Party concerning the status or substance of any communications between Lender
and Tracker concerning the proposed restructuring of the Liabilities and
Obligations under the Loan Agreements in connection with the consummation of the
Merger, and each of the Loan Parties hereby agrees and acknowledges that Lender
shall not have any liability or responsibility for the accuracy or completeness
of any such disclosures by Tracker to any Loan Party.
(h) Any failure by any of the Borrowers or any other Loan
Parties to comply with any of the covenants in this Section or any other terms
and conditions of this Agreement shall constitute an immediate Forbearance
Default and an immediate Default under the GE Loan Agreement and an immediate
Event of Default under the TCFC Loan Agreement, and shall not be subject to cure
or any grace period. Each of the covenants in this Section shall survive the
termination of the Forbearance Period and the termination of this Agreement and
shall continue to be binding on the Borrowers and the other Loan Parties.
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SECTION 7. RATIFICATION OF LIABILITY. Each of the Loan Parties as debtors,
grantors, pledgors, guarantors, assignors, or in other similar capacities in
which such Loan Parties grant liens or security interests in their properties or
otherwise act as accommodation parties or guarantors, as the case may be, under
the Loan Documents, hereby ratifies and reaffirms all of its payment and
performance obligations and obligations to indemnify, contingent or otherwise,
under each of such Loan Documents to which such Loan Party is a party, and each
Loan Party hereby ratifies and reaffirms such Loan Party's grant of liens on or
security interest in its properties pursuant to such Loan Documents to which it
is a party as security for the Obligations under the GE Loan Agreement or the
Liabilities under the TCFC Loan Agreement, and confirms and agrees that such
liens and security interests hereafter secure all of the Obligations and
Liabilities, including, without limitation, all additional Obligations and
Liabilities hereafter arising or incurred pursuant to or in connection with
either Loan Agreement or any other Loan Document. Each of the Loan Parties
hereby agrees and reaffirms that the Loan Documents to which it is a party now
applies to all Obligations and Liabilities as defined in the applicable Loan
Agreement, as modified hereby (including, without limitation, all additional
Obligations and Liabilities hereafter arising or incurred pursuant to or in
connection with either Loan Agreement or any other Loan Document). Each of the
Loan Parties (i) acknowledges receipt of a copy of this Agreement and all other
agreements, documents, and instruments executed in connection herewith, (ii)
consents to the terms and conditions of same, and (iii) agrees and acknowledges
that each of the Loan Documents, as modified hereby, remains in full force and
effect and is hereby ratified and confirmed. The execution of this Agreement
shall not operate as a waiver or any right, power or remedy of Lender, nor
constitute a waiver or any provision of any of the Loan Documents nor constitute
a novation of any of the Obligations and Liabilities under the Loan Agreements
or other Loan Documents.
SECTION 8. REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENTS.
(a) Except as specifically amended hereby, all terms,
conditions, covenants, representations and warranties contained in the Loan
Agreements or any other Loan Documents, and all rights of Lender and all of the
Obligations and Liabilities, shall remain in full force and effect. Each of the
Borrowers and the other Loan Parties hereby confirms that the Loan Agreements
and the other Loan Documents are in full force and effect and that none of the
Borrowers and the other Loan Parties has any defenses, setoffs, claims or
counterclaims to the Obligations and Liabilities under the Loan Agreements or
any other Loan Documents.
(b) Except as expressly set forth herein, the execution,
delivery and effectiveness of this Agreement and any consents and waivers set
forth herein shall not directly or indirectly (i) create any obligation to make
any further revolving loans, floorplan inventory loans or other extensions of
credit or to continue to defer the exercise of any default-related right or
remedy or any other enforcement action after a Termination Event, (ii)
constitute a consent or waiver of any past, present or future violations of any
provisions of either Loan Agreement or any other Loan Documents, (iii) amend,
modify or operate as a waiver of any provision of either Loan Agreement or any
other Loan Documents or any right, power or remedy of Lender, (iv) constitute a
consent to the Merger, or any other transaction or restructuring involving any
or all of the Borrowers and the other Loan Parties, (v) constitute a course of
dealing or other basis for altering any Obligations or Liabilities or any other
contract or instrument. Except as expressly set forth herein, Lender reserves
all of its rights, powers, and remedies under the Loan Agreements and the other
Loan Documents, and/or applicable law. All of the provisions of the Loan
Agreements and the other Loan Documents, including, without limitation, the time
of the essence provisions, are hereby reiterated, and if ever waived,
reinstated.
15
(c) Upon the effectiveness of this Agreement, the term "Loan
Documents" as used in any of the Loan Documents (as defined in the GE Loan
Agreement) or in any of the Loan Documents (as defined in the TCFC Loan
Agreement) shall include, without limitation, this Agreement.
SECTION 9. ATTORNEYS' FEE AND EXPENSES. Each of the parties shall bear their own
attorneys' fees and expenses in connection with the negotiation, preparation and
consummation of this Agreement and the other agreements and documents executed
in connection herewith, and the Loan Parties shall not be obligated to reimburse
Lender for any such attorneys' fees and expenses.
SECTION 10. CONSENT TO THE EXECUTION OF MERGER AGREEMENT. Subject to the
occurrence of the Effective Date pursuant to Section 19 hereof, Lender hereby
consents to the execution and delivery by Xxxxxx of the Merger Agreement;
provided, however, that such consent does not constitute (i) a consent by Lender
to the consummation of the Merger or to any other transactions contemplated
therein, or (ii) a consent or agreement by Lender to any of the matters set
forth in Section 6.03(g) of the Merger Agreement
SECTION 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF ILLINOIS.
SECTION 12. HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes, and shall in no way define, limit or extend the scope or
intent of this Agreement or any provision of this Agreement and shall not affect
the construction of this Agreement..
16
SECTION 13. CONSTRUCTION This Agreement and all other agreements and documents
executed in connection herewith have been prepared through the joint efforts of
all of the parties. Neither the provisions of this Agreement or any such other
agreements, instruments and documents nor any alleged ambiguity shall be
interpreted or resolved against any party on the ground that such party's
counsel drafted this Agreement or such other agreements, instruments and
documents, or based on any other rule of strict construction. Each of the
parties hereto represents and declares that such party has carefully read this
Agreement and all other agreements, instruments and documents executed in
connection therewith, and that such party knows the contents thereof and signs
the same freely and voluntarily. The parties hereby acknowledge that they have
been represented by legal counsel of their own choosing in negotiations for and
preparation of this Agreement and all other agreements, instruments and
documents executed in connection therewith and that each of them has read the
same and had their contents fully explained by such counsel and is fully aware
of their contents and legal effect. In addition, in this Agreement, (i) words
"hereof," "herein," hereto," "hereunder" and words of similar import shall mean
and refer to this Agreement as a whole and not merely to the specific section or
clause in which the respective word appears, (ii) words importing gender shall
include the other genders as appropriate, (iii) any terms defined in this
Agreement shall, unless the context otherwise requires, be used in the singular
or the plural depending on the reference, and (iv) the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation." If any matter is left to the decision, right, requirement, request,
determination, judgment, opinion, approval, consent, waiver, satisfaction,
acceptance, agreement, option or discretion of Lender or any of its
Representatives in either Loan Agreement or any other Loan Documents, such
action shall be deemed to be exercisable by Lender or such Representative in its
sole and absolute discretion and according to standards established in its sole
and absolute discretion. Without limiting the generality of the foregoing,
"option" and "discretion" shall be implied by the use of the words "if" and
"may."
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart. Any party hereto may execute
and deliver a counterpart of this Agreement by delivering by facsimile
transmission a signature page of this Agreement signed by such party, and any
such facsimile signature shall be treated in all respects as having the same
effect as an original signature. Any party delivering by facsimile transmission
a counterpart executed by it shall promptly thereafter also deliver a manually
signed counterpart of this Agreement.
SECTION 15. SEVERABILITY. The invalidity, illegality, or unenforceability of any
provision in or obligation under this Agreement in any jurisdiction shall not
affect or impair the validity, legality, or enforceability of the remaining
provisions or obligations under this Agreement or of such provision or
obligation in any other jurisdiction.
SECTION 16. TIME OF ESSENCE. Time is of the essence in the payment and
performance of each of the obligations of each of the Borrowers and the other
Loan Parties hereunder and with respect to all conditions to be satisfied by the
Borrowers and the other Loan Parties.
17
SECTION 17. FURTHER ASSURANCES. Each of the Borrowers and the other Loan Parties
agrees to take all further actions and execute all further agreements,
instruments and documents as Lender may from time to time reasonably request to
carry out the transactions contemplated by this Agreement.
SECTION 18. NOTICES. All notices, requests, and demands to or upon the
respective parties hereto shall be given in accordance with the Loan Agreements.
SECTION 19. EFFECTIVENESS. The provisions of Sections 1, 3(b), 3(c), and 10 of
this Agreement shall become effective at the time (the "Effective Date") that
all of the following conditions precedent have been met (or waived) as
determined by Lender in its sole discretion:
(a) Agreement. Lender shall have received signed counterparts
to this Agreement duly executed and delivered by each of the Lender, Borrowers
and the other Loan Parties.
(b) Merger Agreement. Lender shall have received signed
counterparts to the Merger Agreement in the form attached hereto as Exhibit A,
duly executed and delivered by all of the parties thereto, and such Merger
Agreement shall be in full force and effect.
(c) Other Documents. Lender shall have received signed
counterparts to the Tracker Letter Agreement in form and substance satisfactory
to Lender, duly executed and delivered by all of the parties thereto.
(d) Payment of all Overadvances. Lender shall have received
payment in full in cash of (i) that portion of the Obligations in excess of the
borrowing base and other limitations set forth in the GE Loan Agreement, and
(ii) that portion of the Liabilities in excess of the borrowing base and other
limitations set forth in the TCFC Loan Agreement.
(e) Due Authorization. Each of Borrowers and the other Loan
Parties shall have delivered to Lender (i) evidence of the corporate, limited
liability or partnership authority of Borrower or such Loan Party to execute,
deliver and perform this Agreement and, as applicable, all other agreements and
documents executed in connection therewith, and (ii) such other documents and
instruments as Lender may require, all of the foregoing of which shall be in
form and substance satisfactory to Lender. Without limiting the foregoing,
Lender shall have received from each Loan Party, all in form and substance
satisfactory to Lender, (i) a copy of resolutions duly adopted by the board of
directors of each Loan Party (or of such Loan Party's general partner or
managing member, as the case may be), authorizing and ratifying the execution
and delivery by each such Loan Party of this Agreement and all other agreements,
instruments and documents executed in connection therewith and the consummation
of all transactions contemplated therein, which resolutions shall be certified
as true, complete and correct by the corporate secretary of each Loan Party (or
such Loan Party's general partner or managing member, as the case may be), (ii)
copies of each Loan Party's articles of incorporation, bylaws, certificate of
limited partnership, agreement of limited partnership, articles of organization,
or operating agreement, as the case may be, and all other organizational or
formation documents of each Loan Party, together with all amendments,
supplements and other modifications thereto through the date hereof, certified
as true, complete and correct by the corporate secretary of each Loan Party (or
such Loan Party's general partner or managing member, as the case may be), (iii)
a certificate of the secretary of each Loan Party (or such Loan Party's general
partner or
18
managing member, as the case may be) to the effect that none of such Loan
Party's articles of incorporation, bylaws, certificate of limited partnership,
agreement of limited partnership, articles of organization, or operating
agreement, as the case may be, and other organizational or formation documents
of such Loan Party has been amended, supplemented or otherwise modified since
January 28, 2000, and (iv) a certificate of the secretary of each Loan Party (or
such Loan Party's general partner or managing member, as the case may be),
certifying the names of such Loan Party's officers authorized to sign this
Agreement and all other agreements, instruments and documents to be delivered
hereunder, together with the true signatures of such officers.
(f) Representations and Warranties. The representations and
warranties contained herein shall be true and correct in all respects, and no
Default or Event of Default or event which with notice, the passage of time or
both would constitute a Default or Event of Default under the applicable Loan
Agreement, other than the Specified Defaults, shall exist on the date hereof.
(g) [Intentionally omitted]
(h) No Material Adverse Change. There shall have occurred no
material adverse change in the business, operations, financial conditions,
profits or prospects of any Borrower or other Loan Party, or in the Collateral.
(i) Approvals. The approval and/or consent shall have been
obtained from each Person whose approval or consent is necessary or required to
enable any or all of the Loan Parties to enter into this Agreement or any other
agreement, instrument or document to be executed in connection herewith, and to
perform their respective obligations hereunder and thereunder.
(j) Other Agreements, Instruments and Documents. The Lender
shall have received, in form and substance satisfactory to Lender, all such
other agreements, instruments and documents, certificates, consents, approvals,
waivers, financing statements or amendments and opinions (including, without
limitation, opinions of counsel to the Borrowers and the other Loan Parties) as
Lender may request.
(k) Other Proceedings. All corporate and other proceedings in
connection with the execution and delivery by each of the parties hereto or
thereto of this Agreement and the other agreements, instruments and documents to
be executed in connection herewith or in connection with the transactions
contemplated hereby or thereby shall be satisfactory to Lender and its legal
counsel, and the Lender shall have received all such counterpart originals or
certified or other copies of the agreements, instruments or documents evidencing
such proceedings as the Lender may request.
(l) Satisfaction of Lender's Counsel. All legal matters
incident to this Agreement and all other agreements, instruments and documents
to be executed in connection herewith, and all transactions contemplated hereby
and thereby, shall be satisfactory to counsel for the Lender.
19
By executing and delivering this Agreement, each Loan Party is representing and
warranting as to the satisfaction of the conditions set forth in Sections 19(f),
(g), (i) and (j) hereof.
SECTION 20. WAIVERS BY BORROWERS AND OTHER LOAN PARTIES. BORROWERS AND THE OTHER
LOAN PARTIES WAIVE (i) THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, EITHER LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, THE
OBLIGATIONS, THE LIABILITIES OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND
PROTEST, AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT, MATURITY, OR
RELEASE WITH RESPECT TO ALL OR ANY PART OF THE OBLIGATIONS OR LIABILITIES OR ANY
GUARANTY THEREOF OR ANY COLLATERAL; (iii) NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF ANY COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS AND ALL RIGHTS
WAIVABLE UNDER ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE; (v) ANY RIGHT ANY
BORROWER OR ANY OTHER LOAN PARTY MAY HAVE UPON PAYMENT IN FULL OF THE
OBLIGATIONS AND LIABILITIES TO REQUIRE LENDER TO TERMINATE ITS SECURITY INTEREST
IN ANY COLLATERAL OR IN ANY OTHER PROPERTY OF ANY BORROWER OR ANY OTHER LOAN
PARTY UNTIL TERMINATION OF THE LOAN AGREEMENTS IN ACCORDANCE WITH THEIR
RESPECTIVE TERMS AND THE EXECUTION BY EACH OF THE BORROWERS AND THE OTHER LOAN
PARTIES AND BY EACH PERSON WHO PROVIDES FUNDS TO ANY BORROWER OR OTHER LOAN
PARTY WHICH ARE USED IN WHOLE OR IN PART TO SATISFY THE OBLIGATIONS AND THE
LIABILITIES, OF AN AGREEMENT INDEMNIFYING LENDER FROM ANY LOSS OR DAMAGE THAT
LENDER MAY INCUR AS THE RESULT OF DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT
RECEIVED BY LENDER FROM ANY BORROWER, ANY OTHER LOAN PARTY OR ANY ACCOUNT DEBTOR
AND APPLIED TO ANY OF THE OBLIGATIONS AND LIABILITIES AND RELEASING AND
INDEMNIFYING, IN THE SAME MANNER AS DESCRIBED IN SECTION 4 OF THIS AGREEMENT,
THE RELEASEES FROM ALL CLAIMS ARISING ON OR BEFORE THE DATE OF SUCH TERMINATION
STATEMENT; AND (vi) NOTICE OF ACCEPTANCE HEREOF, AND BORROWERS AND THE OTHER
LOAN PARTIES ACKNOWLEDGE THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH ANY OR ALL OF THE BORROWERS AND
THE OTHER LOAN PARTIES. BORROWERS AND THE OTHER LOAN PARTIES WARRANT AND
REPRESENT THAT THEY HAVE REVIEWED THE FOREGOING WAIVERS WITH THEIR LEGAL COUNSEL
AND HAVE KNOWINGLY AND VOLUNTARILY WAIVED THEIR JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
20
SECTION 21. ASSIGNMENTS; NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of Borrowers, the other Loan Parties, and
Lender and their respective successors and assigns; provided, that none of
Borrowers and the other Loan Parties may delegate any of its duties hereunder
and may not assign any of its rights or remedies set forth in this Agreement
without the prior written consent of Lender. No Person other than the parties
hereto, and in the case of Section 4 hereof, the Releasees, shall have any
rights hereunder or be entitled to rely on this Agreement and all third-party
beneficiary rights (other than the rights of the Releasees under Section 4
hereof) are hereby expressly disclaimed.
SECTION 22. FINAL AGREEMENT. This Agreement (including the exhibits and
schedules attached hereto), the Loan Agreements, the other Loan Documents, and
the other written agreements, instruments, and documents entered into in
connection therewith (collectively, the "Borrower/Lender Documents") set forth
in full the terms of agreement between the parties and are intended as the full,
complete, and exclusive contract governing the relationship between or among the
parties, superseding all other discussions, promises, representations,
warranties, agreements, and understandings between the parties with respect
thereto. No term of the Borrower/Lender Documents may be modified or amended,
nor may any rights thereunder be waived, except in a writing signed by the party
against whom enforcement of the modification, amendment, or waiver is sought.
Any waiver of any condition in, or breach of, any of the foregoing in a
particular instance shall not operate as a waiver of other or subsequent
conditions or breaches of the same or a different kind. Lender's exercise or
failure to exercise any rights or remedies under any of the foregoing in a
particular instance shall not operate as a waiver of its right to exercise the
same or different rights and remedies in any other instances. There are no oral
agreements among the parties hereto.
[Signature page to follow]
21
IN WITNESS WHEREOF, this Forbearance Agreement and Amendment
to Loan Documents has been executed by the parties hereto as of the date first
written above.
TCFC BORROWERS:
XXXXXX BOATS & MOTORS, INC.
TBC MANAGEMENT, INC.
TBC MANAGEMENT, LTD.
XXXXXX BOATING CENTER FLORIDA, INC.
XXXXXX BOATING CENTER GEORGIA, INC.
ADVENTURE MARINE SOUTH, INC.
ADVENTURE BOAT BROKERAGE, INC.
By:
--------------------------------------
Title:
-----------------------------------
GUARANTORS UNDER TCFC LOAN AGREEMENT:
XXXXXX XXXXXXX MARINE, INC.
FALCON MARINE, INC.
FALCON MARINE ABILENE, INC.
TBC ARKANSAS, INC.
XXXXXX BOATING CENTER TENNESSEE, INC.
XXXXXX BOATING CENTER LITTLE ROCK, INC.
XXXXXX BOATING CENTER OKLAHOMA, INC.
XXXXXX BOATING CENTER ARLINGTON, INC.
XXXXXX BOATING CENTER BEAUMONT, INC.
XXXXXX BOATING CENTER BATON ROUGE, INC.
XXXXXX BOATING CENTER LOUISIANA, INC.
XXXXXX BOATING CENTER ALABAMA, INC.
XXXXXX BOATING CENTER MISSISSIPPI, INC.
By:
--------------------------------------
Title:
-----------------------------------
GE BORROWERS:
XXXXXX BOATS & MOTORS, INC.
TBC ARKANSAS, INC.
XXXXXX BOATING CENTER ARLINGTON, INC.
XXXXXX BOATING CENTER BEAUMONT, INC.
XXXXXX BOATING CENTER OKLAHOMA, INC.
XXXXXX BOATING CENTER TENNESSEE, INC.
XXXXXX XXXXXXX MARINE, INC.
FALCON MARINE, INC.
FALCON MARINE ABILENE, INC.
XXXXXX BOATING CENTER ALABAMA, INC.
XXXXXX BOATING CENTER LOUISIANA, INC.
XXXXXX BOATING CENTER BATON ROUGE, INC.
XXXXXX BOATING CENTER MISSISSIPPI, INC.
XXXXXX BOATING CENTER LITTLE ROCK, INC.
RED RIVER MARINE ARKANSAS, INC.
SHELBY MARINE CENTER, INC.
SHELBY MARINE PICKWICK, LLC
By:
--------------------------------------
Title:
-----------------------------------
GUARANTORS UNDER GE LOAN AGREEMENT:
XXXXXX BOATING CENTER FLORIDA, INC.
XXXXXX BOATING CENTER GEORGIA, INC.
ADVENTURE MARINE & OUTDOORS, INC.
ADVENTURE MARINE SOUTH, INC.
ADVENTURE BOAT BROKERAGE, INC.
By:
--------------------------------------
Title:
-----------------------------------
LENDER:
GE COMMERCIAL DISTRIBUTION FINANCE
CORPORATION, as successor-in-interest to
Deutsche Financial Services Corporation
and f/k/a Transamerica Commercial
Finance Corporation
By:
--------------------------------------
Title:
-----------------------------------
EXHIBIT A
EXHIBIT A TO FORBEARANCE AGREEMENT
Specified Defaults
1. The Default and Events of Default arising solely by virtue of Borrowers'
failure to pay the Obligations and Liabilities under the Loan Agreements on the
October 31, 2004 Termination Date.
2. The Events of Default arising under the GE Loan Agreement solely by virtue of
the GE Borrowers' failure to comply with any of the financial covenants set
forth in Sections 9.1.1, 9.1.2, 9.1.3, 9.1.4, and 9.1.5 of the GE Loan Agreement
for any time periods ending on or before the Outer Forbearance Date.
3. The Defaults arising under the TCFC Loan Agreement solely by virtue of the
TCFC Borrowers' failure to comply with any of the financial covenants set forth
in Sections 5.1(W), (X), (Y) and (Z) of the TCFC Loan Agreement for any time
periods ending on or before the Outer Forbearance Date.
4. The Events of Default and Defaults arising under either Loan Agreement solely
by virtue of the applicable Borrowers' failure to pay any Obligations or
Liabilities in excess of the applicable limitations set forth in the applicable
Loan Agreement (each a "Defaulted Payment Obligation"), but only to the extent
such Defaulted Payment Obligation has been paid in full on or before the
Effective Date.
EXHIBIT B TO FORBEARANCE AGREEMENT
[Insert copy of the final form of Merger Agreement]
