EXHIBIT 10.49
Confidential Treatment Requested.
Confidential portions of this document have been redacted and filed
separately with the Commission.
LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of
____________, 2000, by and between TRANSAMERICA COMMERCIAL FINANCE CORPORATION
(the "Lender") and the Persons listed on Schedule I attached hereto
(individually, a "Borrower" and collectively, the "Borrowers").
THE PARTIES HERETO agree as follows:
ARTICLE ONE. DEFINITIONS
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SECTION 1.1. DEFINED TERMS. In addition to terms defined elsewhere in
this Agreement or any Supplement or Exhibit hereto, when used herein, the
following terms shall have the following meanings:
(A) "Account Debtor" shall mean individually, and "Account
Debtors" shall mean collectively, each Person who is or who may become obligated
to any Borrower under, with respect to, or on account of an Account Receivable
or other Collateral.
(B) "Accounts Receivable" shall mean any and all accounts (as
such term is defined in the UCC) of any Borrower and each and every right of any
Borrower to (i) the payment of money or (ii) the receipt or disbursement of
products, goods, services or other valuable consideration, whether such right
now exists or hereafter arises, whether such right arises out of a sale, lease
or other disposition of Inventory, or out of a rendering of services, or any
other transaction or event, whether such right is created, generated or earned
by any Borrower or by some other Person who subsequently transfers its interest
to any Borrower, whether such right is or is not already earned by performance,
and howsoever such right may be evidenced, together with all other rights and
interests (including all liens and security interests) which any Borrower may at
any time have by law or agreement against any Account Debtor or other Person
obligated to make any such payment or against any property of such Account
Debtor or other Person.
(C) "ACH Debit" shall mean an Automated Clearing House debit
by a Collecting Bank.
(D) "Adjusted Libor" means the rate per annum determined
pursuant to the following formula:
Adjusted Libor = Libor
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100%- Reserve Percentage.
(E) "Affiliate" shall mean individually, and "Affiliates"
shall mean collectively, each Person which, directly or indirectly, owns or
controls, on an aggregate basis, at least a five percent (5%) interest in any
other Person, or which is controlled by or is under common control with any
other Person.
(F) "Borrowing Base" 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 A, plus (ii) 95% of
Borrowers' then existing Eligible Inventory B, plus (iii) 75% of Borrowers' then
existing Eligible Inventory C; plus (iv) 95% of Borrowers' then existing
Eligible Inventory D; plus (v) 90% of Borrowers' then Eligible Inventory E, plus
(vi) 70% of the NADA "low wholesale" value of Borrowers' then Eligible Inventory
F, plus (vii) 50% of Borrowers' then Eligible Inventory G, plus (viii) 80% of
Borrower's Eligible Accounts Receivable., plus (ix) the following amounts: (a)
for the period commencing with the Closing Date and ending on March 30, 2000,
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$347,895.00; and (b) for the period commencing with March 31, 2000 and ending on
June 29, 2000, $312,895.72; and (c) commencing on June 30, 2000 and at all times
thereafter, zero.
(G) "Business Day" shall mean any day (other than a Saturday
or Sunday) on which the Federal Reserve Bank of Chicago is open for business.
(H) "Business Plan" shall mean any projected balance sheet and
profit and loss statement of Borrower for the annual period ending on the last
day of any of Borrower's fiscal year, prepared in accordance with generally
accepted accounting principles, together with appropriate supporting details and
a statement of underlying assumptions, and containing at least an income
statement and balance sheet projections, all prepared by Borrower's president
and/or chief financial officer.
(I) "Closing Date" shall mean the date upon which all of the
terms and conditions of the Documents to make the first Revolving Loan have been
met or fulfilled to the satisfaction of Lender.
(J) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(K) "Collateral" shall mean the following property owned by
any Borrower, howsoever arising, wherever located and whether now owned or
existing or hereafter existing or acquired:
(i) all Accounts Receivable;
(ii) all Inventory;
(iii) any and all monies, reserves, deposits, deposit
accounts, securities, cash, cash equivalents, balances,
credits, and interest and dividends on any of the
above, of or in the name of such Borrower, now or
hereafter with the Lender and any and all other like
property of any kind and description of or in the name
of such Borrower, now or hereafter, for any reason or
purpose whatsoever, in the possession or control of, or
in transit to, the Lender or any agent or bailee for
the Lender;
(iv) all chattel paper, contract rights and instruments;
(v) all General Intangibles;
(vi) all books, records and computer records in any way
relating to the property described in clauses (i)
through (v) above; and
(vii) any and all substitutions, renewals, improvements,
replacements, additions and proceeds of (i) through
(vi) above, including, without limitation, proceeds
of insurance policies for the property described in
clauses (i) through (vi) above.
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(L) "Collateral Locations" shall mean for each Borrower the
locations for such Borrower set forth on Exhibit 1.1(L) attached hereto and
those transient boat shows or events typically attended by Borrowers or any of
them in the ordinary course of business.
(M) "Collecting Bank" shall mean individually, and "Collecting
Banks" shall mean collectively, such banks required and acceptable to Lender to
collect and remit funds in accordance with this Agreement.
(N) "Collection Accounts" shall have the meaning set forth
in Section 3.3(B) of this Agreement.
(O) "DFS " shall mean Deutsche Financial Services,
Corporation.
(P) "DFS Intercreditor Agreement" shall mean that certain
intercreditor ▇▇▇▇▇▇▇▇▇.▇▇ and between Lender and DFS in form and manner
satisfactory to Lender dated the date of this Agreement relating to the
Liabilities and the DFS Financing, as may be amended and/or restated from time
to time.
(Q) "DFS Financing" shall mean that certain financing more
fully described on Exhibit 1.1(Q) attached hereto, as may be amended, extended,
renewed, supplemented, replaced and /or restated from time to time.
(R) "Default Rate" shall mean, as of the date of any
determination, a rate equal to the lesser of (i) 4% above the Pre-Default Rate;
or (ii) the Prime Rate, plus 6%; or (iii) the highest rate allowed by applicable
law.
(S) "Documents" shall mean this Agreement, the Guaranties, the
Guarantor Security Agreements, any EDI matter and any other instruments or
documents required or contemplated hereunder or thereunder, whether now existing
or at any time hereafter arising.
(T) "EDI" shall mean electronic data interchange including
facsimile transmission.
(U) "Eligible Accounts Receivable" shall mean those Accounts
Receivable of Borrower which the Lender deems in its reasonable discretion, to
be eligible. Without limitation of the foregoing, unless otherwise agreed to in
writing by the Lender, the following shall not constitute Eligible Accounts
Receivable: (i) Accounts Receivable which remain unpaid 45 days after the
contract date of such Accounts Receivable; (ii) Accounts Receivable not financed
by a lender acceptable, in Lender's sole discretion, to Lender; and (iii)
Accounts Receivable with respect to which the Account Debtor is a Borrower, any
guarantor of the Liabilities, any ▇▇▇▇▇▇ Entity or a director, officer, employee
or Affiliate of any Borrower or any guarantor of the Liabilities; (iv) Accounts
Receivable with respect to which the Account Debtor is either (a) not a resident
of the United States or (b) located outside the United States unless such
Account Receivable is either (I) subject to a letter of credit in form and
manner satisfactory to Lender or (II) insured in form and manner satisfactory to
Lender; (v) Accounts Receivable in dispute or with respect to which the Account
Debtor has asserted or may assert a counterclaim or has or may have a right of
setoff unless such Account Debtor has waived in writing all rights to offset and
setoff; (vi) Accounts Receivable with respect to which the Lender does not have
a first and valid fully perfected security interest; (vii) Accounts Receivable
with respect to which the Account Debtor is the subject of a bankruptcy or a
similar insolvency proceeding or has made an assignment for the benefit of
creditors or whose assets have been conveyed to a receiver or trustee; and
(viii) Accounts Receivable with respect to which the Account Debtor's obligation
to pay is either on a "COD" basis or is conditional upon the Account Debtor's
approval or is otherwise subject to any repurchase obligation or return right,
as with sales made on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale on
approval or consignment basis.
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(V) "Eligible Inventory" shall mean such Inventory of any
Borrower located on the Collateral Locations for such Borrower that Lender deems
in its reasonable discretion to be eligible. Without limitation of the
foregoing, unless otherwise agreed to by the Lender, the following shall not
constitute Eligible Inventory for any Borrower: (i) Inventory which is in
transit from its manufacturer; (ii) Inventory which is not in good and
merchantable condition, or not either currently usable or currently salable in
the ordinary course of any Borrower's business; (iii) Inventory which is
obsolete; (iv) Inventory which the Lender determines, in the exercise of its
reasonable discretion and in accordance with the Lender's customary reasonable
business practices and in good faith, to be unacceptable due to age, type,
category and/or quantity; (v) Inventory with respect to which the Lender does
not have a first and valid fully perfected security interest; (vi) Inventory
which is stored with on a bailment, consignment, warehouse or similar third
party arrangement, unless such bailee, consignee, warehouse Person, or other
third party, as applicable, delivers to Lender an agreement in form and
substance satisfactory to Lender; (vii) work-in-process inventory; (viii)
Inventory not located on the Collateral Locations of such Borrower; and (ix)
demonstration models.
(W) "Eligible Inventory A" shall mean such then Eligible
Inventory of any Borrower that is up to * days from the date of purchase by such
Borrower which the Lender deems in its reasonable discretion to be eligible that
is manufactured by a Vendor subject to a Vendor Repurchase Agreement. Eligible
Inventory A shall include returned and repossessed Inventory that is unused,
undamaged which any Borrower intends to resell to another Person.
(X) "Eligible Inventory B" shall mean such then Eligible
Inventory of any Borrower that is between * days from the date of purchase by
such Borrower which the Lender deems in its reasonable discretion to be eligible
that is manufactured by a Vendor subject to a Vendor Repurchase Agreement.
Eligible Inventory B shall include returned and repossessed Inventory that is
unused, undamaged which any Borrower intends to resell to another Person.
(Y) "Eligible Inventory C" shall mean such then Eligible
Inventory of any Borrower that is more than * days from the date of purchase by
such Borrower which the Lender deems in its reasonable discretion to be eligible
that is manufactured by a Vendor subject to a Vendor Repurchase Agreement.
Eligible Inventory C shall include returned and repossessed Inventory that is
unused, undamaged which any Borrower intends to resell to another Person.
(Z) "Eligible Inventory D" shall mean such then Eligible
Inventory of any Borrower consisting of watercraft, watercraft motors and
watercraft trailers that are up to * days from the date of purchase by such
Borrower that are purchased on open account by any Borrower that the Lender
deems in its reasonable discretion to be eligible. Eligible Inventory D shall
include returned and repossessed Inventory that is unused, undamaged which any
Borrower intends to resell to another Person.
(AA) "Eligible Inventory E" shall mean such then Eligible
Inventory of any Borrower consisting of watercraft, watercraft motors and
watercraft trailers that are between * days from the date of purchase by such
Borrower that are purchased on open account by any Borrower that the Lender
deems in its reasonable discretion to be eligible. Eligible Inventory E shall
include returned and repossessed Inventory that is unused, undamaged which any
Borrower intends to resell to another Person.
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*Indicates Confidential Treatment Requested. The redacted material has been
filed separately with the Commission.
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(BB) "Eligible Inventory F" shall mean such Eligible Inventory
of any Borrower that is used Inventory consisting of watercraft in one or more
of the Borrowers' possession in the aggregate less than * days from the date of
purchase by such Borrower which the Lender deems in its reasonable discretion to
be eligible. Eligible Inventory F shall include returned and repossessed
Inventory that is undamaged which any Borrower intends to resell to another
Person.
(CC) "Eligible Inventory G" shall mean such Eligible Inventory
of any Borrower that is parts and accessories Inventory that the Lender deems in
its reasonable discretion to be eligible. Eligible Inventory G shall include
returned and repossessed Inventory that is undamaged which any Borrower intends
to resell to another Person.
(DD) "Event of Default" shall have the meaning set forth in
Section 7.1 of this Agreement.
(EE) "Fixed Charge Coverage Ratio" for any 12 month period
shall mean a fraction, (i) the numerator of which is the ▇▇▇▇▇▇ Entities
earnings before interest, taxes, depreciation and amortization in such 12 month
period and (ii) the denominator of which are the payments of principal and
interest required to be made by the ▇▇▇▇▇▇ Entities on all indebtedness
(including, but not limited to, capitalized leases) to all lenders (including,
but not limited to, Lender and all Persons providing any Third Party Financing)
in such 12 month period.
(FF) "Floor Plan Arrangement" shall mean any Eligible
Inventory of any Borrower (i) which is the subject of a Free Floor Plan
Agreement with a Vendor that is in full force and effect; and (ii) for which the
invoice has been sent directly to Lender by the vendor of the Eligible Inventory
for payment by Lender directly to such vendor.
(GG) "Floor Plan Interest Rebate" and "Floor Plan Interest
Rebates" shall have the meanings set forth in Section 5.2 of this Agreement.
(HH) "Free Floor Plan Agreement" shall mean individually and
"Free Floor Plan Agreements" shall mean collectively, each agreement in form and
manner reasonably satisfactory to Lender by and between the Vendor of any
Eligible Inventory and Lender pursuant to which such Vendor has made an
unqualified agreement to provide free floor planning of such Eligible Inventory
for a specified period of time (a "Free Floor Plan Period") to a Borrower and
such Vendor shall be paying interest to Lender on such Eligible Inventory during
such Free Floor Plan Period.
(II) "Free Floor Plan Period" shall have the meaning set forth
in Section 1.1(II) of this Agreement.
(JJ) "General Intangibles" shall mean all general intangibles
(as such term is defined in the UCC) owned by any Borrower, including, but not
limited to goodwill, trademarks, trade names, licenses, patents, patent
applications, copyrights, inventions, franchises, books and records of any
Borrower, designs, trade secrets, registrations, prepaid expenses, all rights to
and payments of refunds, overpayments, rebates and return of monies, including,
but not limited to, sales tax refunds, tax refunds, tax refund claims and rights
to and payments of refunds, overpayments or overfundings under any pension,
retirement or profit sharing plans to the extent allowable by law and any
guarantee, security interests or other security held by or granted to any
Borrower to secure payment by an Account Debtor of any of the Accounts
Receivable.
(KK) "Guarantor" shall mean individually and "Guarantors"
shall mean collectively, each of the Persons listed on Schedule II attached
hereto.
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(LL) "Guarantor Security Agreement" and "Guarantors Security
Agreements" shall have the meaning set forth in Section 3.9 of this Agreement.
(MM) "Guaranty" shall mean individually and "Guaranties" shall
mean collectively each Guaranty of the Guarantors in form and manner
satisfactory to Lender.
(NN) "Guarantor Collateral" shall mean the following property
owned by any Guarantor, howsoever arising, wherever located and whether now
owned or existing or hereafter existing or acquired:
(i) all Accounts Receivable;
(ii) all Inventory;
(iii) any and all monies, reserves, deposits, deposit
accounts, securities, cash, cash equivalents, balances,
credits, and interest and dividends on any of the
above, of or in the name of such Guarantor, now or
hereafter with the Lender and any and all other like
property of any kind and description of or in the name
of such Guarantor, now or hereafter, for any reason or
purpose whatsoever, in the possession or control of, or
in transit to, the Lender or any agent or bailee for
the Lender;
(iv) all chattel paper, contract rights and instruments;
(v) all General Intangibles;
(vi) all books, records and computer records in any way
relating to the property described in clauses (i)
through (v) above; and
(vii) any and all substitutions, renewals, improvements,
replacements, additions and proceeds of (i) through
(vi) above, including, without limitation, proceeds of
insurance policies for the property described in
clauses (i) through (vi) above.
(OO) "Interest Rate " shall mean (i) if Libor and Adjusted
Libor is available and can be computed, Adjusted Libor, plus the Libor Interest
Rate Spread; or (ii) if for any reason Libor is not available or cannot be
computed pursuant to the provisions of this Agreement, the Prime Rate, plus the
Prime Interest Rate Spread.
(PP) "Interest Coverage Ratio" for any 12 month period shall
mean a fraction, (i) the numerator of which is the ▇▇▇▇▇▇ Entities' earnings
before interest and taxes in such 12 month period and (ii) the denominator of
which are the payments of interest made by the ▇▇▇▇▇▇ Entities on all
indebtedness to all lenders (including, bit not limited to, Lender and all
Persons providing any Third Party Financing) in such 12 month period.
(QQ) "Inventory" shall mean any and all goods, finished goods,
whole goods, materials, raw materials, work-in-progress, components or supplies,
wheresoever located and whether now owned or hereinafter acquired and owned by
any Borrower, including, without limitation, goods, finished goods, whole goods,
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materials, raw materials, work-in-process, components or supplies in transit,
wheresoever located, whether now owned or hereafter acquired by any Borrower,
which are held for demonstration, illustration, sale or lease, furnished under
any contract of service or held as raw materials, work-in-process for
manufacturing or processing or supplies for manufacturing or processing, and all
materials used or consumed in the business of any Borrower, and shall include
such other property, the sale or disposition of which has given rise to an
Accounts Receivable and which has been returned to or repossessed or stopped in
transit by or on behalf of any Borrower, but shall not include property owned by
third parties in the possession of any Borrower.
(RR) "Liabilities" shall mean all liabilities, indebtedness
and obligations of the Borrowers, and each of them, to the Lender, howsoever
created, arising or evidenced, whether now existing or hereafter arising,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, primary or secondary, joint or several,
whether existing or arising through discount, overdraft, purchase, direct loan,
participation, operation of law, written or oral agreement or agreement created
by EDI or otherwise, including, but not limited to, all liabilities,
indebtedness and obligations of any Borrower to the Lender, whether now existing
or hereafter arising, pursuant to any letter of credit, any standby letter of
credit, any floor plan agreement, or any of the Documents and reasonable outside
attorneys' and paralegals' fees or charges relating to the preparation of the
Documents and the enforcement of Lender's rights, remedies, powers and security
interests under this Agreement, including, but not limited to, the drafting of
any documents in the preparation and enforcement of the Loans.
(SS) "Libor" shall mean, as of the date of any determination,
the highest 30 day "Libor rate" (rounded upward, if necessary, to the nearest
1/16 of 1%) published in the "Money Rates" column of the The Wall Street Journal
on the first business day of the month. In the event The Wall Street Journal
shall, for any reason, fail or cease to publish the 30 day Libor rate of
interest, Lender shall choose a comparable publication to use as the basis for
the Libor rate of interest. Libor is the base interest rate charged by the
Lender on commercial loans to a substantial number of the Lender's good business
customers, but it is not necessarily the Lender's lowest interest rate charged
to any customer. Libor is subject to change by the Lender without notice of any
kind.
(TT) *.
(UU) "Line of Credit" shall have the meaning set forth in
Section 2.1 of this Agreement.
(VV) "Loan" shall mean individually, and "Loans" shall mean
collectively, each of the Revolving Loans.
(WW) "Lock Box Account" and "Lock Box Accounts" shall have the
meanings set forth in Section 3.3(B) of this Agreement.
(XX) "Material Adverse Change" shall mean a change in the
financial condition of any Borrower that would cause a reasonable person to have
concern regarding such Borrower's ability to continue operating in its normal
course of business.
(YY) "Maximum Credit Amount" shall mean $50,000,000.00, United
States funds.
(ZZ) "Mortgagee Waivers" shall have the meaning set forth in
Section 3.7 of this Agreement.
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*Indicates Confidential Treatment Requested. The redacted material has been
filed separately with the Commission.
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(AAA) "NADA " shall mean National Automobile Dealers
Association, or its equivalent chosen by Lender.
(BBB) "Net Loans" shall mean the Loans outstanding from time
to time minus the lesser of (i) $25,000,000.00; or (ii) the aggregate amount of
Eligible Inventory that is under a Free Floor Plan Period to Borrowers under a
Floor Plan Arrangement at the time of calculation.
(CCC) "Net Worth" shall mean the total amount of issued and
outstanding capital stock, plus paid in capital and retained earnings and less
treasury stock.
(DDD) "Objected Loan" and "Objected Loans" shall have the
meanings set forth in Section 2.7(A) of this Agreement.
(EEE) "Parent" shall mean ▇▇▇▇▇▇ Boats & Motors, Inc. and its
successors and assigns.
(FFF) "Permitted Indebtedness" shall mean (i) the Liabilities;
and (ii) current accounts payable arising in the ordinary course of business;
and (iii) the Subordinated Debt; and (iv) the indebtedness more fully set forth
on Exhibit 1.1(FFF) attached hereto; and (v) indebtedness up to $1,000,000.00 at
any time.
(GGG) "Permitted Liens" shall mean (i) for current taxes not
delinquent or taxes being contested in good faith and by appropriate proceedings
and for which adequate reserves have been established; and (ii) liens arising in
the ordinary course of business for sums not due or sums being contested in good
faith and by appropriate proceedings and for which adequate reserves have been
established, but not involving any deposits, advances or borrowed money or the
deferred purchase price of property or services; and (iii) liens in favor of
Lender; and (iv) liens specifically permitted pursuant to this Agreement; and
(v) those liens more fully set forth on Exhibit 1.1(GGG) attached hereto and
(vi) liens in favor of the holders of the Subordinated Debt that are expressly
subordinated to the liens in favor of Lender.
(HHH) "Person" shall mean individually, and "Persons" shall
mean collectively, any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise including, without limitation, any
instrumentality, division, agency, body or department thereof).
(III) "Pre-Default Rate" shall mean, as of the date of any
determination, the per annum rate equal to from time to time of the greater of
(A) _%; or (B) the Interest Rate.
(JJJ) *.
The next section is intentionally "(LLL)".
(LLL) "Prime Rate" shall mean, as of the date of any
determination, the highest "prime rate" for financial institutions located in
the United States of America published in the "Money Rates" column of the The
Wall Street Journal on the first business day of the month. In the event The
Wall Street Journal shall, for any reason, fail or cease to publish the prime
rate of interest, Lender shall choose a comparable publication to use as the
basis for the prime rate of interest. The Prime Rate is the interest rate
charged by the Lender on commercial loans to a substantial number of the
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*Indicates Confidential Treatment Requested. The redacted material has been
filed separately with the Commission.
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Lender's good business customers, but it is not necessarily the Lender's lowest
interest rate charged to any customer. The Prime Rate is subject to change by
the Lender without notice of any kind.
(MMM) "Quarterly Floor Plan Average Daily Balance" shall mean
the average daily balance of loans outstanding relating to Borrowers' Inventory
that is subject to a Floor Plan Arrangement as calculated on a monthly basis on
the last day of each month based on the number of days in the 3 month period
ending on the date of calculation.
(NNN) "Revolving Loan" and "Revolving Loans" shall have
the meanings set forth in Section 2.1 of this Agreement.
(OOO) "Reserve Percentage" means the maximum rate of all
reserve requirements (including, but not limited to, any marginal, emergency,
supplemental or other special reserves) imposed by any governmental Person on
Lender, pursuant to or relating to the Loans, including, but not limited to, by
the Board of Governors of the Federal Reserve System (or any successor), under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable month as of the first day of such month, but subject to
any amendments to such reserve requirement by such Board or its successor, and
taking into account any transitional adjustments thereto becoming effective
during such month. For purposes of this definition, any portion of the
Liabilities subject to a Libor based interest calculation shall be deemed to be
Eurocurrency liabilities as defined in Regulation D without benefit of or credit
for prorations, exemptions or offsets under Regulation D, provided Lender is
subject to such regulation with respect to or relating to the Loans.
(PPP) "Subordinated Debt" shall mean indebtedness due and
owing by any Borrower to any Person (whether such indebtedness shall be now
existing or hereinafter arising) which is permitted to exist pursuant to this
Agreement and is subordinated to the Liabilities, all as evidenced by the
agreements, documents and instruments attached to the Subordination Agreements.
(QQQ) "Subordination Agreement" shall mean individually, and
"Subordination Agreements" shall mean collectively, each agreement given to the
Lender from time to time by any Person with respect to the Subordinated Debt,
all in the form and manner reasonably satisfactory to Lender.
(RRR) "Tangible Net Worth" shall mean as of any date the sum
of Borrowers' (i) net worth as reflected on its last twelve-month consolidated
fiscal financial statements, plus (ii) net earnings since the end of such fiscal
year, both after provision for taxes and with Inventory determined on a first
in, first out basis plus (iii) Subordinated Debt, and plus (iv) unamortized
income, less the sum of Borrowers' (a) intangible assets, including, without
limitation, unamortized leasehold improvements, goodwill, franchises, licenses,
patents, trade names, copyrights, service marks, brand names, covenants not to
compete and any other asset which would be treated as an intangible under
generally accepted accounting principles; (b) prepaid expenses (however such
item shall not include prepaid inventory); (c) franchise fees; (d) notes,
Accounts Receivable and other amounts owed to it by any guarantor, Affiliate or
employee of any Borrower; (e) losses since the end of such fiscal year; and (f)
interest in the cash surrender value of officer's or shareholder's life
insurance policies.
(SSS) "Termination Date" shall mean the date 3 years from the
date of this Agreement.
(TTT) "Third Party Financing" shall mean such indebtedness
consented to in writing by Lender due from time to time by any Borrower to any
an all Persons solely relating to the financing of such Borrower.
(UUU) "Third Party Waiver" and "Third Party Waivers" shall
have the meanings set forth in Section 3.6 of this Agreement.
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separately with the Commission.
(VVV) "Transaction Statement" shall mean a statement which at
Lender's option or Borrower's reasonable request may be issued by Lender to any
Borrower from time to time which identifies the Inventory and Accounts
Receivable financed and/or the Loans made and the terms and conditions of
repayment therefor.
(WWW) "▇▇▇▇▇▇ Entity" shall mean individually, and "▇▇▇▇▇▇
Entites" shall mean collectively, any Borrower (other than a shareholder of any
Borrower which is not also a Borrower), any Guarantor and any Affiliate of any
Borrower that may exist at any time and from time to time, including, but not
limited to, the Persons listed on Exhibit 1.1(WWW) attached hereto.
(XXX) "UCC" shall mean the Uniform Commercial Code as enacted
and amended in the State of Illinois.
(YYY) "Vendor" shall mean individually, and "Vendors" shall
mean collectively, each vendor of Inventory to any Borrower.
(ZZZ) "Vendor Repurchase Agreement" shall mean individually
and "Vendor Repurchase Agreements" shall mean collectively, each agreement in
form and manner reasonably satisfactory to Lender by and between a Vendor of any
Inventory and Lender pursuant to which such Vendor has made an unqualified
agreement to repurchase such Inventory from Lender.
SECTION 1.2. OTHER TERMS. Accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with generally accepted accounting principles in effect from time to
time. Terms used in this Agreement which are defined in the UCC, shall, unless
the context indicates otherwise or are otherwise defined in this Agreement, have
the meanings provided for by the UCC.
ARTICLE TWO. LOANS
------------------
SECTION 2.1. LOAN AMOUNT. Subject to the terms and conditions of this
Agreement, on the date upon which all of the terms and conditions of the
Documents have been met or fulfilled to the satisfaction of Lender (the "Closing
Date"), the Lender shall make loans in the aggregate to the Borrowers on a
revolving basis (such loans being herein called individually a "Revolving Loan"
and collectively the "Revolving Loans") from time to time in such amounts as the
Borrowers may from time to time request up to the lesser of (A) the Maximum
Credit Amount; or (B) the Borrowing Base from time to time (the lesser of (A) or
(B) shall be referred to as the "Line of Credit"); provided, however, that (i)
Eligible Inventory shall be valued at the lower of cost or market value using
the first in, first out method of inventory accounting; and (ii) each borrowing
by any Borrower hereunder with respect to any Revolving Loan shall be in the
aggregate principal amount of at least (a) $1,000.00 if made directly to a
vendor of Inventory subject to a Vendor Repurchase Agreement; and (b)
$500,000.00 if made directly to Borrowers; and (iii) repayments from time to
time of the Line of Credit shall be available to be reborrowed pursuant to the
terms and conditions of this Agreement; and (iv) if the Revolving Loans
outstanding at any time or from time to time exceeds the advance limitations
described above, Borrowers shall pay on demand to the Lender such amount
necessary to eliminate such excess; and (v) the Lender's commitment to make
Revolving Loans shall remain in effect for a period to and including the
Termination Date; and (vi) notwithstanding anything else contained in this
Agreement, (a) upon the occurrence and continuance of any Event of Default, and
in every such event, the Lender may, in its sole discretion, immediately cease
to make Revolving Loans; and (b) Borrowers shall repay to the Lender on the
Termination Date all Revolving Loans, plus interest accrued to the date of
payment.
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SECTION 2.2. USE OF LOAN PROCEEDS. The proceeds of any borrowing by the
Borrowers pursuant to the Revolving Loans shall be used by the Borrowers solely
for refinancing existing indebtedness of the Borrowers, providing working
capital for Borrowers and paying for operating expenses and the fees, costs and
expenses of the Lender as provided for in this Agreement.
SECTION 2.3. REQUESTS FOR REVOLVING LOANS. Each request by the
Borrowers for any Revolving Loan under the Line of Credit shall be (A) made in
writing, by EDI or by telephone and if by telephone, shall be promptly confirmed
in writing; and (B) and shall be signed by a duly authorized officer of
Borrowers. Each Revolving Loan shall be sent by Federal Reserve wire transfer as
directed by Borrowers in writing or by EDI or through acceptance of an ACH Debit
by a Collecting Bank. Lender shall not be required to make more than one
Revolving Loan to Borrowers on any day. The date and amount of each Revolving
Loan made by the Lender and of each repayment of principal thereon received by
the Lender shall be recorded by the Lender in the records of the Lender and the
aggregate unpaid principal amount shown on such records shall be rebuttable,
presumptive evidence of the principal owing and unpaid on the Revolving Loans.
The failure to record any such amount on such records shall not, however, limit
or otherwise affect the obligations of the Borrowers to repay the principal
amount of the Revolving Loans together with all interest accruing thereon.
SECTION 2.4. INTEREST.
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(A) General. The outstanding principal balance of the Loans
and the other obligations hereunder shall bear interest before the occurrence of
an Event of Default on the average daily outstanding balance thereof, at the
Pre-Default Rate. Notwithstanding anything else contained in this Agreement,
with respect to the Loans, Borrowers shall only be obligated to pay interest on
the Net Loans outstanding from time to time. Interest will be calculated for the
actual number of days elapsed on the basis of a year consisting of 360 days.
Interest will accrue from the date a Loan is made or other obligation is
incurred. Interest accruing on Loans and other obligations hereunder prior to an
Event of Default shall be due and payable by Borrowers monthly in arrears for
each month immediately upon receipt of a billing statement from Lender for such
month; provided, however, that Borrowers agrees that Lender may provide for the
payment of any accrued interest hereunder by making a Revolving Loan on the
first day of any month for the prior month's accrued interest. Upon the
occurrence of an Event of Default and for so long as such Event of Default
continues, such interest shall accrue at the Default Rate and shall be payable
upon demand.
(B) Change of Law. Notwithstanding any other provisions of the
Documents, if at any time Lender shall determine in good faith that any change
in applicable laws, treaties or regulations or in the interpretation thereof
makes it unlawful for Lender to create or continue to maintain any Libor based
interest rate, it shall promptly so notify the undersigned and the obligation of
Lender to create, continue or maintain such Libor based interest rate under this
Agreement shall terminate until it is no longer unlawful for Lender to create,
continue or maintain such Libor based interest rate. Borrower, on demand, shall,
if the continued maintenance of any Libor based interest rate is unlawful, at
its option, either (i) thereupon prepay the outstanding principal amount of the
affected Libor based interest rate, together with all interest accrued thereon
and all other amounts payable to Lender with respect thereto under this
Agreement; or (ii) convert the principal amount of the Liabilities into a Prime
Rate based interest rate available hereunder, subject to the terms and
conditions of this Agreement.
(C). Unavailability of Deposits or Inability to Ascertain
Libor. Notwithstanding any other provision of this Agreement, if prior to the
commencement of any month, Lender shall determine that deposits of any Libor
based interest rate during such month are not readily available to Lender in the
relevant market or by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining Libor or Adjusted
Libor, then Lender shall promptly give notice thereof to Borrowers and the
obligations of Lender to create, continue or effect by conversion any Libor
based interest rate for such month shall terminate and the interest rate in this
Agreement shall be converted into a Prime Rate based interest rate; provided,
however, that when deposits in such amount and for any month shall again be
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readily available in the relevant market and adequate and reasonable means exist
for ascertaining Libor or Adjusted Libor, the undersigned then shall have the
option of reconverting the method of computing the interest rate on the
Liabilities into a Libor based interest rate.
(D) Taxes and Increased Costs. With respect to any Libor based
interest rate, if Lender shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over Lender or its lending branch or any Libor based interest rate
contemplated by this Agreement (whether or not having the force of law) shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or for the
account of, or loans by, or any other acquisition of funds or disbursements by,
Lender which is not in any instance already accounted for in computing the
interest rate applicable to such Libor based interest rate;
(ii) subject Lender, any Libor based interest rate or this
Agreement to any tax (including, without limitation, any United Stated interest
equalization tax or similar tax however named applicable to the acquisition or
holding of debt obligations and any interest or penalties with respect thereto),
duty, charge, stamp tax, fee, deduction or withholding in respect of this
Agreement, any Libor based interest rate or this Agreement, except such taxes as
may be measured by the overall net income or gross receipts of Lender or its
lending branches and imposed by the jurisdiction, or any political subdivision
or taxing authority thereof, in which Lender's principal executive office or its
lending branch is located;
(iii) change the basis of taxation of payments of principal
and interest due from the undersigned to Lender hereunder or under this
Agreement to the extent it evidences any Libor based interest rate (other than
by a change in taxation of the overall net income or gross receipts of Lender);
or
(iv) impose on Lender any penalty with respect to the
foregoing or any other condition regarding this Agreement, its disbursement, any
Libor based interest rate or this Agreement to the extent it evidences any Libor
based interest rate;
and Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to Lender of
creating or maintaining any Libor based interest rate hereunder or to reduce the
amount of principal or interest received or receivable by Lender (without
benefit of, or credit for, any prorations, exemption, credits or other offsets
available under any such laws, treaties, regulations, guidelines or
interpretations thereof), then the interest rate on the this Agreement shall be
converted to a Prime Rate based interest rate. If Lender makes such a
determination, Lender shall provide to the undersigned a certificate setting
forth the computation of the increased cost or reduced amount as a result of any
event mentioned herein in reasonable detail and such certificate shall be
conclusive if reasonably determined.
SECTION 2.5. PAYMENTS AND COLLECTIONS.
------------------------
(A) General. All payments hereunder shall be made, without
setoff or counterclaim, to Lender prior to 3:00 p.m. , Chicago time, on the date
due at its office in immediately available funds at Chicago, Illinois or at such
other place as may be reasonably designated by Lender to Borrowers in writing or
by EDI. Any payments received after such time shall be deemed received on the
next Business Day. Whenever any payment shall be stated to be due on a date
other than a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest, fees and charges, without penalty other than such additional interest,
fees and charges. Notwithstanding anything to the contrary herein, all items of
payment for purposes of (i) determining the occurrence of an Event of Default
shall be deemed received upon actual receipt by Lender at its bank, The Northern
Trust Bank, Chicago, Illinois or such bank as Lender may use as its depository
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bank from time to time, unless subsequently dishonored for any reason; (ii)
calculating the Borrowing Base shall be applied by Lender against the principal
of and/or interest on any Loans on the Business Day deemed received pursuant to
this Section by Lender at its bank, The Northern Trust Bank, Chicago, Illinois
or such bank as Lender may use as its depository bank from time to time; and
(iii) calculating interest shall be deemed to have been applied by Lender
against the principal of and/or interest on any Loan on the Business Day
received by Lender, whether such payment is by check, wire, ACH debit or other
means. Lender may at any time in its reasonable business discretion change the
time for payment of future Loans or change the terms of such financing by giving
Borrowers a thirty (30) day notice specifying such change, provided, however,
that if Lender desires to reduce any advance rate on any specific Eligible
Inventory, then if Borrowers request in writing to have Lender release its lien
on such specific Eligible Inventory, then Lender shall reasonably review such
request and if Lender releases such lien, on such specific Eligible Inventory,
such release shall be without penalty to Borrowers pursuant to Section 2.6(A) of
this Agreement.
(B) Revolving Loans. Borrowers shall repay to the Lender
on the Termination Date all Revolving Loans, plus interest accrued to the date
of payment.
(C) Special Draws of the Line of Credit. Lender is hereby
authorized to make a Revolving Loan with the proceeds disbursed directly to
Lender to make any required payments of principal, interest, fees and/or costs
currently due and owing by Borrowers and not yet paid pursuant to the Documents.
SECTION 2.6. SPECIAL LINE OF CREDIT FEES.
---------------------------
(A) Early Termination. If the Borrower voluntarily terminates
the Line of Credit, contemporaneously with such termination, Borrower shall pay
Lender an amount equal to 1/2% of the Maximum Credit Amount if such termination
occurs on or before the day prior to the Termination Date.
SECTION 2.7. STATEMENTS.
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(A) Acceptance. Borrowers agree to pay the Loans and interest
on the Loans in accordance with this Agreement and the other Documents.
Borrowers agrees that the terms and conditions stated in each Transaction
Statement shall be accepted as to the Loans identified therein if not objected
to in writing by Borrowers within 60 days after the date of such statement. If
Borrowers object to any specific Loans (individually, an "Objected Loan" and
collectively, the "Objected Loans"), then where applicable the Objected Loans
shall be subject to the terms and conditions of the most recently accepted
Transaction Statement related to Loans covering the same model of Inventory or
Accounts Receivable financed, as applicable. If there is no such previously
accepted Transaction Statement relating to the Objected Loans, Borrowers agree
that, in addition to any other right or remedy Lender may have under the
Documents, the Objected Loans related to the objected Transaction Statement
shall, notwithstanding any other provision of the Documents, be due and payable
within 90 days after the date of such Objected Loans and interest shall accrue
at the interest rate in effect pursuant to the Documents.
(B) Adjustment. Subject to Sections 2.6(A) and (C) of this
Agreement, any statement with respect to any Liabilities sent to Borrowers by
Lender, including without limitation any Transaction Statement, shall be subject
to subsequent adjustment by Lender but shall be presumed accurate evidence of
Liabilities and information covered thereby, unless Lender shall have received
written notice from Borrowers specifying any error within 60 days after the date
of such statement. Notwithstanding such notice by Borrowers to Lender,
Borrowers' obligation to make payments to Lender with respect to such statement
shall not be waived or extended unless and until Lender consents in writing to
such waiver or extension.
(C) Savings Provisions. All agreements between Lender and any
Borrower, whether now existing or hereafter arising, and whether written or
oral, are hereby limited by this Section. In no contingency, whether by reason
of acceleration or the maturity of the amounts due hereunder or otherwise, shall
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interest contracted for, charged, received, paid or agreed to be paid to Lender
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable to Lender in excess
of the maximum lawful amount, the interest shall be reduced to the maximum
amount permitted under applicable law; and if, from any circumstance, Lender
shall have received anything of value deemed interest by applicable law, in
excess of the maximum lawful amount, an amount equal to any excess of interest
shall be applied to the reduction of the principal amount of Liabilities to
Lender and not to the payment of interest, or if such excess interest exceeds
the unpaid balance of the principal amount of Liabilities to Lender, such excess
shall be refunded to Borrowers. All interest paid or agreed to be paid to
Lender, to the extent permitted by applicable law, shall be amortized, prorated,
allocated and spread throughout the full term of this Agreement until payment in
full of all principal obligations owing by Borrowers so that interest for such
full term shall not exceed the maximum amount permitted by applicable law.
SECTION 2.8. TERMS AND TERMINATION. The term of this Agreement, unless
sooner terminated as provided in this Agreement, shall be until the Termination
Date; provided, however, that Lender may terminate this Agreement immediately by
written notice to Borrowers in whole or only with respect to certain Inventory
if Borrowers shall lose or relinquish any right to sell or deal in any product
line of Inventory that would materially affect Borrowers ability to operate in
the ordinary course of business, or if Borrowers fails to pay any of the
Objected Loans due to an objection to the terms of any Transaction Statement and
Lender determines that the Transaction Statement does not contain a bona fide
error. Upon termination of this Agreement, all Liabilities to Lender (or, if
this Agreement is terminated only with respect to certain Inventory, Liabilities
to Lender relative to such Inventory) shall become immediately due and payable
without notice or demand. Upon any termination, Borrowers shall remain liable to
Lender for all Liabilities to Lender, including without limitation interest,
fees, charges and expenses arising prior to or after the effective date of
termination, and all of Lender's rights and remedies and its security interest
shall continue until all Liabilities to Lender are paid and all obligations of
Borrowers are performed in full. No provision of this Agreement shall be
construed to obligate Lender to make any Loans, following the occurrence of any
Event of Default.
ARTICLE THREE. COLLATERAL
-------------------------
SECTION 3.1. SECURITY INTERESTS. To secure payment of the Liabilities,
each Borrower hereby irrevocably pledges, assigns, transfers, conveys and sets
over to the Lender and hereby grants to the Lender a first and paramount
security interest in and to the Collateral owned by it, howsoever arising,
wherever located and whether now owned or existing or hereafter existing or
acquired. The parties acknowledge and agree that Lender shall have a purchase
money security interest in and to all Inventory of the Borrowers as provided by
law.
SECTION 3.2. PERFECTION AND FILING REQUIREMENTS. Each Borrower shall
perform any and all acts reasonably requested by the Lender to establish,
maintain and continue the Lender's security interests and liens in the
Collateral, including but not limited to, executing financing statements and
such other instruments and documents when and as reasonably requested by the
Lender.
SECTION 3.3. COLLECTION OF ACCOUNTS RECEIVABLE. Unless otherwise
provided herein, Borrowers may collect at their own expense the Accounts
Receivable in the ordinary course of business; provided, however, that
Borrowers' authorization to collect the Accounts Receivable is subject to the
following:
(A) The Lender, may, in its sole and reasonable discretion,
notify any or all of the Account Debtors at any time (i) whether before or after
the occurrence of an Event of Default, that the Accounts Receivable have been
assigned to the Lender; and/or (ii) following the occurrence of an Event of
Default, that all further payments on the Accounts Receivable should be paid
solely to the Lender. When requested by the Lender after the occurrence of an
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Event of Default, Borrowers at their expense will notify or cause to be notified
any or all Account Debtors to pay directly to the Lender any sum or sums then
due or to become due on the Accounts Receivable or any part thereof and all
bills and statements thereafter sent by Borrowers to such Account Debtors shall
state that the same have been assigned to the Lender and are payable solely to
the Lender.
(B) The Lender, at any time whether before or after the
occurrence of an Event of Default, may in its sole and reasonable discretion,
require any Borrower to establish and maintain "lock box" accounts
(individually, a "Lock Box Account" and collectively, the "Lock Box Accounts"),
and, Borrowers, at their expense, will notify or cause to be notified all
Account Debtors to pay directly any sum or sums then due or to become due on the
Accounts Receivable to such Lock Box Accounts. So long as no Event of Default
has occurred, the Lock Box Accounts shall be subject to the control of
Borrowers. Following the occurrence of any Event of Default, the Lock Box
Accounts shall be subject to the control of Lender. In the event Lender requires
Lock Box Accounts to be established pursuant to this Section, Borrowers shall
establish the Lock Box Accounts with such Collecting Banks reasonably acceptable
to Lender to which all Account Debtors shall directly remit all payments on
Accounts Receivable and in which each Borrower will immediately deposit, in
kind, all cash and other payments made for Inventory and all other proceeds of
Collateral. The Collecting Banks shall acknowledge and agree, in a manner
reasonably satisfactory to Lender, that: all payments made to Lock Box Accounts
are the sole and exclusive property of Lender; they have no right to setoff
against Lock Box Accounts; and they will transfer (i) by wire transfer of
immediately available funds (ii) by acceptance of an ACH Debit or (iii) by any
other method, immediately available funds in a manner satisfactory to Lender,
funds deposited into Lock Box Accounts (collectively, the "Collection Accounts")
to Lender on a daily basis in such bank and account as Lender shall designate
or, in the case of an ACH Debit, as presented for acceptance. All payments made
to the Collection Accounts or otherwise received by the Collecting Banks or
Lender, whether on the Accounts Receivable or as proceeds of other Collateral or
otherwise, shall following the occurrence of any Event of Default be under the
sole dominion and control of Lender and will be applied on account of
Liabilities as provided herein. Following the establishment of any Lock Box
Accounts pursuant to this Section, Borrowers and their Affiliates shall receive,
as trustee for Lender, any monies, checks, notes, drafts or any other payments
relating to and/or proceeds of Accounts Receivable or other Collateral which
come into the possession or under the control of any Borrower or their
Affiliates and immediately remit, or cause to be remitted, the same in kind to
Lender at Lender's office set forth above. Borrowers shall pay Lender any and
all reasonable fees, costs and expense which Lender incurs in connection with
Collection Accounts and with collecting any check or item of payment received
and/or delivered to any Collecting Bank or Lender on account of Liabilities to
Lender. Borrowers shall reimburse Lender for (i) any loss, cost or damages
resulting from claims asserted by the Collecting Banks in connection with
Collection Accounts or any returned or uncollected checks or other items
received by the Collecting Banks and (ii) any amount paid to any Collecting Bank
arising out of Lender's indemnification of such Collecting Banks relating to a
Collection Account.
(C) In the event an Account Debtor is notified under
Subsections 3.3(A) or 3.3(B) of this Agreement or one or more Events of Default
have occurred under the terms of this Agreement, the Lender shall have and
succeed to all rights, remedies, securities and liens of each Borrower in
respect to such Accounts Receivable or other Collateral, including, but not
limited to, the right of stoppage in transit of any merchandise, guarantees or
other contracts or suretyship with respect to any such merchandise, warranties,
unpaid seller's liens, statutory liens, artisans' liens, or the right to other
collateral security held by or to which such Borrower is entitled for the
payment of any such merchandise, and shall have the right to enforce the same in
its name or to direct the enforcement thereof by such Borrower for the benefit
of the Lender, and such Borrower shall, at the reasonable request of the Lender,
deliver to the Lender a separate written assignment of any of the same. The
Lender, however, shall not incur any obligation or liability of any Borrower to
any Account Debtor, including, but not limited to, obligations or liabilities
pursuant to any contract, agreement, warranty, guarantee, judicial decree or
jury award. The Lender, in such an event, is also hereby irrevocably authorized
to receive, open and dispose of all mail addressed to each Borrower, to notify
the Post Office authorities to change the address for delivery of such
Borrower's mail to an address designated by the Lender, to endorse such
Borrower's name on all notes, checks, drafts, bills of exchange, money orders,
commercial paper of any kind whatsoever, and any other instruments or documents
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received howsoever in payment of the Accounts Receivable, or any part thereof,
and the Lender or any officer or employee thereof is hereby irrevocably
constituted and appointed agent and attorney-in-fact for such Borrower for the
foregoing purpose.
(D) Borrower in the aggregate shall not collect, compromise or
accept any sum in full payment or satisfaction of any of the Accounts Receivable
totaling more than $50,000.00 in the aggregate for materially less than the
amount due without the express written consent of the Lender, except in the
ordinary course of business. The consent of Lender required in this clause shall
not be unreasonably withheld or delayed.
(E) The Lender may directly request any Account Debtor for a
written confirmation of the Accounts Receivable at any reasonable time whether
before or after the occurrence of an Event of Default.
(F) All collections of Accounts Receivable through the Lock
Box Accounts shall be credited against the Line of Credit on such Business Day
as the date of receipt by Lender of immediately available funds of such
collections.
SECTION 3.4. USE OF COLLATERAL. Borrowers shall at all times keep the
Collateral in good condition and repair and free and clear of all unpaid charges
(including, but not limited to, taxes), liens and encumbrances, and shall pay or
cause to be paid all obligations as they come due, including but not limited to,
mortgage payments, real estate taxes, assessments and rent due on the premises
where the Collateral is or may be located, except for charges, liens,
encumbrances and obligations being contested in good faith by Borrowers and for
which adequate reserves have been established. Borrowers agree that (except as
provided in the immediately preceding sentence) in the event Borrowers fail to
pay such obligations, the Lender may, at its sole and arbitrary discretion, pay
such obligations for the account of Borrowers. The Lender may, in its sole
discretion, discharge taxes, liens or security interests or other encumbrances
at any time levied or placed on the Collateral and may, in its sole and
arbitrary discretion, pay for the maintenance and preservation of the
Collateral. Any payments made by the Lender pursuant to this Section shall be
repayable to the Lender by Borrowers immediately upon the Lender's demand
therefor, with interest at a rate equal to the highest interest rate described
in this Agreement in effect from time to time during the period from and
including the date funds are so expended by the Lender to the date of repayment,
and any such amounts due and owing the Lender shall be an additional obligation
of Borrowers to the Lender secured hereunder.
SECTION 3.6. THIRD PARTY WAIVERS. Borrower shall deliver to Lender
landlord waivers, bailee waivers, warehouse waivers or other third party waivers
required by Lender (individually, a "Third Party Waiver" and collectively, the
"Third Party Waivers") executed by the lessors, bailors, warehouse owners and/or
operators and consignors of or at the Collateral Locations used by Borrower, all
in form and manner reasonably satisfactory to Lender.
SECTION 3.7. MORTGAGEE WAIVER. Borrowers shall deliver to Lender a
mortgagee waivers (the "Mortgagee Waivers") executed by the mortgagees of the
Corporate Real Property, in form and manner satisfactory to Lender.
SECTION 3.8 GUARANTIES. The Liabilities, including, but not limited to,
all obligations of each of the Borrowers to Lender under or in connection with
the Documents, shall be unconditionally guaranteed by the Guarantors; provided,
however, that notwithstanding anything else contained in this Agreement, the
maximum amount of liability for the Liabilities of each Guarantor shall be
unlimited. To evidence the Guaranties pursuant to this Section, the Guarantors
shall execute and deliver to Lender the Guaranties. In the event at any time or
from time to time Parent establishes any subsidiary that owns assets
substantially similar to the Collateral that does not become a Borrower, such
Person shall, contemporaneously with their establishment (i) unconditionally
guaranty the Liabilities in substantially the same form as the Guaranties; (ii)
acknowledge, agree and consent to the terms and provisions of the Documents; and
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(iii) be included within the term "Guarantor" as used in this Agreement, and
execute and deliver a Guaranty and a Guarantor Security Agreement.
SECTION 3.9 GUARANTOR COLLATERAL. As additional security for the
payment and performance of the Liabilities and the payment and performance of
each Guarantors' Guaranty, each Guarantor shall pledge and grant a security
interest to Lender in and to the Guarantor Collateral owned by such Guarantor.
To evidence to these pledges and grants of security interest pursuant to this
Section, Borrower shall cause each Guarantor to execute and deliver to Lender a
security agreement (individually a "Guarantor Security Agreement" and
collectively the "Guarantor Security Agreements") in form and manner
satisfactory to Lender.
SECTION 3.10. CROSS COLLATERALIZATION. Each Borrower acknowledges and
agrees that (A) the Collateral secures all of the Liabilities, including, but
not limited to, the Loans and (B) Lender shall not release any lien on the
Collateral unless and until all the Liabilities (whether arising pursuant to
this Agreement or otherwise) are paid in full; provided, however, that nothing
contained in this Section shall preclude Borrowers from selling Collateral in
the ordinary course of business.
ARTICLE FOUR. REPRESENTATIONS AND WARRANTIES
--------------------------------------------
SECTION 4.1. BORROWER. Each Borrower represents and warrants to the
Lender that:
(A) Organization, Etc. It is duly organized, validly existing
and in good standing under the laws of the State of its incorporation and is
duly qualified and in good standing or has applied for qualification as a
foreign corporation authorized to do business in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required.
(B) Authorization: No Conflict. The execution and delivery of
the Documents are all within the corporate powers of it, have been duly
authorized by all necessary action, have, or by the time of their execution and
delivery shall have, received all necessary governmental or regulatory approval
(if any shall be required), and do not and will not contravene or conflict with
any provision of (i) law, rule, regulation or ordinance, (ii) the articles of
incorporation or by-laws of it; or (iii) any agreement binding upon it or any of
their properties, as the case may be.
(C) Validity and Binding Nature. The Documents executed by it
are the legal, valid and binding obligations of it, enforceable against it, in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization and other similar laws of general
application affecting the rights and remedies of creditors and except as the
availability of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
(D) Title to Assets. Except as set forth in Section 4.1(E) of
this Agreement, it has good and marketable title to all assets owned by it,
including, but not limited to, the Collateral, subject to no (i) liens,
encumbrances, security interests, or mortgages; (ii) zoning, building, fire,
health or environmental code violations of any governmental authority; and (iii)
violations of any covenants, conditions or restrictions of record.
(E) Liens. None of its assets are subject to any lien,
encumbrance or security interest, except for Permitted Liens.
(F) Financial Statements. Its financial statements which have
been previously delivered to Lender have been prepared on a basis and in
conformity with generally accepted accounting principles consistently applied,
are true and correct and fairly present the consolidated financial condition of
it as at the dates of such financial statements and the results of its
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operations for the periods then ended, and since the date of the latest
financial statement delivered to Lender there has been no Material Adverse
Change in the financial condition or operations.
(G) Litigation and Contingent Liabilities. No litigation or
arbitration, administrative or governmental proceedings are pending or
threatened against it that would, if adversely determined, materially and
adversely affect its financial condition or continued operations.
(H) No Violations of Laws. It (i) is not in material violation
of any law, ordinance, rule, regulation, judgment, decree or order of any
federal, state or local governmental body or court; and (ii) has obtained all
required permits, certificates, licenses, approvals and other authorizations
from governmental agencies and entities (whether federal, state or local)
necessary to carry on its operation.
(I) Burdensome Obligations. Except for indentures, agreements,
leases, contracts, deeds or other instruments entered into in the ordinary
course of business that are not otherwise precluded or prohibited pursuant to
the Documents, it is not a party to any indenture, agreement, lease, contract,
deed or other instrument, or subject to any partnership restrictions or has any
knowledge of anything which would materially and adversely affect or impair the
business, assets, operations, properties, or condition, financial or otherwise,
of it.
(J) Taxes. All federal, state and local tax returns required
to be filed by it have been filed with the appropriate governmental agencies and
all taxes due and payable by it have been timely paid.
(K) No Default or Event of Default. No event or condition
exists under any material agreement, instrument or document to which it is a
party or may be subject, or by which it or any of its properties are bound,
which constitutes a default or an event of default thereunder, or will, with the
giving of notice, passage of time, or both, would constitute a default or event
of default thereunder.
(L) Employee Benefit Plans. Each employee benefit plan, if
any, (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended from time to time) maintained by it complies in all material
respects with all applicable requirements of law and regulations and all
payments and contributions required to be made with respect to such plans have
been timely made.
(M) Federal Laws and Regulations. It is not (i) an "investment
company" or a company "controlled", whether directly or indirectly, by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended; (ii) a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended; or (iii) engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System).
(N) Fiscal Year. The fiscal year of it ends on September
30 of each year.
(O) Officers of It. As of the Closing Date, each Person listed
below holds the respective office or offices in it set forth next to such
Person's name:
Name Office
---- ------
▇▇▇▇ ▇▇▇▇▇▇ President
▇▇▇ ▇▇▇▇▇▇▇▇▇ Executive Vice President
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▇▇▇▇ ▇▇▇▇▇▇▇ Chief Financial Officer, Secretary
and Treasurer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Assistant Secretary
(P) Genuineness of Accounts Receivable. All the Accounts
Receivable of it are genuine and were incurred in the ordinary course of
business and are not in default.
(Q) Collateral Locations. All of the tangible Collateral
of each Borrower is located at the Collateral Locations for such Borrower.
(R) Subordinated Debt. The agreements, documents and
instruments attached to the Subordination Agreements being executed and
delivered contemporaneously with the execution of this Agreement are true and
correct copies of all of the documentation evidencing the Subordinated Debt of
it in existence as of the date of this Agreement and represent the complete
agreement of it to make payments with respect to the Subordinated Debt, and
there have been no changes, modifications, alterations or amendments to such
agreements, documents and instruments.
ARTICLE FIVE. COVENANTS
-----------------------
SECTION 5.1. BORROWERS. Until all the Liabilities are paid in full,
each Borrower covenants and agrees that:
(A) Financial Statements and Certificates. It will furnish to
the Lender (i) within 90 days after the close of each fiscal year of it, a copy
of the annual consolidated audited report of the Borrowers consisting of at
least a balance sheet, statement of operating results and retained earnings,
statement of cash flows and notes to financial statements, profit and loss
statement and statement of changes in financial position of it prepared on a
consolidating and consolidated basis and in conformity with generally accepted
accounting principles, duly prepared by certified public accountants of
recognized standing selected by it and approved by the Lender, together with a
certificate from such accountants to the effect that, in making the examination
necessary for the signing of such annual report by such accountants, they have
not become aware of any Event of Default that has occurred and is continuing, or
if they have become aware of any such event, describing it and the steps, if any
taken or being taken to cure it; (ii) within 45 days after the end of each
fiscal quarter of it, (a) a copy of an unaudited consolidated financial
statement of the Borrowers prepared in the same manner as the report referred to
in clause (i) above, signed by the chief financial officer or Corporate
Controller of Parent and consisting of at least a balance sheet as at the close
of such quarter, statements of earnings, cash flow, income and source and
application of funds for such quarter and for the period from the beginning of
such fiscal year to the close of such quarter; and (b) a certificate signed by
the President or chief financial officer of it providing that (I) the financial
statements being provided to Lender pursuant to clauses (ii)(a) are true and
correct and (II) no Event of Default has occurred, including, but not limited
to, no Event of Default with respect to any of the financial covenants contained
in the Documents; and (iii) within 30 days after the end of each month, (1) a
statement showing age and reconciliation of its Accounts Receivable and accounts
payable for the preceding month and a status of its Inventory showing location,
age, components and value, in such form and detail as Lender may reasonably
request; and and (2) a certificate signed by the President or chief financial
officer of it providing that the financial statements being provided to Lender
pursuant to clause (iii)(1) above is true and correct; and(iv) if requested by
Lender in writing, (1) documentation to support the Accounts Receivable
statement set forth in clause (iii)(1) above, including, but not limited to,
sales reports, cash receipts reports and credit and debit journals; and/or (2)
copies of all of its bank statements and reconcilliations thereof, including,
but not limited to, Lock Box Accounts statements; (v) on the fifteenth (15th)
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day of each month, (or if such day is not a Business Day, the next day that is a
Business Day) a completed Lender's standard form borrowing base certificate,
which shall be executed by the President or the chief financial officer of the
Borrowers, and shall contain information as of the last Business Day of the
immediately preceding month; (vi) at least 45 days prior to the end of each of
its fiscal years, a copy of its Business Plan for the immediately following
fiscal year; (vii) schedules of Accounts Receivable in form and manner
acceptable to Lender (which shall include current addresses and telephone
numbers of Account Debtors) as often as requested by Lender, (viii) at Lender's
request, Borrowers shall make available to Lender for inspection copies (or, at
Lender's request after an Event of Default, originals) of all orders, invoices,
and similar agreements and documents, and all original shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for
Inventory, the sale or disposition of which has resulted in Accounts Receivable;
(ix) the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any Accounts
Receivable, immediately upon receipt thereof and in the same form as received,
with all necessary endorsements to enable Lender to enforce the same; (x) copies
of all federal and state tax returns of it, including, but not limited to,
requests for extensions of such tax returns, when and as filed; (xi) copies of
any and all reports, examinations, notices, warnings and citations issued by any
governmental or quasi-governmental (whether federal, state or local), unit,
agency, body or entity with respect to it; and (xii) such other information as
the Lender from time to time reasonably requests. Borrowers' failure to deliver
or execute and deliver any of the items listed in this Section shall not affect
or limit Lender's security interest in the Collateral.
(B) Books, Records and Inspections. It will (i) maintain
complete and accurate books and records; (ii) permit reasonable access by the
Lender to the books and records of it; (iii) make entries on its books and
records, in form and manner reasonably satisfactory to Lender, disclosing
Lender's security interest in the Collateral and shall keep a separate account
on its books of all collections received thereon; and (iv) permit the Lender,
upon reasonable notice, to inspect the properties, whether real or personal, and
operations of it. Without limitation of the foregoing, it acknowledges and
agrees that Lender shall (a) conduct an annual complete field audit of all of
the Borrowers: and (b) conduct Inventory inspections at any time and from time
to time, including, but not limited to, quarterly inventory audits; and (c)
audit at least 20% of all Inventory at all locations of Borrowers, including,
but not limited to, each of the Collateral Location, at least on an annual
basis; and (d) audit Accounts Receivable not less than annually.
(C) Insurance. It will maintain such insurance as may be
required by law and such other insurance to the extent and against such hazards
and liabilities as is customarily maintained by companies similarly situated.
All property insurance policies with respect to the Collateral shall contain
loss payable clauses in form and substance reasonably satisfactory to the
Lender, naming the Lender as a loss payee as its interest may appear, and
providing that such policies and loss payable clauses may not be canceled,
amended or terminated unless at least thirty (30) days prior written notice
thereof has been given to the Lender. All insurance proceeds received by the
Lender may be retained by the Lender, in its sole discretion, for application to
the payment of any of the principal or interest on the Liabilities then due and
owing the Lender by it as the Lender may determine.
(D) Taxes and Liabilities. It will pay when due all taxes,
assessments and other liabilities except as contested in good faith and by
appropriate proceedings and for which adequate reserves have been established.
(E) Restriction on Dividends. It will not declare or pay, or
authorize a declaration or payment of, any cash dividend in respect of, any
class of its capital stock if an Event of Default has occurred or will occur
(including, but not limited to, following any notice and cure periods) as a
result of any such dividend.
(F) Indebtedness. It will not incur or permit to exist any
indebtedness or liability for borrowed money or for the deferred purchase price
of any property or any services, except for Permitted Indebtedness.
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(G) Liens. It will not create or permit to exist any mortgage,
pledge, title retention lien, or other lien, encumbrance or security interest
with respect to any Collateral now owned or hereafter acquired and owned, except
for Permitted Liens.
(H) Guaranties, Loans or Advances. It will not become or be a
guarantor or surety of, or otherwise become or be responsible in any manner with
respect to any undertaking of any other Person, or make or permit to exist any
loans or advances to any other Person, except (i) for the endorsement, in the
ordinary course of collection, of instruments payable to it or to its order; and
(ii) guaranties given to Lender; and (iii) guaranties given to DFS and/or any
Person providing any financing to any ▇▇▇▇▇▇ Entity in form and manner
satisfactory to Lender.
(I) Mergers, Consolidations and Sales. It will not be a party
to any merger or consolidation with, or purchase or otherwise acquire all or
substantially all of the assets or stock of any class of, or any partnership,
ownership or joint venture interest in, any other Person, or sell, transfer,
convey or lease all or any substantial part of its assets, or sell or assign,
with or without recourse, any Accounts Receivable, except (i) with the prior
written consent of the Lender; or (ii) solely with respect to a merger,
consolidation, purchase or other acquisition, if Parent provides Lender with a
certificate signed by the President or chief financial officer of it (a)
describing the nature of such merger, consolidation, purchase or other
acquisiton; and (b) providing that no Event of Default has occurred, or will
occur (including, but not limited to, following any notice and cure periods) as
a result of any such merger, consolidation, purchase or other acquisition,
including, but not limited to, no Event of Default with respect to any of the
financial covenants contained in the Documents; or (iii) acquisitions that in
the aggregate do not exceed five percent (5%) of the value of the Borrowers'
assets as calculated from time to time.
(J) Self-Dealing. It shall not purchase, acquire or lease any
property from, or sell, transfer or lease any property to (a) any Affiliate, (b)
any officer, director or shareholder of it or any Affiliate, (c) any guarantor
of the Liabilities or (d) any member of the immediate family of any of the
foregoing, except on terms comparable to the terms which would prevail in an
arms-length transaction between unaffiliated third parties.
(K) Stock. It will neither purchase, retire, redeem or
otherwise acquire any shares nor issue any additional shares of any class of
capital stock of it, except (i) that it may issue additional shares of stock in
connection with any acquisition assets of another Person permitted under this
Agreement; and (ii) the repurchase of up to $1,000,000.00 in the aggregate of
its capital stock in the open market.
(L) Violation of Law. It will not materially violate any law,
statute, ordinance, rule, regulation, judgment, decree, order, writ or
injunction of any federal, state or local authority, court, agency, bureau,
board, commission, department or governmental body.
(M) Unconditional Purchase Obligations. It will neither enter
into or be a party to any contract for the purchase of materials, supplies or
other property or services if such contract requires that payment be made by it
regardless of whether or not delivery is ever made of such materials, supplies
or other property or services.
(N) Maintenance of Business. It will preserve its corporate
existence in the jurisdiction of establishment, as that may be from time to
time, and it will not operate in any business other than a business
substantially the same as the business of it as in effect on the date of this
Agreement.
(O) Employee Benefit Plans. It will (i) maintain each employee
benefit plan as to which it may have any liability in substantial compliance
with all applicable requirements of law and regulations; (ii) make all payments
and contributions required to be made pursuant to such plans in a timely manner;
and (iii) neither establish any new employee benefit plan, agree or contribute
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to any multi-employer plan nor amend any existing employee pension benefit plan
in a manner which would increase its obligation to contribute to such plan.
(P) Use of Proceeds. It will not permit any proceeds of the
Loans to be used either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying any margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended from time to time.
(Q) Good Title. It shall at all times maintain good and
marketable title to all of its assets.
(R) Officers of It. Each Person listed below will at all times
hold the respective office or offices in it next to such Person's name:
Name Office
---- ------
▇▇▇▇ ▇▇▇▇▇▇ President
▇▇▇ ▇▇▇▇▇▇▇▇▇ Executive Vice President
▇▇▇▇ ▇▇▇▇▇▇▇ Chief Financial Officer, Secretary
and Treasurer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Assistant Secretary
(S) Eligible Inventory. If it determines that a previously
scheduled item of Eligible Inventory ceases to be an Eligible Inventory under
any of the criteria described in Section 1.1 of this Agreement, then it shall
immediately notify the Lender thereof.
(T) Certification. All reports, certificates, schedules,
notices and financial information submitted by it to the Lender pursuant to this
Agreement shall be certified as true and correct by the President or the chief
financial officer of it.
(U) Collateral Locations; Material Adverse Change. It shall
give the Lender (i) 30 days prior written notice of the location of any
Collateral at any place other than the Collateral Locations of it; and (ii)
prompt written notice of any event, occurrence or other matter which has
resulted or may result in a Material Adverse Change in its financial condition
or business operations.
(V) Fiscal Year. The fiscal year of it shall end on September
30 of each year.
(W) Unsubordinated Debt To Tangible Net Worth Ratio. It shall
not cause, suffer or permit the ratio of (i) the ▇▇▇▇▇▇ Entities' total
consolidated liabilities minus Subordinated Debt to (ii) the ▇▇▇▇▇▇ Entities'
Tangible Net Worth plus Subordinated Debt to be greater than the following at
the end of each of its fiscal quarters:
6.25 to 1.0 December 31 of each fiscal year
6.0 to 1.0 March 31 of each fiscal year
5.0 to 1.0 June 30 and September 30 of each fiscal year
(X) Tangible Net Worth. It shall not cause, suffer or permit
the ▇▇▇▇▇▇ Entities' Tangible Net Worth plus Subordinated Debt to be less than
the following, all as measured at the end of each of its fiscal quarters:
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$18,000,000.00 December 31, 1999 through March 30, 2000
$20,000,000.00 March 31, 2000 through June 29, 2000
$22,500,000.00 June 30, 2000 and at all times thereafter
(Y) Interest Coverage Ratio. The ▇▇▇▇▇▇ Entities shall
maintain a Interest Coverage Ratio of not less than 2.0 to 1.0, all as measured
at the end of each fiscal quarter of it, as calculated for the 12 month period
ending at the end of such fiscal quarter.
(Z) Fixed Charge Coverage Ratio. The ▇▇▇▇▇▇ Entities shall
maintain a Fixed Charge Coverage Ratio of not less than the following, all as
measured at the end of each fiscal quarter of it, as calculated for the 12 month
period ending at the end of such fiscal quarter:
1.2 to 1.0 Closing Date through June 29, 2000
1.5 to 1.0 June 30, 2000 and at all times thereafter
(AA) Subordinated Debt. Except as set forth in the Subordina-
tion Agreements, it will not make any payments pursuant to the Subordinated
Debt.
(BB) Returns of Inventory. Borrowers shall promptly notify
Lender of all returns of Inventory received by Borrowers, in the reports to be
provided to Lender pursuant to Section 5.1 (A) of this Agreement. After an Event
of Default has occurred, no return of Inventory shall be accepted, and no sale
of returned Inventory shall be made, by Borrowers without Lender's prior written
consent.
(CC) Inventory System. Borrowers shall maintain a perpetual
inventory system, keeping accurate records itemizing and describing the kind,
type, age, quality, quantity and cost of Inventory and withdrawals and
additions. Such records shall be available for inspection during Borrowers'
usual business hours at the request of Lender or its designee. Borrowers shall
conduct a cycle count of Inventory as reasonably requested by Lender so as to
equate to a full inventory count at each location on a monthly basis, and
promptly report the results to Lender in form and with such specificity as
Lender shall require.
(DD) Business Plan. Each Business Plan shall (i) constitute
its best good faith estimate of its management regarding the course of its
business for the period covered by such Business Plan; and (ii) be based on
assumptions which shall be reasonable and realistic based on the then current
economic conditions at the time of preparation of such Business Plan.
(EE) Restrictions on Use of Assets. None of the Collateral of
any Borrower other than the Parent shall be transferred to the Parent or any of
the other ▇▇▇▇▇▇ Entities that are not a Borrower.
(FF) Within 120 days after the Closing Date, Parent shall
assign, transfer, sell or otherwise dispose of its assets located at its retail
locations in Austin, Texas, San Antonio, Texas, and Houston, Texas to a
Guarantor or such other Person who shall become a Guarantor and shall execute
and deliver to Lender a Guaranty and Guarantor Security Agreement.
(GG) Within 90 days after the Closing Date, Borrowers shall
establish a separate Lock Box Account at a financial institution satisfactory to
Lender to collect monies solely for the Borrowers.
SECTION 5.2. LENDER. Until the Liabilities are paid in full, Lender
agrees to pay to Borrowers a portion of the interest paid by certain Vendors to
Lender pursuant to the Floor Plan Arrangements (individually, a "Floor Plan
Interest Rebate" and collectively, the "Floor Plan Interest Rebates") solely for
the Free Floor Plan Period under a Floor Plan Arrangement. The Floor Plan
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Interest Rebates relating to the Vendors in effect as of the Closing Date are
set forth on Exhibit 5.2 attached hereto. The Floor Plan Interest Rebates made
available to Lender (A) will vary by Vendor; and (B) may be adjusted from time
to time, at Lender's sole discretion, upon 30 days prior written notice from
Lender to Borrower . All Floor Plan Interest Rebates for any Vendor shall (i)
reflect an annualized percentage rate; and (ii) be calculated on a quarterly
basis based on the calendar quarters ending on the last day of each March, June,
September and December; and (iii) be based on the average daily balances of
floor plan with such Vendor during such calendar quarter. All amounts due by
Lender to Borrowers pursuant to this Section shall be offset on a quarterly
basis against amounts due by Borrowers to Lender pursuant to the Documents.
ARTICLE SIX. CONDITIONS PRECEDENT
---------------------------------
SECTION 6.1. SPECIAL CONDITIONS PRECEDENT TO THE MAKING OF THE FIRST
LOAN. Lender's obligation to make the first Loan is subject to the fulfillment
of each and every one of the following conditions prior to or contemporaneously
with the making of such first loan:
(A) Delivery of Documents. The Lender shall have received each
of the following, in form and substance satisfactory to the Lender and its
counsel, and where applicable, duly executed and recorded:
(i) Certificates of the Secretaries of Borrowers and
certifying as to (a) all corporate actions taken and
consents made by Borrowers to authorize the
transactions provided for or contemplated under this
Agreement and the execution, delivery and performance
of the Documents; and (b) the names of the officers or
employees of Borrowers authorized to sign the
Documents, together with a sample of the true signature
of each such Person. (Lender may conclusively rely on
such certificates until formally advised by a like
certificate of any changes therein.);
(ii) Acknowledgment copies from the appropriate governmental
authority of all Uniform Commercial Code financing
statements required to perfect the Lender's security
interests in the Collateral;
(iii) Copies of Uniform Commercial Code, tax lien and
judgment searches made with such governmental offices
as Lender deems necessary;
(iv) Certificates of insurance and loss payable clauses
covering the Collateral and meeting the requirements of
this Agreement;
(v) The Third Party Waivers;
(vi) The Mortgagee Waivers;
(vii) The Guaranties;
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(viii) The Guarantor Security Agreements;
(ix) The Subordination Agreements, if any;
(xi) The executed opinion of counsel to Borrowers addressed
to the Lender and dated the date of this Agreement;
(xii) Certified copies of the Articles of Incorporation or
Charter and By-laws of Borrowers, as restated or
amended as to the date of this Agreement;
(xiii) Certificates of good standing for Borrowers in the
jurisdiction of their incorporation, in the principal
places in which they conduct business and in places in
which they own real estate and/or Collateral;
(xiv) A writing from Borrowers' certified public accountants
(selected by Borrowers and approved by Lender)
addressed to Lender acknowledging that (a) all
financial statements prepared by such accountants are
also being prepared for the benefit of Lender and (b)
Lender shall rely on such financial statements;
provided that such type of writing is available from
Borrowers' regularly employed certified public
accountants based upon the level of diligence conducted
by such accountants as of the Closing Date in
Borrowers' audited financial statements
(xv) DFS Intercreditor Agreement ; and
(xvi) Such other instruments or documents as the Lender may
reasonably request.
SECTION 6.2. GENERAL CONDITIONS PRECEDENT TO EACH LOAN. In addition to
all other requirements of this Agreement, including, but not limited to, those
set forth in Section 6.1 of this Agreement, Lender's obligation to make each
Loan is subject to the fulfillment of each and every of the following conditions
prior to or contemporaneously with the making of each and every such Loan:
(A) No Event of Default. No Event of Default shall have
occurred and be continuing, may occur with the giving of notice, the passage of
time or both or shall result from the making of any Loan.
(B) No Material Adverse Change. There shall have been no
Material Adverse Change in the business of the Borrowers or the financial
condition of the Borrowers from the most recent financial statements submitted
by Borrowers to Lender.
(C) Continuation of Representations and Warranties. The
representations and warranties contained in this Agreement shall be true and
correct in all material respects as of the making of any Loan, with the same
effect as though made on such dates.
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ARTICLE SEVEN. EVENTS OF DEFAULT
--------------------------------
SECTION 7.1. EVENTS OF DEFAULT. Each of the following acts, occurrences
or omissions shall constitute an event of default under this Agreement (herein
referred to as an "Event of Default"), whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or any order,
rule or regulation of any governmental or nongovernmental body or tribunal:
(A) Any Borrower shall default in the payment when due of any
principal amount due and owing to the Lender; or
(B) Any Borrower shall fail to pay any interest amount due and
owing to the Lender within thirty (30) days of the billing date of such
interest; or
(C) Except for the Event of Default set forth in Section
7.1(A) of this Agreement, default, and continuance thereof for 25 days after
written notice thereof to Borrowers by the Lender, in the payment of any other
amount owing by Borrowers or any Guarantor to the Lender pursuant to the
Documents or pursuant to any other agreement, note, instrument or guarantee; or
(D) Any representation or warranty made by any Borrower or any
Guarantor contained in the Documents shall at any time prove to have been
incorrect in any material respect when made and not cured as of the date of such
discovery; or
(E) Any Borrower or any Guarantor shall default in the
performance or observance of any term, covenant, condition or agreement on its
part to be performed or observed under the Documents (not constituting an Event
of Default under any other clause of this Section 7.1 of this Agreement) and
such default shall continue unremedied for 25 days after written notice thereof
shall have been given by the Lender to Borrowers; or
(F) Either: (i) any Borrower or any Guarantor shall become
insolvent or generally fail to pay, or admit in writing its inability to pay,
such Person's debts as they become due, or a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or
receivership law or statute is filed by or against any Borrower or any Guarantor
or any Borrower or any Guarantor makes an assignment for the benefit of
creditors; provided, however, that no Event of Default shall exist pursuant to
this Subsection E, Clause (i) due to an involuntary bankruptcy case, proceeding
or petition filed against any Borrower or any Guarantor unless such involuntary
case, proceeding or petition shall not have been dismissed or withdrawn within
60 days after the date of such involuntary filing; or (ii) corporate or other
action shall be taken by any Borrower or any Guarantor for the purpose of
effectuating any of the foregoing; provided, further, that notwithstanding
anything else contained in this Agreement no ▇▇▇▇▇▇ Entity which is both (a) a
borrower to Lender, DFS or any other Person providing financing to such ▇▇▇▇▇▇
Entity similar to the Loans or the DFS Financing; and (b) a guarantor to Lender,
DFS or such other Person shall be deemed insolvent solely by virtue of such
guaranty; or
(G) If notice is given that $1,000,000.00 or more of the
Collateral is subject to levy, attachment, seizure, or confiscation or uninsured
loss; provided, however, that the deductible amount on any insurance policy
currently in effect on the Collateral shall not be considered an uninsured loss
pursuant to this Subsection; or
(H) any Borrower or any Guarantor shall be dissolved, whether
voluntarily or involuntarily and such Person has not taken all actions required
to become reinstated, unless (i) in the case of a Borrower, all assets of such
Borrower have been transferred to another Borrower; or (ii) in the case of a
Guarantor, all assets of such Guarantor have been transferred to a Borrower or
another Guarantor; or
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(I) Subject to any applicable cure and/or notice periods, any
material default shall occur under any material agreement, document or
instrument binding upon any Borrower or any Guarantor, or any assets of any
Borrower or any Guarantor, including, but not limited to, any default in the
payment when due of any principal of or interest on any indebtedness for money
borrowed or guaranteed by any, or any default in the payment when due, or in the
performance or observance of, any material obligation of, or condition agreed to
by, any Borrower or any Guarantor with respect to any purchase or lease of any
real or personal property or services; or
(J) Any default or event of default (howsoever such terms are
defined) shall occur under any Third Party Financing; or
(K) Any default or event of default (howsoever such terms are
defined) shall occur under the DFS Financing.
ARTICLE EIGHT. REMEDIES
SECTION 8.1. REMEDIES UPON DEFAULT. Upon the occurrence and contin-
uance of any Event of Default, and the expiration of any applicable cure period,
and in every such event:
(A) notwithstanding anything in the Documents, Lender may, in
its sole and arbitrary discretion, declare the principal of and interest on any
or all of the Loans, and all other amounts owed under the Documents, to be
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived; and
(B) Lender may, in its sole and arbitrary discretion, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, exercise all of the remedies of a secured party and
mortgage holder under applicable law, including, but not limited to, the UCC,
and all of its rights and remedies under the Documents; and
(C) Lender may require any Borrower to make the Collateral and
the records pertaining to the Collateral available to the Lender at a place
designated by the Lender which is reasonably convenient or may take repossession
of the Collateral and the records pertaining to the Collateral without the use
of any judicial process and without any prior notice thereof to Borrowers; and
(D) except as otherwise provided by law, Lender may, at its
option, and in its sole and arbitrary discretion, sell the Collateral at public
or private sale upon such commercially reasonable terms and conditions and
Lender may purchase the Collateral at any such sale, and apply the net proceeds,
after deducting all costs, expenses and attorneys' fees incurred at any time in
the collection of the indebtedness of Borrowers to the Lender and in the
protection and sale of the Collateral, to the payment of said indebtedness,
returning the remaining proceeds, if any, to Borrowers, with each Borrower
remaining liable for any amount remaining unpaid after such application; and
(E) the Lender may, at its option, and in its reasonable
discretion, grant extensions, compromise claims and settle Accounts Receivable
for less than face value, all without prior notice to Borrowers; and
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(F) Lender may, at its option, and in its sole and arbitrary
discretion, use, in connection with any assembly or disposition of the
Collateral, any trademark, trade name, trade style, copyright, patent right or
technical process used or utilized by any Borrower provided such use is only to
assemble or dispose of such Collateral; and
(G) each Borrower shall, upon the request of the Lender,
forthwith upon receipt, transmit and deliver to the Lender in the form received,
all cash, checks, drafts and other instruments for the payment of money
(properly endorsed, where required, so that such items may be collected by
Lender) which may be received by such Borrower at any time in full or partial
payment of any Collateral. No Borrower shall commingle any such items which may
be so received by such Borrower with any other of its funds or property but
shall hold them separate and apart from their own funds or property and in trust
for the Lender until delivery is made to Lender; and
(H) the Lender may, at its option, and in its reasonable
discretion, accept the return of any Inventory directly from an Account Debtor,
without notice to or consent by any Borrower; and
(I) Lender may exercise all of its rights and remedies against
any of the Guarantors under applicable law and the Documents.
SECTION 8.2. REMEDIES ARE SEVERABLE AND CUMULATIVE. All provisions
contained herein pertaining to any remedy of the Lender shall be and are
severable and cumulative and in addition to all other rights and remedies
available in the Documents, at law and in equity, any one or more may be
exercised simultaneously or successively. Any notification required pursuant to
this Article Eight or under applicable law shall be reasonably and properly
given to Borrowers at the address and by any of the methods of giving such
notice as set forth in this Agreement, at least 5 days before taking any action.
ARTICLE NINE. MISCELLANEOUS
---------------------------
SECTION 9.1. NO WAIVER; MODIFICATIONS IN WRITING. No failure or delay
on the part of Lender in exercising any right, power or remedy pursuant to the
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof, or the exercise of any other right, power or remedy. No
amendment, modification, supplement, termination or waiver of any provision of
the Documents, nor any consent by Lender to any departure by any Borrower or any
Guarantor therefrom, shall be effective unless the same shall be in writing and
signed by Lender. Any waiver of any provision of the Documents and any consent
by Lender to any departure by any Borrower or any Guarantor from the terms of
any provision of the Documents shall be effective only in the specific instance
and for the specific purpose for which given. No notice to or demand on any
Borrower or any Guarantor in any case shall entitle any Borrower or any
Guarantor to any other or further notice or demand in similar or other
circumstances.
SECTION 9.2. SET-OFF. Lender shall have the right to set-off,
appropriate and apply toward payment of any of the Liabilities, in such order of
application as Lender may from time to time and at any time elect, any cash,
credit, deposits, accounts, securities and any other property of any Borrower
which is in transit to or in the possession, custody or control of Lender, or
any agent, bailee, or Affiliate of Lender. each Borrower hereby grants to Lender
a security interest in all such property.
SECTION 9.3. NOTICES, ETC. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing personally delivered or sent by overnight courier or
by facsimile machine, and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent by facsimile machine
or one (1) day after such notice is sent by overnight courier to the intended
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recipient thereof in accordance with the provisions of this Section 9.3. Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 9.3 of this Agreement, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses indicated for such
party below:
If to the Borrowers: ▇▇▇▇▇▇ Boats & Motors, Inc.
5000 Plaza on the ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Fax No.: (▇▇▇)▇▇▇-▇▇▇▇
If to the Lender: Transamerica Commercial Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Levenfeld ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Bright ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLC
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.4. COSTS, EXPENSES AND TAXES. Borrowers agree to pay all
reasonable out-of-pocket fees and expenses of Lender (including, but not limited
to, UCC Filing and Search Fees and fees and expenses of outside counsel to
Lender and paralegals) in connection with the making of the Loans and
preparation, administration and enforcement of the Documents and the Loans,
including, but not limited to, Lender's standard wire transfer and check return
fees, all as may be established and changed by Lender from time to time. Without
limitation of the foregoing, each Borrower acknowledges and agrees that Lender's
reasonable field audit fees and reasonable out of pocket expenses shall be
charged to Borrowers. In addition, Borrowers shall pay any and all stamp,
transfer and other taxes payable or determined to be payable in connection with
the execution and delivery of the Documents and agrees to hold the Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes. If any suit or
proceeding arising from any of the foregoing is brought against Lender,
Borrowers, to the extent and in the manner directed by Lender, will resist and
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defend such suit or proceeding or cause the same to be resisted and defended by
counsel approved by Lender. If Borrowers shall fail to do any act or thing which
it has covenanted to do under this Agreement or any representation or warranty
on the part of Borrowers contained in this Agreement shall be breached, Lender
may, in its sole and arbitrary discretion, after 25 days written notice is sent
to Borrowers, do the same or cause it to be done or remedy any such breach, and
may expend its funds for such purpose; and any and all amounts so expended by
the Lender shall be repayable to the Lender by Borrowers immediately upon the
Lender's demand therefor, with interest at a rate equal to the highest interest
rate set forth in this Agreement in effect from time to time during the period
from and including the date funds are so expended by Lender to the date of
repayment, and any such amounts due and owing Lender shall be deemed to be part
of the Liabilities secured hereunder. The obligations of Borrowers under this
Section shall survive the termination of this Agreement and the discharge of the
other obligations of Borrowers under the Documents.
SECTION 9.5. COMPUTATIONS. Where the character or amount of any asset
or liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those at the time in effect.
SECTION 9.6. FURTHER ASSURANCES. each Borrower agrees to do such
further acts and things and to execute and deliver to Lender such additional
assignments, agreements, powers, documents and instruments as Lender may
reasonably require or deem advisable to carry into effect the purposes of the
Documents, or to confirm unto Lender its rights, powers and remedies under the
Documents.
SECTION 9.7. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which counterparts, once they are executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same agreement.
SECTION 9.8. BINDING EFFECTS; ASSIGNMENT. This Agreement shall be
binding upon, and inure to the benefit of, Lender, each Borrower and their
respective successors, assigns, representatives and heirs. No Borrower shall
assign any of its rights nor delegate any of its obligations under Documents
without the prior written consent of Lender and no such consent by Lender shall,
in any event, relieve any Borrower of any of its obligations under the
Documents.
SECTION 9.9. HEADINGS. Captions contained in this Agreement are
inserted only as a matter of convenience and 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.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, together with the
Documents, contains the entire agreement between the parties hereto with respect
to the transactions contemplated herein and supersede all prior representations,
agreements, covenants and understandings, whether oral or written, related to
the subject matter of the Agreement. Except as specifically set forth in this
Agreement, Lender makes no covenants to any Borrower, including, but not limited
to, any other commitments to provide any additional financing to any Borrower.
SECTION 9.11. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of Illinois and for all purposes shall
be construed in accordance with the laws of the State of Illinois.
SECTION 9.12. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
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unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.13. CONFLICT. In the event of any conflict between this
Agreement and any of the other Documents, the terms and provisions of this
Agreement shall govern and control.
SECTION 9.14. POWER OF ATTORNEY. Each Borrower hereby grants to Lender
an irrevocable power of attorney coupled with an interest, authorizing and
permitting Lender, at its option but without obligation, at such Borrower's sole
expense, in such Borrower's name or otherwise, to the extent reasonably
determined by Lender to be necessary or advisable in order to carry out Lender's
rights or remedies or any Borrower's obligations pursuant to the Documents to
the extent any Borrower has failed or refused to execute or fulfill any of its
obligations pursuant to the Documents to do any or all of the following: (a)
execute on behalf of such Borrower any financing statement, or any continuation
or amendment thereof, security agreement, assignment of rentals from real or
personal property, report, notice, schedule of Accounts Receivable, and any
other agreement or document that Lender may, in its reasonable discretion, deem
advisable in order to (i) perfect, maintain or improve Lender's security
interest in the Collateral or other property intended to constitute Collateral,
or (ii) exercise a right of such Borrower or Lender, or (iii) fully consummate
the transactions contemplated under this Agreement and the Documents; (b)
execute on behalf of such Borrower, any invoice relating to any of the Accounts
Receivable, any draft against or notice to any Account Debtor, any proof of
claim in bankruptcy, or other similar document against any Account Debtor, any
notice or claim of mechanic's, material supplier's or other Lien, or assignment
or satisfaction thereof; (c) take control in any manner of any cash or non-cash
proceeds of Collateral; endorse such Borrower's name upon any instruments, money
orders, bills of lading, freight bills, chattel paper or other agreements or
documents, evidence of payment or Collateral that may come into Lender's
possession; and sign such Borrower's name to any verification of its Accounts
Receivable and notices thereof to such Borrower's Account Debtors; (d) endorse
all checks and other forms of remittances in payment of Accounts Receivable
received by Lender "Pay to the Order of Transamerica Commercial Finance
Corporation", or in such other manner as Lender may choose; (e) notify post
office authorities to change the address for delivery of any of such Borrower's
mail to an address designated by Lender and receive and open all mail addressed
to such Borrower and make such disposition as is reasonable under the
circumstances, and Lender will endeavor to provide such Borrower with originals
or copies thereof; (f) pay, contest or settle any Lien with respect to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) following the occurrence of an Event of
Default, demand payment of Accounts Receivable, enforce payment of Accounts
Receivable by legal proceedings or otherwise, and enforce any and all rights of
such Borrower in Accounts Receivable; grant extensions of time to pay,
compromise claims and settle Accounts Receivable for less than face value and
execute all releases and other documents in connection therewith; (h) settle and
adjust, and give releases of, any claim under any insurance policy that relates
to any of the Collateral and obtain payment therefor, and make all
determinations and decisions with respect to any such policy and endorse such
Borrower's name on any instrument or other item of payment or the proceeds of
such policy; and (i) take any action or pay any sum required of such Borrower
pursuant to this Agreement, and any other present or future agreements between
Lender and such Borrower and do all acts and things which are necessary to
fulfill such Borrower's obligations under this Agreement.
SECTION 9.15. JURISDICTION; WAIVER. EACH BORROWER ACKNOWLEDGES THAT
THIS AGREEMENT IS BEING SIGNED BY THE LENDER IN PARTIAL CONSIDERATION OF
LENDER'S RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THE TERMS AND
PROVISION OF THIS AGREEMENT AND THE DOCUMENTS. EACH BORROWER CONSENTS TO
JURISDICTION IN THE STATE OF ILLINOIS AND VENUE IN ANY FEDERAL OR STATE COURT IN
THE COUNTY OF ▇▇▇▇ FOR SUCH PURPOSES AND WAIVES ANY AND ALL RIGHTS TO CONTEST
SAID JURISDICTION AND VENUE AND ANY OBJECTION THAT SAID COUNTY IS NOT
CONVENIENT. EACH BORROWER WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST
LENDER IN ANY JURISDICTION EXCEPT THE AFORESAID COUNTY AND STATE. LENDER AND
EACH BORROWER HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST
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ANY OTHER PARTY WITH RESPECT TO ANY MATTER WHATSOEVER RELATING TO, ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THE LOANS, THE DOCUMENTS AND/OR THE TRANSACTIONS
WHICH ARE THE SUBJECT OF THE DOCUMENTS.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered at ▇▇▇▇ County, Illinois as of the date first above
written.
LENDER: TRANSAMERICA COMMERCIAL FINANCE CORPORATION
------
By:_________________________________
Title: Vice President
(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
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BORROWERS: ▇▇▇▇▇▇ BOATS & MOTORS, INC.
---------
By:________________________________
Title: Secretary
(SIGNATURES CONTINUE ON NEXT PAGE.)
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▇▇▇▇▇▇ BOATING CENTER GEORGIA, INC.
By:________________________________
Title:Secretary
▇▇▇▇▇▇ BOATING CENTER FLORIDA, INC.
By:__________________________________
Title: Secretary
(SIGNATURES CONTINUE ON NEXT PAGE.)
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ADVENTURE MARINE & OUTDOORS, INC.
By:__________________________________
Title: Secretary
ADVENTURE MARINE SOUTH, INC.
By:________________________________
Title: Secretary
ADVENTURE BOAT BROKERAGE, INC.
By:__________________________________
Title: Secretary
(SIGNATURES CONTINUE ON THE NEXT PAGE.)
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TBC MANAGEMENT, INC.
By:__________________________________
Title: Secretary
TBC MANAGEMENT, LTD.
By:__________________________________
Title: Secretary
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TRANSAMERICA COMMERCIAL FINANCE CORPORATION - ▇▇▇▇▇▇ BOATS & MOTORS, INC.
LOAN AND SECURITY AGREEMENT
-------------------------------
EXHIBIT/SCHEDULE LIST
---------------------
Exhibit/Schedule No.
--------------------
List of Borrowers I
List of Guarantors II
Collateral Locations 1.1(L)
DFS Financing 1.1(Q)
Permitted Indebtedness 1.1(FFF)
Permitted Liens 1.1(GGG)
▇▇▇▇▇▇ Entities 1.1(WWW)
* *
________________________
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filed separately with the Commission.
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SCHEDULE I TO ▇▇▇▇▇▇ BOATS & MOTORS, INC. -
LOAN AND SECURITY AGREEMENT
-------------------------------
List of Borrowers
-----------------
▇▇▇▇▇▇ Boats & Motors, Inc.
TBC Management, Ltd.
TBC Management, Inc.
▇▇▇▇▇▇ Boating Center Georgia, Inc.
▇▇▇▇▇▇ Boating Center Florida, Inc.
Adventure Marine & Outdoors, Inc.
Adventure Marine South, Inc.
Adventure Boat Brokerage, Inc.
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EXHIBIT 1.1(L) TO ▇▇▇▇▇▇ BOATS & MOTORS, INC. -
LOAN AND SECURITY AGREEMENT
-------------------------------
Collateral Locations
--------------------
1. ▇▇▇▇▇▇ Boats & Motors, Inc.
5000 Plaza on the ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT 5.2 TO ▇▇▇▇▇▇ BOATS & MOTORS, INC. -
LOAN AND SECURITY AGREEMENT
--------------------------------
*
-
*
*
*
*
*
*
_______________________________
*Indicates Confidential Treatment Requested. The redacted material has been
filed separately with the Commission.
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