EXHIBIT 10.70
January 7, 2003
▇▇▇▇▇▇ Boats & Motors, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
Per the request of management of ▇▇▇▇▇▇ Boats & Motors, Inc.
("Borrower"), TMRC, L.L.P. ("Tracker") has discussed with the Negotiating
Committee of Borrower the terms under which Tracker, either singly or together
or in conjunction with one or more other lenders (in either case, the "Lender"),
would be willing to provide short-term bridge financing to Borrower to fund
immediate cash needs of Borrower. This letter outlines the salient terms of such
proposed bridge financing, including the amounts and purposes thereof. Any
obligation of the Lender to extend the bridge financing to Borrower is subject
to, among other things, documentation acceptable to the Lender and its legal
counsel.
BRIDGE FACILITY
BORROWER: ▇▇▇▇▇▇ Boats & Motors, Inc.
AMOUNT: The maximum amount to be funded would be $500,000
from time to time over a 30-day period. See
"Advances" below.
PURPOSE: Use of funding is limited to the working capital and
immediate operating expense needs of borrower, and
fees costs and expenses of lender.
MATURITY: April 30, 2003.
ADVANCES: At the request of a newly formed Operations
Committee of the Board of Directors of Borrower (the
"Board"), the Lender, in its discretion, may make
additional advances through January 31, 2003 of all
or a portion of the remaining bridge facility.
INTEREST RATE: The from-time-to-time announced prime rate of
JPMorgan Chase Bank plus 4%, payable at maturity.
COLLATERAL, FEES AND COVENANTS
COLLATERAL: All refunds owing from the IRS; proceeds to be used
to repay bridge loan.
DEFAULT RATE: In the event of default under the bridge loan,
interest thereunder would be charged at a rate equal
to two percent (2%) per annum higher than the rate
chargeable prior to such event.
EXPENSES: All out-of-pocket expenses, including without
limitation, legal fees and legal expenses, appraisal,
title insurance, recording and filing fees and field
examination fees and other additional costs incurred
by Lender in relation to execution and funding of the
initial advance under the bridge facility would be
payable by Borrower and, at the option of Lender, may
be charged to the Facility to the extent available.
ADDITIONAL FINANCING: During the initial funding period, Lender will review
and analyze the business plans, projections and other
relevant information to determine the financing needs
of the Company through the 2003 season and beyond.
The Lender (either singly or collectively) may, but
shall not be obligated to, provide additional
financing based upon such review and analysis.
CONDITIONS PRECEDENT TO FUNDING
The following conditions shall have been fulfilled in the sole
determination of the Lenders prior to the initial disbursement of funds under
the bridge facility:
1. Borrower shall have taken (or will take, promptly upon being advised
by Tracker of its Board designees) any and all actions necessary to (a) change
the composition of the Board, and any committees of the Board designated by
Tracker, in a manner satisfactory to Tracker, such that Tracker's designees
constitute a majority of the Board and of any designated committees thereof.
Additionally, Borrower shall have created a new committee of the Board to be
known as the Operations Committee, initially comprised of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, which such committee shall be responsible for,
among other things related to the operation of the business of Borrower,
reviewing all weekly cash flow reports generated by management of Borrower and
other reports and information requested by the committee, and shall have sole
authority to request borrowings under the Facility.
2. Each of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall have deposited such
shareholder's shares of Borrower's common stock in a voting trust in exchange
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for a voting trust certificate evidencing such shareholder's beneficial interest
in the deposited shares. The voting trust will have a term of five (5) years,
but will terminate at such time as Tracker is the holder (directly or through
voting trust certificates) of 55% or more of the common stock of Borrower on a
fully-diluted, as if converted, basis. The voting trust will otherwise be in
such form and substance as is reasonably acceptable to Messrs. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, and Tracker. A designee of Tracker shall be the trustee of such voting
trust (the "Trustee") and shall have sole authority to vote all deposited shares
on behalf of all holders of voting trust certificates.
3. Tracker shall have obtained from each of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
the right, for a period of ninety (90) days, to purchase voting trust
certificates representing that number of shares of Borrower's common stock equal
to the lesser of (a) the number of shares (pro rata among Messrs. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇) required to give Tracker 51% or more of the common stock
of Borrower, on a fully-diluted, as if converted, basis, or (b) 30% of such
insider's holdings of Borrower common stock, in either case at a price per share
equal to $1.20. Tracker shall not be limited in any manner from acquiring shares
of common stock of Borrower in privately negotiated transactions.
4. Each holder of the Notes issued by Borrower under the Subordinated
Note Purchase Agreement dated as of December 14, 2001 (the "Note Purchase
Agreement") shall have (a) amended the Note Purchase Agreement and the Notes
held by such holder to prohibit the conversion of such Notes until November 15,
2004, and (b) agreed to deposit all shares acquired through the conversion of
such Notes into the voting trust referred to in paragraph 2 above.
5. Each of the executive officers and directors of Borrower listed on
Schedule A shall have relinquished their rights to acquire shares of the common
stock of Borrower through the exercise of the currently outstanding options held
by such individual.
6. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall have granted to Tracker an irrevocable proxy
for a period of five years (subject to earlier termination to occur or
termination of such voting trust) covering his shares of ▇▇▇▇▇▇ common stock.
7. Borrower would be required to execute or cause to be executed and
deliver or cause to be delivered to Tracker such documents, instructions,
certificates, opinions and assurances as Tracker requests in connection with the
transactions described in this letter on the basis outlined above (the "Loan
Documents") and in connection with Borrower's authority and capacity to accept
the loans and execute the Loan Documents; and Borrower would be required to take
such other actions in connection with such loans as Tracker may reasonably
request. All such requirements would be subject to Tracker's approval and the
approval of its counsel as to form and substance.
8. All financial statements and financial information that would have
been delivered to Tracker prior to initial funding shall have been deemed
acceptable to Tracker in its sole discretion.
9. All documents to be delivered in connection with the Facility shall
have been delivered in the State of Missouri and would not become effective
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against or binding upon the lenders until so executed by Borrower, delivered to
Tracker and executed by Tracker in the City of Springfield, County of ▇▇▇▇▇▇,
Missouri. All loan agreement and related documents would be interpreted under
the internal laws of the State of Missouri.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ▇▇▇▇▇▇
To induce the commitment for the bridge financing and the other
commitments and actions of the parties, ▇▇▇▇▇▇ hereby represents and warrants to
and for the benefit of Tracker as follows:
(a) ▇▇▇▇▇▇ and each of its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
out its business as now conducted, except where the failure to obtain such
governmental licenses, authorizations, consents and approvals would not
materially adversely affect the business, consolidated financial position or
consolidated results of operations of ▇▇▇▇▇▇ and its Subsidiaries, taken as a
whole, and would not in any manner draw into question the validity of this
Agreement or any Ancillary Agreement (defined below).
(b) The execution, delivery and performance by ▇▇▇▇▇▇ of this Agreement
and each of the other agreements, documents (the "Ancillary Agreements") and
actions contemplated herein are all within ▇▇▇▇▇▇ corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with any governmental body, agency or official (other than
the filing of an information statement pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the filing
of a Form 8-K pursuant to the Exchange Act disclosing the transactions
contemplated hereunder) and do not contravene, or constitute a default under,
any provisions of applicable law or regulation or of the Certificate of
Incorporation or bylaws of ▇▇▇▇▇▇, of any agreement relating to any senior
indebtedness or of any other agreement, judgment, injunction, order, decree or
other instrument that is material, individually or in the aggregate, or would
result in the creation or imposition of any Lien on any asset of ▇▇▇▇▇▇ or any
of its Subsidiaries. The three-year moratorium set forth in the Texas Business
Combination Law does not apply to the transactions contemplated by this
Agreement.
(c) This Agreement and each of the Ancillary Agreements constitutes a
valid and binding agreement of ▇▇▇▇▇▇ and, to the extent a party thereto, each
Subsidiary, enforceable against ▇▇▇▇▇▇ and such Subsidiary in accordance with
their respective terms, except as relating to or affecting the creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considering any proceeding or action in equity or at law).
(d) The authorized capital stock of ▇▇▇▇▇▇ consists of 50,000,000 shares
of ▇▇▇▇▇▇ Common Stock, 4,329,917 shares of which are outstanding as of the
close of business on December 19, 2002, and 1,000,000 shares of ▇▇▇▇▇▇ Preferred
Stock of which only the 80,000 shares owned by Tracker have been issued and are
outstanding. Except for (i) the Notes, and (ii) options to purchase a total of
316,798 shares of ▇▇▇▇▇▇ Common Stock pursuant to employee benefit plans as in
effect on the date hereof (of which the Options for a total of 237,198 shares of
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▇▇▇▇▇▇ Common Stock have been duly and effectively terminated), ▇▇▇▇▇▇ does not
have any commitments, agreements or obligations to issue shares of ▇▇▇▇▇▇ Common
Stock or securities exercisable, convertible or exchangeable for shares of
▇▇▇▇▇▇ Common Stock.
(e) All issued shares of the equity securities of ▇▇▇▇▇▇, and all
outstanding shares in the Subsidiaries of ▇▇▇▇▇▇ are validly issued pursuant to
proper authorization of the Board and the Board of Directors of such Subsidiary
and are fully paid and nonassessable. The shares of ▇▇▇▇▇▇ Common Stock issuable
upon the conversion of the Shareholder Notes will be fully paid and
nonassessable when issued in accordance with the terms of the Agreement pursuant
to which the Notes were issued.
(f) Except as set forth in Schedule B, neither ▇▇▇▇▇▇ nor any of its
Subsidiaries is in default with respect to any material amount of its existing
indebtedness.
(g) Except for shares issuable upon the conversion of Notes (which shall
be issued in the name of, and deposited with, the Trustee) or upon the exercise
of stock options, for a period of five years commencing on the date hereof,
▇▇▇▇▇▇ shall not issue any shares of equity securities or securities convertible
into, exercisable or exchangeable for any class of equity securities without the
approval of Tracker.
This letter is being signed simultaneously with the execution of a Loan
and Security Agreement providing for the bridge financing, the Voting Trust
Agreement, the option referred to herein, the amendment to the Note Purchase
Agreement and/or Notes referred to herein, the termination of rights referred to
herein, the taking of all other actions contemplated herein, and the
simultaneous delivery of all documents contemplated herein, whereupon it shall
constitute a binding agreement among ▇▇▇▇▇▇ and Tracker, and the obligations of
such parties shall survive the execution and delivery hereof.
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The undersigned, intending to be legally bound, hereby signs this Letter
Agreement as of the day and year first above written.
TMRC, L.L.P. ▇▇▇▇▇▇ BOATS AND MOTORS, INC.
By: Tracker Marine, L.L.C.
By: Three ▇▇▇▇▇ Company, its sole member By:
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
By:
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Name:
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Title:
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SCHEDULE A
Optionee Number of Option Shares
-------- -----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,267
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 76,933
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 76,665
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 33,333