<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission File No. 1-14173
MARINEMAX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-3496957
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
Number)
18167 U.S. 19 NORTH, SUITE 499
Clearwater, Florida 33764
(Address of principal executive offices) (ZIP Code)
727-531-1700
(Registrant's telephone number, including area code)
Indicate by check whether the registrant: (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of outstanding shares of the registrant's Common Stock on July 31,
1999 was 15,237,525
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MARINEMAX, INC.
Table of Contents
<TABLE>
<CAPTION>
Item No. Page
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<S> <C>
PART I FINANCIAL INFORMATION
1. Financial Statements (unaudited):
Condensed Consolidated Results of Operations
For the Three-Month and Nine-Month Periods Ended
June 30, 1998 and June 30, 1999................................ 3
Condensed Consolidated Balance Sheets as of
September 30, 1998 and June 30, 1999........................... 4
Condensed Consolidated Statements of Cash Flows
For the Nine-Month Periods Ended
June 30, 1998 and June 30, 1999................................ 5
Notes to Condensed Consolidated Financial Statements............. 7
2. Management's Discussion and Analysis of Results of Operations
and Financial Condition.......................................... 10
PART II OTHER INFORMATION
1. Legal Proceedings............................................... 15
2. Changes in Securities and Use of Proceeds....................... 15
3. Defaults Upon Senior Securities................................. 15
4. Submission of Matters to Vote of Security Holders............... 15
5. Other Information............................................... 15
6. Exhibits and Reports on Form 8-K................................ 15
7. Signatures...................................................... 16
</TABLE>
2
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ITEM 1. FINANCIAL STATEMENTS
MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Results of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three-Month For the Nine-Month
Period Ended June 30, Period Ended June 30,
--------------------------- ---------------------------
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $105,250,051 $161,628,952 $214,033,037 $324,375,777
Cost of sales 80,336,888 123,691,688 164,859,835 247,310,479
------------ ------------ ------------ ------------
Gross profit 24,913,163 37,937,264 49,173,202 77,065,298
Selling, general and
administrative expenses 13,494,629 23,316,259 39,469,036 56,992,947
Non-recurring settlement
(Note 3) - - 15,000,000 -
------------ ------------ ------------ ------------
Income (loss) from
operations 11,418,534 14,621,005 (5,295,834) 20,072,351
Interest expense, net 1,468,134 597,408 2,560,824 1,364,522
------------ ------------ ------------ ------------
Income (loss) before
income taxes 9,950,400 14,023,597 (7,856,658) 18,707,829
Income tax provision
(benefit) 3,468,049 5,529,213 (1,717,156) 7,464,904
------------ ------------ ------------ ------------
Net income (loss)
(Note 3) $ 6,482,351 $ 8,494,384 $ (6,139,502) $ 11,242,925
============ ============ ============ ============
Basic and diluted net
income (loss) per
common share (Note 3): $ 0.56 $ 0.56 $ (0.62) $ 0.76
============ ============ ============ ============
Shares used in computing
net income (loss) per
common share:
Basic 11,624,855 15,228,587 9,910,101 14,866,850
============ ============ ============ ============
Diluted 11,635,267 15,238,110 9,913,571 14,873,280
============ ============ ============ ============
Pro Forma Data:
Pro forma income tax
provision (benefit) $ 512,111 $ (1,425,507)
------------ ------------
Pro forma net income
(loss) $ 5,970,240 $ (4,713,995)
============ ============
Pro forma basic and
diluted net income
(loss) per share
(Note 3) $ 0.51 $ (0.48)
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
1998 1999
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,860,866 $ 21,140,383
Accounts receivable, net 18,511,878 17,144,247
Inventories 80,756,342 137,430,009
Prepaids and other current assets 2,824,345 2,262,905
Deferred tax asset -- 1,226,448
------------ ------------
Total current assets 109,953,431 179,203,992
PROPERTY AND EQUIPMENT, net 24,776,439 31,330,847
DEFERRED TAX ASSET 103,426 --
GOODWILL AND OTHER ASSETS 15,624,996 35,378,038
------------ ------------
Total assets $150,458,292 $245,912,877
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,591,679 $ 28,559,428
Customer deposits 4,815,979 8,459,850
Accrued expenses 6,044,506 18,938,102
Short-term borrowings 45,813,419 101,548,966
Current maturities of long-term debt 442,519 535,836
Deferred taxes 165,511 --
Settlement payable 15,000,000 --
------------ ------------
Total current liabilities 80,873,613 158,042,182
LONG-TERM DEBT, net of current maturities 3,249,494 3,421,841
DEFERRED TAX LIABILITY -- 144,352
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
5,000,000 shares authorized, none issued
or outstanding -- --
Common stock, $.001 par value; 40,000,000
shares authorized, 14,600,428 and 15,237,525
shares issued and outstanding at September 30,
1998 and June 30, 1999, respectively 14,601 15,238
Additional paid-in capital 57,113,708 63,839,463
Retained earnings 9,206,876 20,449,801
------------ ------------
Total stockholders' equity 66,335,185 84,304,502
------------ ------------
Total liabilities and stockholders' equity $150,458,292 $245,912,877
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine-Month Periods Ended
(Unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
1998 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (6,139,502) $ 11,242,925
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 930,415 2,773,502
Deferred income tax provision (benefit) 238,152 (1,144,181)
Loss (gain) on sale of property and
equipment 43,147 35,767
Stock Compensation -- 84,597
Decrease (increase) in --
Accounts receivable, net (6,021,947) 2,384,174
Due from related parties 640,632 --
Inventories 1,089,916 (36,878,751)
Prepaids and other assets (4,055,046) (4,621,750)
Increase (decrease) in --
Accounts payable 1,508,627 19,486,446
Customer deposits 2,928,420 (1,398,442)
Accrued expenses and other liabilities 975,670 12,051,224
Short-term borrowings (20,652,293) 36,256,301
Settlement payable 15,000,000 (15,000,000)
------------ ------------
Net cash provided by (used in)
operating activities (13,513,809) 25,271,812
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,566,189) (7,887,838)
Proceeds from sale of property and equipment 84,000 29,469
Cash acquired (used) in purchase of
businesses 496,659 (4,137,740)
------------ ------------
Net cash provided by (used in)
investing activities (1,985,530) (11,996,109)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net
of offering expenses and underwriting
commissions 38,300,327 --
Proceeds from sale of common stock under
employee benefit plans -- 238,150
Net borrowings (repayments) on notes
payable to related parties (3,102,053) --
Repayments on long-term debt (6,084,982) (234,336)
Redemption of Common Stock (150,000) --
Distributions to stockholders (9,466,184) --
------------ ------------
Net cash provided by (used in)
financing activities 19,497,108 3,814
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,997,769 13,279,517
CASH AND CASH EQUIVALENTS,
beginning of period 11,537,934 7,860,866
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 15,535,703 $ 21,140,383
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine-Month Periods Ended
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
June 30, June 30,
1998 1999
----------- ------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash paid for
Interest $ 2,381,352 $ 1,867,369
Income taxes $ -- $ 836,802
Supplemental Disclosures of Non-Cash Investing
and Financing Activities:
Issuance of Common Stock and Warrants in
exchange for business, property and
equipment $10,590,206 $19,479,246
Assumption of debt (primarily inventory
financing) in conjunction with
acquisition of businesses, property
and equipment $ 4,107,428 $ 6,403,645
</TABLE>
See Notes to Condensed Consolidated Financial Statements
6
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MARINEMAX, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. COMPANY BACKGROUND AND BASIS OF PRESENTATION
MarineMax, Inc. (a Delaware corporation) was incorporated in January 1998.
MarineMax, Inc. and subsidiaries (MarineMax or the Company) engage primarily in
the retail sale and service of new and used boats, motors, trailers, marine
parts and accessories. The Company currently operates through 47 retail
locations in 13 states, consisting of Arizona, California, Delaware, Florida,
Georgia, Minnesota, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania,
South Carolina and Texas.
In October 1998, the Company formed a new subsidiary, MarineMax Motor
Yachts, Inc. (Motor Yachts), and entered in to a Dealership Agreement with
Hatteras Yachts, a division of Genmar Industries, Inc. The Agreement gives the
Company the rights to sell Hatteras Yachts throughout the state of Florida
(excluding the Florida Panhandle) and the U.S. distribution rights for Hatteras
products over 74 feet.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements to conform with the financial statement presentation of the
current period. The consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are wholly owned. All significant
intercompany transactions and accounts have been eliminated.
The accompanying financial statements are unaudited and have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission (the SEC). Although the September 30,1998 balance sheet was
derived from audited financial statements, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to SEC rules and regulations. The accompanying condensed financial
statements and related notes should be read in conjunction with the Company's
Amended Annual Report on Form 10-K/A (File number 1-4173) as filed with the SEC
on July 29, 1999.
2. ACQUISITIONS
The Company has consummated a series of business combinations. On March 1,
1998, the Company acquired, in separate merger transactions, all of the issued
and outstanding common stock of Bassett Boat Company of Florida, Gulfwind South,
Inc., Gulfwind U.S.A., Inc., 11502 Dumas, Inc. and subsidiaries d/b/a Louis
DelHomme Marine, Harrison's Boat Center, Inc., and Harrison's Marine Centers of
Arizona, Inc. (collectively, the Original Merged Companies) in exchange for
7,799,844 shares of the Company's common stock.
On July 7, 1998, the Company acquired, in separate merger transactions,
all of the issued and outstanding common stock of Cochran's Marine, Inc. and C &
N Marine Corporation (together Cochran's Marine) in exchange for 603,386 shares
of its common stock.
On July 30, 1998, the Company acquired, in a merger transaction, all of
the issued and outstanding common stock of Sea Ray of Wilmington, Inc. (f.k.a.
Skipper Bud's of North Carolina) in exchange for 412,390 shares of its common
stock.
These business combinations (collectively, the Pooled Companies) have been
accounted for under the pooling-of-interests method of accounting. Accordingly,
the financial statements of the Company have been restated to reflect the
operations as if the Pooled Companies had operated as one entity since
inception.
On March 1, 1998, MarineMax effected business combinations in which it
acquired, in separate merger transactions, the beneficial interests in Bassett
Boat Company, Bassett Realty, L.L.C., Gulfwind South Realty, L.L.C., Harrison's
Realty, L.L.C. and Harrison's Realty California, L.L.C. (collectively, the
Original Property Acquisitions) in exchange for 1,392,026 shares of the
Company's common stock. Additionally, on July 7, 1998, MarineMax acquired, in
separate merger transactions, the beneficial interests in C & N Realty L.L.C.,
Walker Marina Realty, L.L.C., Marina Drive Realty I, L.L.C., and Marina Drive
Realty II, L.L.C. (collectively, Cochran's L.L.C.s) in exchange for 120,000
shares of the Company's common stock. These acquisitions have been accounted for
under the purchase method of accounting.
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On April 30, 1998, the Company acquired, in a merger transaction, all of
the issued and outstanding common stock of Stovall Marine, Inc. (Stovall) in
exchange for 492,306 shares of the Company's common stock, valued at
approximately $5.3 million. The acquisition has been accounted for under the
purchase method of accounting, which resulted in the recognition of
approximately $5.3 million in goodwill.
On September 3, 1998, the Company acquired the net assets of Brevard Boat
Sales, Inc. (Brevard) in exchange for approximately $1.3 million of cash,
including acquisition costs, and 14,652 shares of the Company's common stock,
valued at approximately $125,000. The acquisition has been accounted for under
the purchase method of accounting, which resulted in the recognition of
approximately $1.1 million in goodwill.
On September 15, 1998, the Company acquired the net assets, including the
retail location of Sea Ray of Las Vegas (Vegas) in exchange for approximately
$3.7 million of cash, including acquisition costs. The acquisition has been
accounted for under the purchase method of accounting, which resulted in the
recognition of approximately $1.1 million in goodwill.
On September 30, 1998, the Company acquired the net assets of Treasure
Cove Marina, Inc. (Treasure Cove) in exchange for approximately $7.8 million of
cash, including acquisition costs, and 250,000 shares of the Company's common
stock, valued at approximately $2.3 million. The acquisition has been accounted
for under the purchase method of accounting, which resulted in the recognition
of an approximately $12.6 million in goodwill.
On October 28, 1998, the Company acquired the net assets of Woods &
Oviatt, Inc. (Woods & Oviatt), a prominent yacht brokerage operation, in
exchange for approximately $1.7 million of cash, including acquisition costs.
The acquisition has been accounted for under the purchase method of accounting,
which resulted in the recognition of approximately $1.7 million in goodwill.
On February 11, 1999, the Company acquired the net assets of Boating World
(Boating World) in exchange for approximately $523,000 of cash, including
acquisition costs and warrants valued at approximately $269,000. The warrants
provide the holder the right to buy 40,000 shares of MarineMax common stock at
$15.00 per share and were valued using a Black-Scholes model assuming a 5.25%
risk free rate of return, a volatility factor of 44.7% and an expected dividend
yield of 0%. The acquisition has been accounted for under the purchase method of
accounting, which resulted in the recognition of approximately $700,000 in
goodwill.
On March 9, 1999, the Company acquired the net assets of Merit Marine
(Merit) in exchange for approximately $1.2 million of cash, including
acquisition costs, 476,000 shares of the Company's common stock, valued at
approximately $4.8 million, a $3 million promissory note, with interest payable
at LIBOR plus 125 basis points, and the assumption of certain liabilities. The
assumed liabilities include the outstanding floor plan obligations related to
boat inventories, which primarily finance Merit Marine's Sea Ray products. The
acquisition has been accounted for under the purchase method of accounting,
which resulted in the recognition of approximately $9.2 million in goodwill.
On April 5, 1999, the Company acquired the net assets of Suburban
Boatworks, Inc. (Suburban) in exchange for $965,000 of cash, including
acquisition costs, 121,090 shares of the Company's common stock, valued at
approximately $1.4 million, a $500,000 promissory note, with interest payable at
LIBOR plus 125 basis points, and the assumption of certain liabilities. The
assumed liabilities include the outstanding floor plan obligations related to
boat inventories, which primarily finance Suburban's Sea Ray products. The
acquisition has been accounted for under the purchase method of accounting,
which resulted in the recognition of approximately $3.6 million in goodwill.
The Original Property Acquisitions, Stovall, Cochran's L.L.C.s, Brevard,
Vegas, Treasure Cove, Woods & Oviatt, Boating World, Merit and Suburban
(collectively, the Purchased Companies) have been reflected in the Company's
financial statements subsequent to their respective acquisition dates. The
Company's common stock issued in conjunction with the acquisition of each of the
Purchased Companies has been valued at approximately the current market price on
each of their respective acquisition dates. The goodwill associated with the
acquisition of the Purchased Companies represents the excess of the purchase
price over the estimated fair value of the net assets acquired and is being
amortized over forty years on a straight-line basis.
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3. PRO FORMA RESULTS OF OPERATIONS AND NONRECURRING SETTLEMENT
In connection with the merger of the Pooled Companies, the applicable
merged companies terminated their S corporation status and recorded a deferred
income tax charge and a corresponding net deferred tax liability of
approximately $1,250,000, representing the tax effect of differences in bases in
assets and liabilities for financial reporting and income tax purposes. The
Company has presented pro forma income tax disclosure as if the Company and
subsidiaries were C corporations for the three-month and nine-month periods
ended June 30, 1998.
The Company and Brunswick Corporation (Brunswick) disputed the
applicability of the change in control provisions in the dealership agreements
of the Original Merged Companies. In order to avoid a long, costly and
disruptive dispute, the Company and Brunswick agreed not to challenge the change
in control provisions of the dealership agreements, and the Company agreed to
pay Brunswick $15 million. The Settlement payable to Brunswick required interest
to be paid quarterly at the 30-day LIBOR rate plus 125 basis points. The $15
million Settlement payable was paid in full to Brunswick in December 1998.
4. SHORT-TERM BORROWINGS:
On March 18, 1999, the Company renegotiated and supplemented its working
capital borrowing facilities by entering into two revolving line of credit
facilities (the Facilities) with separate institutions (the Lenders) providing
for combined borrowing availability of $155 million at a weighted average
interest rate of approximately LIBOR plus 140 basis points. Both facilities have
similar terms and mature in March 2001. As of June 30, 1999, the total available
borrowings under short-term borrowings were approximately $44.0 million.
5. SUBSEQUENT EVENTS:
On July 12, 1999, the Company executed an agreement for an additional
working capital borrowing facility with a separate financial institution
providing for a borrowing availability of $30 million at an interest rate of
LIBOR plus 160 basis points. Borrowings under this facility are pursuant to a
borrowing base formula and are used primarily for financing the Company's
inventory. This facility has similar terms to the Company's existing working
capital borrowing facilities and matures in July 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
This Management's Discussion and Analysis of Results of Operations and Financial
Condition contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the Securities Act), and Section
21E of the Securities Exchange Act of 1934, as amended. These statements relate
to future economic performance, plans and objectives of the Company for future
operations and projections of revenue and other financial items that are based
on the belief of the Company as well as assumptions made by, and information
currently available to, the Company. Actual results could differ materially from
those currently anticipated as a result of a number of factors, including those
listed in the "Risk Factors" of the Company's Amended Annual Report on Form
10-K/A (Registration number 1-14173) as filed with the SEC on July 29, 1999.
These risks include the impact of seasonality and weather, general economic
conditions and the level of consumer spending, the Company's ability to
integrate the acquisitions into existing operations and numerous other factors
identified in the Company's filings with the Securities and Exchange Commission.
GENERAL
The Company is the largest recreational boat retailer in the United
States. Through 47 retail locations in 13 states, the Company sells new and used
recreational boats and related marine products, including engines, boats,
trailers, parts, and accessories. The Company also arranges related boat
financing, insurance and extended warranty contracts; provides boat repair and
maintenance services; and offers boat brokerage services.
MarineMax was incorporated in January 1998. MarineMax has consummated a
series of business combinations since its formation. On March 1, 1998, MarineMax
acquired, in separate merger transactions, all of the issued and outstanding
common stock of Bassett Boat Company of Florida, Gulfwind South, Inc., Gulfwind
U.S.A., 11502 Dumas, Inc. and subsidiaries d/b/a Louis DelHomme Marine,
Harrison's Boat Center, Inc., and Harrison's Marine Centers of Arizona, Inc.
(collectively, the Original Merged Companies) in exchange for 7,799,844 shares
of the Company's Common Stock. On July 7, 1998 the Company acquired, in separate
merger transactions, all of the issued and outstanding common stock of Cochran's
Marine, Inc. and C & N Marine Corporation (together Cochran's Marine) in
exchange for 603,386 shares of its Common Stock. On July 30, 1998, the Company
acquired all of the issued and outstanding common stock of Sea Ray of
Wilmington, Inc. (f.k.a. Skipper Bud's of North Carolina) in a merger
transaction in exchange for 412,390 shares of its Common Stock.
These business combinations (collectively, the Pooled Companies) have been
accounted for under the pooling-of-interests method of accounting. Accordingly,
the financial statements of the Company have been restated to reflect the
operations as if the companies had operated as one entity since inception.
In addition to the Pooled Companies, the Company has acquired seven
additional boat retailers, one brokerage operation and companies owning real
estate used in the operations of certain subsidiaries of the Company
(collectively, the Purchased Companies). In connection with these acquisitions,
the Company issued an aggregate of 2,866,074 shares of its common stock, issued
40,000 warrants, paid an aggregate of approximately $17.2 million in cash and
entered into promissory notes totaling $3.5 million, resulting in the
recognition of an aggregate of $35.3 million in goodwill, which represents the
excess of the purchase price over the estimated fair value of the net assets
acquired. The Purchased Companies have been reflected in the Company's financial
statements subsequent to their respective acquisition dates. Each of the
Purchased Companies is continuing its operations as a wholly owned subsidiary of
the Company.
Each of the Pooled Companies and Purchased Companies historically operated
with a calendar year-end, but adopted the September 30 year-end of MarineMax on
or before the completion of its acquisition. The September 30 year-end more
closely conforms to the natural business cycle of the Company. The following
discussion compares the three-month period ended June 30, 1999 to the
three-month period ended June 30,1998, and the nine-month period ended June 30,
1999 to the nine-month
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period ended June 30,1998 and should be read in conjunction with the condensed
consolidated financial statements of the Company, including the related notes
thereto, appearing elsewhere in this Report.
The Pooled Companies operated historically as independent, privately owned
entities, and their results of operations reflect varying tax structures,
including both S and C corporations, which have influenced the historical level
of employee-stockholder compensation. The selling, general, and administrative
expenses of the Pooled Companies include compensation to employee-stockholders
totaling approximately $4.6 million for the nine months ended June 30, 1998. As
a result of the varying practices regarding compensation to
employee-stockholders among the Pooled Companies, the comparison of operating
margins from period to period is difficult and less meaningful. Certain
employee-stockholders have entered into employment agreements with the Company,
reflecting reduced compensation when compared to historical levels.
The condensed consolidated financial statements included with this filing
include a pro forma adjustment for income taxes as if the Company was a C
corporation from its inception. The condensed consolidated financial statements
do not include pro forma adjustments for the effects of contractually reduced
compensation levels of certain members of management nor the planned addition of
public company expenses.
In December 1998, the Company paid $15,000,000 in relation to a March 1998
settlement (Settlement Obligation) reached with its primary supplier, Brunswick
Corporation (see the Company's Amended Annual Report on Form 10-K/A as filed
with the SEC on July 29, 1999).
CONSOLIDATED RESULTS FROM OPERATIONS
Three-Month Period Ended June 30, 1999 Compared to Three-Month Period Ended June
30, 1998:
Revenue. Revenue increased $56.3 million, or 53.6%, to $161.6 million for
the three-month period ended June 30, 1999 from $105.3 million for the
three-month period ended June 30, 1998. Of this increase, $3.3 million was
attributable to 6% growth in comparable stores sales and $53.0 million was
attributable to stores not eligible for inclusion in the comparable store base.
The increase in comparable store sales for the three-month period ended June 30,
1999 resulted primarily from the Company's retailing strategies, including the
implementation of the MarineMax Value-Price sales approach and MarineMax Care
(two years of defined maintenance), more effective utilization of the
prospective customer tracking feature of the integrated computer system, and
increased access to all MarineMax store inventories, which assists the Company's
retail locations in offering the products that customers desire.
Gross Profit. Gross profit increased $13.0 million, or 52.2%, to $37.9
million for the three-month period ended June 30, 1999 from $24.9 million for
the three-month period ended June 30, 1998. Gross profit as a percentage of
revenue decreased to 23.5% in 1999 from 23.7% in 1998. The decrease in gross
profit margin was attributable to reduced sales of products, such as finance and
insurance contracts, that historically result in higher gross profits. The
reduction in sales of these products was caused by a temporary promotion offered
by Sea Ray, the Company's primary manufacturer, in which the customer was
entitled to an extended warranty contract at Sea Ray's expense.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased by approximately $9.8 million, or 72.8%, to
$23.3 million for the three-month period ended June 30, 1999 from $13.5 million
for the three-month period ended June 30, 1998. Selling, general, and
administrative expenses as a percentage of revenue increased to 14.4% in 1999
from 12.8% in 1998. This increase resulted from the investment of additional
resources to train employees at MarineMax University; investments in
establishing service departments in certain markets; and the additional overhead
associated with operating as a public company, partially offset by reductions in
other selling, general, and administrative expenses through achieving operating
efficiencies and synergies.
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Interest Expense, Net. Interest expense, net decreased approximately
$903,000 or 59.3%, to approximately $597,000 in 1999 from approximately $1.5
million in 1998. Interest expense, net as a percentage of revenue decreased to
0.4% in 1999 from 1.4% in 1998. The decrease resulted primarily from the reduced
interest rate on the Company's lines of credit and reduced level of debt as a
result of the Company's cash and inventory management activities, including the
application of the June 1998 IPO proceeds.
Nine-Month Period Ended June 30, 1999 Compared to Nine-Month Period Ended June
30,1998:
Revenue. Revenue increased $110.4 million, or 51.6%, to $324.4 million for
the nine-month period ended June 30, 1999 from $214.0 million for the nine-month
period ended June 30, 1998. Of this increase, $27.3 million was attributable to
16% growth in comparable stores sales in 1999 and $83.1 million was attributable
to stores not eligible for inclusion in the comparable store base. The increase
in comparable store sales in 1999 resulted primarily from the Company's
experience-based retailing strategies, including the implementation of the
MarineMax Value-Price sales approach and MarineMax Care, more effective
utilization of the prospective customer tracking feature of the integrated
computer system, and a greater emphasis on used boat sales.
Gross Profit. Gross profit increased $27.9 million, or 56.8%, to $77.1
million for the nine-month period ended June 30, 1999 from $49.2 million for the
nine-month period ended June 30, 1998. Gross profit margin as a percentage of
revenue increased to 23.8% in 1999 from 23.0% in 1998. The increase in gross
profit margin was attributable to the implementation of the Company's
experience-based retailing strategies, including the implementation of the
MarineMax Value-Price sales approach and MarineMax Care and increased sales of
products, such as finance and insurance contracts, that historically result in
higher gross profits.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $17.5 million, or 44.4%, to
$57.0 million for the nine-month period ended June 30, 1999 from $39.5 million
for the nine-month period ended June 30, 1998. Selling, general, and
administrative expenses as a percentage of revenue decreased to 17.6% in 1999
from 18.4% in 1998. Substantially all of this decrease was attributable to a
$4.6 million reduction of stockholder-employee compensation in the nine-month
period ended June 30, 1999 versus the nine-month period ended June 30, 1998. In
addition, the Company experienced a reduction in selling, general, and
administrative expenses by achieving operating efficiencies and synergies, which
was partially offset by additional expenses associated with MarineMax University
and operating as a public company.
Non-Recurring Settlement. The Non-Recurring Settlement for the nine-month
period ended June 30, 1998 was attributable to the $15.0 million charge under
the Settlement Agreement the Company entered into with Brunswick.
Interest Expense, Net. Interest expense, net decreased approximately $1.2
million, or 46.7%, to $1.4 million in 1999 from $2.6 million in 1998. Interest
expense, net as a percentage of revenue decreased to 0.4% in 1999 from 1.2% in
1998. The decrease resulted primarily from the reduced interest rate on the
Company's lines of credit and reduced level of debt as a result of the Company's
cash and inventory management activities. The decrease was partially offset by
increased debt associated with higher levels of outstanding borrowings related
to the increased level of inventories required to support the increased level of
revenue.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support
operations, including new and used boat and related parts inventories,
off-season liquidity, and growth through new retail openings and acquisitions.
These cash needs have historically been financed with cash from operations and
borrowings under credit facilities. Historically, the Company utilized a
combination of floor plan financing, working capital lines of credit, and loans
from stockholders to finance inventory levels. These historic
12
<PAGE> 13
credit facilities had varying interest rates, terms, and payment requirements.
The Company depends upon dividends and other payments from its operating
subsidiaries to fund its obligations and meet its cash needs. No agreements
exist that restrict this flow of funds.
At June 30, 1999, the Company's indebtedness totaled approximately $105.5
million, of which approximately $4.0 million was associated with the Company's
real estate holdings and the remaining $101.5 million was associated with
financing the Company's current inventory level and working capital needs.
On March 18, 1999, the Company renegotiated and supplemented its working
capital borrowing facilities by entering into two revolving lines of credit
facilities (the Facilities) with separate institutions (the Lenders) providing
for combined borrowing availability of $155 million at a weighted average
interest rate of approximately LIBOR plus 140 basis points. Both facilities have
similar terms and mature in March 2001. As of June 30, 1999, the total available
borrowings under short-term borrowings were approximately $53.5 million.
On July 12, 1999, the Company executed an agreement for a new working
capital borrowing facility with a separate financial institution providing for a
borrowing availability of $30 million at an interest rate of LIBOR plus 160
basis points. Borrowings under this facility are pursuant to a borrowing base
formula and are used primarily for financing the Company's inventory. This
facility has similar terms to the Company's existing working capital borrowing
facilities and matures in July 2002.
The Company is currently in the process of increasing its inventory and
working capital borrowing capacity. The Company has obtained a commitment letter
from another financial institution. Pursuant to the commitment letter upon
completion and execution of the legal documentation the Company anticipates that
its inventory and working capital borrowing capacity will be increased from the
current $185 million to over $230 million.
During the nine-month period ended June 30, 1999, the Company acquired
three additional boat retailers and one brokerage operation. In connection with
these acquisitions, the Company paid an aggregate of approximately $4.4 million
in cash, including acquisition costs, executed promissory notes totaling $3.5
million, and issued stock and warrant consideration, resulting in the
recognition of an aggregate of approximately $15.2 million in goodwill, which
represents the excess of the purchase price over the estimated fair value of the
net assets acquired.
The Company believes that its working capital lines of credit and
internally generated working capital will sufficient to meet the Company's cash
requirements at least through the remainder of fiscal 1999.
IMPACT OF SEASONALITY AND WEATHER ON OPERATIONS
The Company's business, as well as the entire recreational boating
industry, is highly seasonal, with seasonality varying in different geographic
markets. With the exception of Florida, the Company generally realizes
significantly lower sales in the quarterly period ending December 31 with boat
sales generally improving in January with the onset of the public boat and
recreation shows. The Company's current operations are concentrated in the more
temperate regions of the United States, and its business could become
substantially more seasonal as it acquires retailers that operate in colder
regions of the United States.
YEAR 2000 COMPLIANCE
The Company currently is addressing a universal situation commonly
referred to as the "Year 2000 Problem." Year 2000 Problems result from the
inability of computer programs or computerized equipment to accurately
calculate, store or use a date subsequent to December 31, 1999. The erroneous
date can be interpreted in a number of different ways; typically the year 2000
is represented as the year 1900. This could result in a system failure or
miscalculations causing disruptions of operations including, among other things,
a temporary inability to process transactions, send invoices or engage in
similar normal business activities. The Company has developed a plan to devote
the necessary resources to
13
<PAGE> 14
identify and modify internal systems impacted by the Year 2000 Problem or to
implement new year 2000 compliant systems in a timely manner.
The Company's plan includes conducting an inventory of all hardware and
software that may be subject to the Year 2000 Problem, surveying third party
suppliers of all of the mission critical dealership systems and implementing an
action plan to correct deficiencies before the end of calendar 1999.
The Company depends upon the dealerships' transactional computer systems
for daily operations. All of the Company's dealerships use an identical dealer
management system supported by a major computer system provider for the marine
industry. The Company has contacted the provider and has received written
assurance that its systems are, or will be, year 2000 ready. In addition to
assurances from the system provider, the Company is performing internal testing
to ensure the dealer management systems are year 2000 compliant. The Company
depends upon this provider, as do most other dealerships using the providers
system, to address the year 2000 issues. If the provider fails to adequately
address the year 2000 issue and does not correct the problems in a timely
manner, the Company may materially and adversely affected.
The Company depends upon manufacturers for the production and delivery of
new boats and parts. The Company has contacted the manufacturers and has
received written assurances from them that their systems are, or will be, year
2000 ready. The Company depends upon the manufacturers, as do all other
dealerships worldwide that sell their products, to address the year 2000 issues.
If the manufacturers fail to adequately address the year 2000 issue and do not
correct the problems in a timely manner, the Company may experience shortages in
new boat and parts inventories.
As of July 25, 1999, the Company has received a written response from 90%
of its mission critical vendors. In addition, the Company has formulated a
contingency plan under which alternative third party service providers and
vendors could be utilized and a manual dealership management system could be
implemented, which would enable the Company to continue its retail operations.
While the Company has developed contingency plans, failure by the Company, its
manufacturers or third party service providers and vendors to adequately address
the year 2000 issue could have an adverse effect on the Company.
14
<PAGE> 15
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On April 5, 1999, the Company issued 121,090 shares of its common
stock valued at approximately $1.4 million to the former principal of
Suburban Boatworks, Inc in conjunction with the Company's acquisition of
Suburban Boatworks, Inc. The Company issued the common stock without
registration in reliance on the exemption provided by Section 4(2) of the
Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1999 Annual Meeting of Stockholders was held on March
2, 1999. The following nominees were elected to the Company's Board of
Directors to serve as Class I directors for a three-year term expiring in
2002, or until their successors are elected and qualified, or until their
earlier resignation or removal:
<TABLE>
<CAPTION>
Votes in
Nominee Favor Withheld
------- ----- --------
<S> <C> <C>
Richard R. Bassett 12,947,779 6,750
Paul Graham Stovall 12,947,779 6,750
R. David Thomas 12,947,779 6,750
</TABLE>
The following additional item was voted upon by the Company's
stockholders:
<TABLE>
<CAPTION>
Broker
Votes in Favor Opposed Abstained Non-Vote
-------------- ------- --------- --------
<S> <C> <C> <C>
12,910,818 35,043 8,668 --
</TABLE>
The following directors' terms of office continued after the 1999 Annual
meeting of Stockholders: William H. McGill, Robert S. Kant, Stuart Turley,
and Richard C. LaManna, Jr. In April 1999, Richard C. LaManna, Jr.
resigned his position to the Company's Board of Directors.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.13 Amended and Restated Loan and Security Agreement between the
Company and NationsCredit Distribution Finance, Inc.
10.16 Accounts Receivable and Inventory Financing Agreement between the
Company and Transamerica Commercial Finance Corporation.
27.1 Financial Data Schedule
</TABLE>
15
<PAGE> 16
MARINEMAX, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARINEMAX INC.
August 10, 1999 By: /s/ Michael H. McLamb
----------------------------------
Michael H. McLamb
Chief Financial Officer, Vice
President, Secretary and Treasurer
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<S> <C>
10.13 Amended and Restated Loan and Security Agreement between the
Company and NationsCredit Distribution Finance, Inc.
10.16 Accounts Receivable and Inventory Financing Agreement between the
Company and Transamerica Commercial Finance Corporation.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.13
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN SECURITY AGREEMENT is dated March 18,
1999, between MARINEMAX, INC., a Delaware corporation ("Company"), BASSETT BOAT
COMPANY OF FLORIDA, a Florida corporation, GULFWIND SOUTH, INC., a Florida
corporation, GULFWIND USA, INC., a Florida corporation, MARINEMAX MOTOR YACHTS,
INC., a Delaware corporation, MARINEMAX OF BREVARD COUNTY, INC., a Delaware
corporation, STOVALL MARINE, INC., a Georgia corporation, MARINEMAX OF TREASURE
COVE, INC., a Delaware corporation, MARINEMAX OF NORTH CAROLINA, INC., a North
Carolina corporation, C & N MARINE CORPORATION, a Minnesota corporation, and
COCHRANS MARINE, INC., a Minnesota corporation (singularly, a "Dealer",
collectively, "Dealers") and NATIONSCREDIT DISTRIBUTION FINANCE, INC., a North
Carolina corporation with its principal place of business at 1355 Windward
Concourse, Alpharetta, Georgia 30005 and NATIONSBANK, N.A., a national banking
association (together "Lender") amending and restating in its entirety the Loan
and Security Agreement dated April 7, 1998, amended by Amendment No.1 to Loan
and Security Agreement dated January 5, 1999.
WITNESSETH:
WHEREAS, Borrowers' have requested a credit facility up to $105,000,000
from Lender, and Lender has agreed to provide such facility on the terms set
forth herein;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
"Account" means accounts, receivables, chattel paper and other rights
to payment arising from the sale or lease of goods or provision of services in
the ordinary course of business, including all amounts payable by, and rights
and claims against, any manufacturer or vendor of Inventory, such as volume
purchase discounts, advertising rebates, price protection, warranty work,
incentives and credits.
"Advance" means an advance made by Lender to Borrowers pursuant to
Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"Approved Vendor" means a manufacturer or vendor that is (a) requested
by Borrowers to Lender, in writing, for establishment of a direct floorplan
funding arrangement under this Agreement, and (b) approved by Lender.
"Borrowers" mean the Company and the Dealers.
"Borrowing Base" means the sum of the following for the Dealers,
determined on a consolidated basis: (a) the lesser of $105,000,000 or the sum of
(i) 100% of the cost (including freight charges) of Eligible New Inventory that
is aged less than 366 days from date of delivery to the Dealers, plus (ii) 90%
of the cost (including freight charges) of Eligible New Inventory that is aged
more than 365 days, but not more than 730 days, from date of delivery to the
Dealers, (b) the lesser of $25,000,000 or the sum of (i) 80% of NADA Wholesale
Value of Eligible Used Inventory that has been held by the Dealers for not more
than 180 days, plus (ii) 72% of the NADA Wholesale Value of Eligible Used
Inventory that has been held by the Dealers for more than 180 days, but not more
than 365 days, (c) the lesser of $15,000,000 or 75% of the cost (excluding
freight charges) of Eligible Parts Inventory, plus (d) the lesser of $25,000,000
or 80% of the net book value of Eligible Accounts.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
A hereto (as modified with the consent of Lender from time to time), in form and
detail satisfactory to Lender.
<PAGE> 2
"Business Day" means a day of the year on which banks are open for
business in Atlanta, Georgia.
"Capital Lease" means any capital lease or sublease, as defined in
accordance with GAAP.
"Change in Control" means an acquisition by any person or entity of
more than 5.0% of the beneficial ownership of the voting stock of Company,
except acquisitions (a) by Richard Bassett, Louis DelHomme, William H. McGill,
Jr., Jerry Marshall, Richard C. LaManna, or any of their family members or
trusts, (b) by Brunswick Corporation, or any of its Subsidiaries, or (c)
consummated after receipt of Lender's prior written consent, which shall not be
unreasonably withheld.
"Collateral" has the meaning set forth in Section 4.01 hereof.
"Committed Advance" means an unfunded approval that has been issued to
an Approved Vendor by Lender, pursuant to which Lender commits to fund a
Dealer's obligations under a purchase order submitted by a Dealer to such
Approved Vendor.
"Commitment" means $105,000,000.
"Company" means MarineMax, Inc., a Delaware corporation.
"Compliance Certificate" means a certificate of an officer of Company
acceptable to Lender, and in form and substance satisfactory to Lender, (a)
certifying that such officer has no knowledge that a material Default or
material Event of Default has occurred and is continuing, or if a material
Default or material Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action being taken or proposed to be taken with
respect thereto, and (b) setting forth detailed calculations with respect to the
covenants described in Section 6.01(a), (b) and (c) hereof.
"Consolidated Collateral" means the following assets of the Dealers,
whether now owned or hereafter acquired and wherever located: (a) all Accounts;
(b) all Inventory; (c) all other goods, equipment, fixtures and furniture; and
(d) all insurance policies and proceeds relating to the foregoing; all books and
records relating to the foregoing; and all proceeds and products of the
foregoing.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or obligation of another in any manner, whether
directly or indirectly, including without limitation any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or any security for the payment of
thereof, (b) to purchase Property or services for the purpose of assuring the
owner of such Debt of its payment, or (c) to maintain the solvency, working
capital, equity, cash flow, fixed charge or other coverage ratio, or any other
financial condition of the primary obligor so as to enable the primary obligor
to pay any Debt or to comply with any agreement relating to any Debt or
obligation.
"Current Ratio" means the ratio, calculated for Company and its
Subsidiaries on a consolidated basis, of (a) cash plus accounts receivable plus
inventory plus prepaid expenses, as defined in accordance with GAAP, to (b)
current liabilities determined in accordance with GAAP.
"Dealers" mean Bassett Boat Company of Florida, a Florida corporation.
Gulfwind South, Inc., a Florida corporation, Gulfwind USA, Inc., a Florida
corporation, MarineMax Motor Yachts, Inc., a Delaware corporation, MarineMax of
Brevard County, Inc., a Delaware corporation, Stovall Marine, Inc., a Georgia,
corporation, MarineMax of Treasure Cove, Inc., a Delaware corporation, MarineMax
of North Carolina, Inc. a North Carolina corporation, C & N Marine Corporation,
a Minnesota corporation, and Cochrans Marine, Inc., a Minnesota corporation. A
single dealer is referred to herein as a "Dealer"
"Debt" means all obligations, contingent or otherwise, which in
accordance with GAAP should be classified on the balance sheet as liabilities,
and in any event including Capital Leases, Contingent Liabilities that are
required to be disclosed and quantified in notes to financial statements in
accordance with GAAP, and liabilities secured by any Lien on any Property,
regardless of whether such secured liability is with or without recourse.
-2-
<PAGE> 3
"Default" means any event specified in Section 7.01 hereof, for which
any requirement for the giving of notice or lapse of time has not yet been
satisfied.
"Eligible Account" means an Account of a Dealer that:
(a) constitutes amounts payable by a vendor or manufacturer of
Inventory for returns, volume purchase discounts, advertising
rebates, price protection, warranty work, incentives, credits or
similar items, or is any other Account approved by Lender from
time to time;
(b) is subject to a perfected, first priority Lien in favor of
Lender, free from any other Lien;
(c) has not remained unpaid more than 90 days, and can be confirmed
with the vendor or manufacturer by Lender;
(d) when aggregated with all other Accounts payable by the Account
obligor (excluding Brunswick Corporation and its Subsidiaries),
does not exceed 5% of total Accounts, unless Lender has
specifically approved the concentration level for such obligor;
(e) is not owing by an Account obligor located or otherwise resident
outside the United States;
(f) is not payable by an Account obligor who has suspended business,
has made an assignment for the benefit of creditors, is
insolvent, or is the subject of a voluntary or involuntary
proceeding under any bankruptcy law or other law for the relief
of debtors;
(g) is not subject to any material condition, contingency, allowance,
defense, dispute, off-set or counterclaim; and
(h) otherwise constitutes collateral reasonably acceptable to Lender
for borrowing purposes.
"Eligible New Inventory" means Inventory of the Dealers that (a) is
subject to a perfected, first priority Lien in favor of Lender, free from any
other Lien other than those acceptable to Lender in its sole discretion, (b) is
located at the Dealer's facilities, or was delivered to a retail purchaser
within the last six business days, or was delivered within the last 10 business
days under a purchase agreement for a lease transaction, (c) does not constitute
Used Inventory or Eligible Parts Inventory, and (d) otherwise constitutes
collateral reasonably acceptable to Lender for borrowing purposes.
"Eligible Parts Inventory" means Inventory of the Dealers that (a)
consists of parts and accessories for boats and trailers, (b) is subject to a
perfected, first priority Lien in favor of Lender, free from any other Lien
other than those acceptable to Lender in its sole discretion, (b) is located at
any of the Dealers' facilities, (c) does not constitute Eligible New Inventory
or Used Inventory, and (d) otherwise constitutes collateral reasonably
acceptable to Lender for borrowing purposes.
"Eligible Used Inventory" means Used Inventory of the Dealers that (a)
is subject to a perfected, first priority Lien in favor of Lender, free from any
other Lien other than those acceptable to Lender in its sole discretion, (b) is
located at the Dealer's facilities, or was delivered to a retail purchaser
within the last six business days, or was delivered within the last 10 business
days under a purchase agreement for a lease transaction, (c) does not constitute
Eligible New Inventory or Eligible Parts Inventory, and (d) otherwise
constitutes collateral reasonably acceptable to Lender for borrowing purposes.
"Environmental Law" means any Law or other authorization or requirement
of any Governmental Body relating to actual or threatened emissions, discharges
or releases of pollutants, contaminants, or hazardous or toxic materials, or
otherwise relating to pollution or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"Event of Default" means any of the events specified in Section 7.01 of
this Agreement, provided any requirement for the giving of notice or lapse of
time has been satisfied.
"Fixed Charges Coverage Ratio" means the ratio, calculated for Company
and its Subsidiaries on a consolidated basis, of (a) pre-tax net income plus
interest expense, to (b) interest expense plus amounts paid or scheduled to be
paid on funded debt (excluding revolving loans owing hereunder) and Capital
Leases, all determined in accordance with GAAP. This ratio shall be measured for
the most recent 12 month period (determined during the first fiscal year on an
annualized basis from the date of the initial public offering of the Company's
common stock).
-3-
<PAGE> 4
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Body" means any governmental official, or state,
commonwealth, federal, foreign, territorial, or other court or governmental
body, including any subdivision, agency, department, commission, board, bureau
or instrumentality.
"Hazardous Materials" means any substances or materials subject to any
Environmental Law, including without limitation materials listed in 49 C.F.R.
Section 172.101, hazardous waste as defined in the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation
Recovery Act, 42 U.S.C. Section 6901 et seq. or the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq., explosive or radioactive materials,
hazardous or toxic wastes or substances, petroleum or petroleum distillates,
asbestos or material containing asbestos, or any other materials or substances
designated as hazardous or toxic under any federal, state or local Law.
"Interest Payment Date" means the 15th day of each calendar month,
commencing April 15, 1999.
"Inventory" means inventory and goods held for sale or lease in the
ordinary course of business, raw materials, work in process, and materials used
or consumed in the business; returned and repossessed goods; replacements and
substitutions therefor; and parts, additions and accessions relating thereto.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any acquisition of, or beneficial interest in, partnership or
membership interests, capital stock or other securities of any Person, or any
advance or capital contribution to or other investment in any Person (except
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business).
"Law" means any law, regulation, order or decree of any Governmental
Body.
"Lender" means NationsCredit Distribution Finance, Inc., a North
Carolina corporation and NationsBank, N.A., a national banking association.
"Leverage Ratio" means the ratio, calculated for the Company and its
Subsidiaries on a consolidated basis, of total liabilities determined in
accordance with GAAP, to Tangible Net Worth.
"LIBOR" means the 90 day London Interbank Offered Rate published in the
Eastern Edition of the Wall Street Journal on the last business day of Lender's
accounting month, effective for the next accounting month.
"License" means any license, permit or other authorization by any
Governmental Body or third Person necessary or appropriate for Company or any of
its Subsidiaries to own or operate their businesses or Properties.
"Lien" means any security interest, lien, pledge, encumbrance, charge
or adverse claim of any kind, including without limitation any agreement to give
or not to give any lien, or any conditional sale or other title retention
agreement.
"Litigation" means any proceeding, claim or investigation by or before
any Governmental Body.
"Loan Papers" means this Agreement, and all financing statements,
certificates, instruments and agreements delivered by any Person hereunder, as
they are modified or extended in accordance with their terms.
"Material Adverse Change" means a material and adverse change in
Company's and the Subsidiaries' financial condition, Properties or business
operations, taken as a whole.
"NADA Wholesale Value" means the wholesale value published in the most
recent NADA Small Boat Appraisal Guide, but if no wholesale value is available
for the boat in such guide, then it shall be the wholesale value published in
the most recent BUC Used Boat Price Guide.
"Operating Lease" means any operating lease or sublease, as defined in
accordance with GAAP.
-4-
<PAGE> 5
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, trust, Governmental Body, association, unincorporated
organization or other entity.
"Plan" means any single employer plan, multiple employer plan or
multi-employer plan, within the meaning of ERISA, established by Company or any
of its Subsidiaries, or otherwise maintained at any time for any of Company's
and its Subsidiaries' employees.
"Property" means all types of real, personal, tangible or intangible
property.
"Retail Paper" means chattel paper and other instruments arising from
Company's or any of its Subsidiaries' sale or lease of goods or provision of
services in the ordinary course of business.
"Rights" means rights, remedies, powers and privileges.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities (including Contingent Liabilities) of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (d) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute an unreasonably
small capital.
"Subsidiary" means, as to any Person, any corporation or limited
liability company at least 50% of whose securities having ordinary voting power
(other than securities having such power only by reason of happening of a
contingency) are owned by such Person, or one or more Subsidiaries of that
Person, or a combination thereof.
"Tangible Net Worth" means, calculated for Company and its Subsidiaries
on a consolidated basis, shareholders' equity determined in accordance with
GAAP, minus items treated as intangibles under GAAP, amounts owing by any
employee, officer or other affiliate, and any other asset that cannot be
identified as tangible to Lender's satisfaction.
"Taxes" means all taxes, assessments, fees or other charges imposed by
any Law or Governmental Body.
"Termination Date" means April 1, 2001.
"Used Inventory" means Inventory of the Dealers that has been (a)
previously sold at retail, (b) registered, documented or titled in any state or
jurisdiction, (c) purchased or acquired by the Dealers from a source other than
the manufacturer, or (d) held by the Dealers for more than two years (and in the
case of Inventory covered by this clause (d), then the Dealers shall be deemed
to have held such Inventory as "Used Inventory" only from such two year date
onward).
ARTICLE II
ADVANCES
2.01. ADVANCES.
(a) Lender shall, subject to the terms and conditions set forth herein,
make Advances to the Borrowers from time to time until the Termination Date, to
fund the Dealers' acquisition of Inventory and for Company's general working
capital and operational purposes. Borrowers may borrow, repay and reborrow in
accordance with this Agreement. In no event may total outstanding Advances, plus
all Committed Advances, exceed the Commitment.
(b) Borrowers may use the proceeds of Advances to fund the Dealers'
acquisition of Inventory, for working capital purposes and for other purposes
satisfactory to Lender. No more than $10,000,000 (unless real estate is pledged
to Lender's satisfaction) may be outstanding at any time for Advances used by
Company for other working capital purposes.
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(c) Lender will send Company statements from time to time listing the
amount of each Advance. If Borrowers do not agree with a statement, they must
immediately notify Lender in writing of the objections. Borrowers' failure to
notify Lender of an objection within 10 business days shall constitute an
acceptance of the statement.
(d) In lieu of a promissory note or other instrument evidencing the
indebtedness hereunder, Lender will maintain records reflecting Borrowers'
outstanding indebtedness. Failure to make notation of any Advance, however, will
not affect the obligations of Borrowers. Entries in such records will be
presumed correct, absent manifest error.
2.02. MAKING ADVANCES. Company shall notify Lender at least one
Business Day prior to any proposed Advance; such notification may be oral, but
must be confirmed by telecopy or in writing by the date of the Advance. An
Approved Vendor may contact Lender directly for approvals constituting Committed
Advances, and Lender will disburse the proceeds of Advances under such approvals
directly to the vendor. Other Advances will be disbursed to Company to an
account or address specified by it. Lender may assume that the proceeds of
Advances are being used by the Dealers to acquire Inventory, unless Company
notifies Lender to the contrary at the time that the Advance is being made. Each
date of borrowing must be a Business Day.
2.03. PREPAYMENT AND REPAYMENT OF ADVANCES.
(a) Borrowers may terminate the Commitment, upon 30 days prior written
notice to Lender, and on the date specified for termination of the Commitment,
all outstanding Advances, accrued interest and charges, and other amounts owing
to Lender will be due and payable in full.
(b) In no event may the amount of outstanding Advances used for the
acquisition of Inventory (including Committed Advances for which the Dealers
have received the applicable Inventory) exceed the current Borrowing Base.
Concurrently with delivery of each Borrowing Base Certificate hereunder,
Borrowers shall repay a principal amount of Advances equal to any such excess.
(c) Company and each Dealer acknowledges and agrees that each is
jointly, severally and unconditionally liable for all Advances, accrued interest
and charges and all other amounts owing to Lender under this Agreement,
regardless of which entity requested the financing or received the funds and
regardless of whether such Advances, accrued interest and charges and other
amounts owing to Lender exist as of the date of this Agreement or hereafter
arise. Lender is authorized (in its sole discretion) to demand payment and
performance of obligations hereunder from any entity executing this Agreement,
in any order. Lender may from time to time modify, waive or release the
obligations of any Borrower, release or impair any security for the performance
of obligations of any such Borrower, or otherwise take or omit to take any
action with respect to any such Borrower or this Agreement, in every case
without affecting the liability of any other Borrower.
2.04. INTEREST ON ADVANCES. Advances shall bear interest at a per annum
rate equal to LIBOR plus 1.25%. Accrued interest is due and payable on each
Interest Payment Date. During the existence of an Event of Default, at the
option of Lender, amounts owing hereunder shall bear interest at a per annum
rate equal to LIBOR plus 4.25%, due and payable on demand.
2.05. COMPUTATIONS AND MANNER OF PAYMENTS. Interest will be calculated
on a simple interest basis for a year of 360 days, based on actual days elapsed.
If any payment is due on a date that is not a Business Day, the due date will be
extended to the next Business Day. Lender may, at any time and without notice to
Borrowers, apply monies received in payment of Borrowers' obligations in such
order of application as Lender shall determine. All payments shall be made in
United States dollars and without set-off, counterclaim or other defense.
Borrowers specifically agree that they will not delay payment of any obligations
to Lender, or assert any defense or set-off with respect to said obligations, on
account of a dispute between Company or one of its Subsidiaries and the vendor
or manufacturer of any Inventory.
ARTICLE III
CONDITIONS PRECEDENT
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3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to fulfillment of the following conditions precedent:
(a) Lender shall be satisfied, in its reasonable discretion, with
Company's and each Subsidiary's financial condition, Properties, business,
affairs or prospects as of the effective date.
(b) Borrowers shall have executed and delivered to Lender all of
Borrowers' Loan Papers, in form and substance satisfactory to Lender.
(c) The Dealers shall have delivered such financing statements and lien
filings as Lender shall request to record and perfect the Liens granted to
Lender under the Loan Papers. Lender shall have received such UCC and Lien
search reports as it shall deem appropriate to evidence that its Liens on the
Consolidated Collateral are first priority Liens, subject only to other Liens
acceptable to Lender in its sole discretion.
(d) Lender shall have received a certificate of a duly authorized
officer of Company, certifying that (i) no Default or Event of Default exists to
the best of the knowledge of the officer executing the certificate, (ii) the
representations and warranties set forth in Article V hereof are true and
correct in all material respects, and (iii) Borrowers have complied with all
agreements and conditions to be complied with by it under the Loan Papers by
such date.
(e) Lender shall have received a certificate of the secretary of each
of Borrowers, certifying (i) that attached copies of its articles of
incorporation, bylaws or other organizational documents are true and complete,
and in full force and effect, without amendment except as shown, (ii) that an
attached copy of resolutions authorizing execution and delivery of the Loan
Papers is true and complete, and that such resolutions are in full force and
effect, were duly adopted, have not been amended, modified, or revoked, and
constitute all resolutions adopted with respect to this loan transaction, and
(iii) to the incumbency, name and signature of each officer or representative
authorized to sign the Loan Papers on behalf of the entity. Lender may
conclusively rely on this certificate until it is otherwise notified by
Borrowers in writing.
(f) Lender shall have received an opinion of counsel to Borrowers (i)
that Borrowers have full power and authority to execute and deliver the Loan
Papers; (ii) that the Loan Papers constitute the legal, valid and binding
respective obligations of Borrowers, enforceable in accordance with their terms;
and (iii) as to such other matters, and otherwise in form and substance,
satisfactory to Lender.
(g) Lender shall have received evidence of insurance as required under
Sections 4.03 and 6.09 hereof.
(h) Lender shall have received copies of all appraisals and
environmental assessments that have been performed with respect to Company's and
its Subsidiaries' real estate, and such appraisals and environmental assessments
shall be in form and substance satisfactory to Lender.
(i) Lender shall have received evidence satisfactory to it that
Borrowers are duly organized, validly existing and in good standing in their
respective jurisdiction of organization, and are duly qualified and in good
standing in all other appropriate jurisdictions.
(j) All proceedings of Borrowers taken in connection with the
transactions contemplated hereby, and all documents incidental thereto, shall be
satisfactory in form and substance to Lender. Lender shall have received copies
of all documents or other evidence that it may reasonably request in connection
with such transactions.
3.02. REQUESTS FOR ADVANCES. Each request for an Advance and each
funding of an Advance by Lender (including the disbursement of an Advance
directly to an Approved Vendor) shall constitute a representation by Borrowers
that on each of the dates of the request and funding, the following are true:
(a) the representations and warranties contained in Article V
hereof are true and correct in all material respects on such
date, as though made on and as of such date, and
(b) no event has occurred or exists, or would result from such
Advance, that could constitute a Default or Event of Default.
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<PAGE> 8
Lender may condition any Advance upon Lender's receipt, in form and substance
acceptable to it, of such other information as it may deem necessary or
appropriate. Notwithstanding the foregoing, even if the foregoing conditions are
not satisfied on the applicable disbursement date, Lender may fund a Committed
Advance that was committed when such conditions were satisfied, without being
deemed to have waived any conditions precedent nor to have established any
course of dealing.
ARTICLE IV
SECURITY INTEREST
4.01. SECURITY INTERESTS IN COLLATERAL. As security for all present and
future obligations of Borrowers to Lender, whether or not arising under this
Agreement, and of whatever kind, now due or to become due, absolute or
contingent, joint or several, each Dealer hereby grants to Lender a continuing
security interest and Lien on the following assets of each Dealer, whether now
owned or hereafter acquired and wherever located (collectively, "Collateral"):
(a) all of Dealer's Accounts;
(b) all of Dealer's Inventory;
(c) all of Dealer's other goods, equipment, fixtures and
furniture; and
(d) all insurance policies and proceeds relating to the foregoing;
all books and records relating to the foregoing; and all
proceeds and products of the foregoing.
4.02. DUTIES RELATING TO COLLATERAL. So long as this Agreement is in
effect or any amounts are owing to Lender, Borrowers agree that they shall:
(a) Keep accurate and complete records of the Consolidated Collateral;
keep all books and records relating to the Consolidated Collateral at Company's
address specified under or pursuant to Section 8.02 hereof; and provide at least
30 days advance written notice to Lender of any change in the location of any
such books and records;
(b) Promptly report and pay all Taxes and other charges against the
Consolidated Collateral; maintain a perfected, first priority Lien in favor of
Lender in the Consolidated Collateral, subject only to other Liens permitted
hereunder; and discharge all other Liens that from time to time attach to or are
asserted against the Consolidated Collateral;
(c) Pay all transportation and storage charges on the Consolidated
Collateral; and pay all rents and other amounts, if any, for the use of premises
on which any of the Consolidated Collateral is kept; and
(d) Take all actions appropriate for the collection and enforcement of
Accounts, and for the perfection of any liens securing Accounts; permit Lender
upon reasonable request to contact Account obligors to verify information
provided by Borrowers, and assist Lender in such verification process; and after
a Default or Event of Default, not adjust, settle or compromise the amount,
payment or performance of any obligations relating to Accounts, without the
prior consent of Lender.
4.03. INSURANCE OF COLLATERAL. Borrowers shall keep all Inventory
insured for full value against all insurable risks, on terms and with insurers
reasonably acceptable to Lender, and with Lender as the loss payee, assignee or
additional insured, as appropriate. Company shall provide notice to Lender in
writing at least 10 days before changing or canceling any policy. Each policy
shall require the insurer to give not less than 30 days prior written notice to
Lender of cancellation, and shall provide that Lender's interest will not be
impaired by any act or neglect of Borrowers or any other Person nor by any use
of the premises for purposes more hazardous than are permitted by the policy.
4.04. FURTHER ASSURANCES. Company shall, and shall cause the Dealers
to, execute such financing statements and other instruments and agreements, and
shall take such actions, as Lender shall request from time to time to evidence
or perfect any Lien granted under the Loan Papers. Unless prohibited by Law,
Dealers authorize
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<PAGE> 9
Lender to execute and file any financing statement or other instrument or
agreement on behalf of Dealers for the foregoing purposes. The parties agree
that a copy of this Agreement, or any financing statement may be filed as a
financing statement in any appropriate jurisdiction, to the extent permitted by
Law. Each Dealer hereby ratifies and confirms the continuation of the security
interest granted to Lender pursuant to the Guaranty and Security Agreement
entered into previously by each Dealer and all parties hereto agree that the
grant of the security interest pursuant to this Section 4 shall not in any
manner be considered a novation of the grant of the security interest in the
aforesaid Guaranty and Security Agreement
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant that the following are true and
correct:
5.01. ORGANIZATION AND QUALIFICATION. Each of Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of organization. Each of Company and its
Subsidiaries is qualified to do business in all jurisdictions where the nature
of its business or Properties require such qualification. Each Subsidiary of
Company as of the date of this Agreement is listed on Exhibit C hereto.
5.02. DUE AUTHORIZATION; VALIDITY. The Board of Directors of Borrowers
have duly authorized the execution, delivery and performance of its Loan Papers.
No consent of any shareholders of Borrowers is required as a prerequisite to the
validity and enforceability of its Loan Papers. Borrowers have full legal right,
power and authority to execute, deliver and perform under its Loan Papers. Such
Loan Papers constitute the legal, valid and binding obligations of Borrowers,
enforceable in accordance with their terms (subject as to enforcement of
remedies to any applicable bankruptcy, reorganization, moratorium, or similar
Laws or principles of equity affecting creditors' rights generally).
5.03. INTENTIONALLY OMITTED
5.04. CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution or
delivery of any Loan Papers, and performance thereunder, do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien on any Properties of Company or any Subsidiary under, or require any
consent, approval or action by or notice to any Governmental Body or other
Person (other than consents already obtained) pursuant to, the articles of
incorporation, bylaws or other organizational documents of Company or any
Subsidiary, or any Law or material agreement to which Company, any Subsidiary or
any of their Properties is subject.
5.05. FINANCIAL STATEMENTS. The financial statements of Company and its
Subsidiaries delivered to Lender fairly present Company's and its Subsidiaries'
results of operation, and Company's and its Subsidiaries financial conditions as
of the dates and for the periods shown, all in accordance with GAAP. Company's
financial statements (and notes thereto) reflect all material liabilities,
direct and contingent, of Company and its Subsidiaries that are required to be
disclosed in accordance with GAAP. None of Company and its Subsidiaries has
material Contingent Liabilities, liabilities for Taxes, forward or long-term
commitments, or unrealized or anticipated losses from any unfavorable
commitments that are not reflected in such financial statements. Each of Company
and its Subsidiaries is Solvent.
5.06. LITIGATION. Except as disclosed to Lender on Exhibit D attached
hereto, there is no Litigation pending or, to the best of Company's knowledge,
threatened against Company or any of its Subsidiaries on the date hereof that
involves a claim for damages or reasonably expected potential liability of
$1,000,000 or more. There is no pending or, to the best of Company's knowledge,
threatened Litigation against Company or any of its Subsidiaries that could
result in a Material Adverse Change.
5.07. LAWS REGULATING INCURRENCE OF DEBT. No proceeds of any Advance
will be used directly or indirectly to acquire any securities, without the prior
written consent of Lender. No Advance will be used to purchase or carry margin
stock (as defined in applicable Federal Reserve regulations), nor to extend
credit to others to do so. None of Company or its Subsidiaries is subject to
regulation under any Law that prohibits or restricts its incurrence of Debt in
any material respect.
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<PAGE> 10
5.08. LICENSES, TITLE TO PROPERTIES, ETC. Each of Company and its
Subsidiaries possesses all material Licenses and is not in violation thereof in
any material respect. Each of Company and its Subsidiaries has full power,
authority and legal right to own and operate its Properties, and to conduct its
business. Each of Company and its Subsidiaries has good and indefeasible title
(fee or leasehold, as applicable) to its Properties, subject to no Lien of any
kind, except as permitted hereunder. None of Company and its Subsidiaries is in
violation of its articles of incorporation, bylaws or other organizational
documents, any award of any arbitrator, or any Law or material agreement to
which Company, any of its Subsidiaries or any of their Properties is subject. No
business or Property of Company or its Subsidiaries is affected by any strike,
lock-out or other labor dispute, material casualty, earthquake, embargo or act
of God. No event or circumstance has occurred or exists that constitutes or
could reasonably be expected to constitute a violation of, or breach or default
under, Company's settlement agreement with Brunswick Corporation.
5.09. OUTSTANDING DEBT AND LIENS. Company and its Subsidiaries have no
outstanding Debt, Contingent Liabilities or Liens, except as expressly permitted
hereunder.
5.10. TAXES. Each of Company and its Subsidiaries has filed all Tax
returns and reports which are required to be filed, and has paid all Taxes, to
the extent due and payable. All Tax liabilities of Company and its Subsidiaries
are adequately provided for on their books (including interest and penalties)
and adequate reserves have been established therefor in accordance with GAAP.
Except as disclosed to Lender, no taxing authority has notified Company or any
of its Subsidiaries of any material deficiency in a Tax return nor asserted any
material Tax liability in excess of that already paid.
5.11. EMPLOYEE BENEFITS. All employee benefits are provided in
accordance with all applicable Laws. Each Plan satisfies the minimum funding
standards under all applicable laws, and has no accumulated deficiency. None of
Company or its Subsidiaries has incurred any withdrawal liability nor engaged in
any prohibited transaction with respect to a Plan. None of Company or its
Subsidiaries has failed to make any payment to a Plan as required under
applicable laws, and no reportable event (as defined under ERISA) has occurred.
None of Company or its Subsidiaries has received any notice from any
Governmental Body or administrator of any potential termination of a Plan, and
no circumstance or event exists that could constitute grounds for the
termination of or appointment of a trustee to administer any Plan.
5.12. ENVIRONMENTAL LAWS. Company has delivered to Lender copies of all
environmental studies and reports conducted or received by Company or its
Subsidiaries in connection with any of their Properties. All Licenses have been
obtained or filed that are required under any Environmental Laws, unless the
failure to obtain or file same could not result in a Material Adverse Change. No
Hazardous Materials are generated or produced at or in connection with any
Properties or operations of Company or its Subsidiaries, and no Hazardous
Materials in any material amounts are released onto any Properties of Company or
its Subsidiaries.
5.13. DISCLOSURE. None of Company and its Subsidiaries has made a
material misstatement of fact, or failed to disclose any fact necessary to make
the facts disclosed not misleading, to Lender during the course of application
for and negotiation of this Agreement, the Loan and Security Agreement dated
April 7, 1998, Amendment No.1 to Loan and Security Agreement dated January 5,
1999 or otherwise in connection with any transactions contemplated hereby. There
is nothing known to Company or its Subsidiaries that could materially adversely
affect Company's or any of its Subsidiaries' financial condition, Properties or
business operations, or that could result in a Material Adverse Change, which is
not set forth herein or in notices hereafter delivered to Lender.
ARTICLE VI
COVENANTS
So long as this Agreement is in effect or any amounts are owing to
Lender, Borrowers agrees as follows:
6.01. FINANCIAL COVENANTS; GUARANTIES.
(a) Company shall maintain a Current Ratio of at least: (i) 1.10 to 1
for the period from October 1 through June 30 of each year and (ii) 1.20 to 1
for the period from July 1 through September 30 of each year.
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(b) Company shall maintain a Leverage Ratio of not more than: (i) 5.5
to 1 at the end of each calendar month for the period from January through June
of each year, and (ii) 2.75 to 1 at the end of each calendar month for the
period from July through December of each year.
(c) Company shall maintain an Fixed Charges Coverage Ratio of at least
1.0 to 1 at the end of each month.
6.02. DEBT; OPERATING LEASES. Company shall not, and shall not permit
any of its Subsidiaries to, incur, assume or be liable in any manner for any
Debt without the consent of Lender, which consent shall not be unreasonably
withheld, except (a) Debt under the Loan Papers, (b) existing Debt shown on
Exhibit B hereto, (c) any Debt obligation to finance the acquisition of marine
related Inventory by Subsidiaries that are not Dealers in an amount not to
exceed $10,000,000, (d) Capital Leases and Debt incurred to acquire equipment
used in Company's or the Subsidiary's business (including refinancings thereof),
in an amount not to exceed $3,000,000 in the aggregate at any time, (e) Debt,
other than for the acquisition of marine related Inventory, incurred, assumed or
otherwise owing by Company or its Subsidiaries that are not Dealers in
connection with a marine related acquisition or a marine related merger in an
amount not to exceed $5,000,000 in any single transaction, unless such
transaction would result in the Company and its Subsidiaries being obligated to
make cash payments for marine related acquisitions and marine related merger
Debt in excess of $7,500,000 in any fiscal year, (f) other Debt subordinated to
repayment of amounts owing hereunder on terms satisfactory to Lender, and
otherwise acceptable to Lender in its sole discretion, and (g) trade payables
incurred and paid in the ordinary course of business. Company and its
Subsidiaries shall not enter into or be party to Operating Leases requiring
total rental payments during any fiscal year in excess of $4,000,000 in the
aggregate.
6.03. CONTINGENT LIABILITIES. Company shall not, and shall not permit
any of its Subsidiaries to, incur, assume or be liable in any manner for any
Contingent Liabilities without the consent of Lender, which consent shall not be
unreasonably withheld, except (a) those resulting from the endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
Contingent Liabilities of Company and its Subsidiaries relating to Debt secured
solely by real property of Company and its Subsidiaries, and in existence on the
date hereof, (c) existing Contingent Liabilities shown on Exhibit B hereto, (d)
Contingent Liabilities of Company created in connection with an acquisition or
merger, as approved by Lender in its reasonable discretion, and (e) Contingent
Liabilities of Company for obligations of its direct or indirect wholly-owned
Subsidiaries.
6.04. LIENS. Company shall not, and shall not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any of its Properties
without the consent of Lender, which consent shall not be unreasonably withheld,
except (a) Liens hereunder, (b) Liens securing Debt, as shown on Exhibit B
hereof, (c) Liens effected by or relating to Capital Leases or other Debt
permitted under Section 6.02(c) and (d) hereof, encumbering only the assets
leased thereunder or acquired with proceeds thereof, (d) Liens satisfactory to
Lender securing Debt or Contingent Liabilities permitted under Section 6.02(e)
or (f) hereof, or Section 6.03(b) hereof, and (e) Tax, mechanics' and
materialmen's Liens relating to amounts that are not yet due and payable, or
that are being contested in good faith by appropriate proceedings, for which
adequate reserves have been established.
6.05. AMENDMENT OF ORGANIZATIONAL DOCUMENTS. Borrowers shall not, amend
or modify, or permit the amendment or modification of, their articles of
incorporation, bylaws or other organizational documents in any material respect,
without the prior written consent of Lender (which will not be unreasonably
withheld).
6.06. LAWS, LICENSES AND MATERIAL AGREEMENTS.
(a) Company shall, and shall cause its Subsidiaries to, obtain and
comply in all material respects with all applicable Laws and Licenses. Company
and its Subsidiaries shall maintain all Plans such that the representation and
warranty in Section 5.11 hereof is true at all times.
(b) Company shall, and shall cause its Subsidiaries to, maintain and
comply in all material respects with all material agreements necessary or
appropriate for their businesses and Properties, other than defaults arising
under due on sale clauses in mortgages and deeds of trust securing the Debt
shown on Exhibit B hereto. Company shall comply with its settlement agreement
with Brunswick Corporation in all material respects. Company shall not
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take any action or suffer to exist any circumstance that could violate, or
constitute a breach under or grounds for termination of, such agreement.
6.07. DISPOSITION OF ASSETS. Company shall not, and shall not permit
any of its Subsidiaries to, sell, transfer, encumber or lease any of their
assets without the consent of Lender, which consent shall not be unreasonably
withheld, except (a) sales or leases of Inventory in the ordinary course of
business, (b) dispositions of obsolete or useless assets, (c) transfers of
Assets between wholly-owned Subsidiaries of Company, and (d) dispositions of
Retail Paper in the ordinary course of business,. Upon any sale of Retail Paper
by any of the Dealers in the ordinary course of business, Lender's Liens in such
Retail Paper shall be automatically released, without any further action by
Lender.
6.08. MERGERS; INVESTMENTS; BUSINESS. Company shall not, and shall not
permit any Subsidiary of Company to, merge into, consolidate with or make any
Investment in any Person, permit any other Person to merge into or consolidate
with it, or form or acquire any new Subsidiary, without Lender's prior written
consent (which shall not be unreasonably withheld), except mergers or
consolidations of a wholly-owned Subsidiary of Company with or into Company or
another wholly-owned Subsidiary. Lender expressly acknowledges that it is
Company's growth strategy to pursue strategic acquisitions that are beneficial
to its business. Within 30 days after Company's acquisition or formation of any
direct or indirect Subsidiary hereafter, Company shall notify Lender in writing
of such acquisition or formation. None of Company and its Subsidiaries shall
change the nature of its business as now conducted.
6.09. INSURANCE. Except as otherwise required by Section 4.03 hereof,
Company shall, and shall cause its Subsidiaries to, (a) keep its insurable
Properties adequately insured at all times by financially sound and reputable
insurers to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies similarly
situated and in the same or similar businesses, (b) maintain in full force and
effect public liability and workers compensation insurance, in amounts customary
for such similar companies to cover normal risks, by insurers satisfactory to
Lender, and (c) maintain such other insurance as may be required by Law or
reasonably requested by Lender. Company shall deliver evidence of renewal of
each insurance policy on or before the date of its expiration, and from time to
time shall deliver to Lender, upon demand, evidence of the maintenance of such
insurance. Company shall promptly deliver to Lender copies of all reports
provided to insurers by Company or any of its Subsidiaries.
6.10. INSPECTION RIGHTS. Company shall, and shall cause its
Subsidiaries to, permit Lender, upon reasonable notice and during normal
business hours, to examine and make copies of and abstracts from any of their
books and records, to inspect their Properties and to discuss their affairs with
any of their directors, officers, managerial employees or accountants, all as
Lender may reasonably request.
6.11. RECORDS; CHANGES IN GAAP; YEAR 2000 COMPATIBILITY. Company shall,
and shall cause its Subsidiaries to, keep adequate books and records in
conformity with GAAP. Company shall not change its fiscal year nor change, or
permit any of its Subsidiaries to change, its method of financial accounting
except in accordance with GAAP. In connection with any change in accounting
methods resulting from a change in GAAP, Company and Lender shall make
appropriate alterations to the covenants set forth in Section 6.01 hereof,
reflecting such change. Company shall take all action necessary to assure that
its and its Subsidiaries' computer-based systems are able to materially operate
and materially effectively process data having dates on or after January 1,
2000.
6.12. REPORTING REQUIREMENTS. Company shall furnish to Lender:
(a) By the 15th day of each month, a Borrowing Base Certificate
prepared on a consolidated basis for Company and the Dealers as of the close of
business for the preceding month and accompanied by detailed Inventory, accounts
payable aging and receivable aging reports, in form and substance satisfactory
to Lender and certified as true and complete by an officer of Company;
(b) As soon as available and in any event within 20 days after the end
of each month, a balance sheet and statement of income of Company and its
Subsidiaries for such month and for the portion of the fiscal year ending with
such month, prepared on a consolidated basis in accordance with GAAP in
reasonable detail, and certified by an officer of Company (in a manner
satisfactory to Lender) as fairly presenting the financial condition and results
of operations of Company and its Subsidiaries, together with a Compliance
Certificate;
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(c) As soon as available and in any event within 120 days after the end
of each fiscal year of Company, an audited balance sheet and statements of
income and cash flows of Company and its Subsidiaries for such fiscal year,
prepared on a consolidated basis in accordance with GAAP in reasonable detail
and accompanied by an unqualified opinion of independent certified public
accountants acceptable to Lender, together with a Compliance Certificate;
(d) Promptly upon receipt thereof, copies of all material reports or
letters submitted to Company or any of its Subsidiaries by any auditors or
accountants in connection with any annual, interim or special audit;
(e) As soon as possible but at least 60 days prior to the commencement
of each fiscal year, a monthly business plan of Company and its Subsidiaries for
such year, including a projected balance sheet and income statements,
accompanied by a statement of assumptions and certified by an officer of Company
in a manner acceptable to Lender;
(f) Promptly upon the filing thereof, copies of all filings made by
Company or any of its Subsidiaries with the Securities and Exchange Commission;
(g) As soon as possible and in any event within five Business Days
after knowledge thereof by an officer of Company or any of its Subsidiaries, a
notice of the occurrence of any material Default or material Event of Default,
setting forth the details thereof, and the action being taken or proposed to be
taken with respect thereto;
(h) As soon as possible and in any event within five Business Days,
notice of any Litigation pending or threatened against Company or any of its
Subsidiaries which, if determined adversely, could result in damages in excess
of $500,000 or more or any other Material Adverse Change, together with a
statement of an officer of Company describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto;
(i) Promptly after filing or receipt thereof, copies of all reports and
notices that Company or any of its Subsidiaries furnishes to or receives from
any holders of any Debt or Contingent Liability relating to a material breach,
default or event of default thereunder, or otherwise relating to any event or
circumstance that could result in a material Default or material Event of
Default; and
(j) Promptly upon request, such information concerning the Borrowing
Base, Accounts, Inventory, Company's or its Subsidiaries' financial condition,
Properties, business, affairs or prospects, and other matters, as Lender may
from time to time reasonably request.
6.13. TRANSACTIONS WITH AFFILIATES. Except as permitted herein, Company
shall not, and shall not permit any of its Subsidiaries to, enter into or be
party to a transaction with an Affiliate (except Company or a direct or indirect
wholly-owned Subsidiary of Company), except on terms no less favorable than
could be obtained on an arm's-length basis with a Person that is not an
Affiliate. Company shall not, and shall not permit any of its Subsidiaries to,
make any loans or advances to any of its officers, shareholders or other
Affiliates (except a direct or indirect wholly-owned Subsidiary of Company),
except advances made for customary travel expenses incurred in the conduct of
Company's business. Company shall not, and shall not permit any of its
Subsidiaries to, make any loans or advances to any Subsidiary of Company, unless
such Subsidiary is directly or indirectly wholly-owned by Company.
ARTICLE VII
EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT. Each of the following shall be an "Event of
Default" hereunder, if the same shall occur for any reason whatsoever, whether
voluntary or involuntary, by operation of Law or otherwise:
(a) Borrowers shall fail to pay any principal owing hereunder when due;
or Borrowers shall fail to pay any interest or other amounts payable under any
Loan Papers within 15 days after the due date therefor;
-13-
<PAGE> 14
(b) Any material representation or warranty of any Borrower made in
connection with this Agreement or any transactions contemplated hereby shall be
incorrect or misleading in any material respect when given;
(c) Any Borrower shall fail to perform or observe any other term or
covenant contained in any of their respective Loan Papers, and such default
shall not be cured within 30 days after the earlier of knowledge thereof by an
officer of such Borrower, or after written notice of the default is delivered by
Lender to Company, but if the default is subject to cure and the cure is being
diligently pursued by appropriate means at the end of such 30 days, then such
Borrower, shall have an additional 30 days thereafter to complete the cure;
(d) Any provision of any Loan Papers shall, for any reason, not be
valid and binding on any Borrower; any Borrower shall not have been Solvent when
it delivered this Agreement to Lender; or any breach, default or event of
default shall occur or exist under any Loan Papers after any applicable grace
period;
(e) Any of the following shall occur: (i) Company or any of its
Subsidiaries shall make an assignment for the benefit of creditors, be insolvent
or unable to pay its debts as they come due, or cease to be Solvent; (ii)
Company ceases doing business as a going concern; (iii) any Subsidiary shall
cease doing business as a going concern without the consent of Lender, which
consent shall not be unreasonably withheld; (iv) Company or any of its
Subsidiaries shall petition any Governmental Body for the appointment of a
trustee, receiver or liquidator of it or any of its assets, or shall commence
any proceedings under any bankruptcy, reorganization, insolvency, moratorium,
liquidation or other debtor relief Laws; (v) any petition shall be filed, or any
such proceedings shall be commenced, against Company or any of its Subsidiaries
under any such Laws and the same is not dismissed or otherwise discharged within
90 days, or an order, judgment or decree shall be entered approving such
petition or appointing any trustee, receiver or liquidator for Company or any of
its Subsidiaries, or any of their assets; or (vi) any final order, judgment or
decree shall be entered decreeing Company's or any of its Subsidiaries'
dissolution, split-up or divestiture of assets;
(f) Any lender(s) under any of the real estate Debt shown on Exhibit B
hereto shall declare such Debt due and payable prior to its stated maturity as a
result of breach of a due-on-sale clause, and such action shall result in a
Material Adverse Change; Company or any of its Subsidiaries shall fail to make
any payment when due with respect to any other Debt or Contingent Liability of
$1,000,000 or more in the aggregate, and such failure shall continue after any
applicable grace period; Company or any of its Subsidiaries shall fail to
observe any term or condition of any agreement relating to any other Debt or
Contingent Liability of $1,000,000 or more in the aggregate, and such failure
shall continue after any applicable grace period; or any such other Debt or
Contingent Liability shall be declared to be due and payable, or required to be
prepaid, prior to the stated maturity thereof; provided, however, it shall not
be an Event of Default if Company or any of its Subsidiaries shall fail to make
any payment when due with respect to any Debt to a manufacturer or vendor of
Inventory if Company or any of its Subsidiaries are in good faith contesting the
payment of such Debt and the aggregate amount of all such contested Debt does
not exceed $2,500,000;
(g) Company and its Subsidiaries shall have any final judgment(s)
outstanding against them for the payment of $2,000,000 or more in excess of
insurance, and such judgment(s) shall remain unstayed and unpaid for over 30
days;
(h) There shall be an issuance of an order of attachment against
Company, any of its Subsidiaries or any material portion of their Properties, or
there shall be damage to or destruction of a substantial part of Company's or
any of its Subsidiaries' assets that is not covered by insurance;
(i) Any investigation or proceeding shall be instituted against Company
or any of its Subsidiaries under or with respect to any Environmental Laws that
could reasonably be expected to result in any penalty, fine, remediation costs
or other damages of $2,000,000 or more in excess of insurance;
(j) Company shall have any material change in its management, without
prior consent of Lender, or there shall be a Change in Control; or
(k) Lender shall determine that there has been a Material Adverse
Change.
7.02. REMEDIES UPON DEFAULT. If an Event of Default described in
Section 7.01(e) hereof shall occur with respect to Company or any Borrower all
amounts owing to Lender shall, to the extent permitted by applicable
-14-
<PAGE> 15
Law, become immediately due and payable without any action by Lender, and
without diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby waived to the
fullest extent permitted by Law. If any other Event of Default shall occur and
be continuing, Lender may do any one or more of the following from time to time:
(a) Declare all Advances, interest and other amounts owing to Lender
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby waived to the
fullest extent permitted by Law;
(b) Terminate or reduce the Commitment; and/or
(c) Exercise any other Rights afforded under any agreement, by Law, at
equity or otherwise, including those Rights of a secured party under the Uniform
Commercial Code in effect in any jurisdiction where the Collateral is kept. Such
Rights shall include the right to cancel any Committed Advances, to direct
Dealers to return any Inventory to a vendor or manufacturer thereof for credit
or refund, to enter any of Borrowers' premises with or without legal process,
but without force, and/or to take possession of and remove Collateral, and books
and records relating to Collateral. At Lender's request during an Event of
Default, Company and the Dealers will assemble, prepare for removal and make
available to Lender at a place to be designated by Lender which is reasonably
convenient to both parties such items of Collateral as Lender may from time to
time request. During the continuance of an Event of Default, Lender may take
control of any funds generated by the Collateral, notify Account obligors to
make payment to an account or location designated by Lender, and in Lender's
name or Dealer's name, demand, collect, receipt for, settle, compromise, sue
for, repossess, accept returns of, foreclose or realize upon any Collateral,
including without limitation Accounts and related instruments and security
therefor. Borrowers waive any and all rights that any of them may have to a
notice prior to seizure by Lender of any Collateral. Ten days written notice of
a public sale date or the date after which a private sale may occur shall be a
reasonable notice. Lender shall not be chargeable with responsibility for the
accuracy or validity of any document or for the existence or value of any
Collateral, and shall not be liable for failure to collect any amounts owing on
an Account or instrument. Borrowers waive all relief from all appraisement,
valuation, deficiency or exemption laws now in force or hereafter enacted.
Lender shall not be required and Borrowers hereby waive any and all rights to
require Lender, (i) to prosecute or seek to enforce any remedies against any
particular Borrower and/or (ii) to require Lender to seek to enforce or resort
to any remedies with respect to any security interests, liens or encumbrances
granted to Lender by any particular Borrower. Lender, at its sole discretion,
may enforce this Agreement against any Borrower or any Collateral of any
Borrower. LENDER SHALL NOT BE LIABLE FOR ANY ACT OR OMISSION OF ITS OFFICERS,
AGENTS OR EMPLOYEES, ABSENT GROSS NEGLIGENCE OR WILFUL MISCONDUCT.
7.03. POWER OF ATTORNEY. Dealers hereby irrevocably appoint Lender,
including any officer or employee of Lender as Lender may designate, as Dealers'
true and lawful attorney-in-fact with power of substitution to do the following
acts on behalf of Dealers' during the continuance of any Event of Default: to
prepare, execute and deliver in the name of Dealers security instruments,
financing statements, lien filings and certificates of title relating to
Collateral; to endorse the Dealers name upon any notes, checks, drafts, money
orders and other forms of instruments made payable to any Dealer and relating to
Collateral; and generally to perform all acts and do all things necessary and
proper in connection with the transactions contemplated hereby or in discharge
of the powers hereby conferred, including the making of affidavits and the
acknowledgment of instruments as fully as if done by the Dealers. The foregoing
powers are coupled with an interest and shall be irrevocable, as long as the
Commitment or any obligations of Borrowers to Lender remain outstanding.
7.04. CUMULATIVE RIGHTS. All Rights available to Lender under the Loan
Papers shall be cumulative of and in addition to all other Rights under any
other agreement, at Law or in equity. The acceptance by Lender at any time and
from time to time of partial payment of any amount owing under any Loan Papers
shall not be deemed to be a waiver of any Event of Default then existing. No
waiver by Lender of an Event of Default shall be deemed to be a waiver of any
Event of Default other than such Event of Default. No delay or omission by
Lender in exercising any Right under the Loan Papers shall impair such Right or
be construed as a waiver thereof or an acquiescence therein, nor shall any
single or partial exercise of any Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
-15-
<PAGE> 16
7.05. PERFORMANCE BY LENDER; EXPENDITURES. Should any covenant of
Borrowers fail to be performed in accordance with the terms of the Loan Papers,
Lender may, at its option, attempt to perform such covenant on behalf of
Borrowers. It is expressly understood, however, that Lender does not assume and
shall never have any liability or responsibility for the performance of any
obligations of Borrowers. Any amounts expended or incurred by Lender in the
performance of any such act or in the enforcement of this Agreement (including
reasonable attorneys' fees) shall constitute part of the obligations secured
hereunder, will bear interest at the default rate hereunder and will be payable
upon demand.
7.06. CONTROL. None of the provisions hereof shall be deemed to give
Lender any right to exercise control over the affairs and/or management of
Company or any of its Subsidiaries, which the parties agree is retained by
Company and its Subsidiaries.
ARTICLE VIII
MISCELLANEOUS
8.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of any Loan Papers, nor consent to any departure by Company or any Dealer
therefrom, shall be effective unless the same shall be in writing and signed by
Lender, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8.02. NOTICES. Unless otherwise provided herein, all notices, demands
and other communications under the Loan Papers shall be in writing and shall be
personally delivered, sent by telecopy or telex (answerback received), or sent
by certified mail, postage prepaid, to the following addresses:
(a) If to Borrowers:
MarineMax, Inc.
18167 U.S. 19 North, Suite 499
Clearwater, Florida 33764
Attention: Michael McLamb
Fax: (727) 531-0123
with a copy to:
Robert S. Kant, Esq.
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012-1656
Fax: (602) 263-2900
(b) If to Lender:
NationsCredit Distribution Finance, Inc.
1355 Windward Concourse
Alpharetta, Georgia 30005
Attention: Marine Group Operations Manager
Fax: (800) 597-4448
and
NationsCredit Distribution Finance, Inc.
10401 Deerwood Park Boulevard
Jacksonville, Florida 32256-0505
Attention: Steve Kelley
Fax: (904) 457-2473
with a copy to:
John D. Evans, Jr., Esq.
NationsBank Corporation
10401 Deerwood Park Boulevard
Jacksonville, Florida 32256-0505
Fax: (904) 457-5196
-16-
<PAGE> 17
or to such other address as any party shall hereafter designate in written
notice to the other party. All notices, demands and other communications will be
effective when so personally delivered or sent by telecopy or telex, or five
days after being so mailed; provided, however, that notices to Lender pursuant
to Article II hereof shall only be effective when received.
8.03. PARTIES IN INTEREST. The Loan Papers shall bind and inure to the
benefit of the parties hereto, and their successors and assigns. Lender may from
time to time assign its rights or obligations hereunder, but Borrowers may not
assign or transfer its rights or obligations hereunder (whether voluntarily or
by operation of Law), without the prior written consent of Lender.
8.04. COSTS, EXPENSES AND TAXES. Borrowers, jointly and severally,
agree to pay on demand (a) all costs and expenses (including reasonable
attorneys' fees) of Lender in connection with any extension, modification,
waiver or release of any Loan Papers, and (b) all costs and expenses of Lender
incurred in any work-out or enforcement of any Loan Papers, including reasonable
attorneys' fees and the costs and expenses of environmental or other
consultants. Borrowers shall pay any stamp, debt, recordation, withholding and
other Taxes payable in connection with any Loan Papers or payments thereunder
(other than Taxes on the overall net income of Lender), and agrees to save
Lender harmless from and against all liabilities relating to any Taxes. All
payments by Borrowers shall be made free and clear of and without deduction for
any Taxes of any nature now or hereafter existing.
8.05. INDEMNIFICATION BY BORROWERS. BORROWERS, JOINTLY AND SEVERALLY,
AGREE TO INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER, ITS AFFILIATES, AND ALL OF
THEIR DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS,
ATTORNEYS AND ASSIGNS, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES
AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST ANY OF THEM IN ANY WAY RELATING TO OR ARISING
OUT OF ANY LOAN PAPERS, ANY TRANSACTION RELATED HERETO OR THERETO, OR ANY ACT,
OMISSION OR TRANSACTION OF COMPANY, ITS SUBSIDIARIES OR ANY OF THEIR AFFILIATES,
OR ANY OF THEIR DIRECTORS, OFFICERS, AGENTS, EMPLOYEES OR REPRESENTATIVES;
PROVIDED, HOWEVER, THAT BORROWERS SHALL NOT INDEMNIFY, DEFEND AND HOLD HARMLESS
ANY INDEMNIFIED PERSON FOR LOSSES OR DAMAGES THAT BORROWERS PROVE WERE CAUSED BY
SUCH PERSON'S WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR OTHER NEGLIGENCE. LENDER
SHALL NOT BE LIABLE TO BORROWERS OR ITS SUBSIDIARIES FOR ANY CONSEQUENTIAL
DAMAGES. This indemnity shall survive repayment of Borrowers' obligations to
Lender.
8.06. HAZARDOUS WASTE INDEMNIFICATION. Borrowers, jointly and
severally, shall indemnify and hold harmless Lender, its Affiliates, and all of
their directors, officers, employees, representatives, agents, successors,
attorneys and assigns, from and against any loss, damage, cost, expense or
liability directly or indirectly arising out of or attributable to the use,
generation, manufacture, treatment, production, storage, release, threatened
release, discharge, disposal or presence of any Hazardous Materials on, under or
about Company's or its Subsidiaries' property or operations or property leased
to Company or its Subsidiaries, including but not limited to attorneys' fees
(including the reasonable estimate of the allocated cost of in-house counsel and
staff). This indemnity shall survive repayment of Borrowers' obligations to
Lender.
8.07. DISCLAIMER OF WARRANTY. BORROWERS ACKNOWLEDGE THAT LENDER HAS
MADE NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO ANY INVENTORY OR OTHER
CONSOLIDATED COLLATERAL, INCLUDING ANY WARRANTY OF MERCHANTABILITY. BORROWERS
IRREVOCABLY WAIVE ANY CLAIMS AGAINST LENDER WITH RESPECT TO THE INVENTORY AND
OTHER CONSOLIDATED COLLATERAL WHETHER FOR BREACH OF WARRANTY OR OTHERWISE. Any
such claims shall not alter, diminish or otherwise impair Borrowers' liabilities
or obligations to Lender under the Loan Papers. Lender does not assume any
obligations of Borrowers relating to the Inventory, any Accounts, any contract
obligations, or any other obligations or duties arising from the Consolidated
Collateral.
8.08. RATE PROVISION. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall Borrowers be obligated to pay any amount in
excess of the maximum amount of interest permitted under applicable Law. If from
any circumstance
-17-
<PAGE> 18
Lender shall ever receive anything of value deemed excess interest under
applicable Law, an amount equal to such excess shall be applied to the reduction
of the principal amount of outstanding Advances and any remainder shall be
refunded to the payor.
8.09. SEVERABILITY; COUNTERPARTS. If any provision of any Loan Papers
is held to be illegal, invalid or unenforceable under present or future Laws
during the term thereof, such provision shall be fully severable, and the Loan
Papers shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof. This Agreement and
the other Loan Papers may be executed in any number of counterparts.
8.10. GOVERNING LAW. This Agreement and the other Loan Papers shall be
governed by and construed in accordance with the laws of the State of Georgia.
The state and federal courts located in Atlanta, Georgia, including the U.S.
District Court for the Northern District of Georgia, shall have jurisdiction to
determine any claim or dispute pertaining to this Agreement. The parties
expressly submit and consent to such jurisdiction, and waive any claim of
inconvenient forum.
8.11. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS
OF ANY FORUM STATE, THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS OR
ANY RELATED MATTERS.
8.12. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
8.13 RELEASE OF GUARANTORS.
(a) Lender hereby releases and discharges each of the Subsidiaries of
Company that are not Dealers from any and all obligations, claims and demands
whatsoever arising from or relating to their respective Guaranty and Security
Agreements heretofore delivered to Lender. Lender terminates and releases all
security interests and liens granted by such Guaranty and Security Agreements.
(b) Upon satisfactory evidence that all necessary financing statements
and termination statements have been filed, Lender shall release and discharge
each of the Dealers from the guaranty obligations (but not the grant of the
security interest therein) in their respective Guaranty and Security Agreements
heretofore delivered to Lender. It is acknowledged that the obligations under
the Guaranty and Security Agreement are hereby assumed hereunder.
(c) Lender hereby releases and discharges Richard R. Bassett, Louis R.
Delhomme, Jr., William H. McGill. Jr., Jerry Marshall, Richard C. LaManna, Jr.,
Paul Graham Stovall, Jon M. Stovall, Robert S. Stovall and any other "Individual
Guarantor" from any and all obligations, claims and demands whatsoever arising
from or relating to their respective Guaranty's heretofore delivered to Lender
IN WITNESS WHEREOF, this Amended and Restated Loan and Security
Agreement is executed as of the date first set forth above.
MARINEMAX, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
-18-
<PAGE> 19
MARINEMAX MOTOR YACHTS, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
MARINEMAX OF BREVARD COUNTY, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
MARINEMAX OF TREASURE COVE, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
MARINEMAX OF NORTH CAROLINA, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
BASSETT BOAT COMPANY OF FLORIDA
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
C & N MARINE CORPORATION
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
COCHRANS MARINE, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
GULFWIND SOUTH, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
GULFWIND USA, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
STOVALL MARINE, INC.
/s/ Michael H. McLamb
By_____________________________________________
Title: Vice President
-19-
<PAGE> 20
NATIONSCREDIT DISTRIBUTION FINANCE, INC.
/s/ Steve T. Kelley
By_____________________________________________
Title: Sr. Vice President
NATIONSBANK, N.A.
/s/ Steve T. Kelley
By_____________________________________________
Title Sr. Vice President
-20-
<PAGE> 21
Exhibit A
To
Amended and Restated Loan and Security Agreement
BORROWING BASE CERTIFICATE
<PAGE> 22
BORROWING BASE CERTIFICATE
NationsCredit Distribution Finance, Inc.
1355 Windward Concourse
Alpharetta, Georgia 30005
This Borrowing Base Certificate is made for the month ending _________.
The undersigned is the _________________ of MarineMax, Inc., a Delaware
corporation ("Company"). This Certificate is delivered pursuant to the Amended
and Restated Loan and Security Agreement dated March 18, 1999, between Company
and NationsCredit Distribution Finance, Inc., and NationsBank, N.A. ("Lender"),
as such agreement may be amended, modified, supplemented, renewed or extended
from time to time ("Loan Agreement"). Terms are used herein as defined in the
Loan Agreement.
The following calculation of the Borrowing Base is made in accordance
with the applicable provisions of the Loan Agreement, and is true and correct in
all material respects as of the end of the aforesaid month:
<TABLE>
<S> <C> <C> <C>
ELIGIBLE INVENTORY:
NEW (cost plus freight charges)
<366 days from invoice (100%) $
-----------------
> 365 but < 731 days from invoice (90%) $
-----------------
TOTAL NEW, maximum $105MM $
----------------
USED
<181 days old (80% NADA or BUC) $
-----------------
> 180 but < 366 days old (72% NADA or BUC) $
-----------------
TOTAL USED, maximum $25MM $
----------------
PARTS
75% of cost (excl. freight), maximum $15MM $
----------------
TOTAL INVENTORY - maximum $105MM $
----------------
ELIGIBLE ACCOUNTS
Total Accounts $
----------------
Less Ineligible Accounts
Account balances 90+ $
-----------------
Concentrations >5% (except Brunswick) $
-----------------
Contra Balances $
-----------------
Other $
-----------------
Total Ineligible Accounts ($ )
----------------
TOTAL ELIGIBLE ACCOUNTS - 80% net book
value, maximum $25MM $
==================
BORROWING BASE AVAILABILITY - max $105MM $
==================
OUTSTANDING BALANCE OF INVENTORY ADVANCES ($ )
----------------
AVAILABILITY (SHORTAGE) $
==================
</TABLE>
Attached hereto are detailed Inventory, accounts payable aging and
receivable aging reports as of close of business for the month covered by this
Certificate, which reports are certified as true and complete in all material
respects. Any repayment of Advances required under Section 2.03(b) of the Loan
Agreement is delivered with this Certificate.
Company represents and warrants to Lender that, except as previously
disclosed to Lender in writing, the representations and warranties contained in
the Amended and Restated Loan and Security Agreement are true and correct in all
material respects as of the date hereof, and there is no material Default or
material Event of Default on the date hereof.
MARINEMAX, INC.
By________________________________
Title: Vice President
<PAGE> 23
Exhibit B
To
Amended and Restated Loan and Security Agreement
DEBT, LIENS AND CONTINGENT LIABILITIES
<PAGE> 24
Existing Debt and Liens
<TABLE>
<CAPTION>
APPROX.
PAYOR DEBT CREDITOR MATURITY DATE COLLATERAL
----- ---- -------- ------------- ----------
<S> <C> <C> <C> <C>
11502 Dumas, Inc. 1,318,135 Transamerica Commercial N/A Floor Plan-Boaters World
Finance Corporation
Harrison's Boat Center, 9,483 Valley National 96 Chevy
Inc. Financial Services Co. Various
Maturity
Dates
Between
the
years
1999
and
2002
4,737 Sea West Federal Credit Dodge 1 Ton
Harrison's Marine Centers 822 Bank One, NA Dodge Truck
of Arizona, Inc.
11,277 Bank One, NA Ford 250
3,936 John Deere Credit Tractor
4,489 Bank One, Arizona, NA 95 Ford 150
17,077 Bank One, NA 97 Ford 250
*Harrison's Realty, L.L.C. 387,000 U.S. Small Business 10/2013 1840 E. Broadway Road
Administration Tempe, AZ
Development Company
MarineMax of North 75,716 First Union 1/2014 Slip F-4
Carolina, Inc.
76,934 First Union 9/2009 Slip G-11
191,692 First Union 2/2010 Slip A-9
Gulfwind USA, Inc. 617,000 First Union National 8/2002 18025 U.S. 19 North
Bank of Florida Clearwater, FL
Gulfwind South, Inc. 2,000 Icon 12/2002 Lease
</TABLE>
*Real property transferred subject to debt of transferor. Debt may not have been
assumed by Payor listed above and may be subject to due on transfer
requirements.
<PAGE> 25
<TABLE>
<CAPTION>
APPROX.
PAYOR DEBT CREDITOR MATURITY COLLATERAL
----- ---- -------- -------- ----------
DATE
----
<S> <C> <C> <C> <C>
Gulfwind South Realty, 1,644,000 Key Bank National 4/2002 1146 6th Avenue South
L.L.C. Association Naples, FL
179,000 Key Bank National 5/2003 1146 6th Avenue South
Association Naples, FL
217,000 Great American Marine 5/2017 Property & Other Equipment
Located at
1146 6th Avenue South
Naples, FL
C&N Marine Realty, L.L.C. 117,000 Sea Ray 5/2000 Property & Other Equipment
Located at 20300 County Road
81
Rogers, MN
MarineMax of New Jersey, $7,414,000 Deutsche Financial N/A Floor Plan-Merit Marine
Inc. Services, Inc.
MarineMax, Inc., $50,000,000 Transamerica Commercial 3/2001 Inventory
Harrison's Boat Center, Finance Corporation
Inc., Harrison's Marine
Centers of Arizona, Inc.,
MarineMax of Las Vegas,
Inc., and MarineMax TX,
L.P.
</TABLE>
<PAGE> 26
Contingent Liabilities
Repurchase obligations of Subsidiaries in connection with the sale of Retail
Paper.
<PAGE> 27
Exhibit C
To
Amended and Restated Loan and Security Agreement
SUBSIDIARIES
Exhibit C
to
Amended and Restated Loan Agreement
SUBSIDIARIES OF MARINEMAX, INC.
<PAGE> 28
SUBSIDIARIES OF MARINEMAX, INC.
<TABLE>
<CAPTION>
TYPE OF LOCATION OF TYPE & PERCENTAGE
NAME & ADDRESS ORGANIZATION ACTIVITIES OF OWNERSHIP
-------------- ------------ ---------- ------------
<S> <C> <C> <C>
Bassett Boat Company of Florida, Inc. Florida corporation Florida 100% of the capital stock owned
700 South Federal Highway by Company
Pompano Beach, FL 33062
Gulfwind South, Inc. Florida corporation Florida 100% of the capital stock owned
14070 McGregor Blvd. by Company
Ft. Myers, FL 33919
Gulfwind USA, Inc. Florida corporation Florida 100% of the capital stock owned
18025 U.S. 19th North by Company
Clearwater, FL 33764
MarineMax of Brevard County, Inc. Delaware corporation Florida 100% of the capital stock owned
1410 King Street by Company
Cocoa, FL 32922
Cochrans Marine, Inc. Minnesota corporation Minnesota 100% of the capital stock owned
N. Hwy. 371 by Company
P.O. Box 518
Walker, MN 56484
C&N Marine Corporation Minnesota corporation Minnesota 100% of the capital stock owned
20300 County Road 81 by Company
P.O. Box 250
Rogers, MN 55374
Stovall Marine, Inc. Georgia corporation Georgia 100% of the capital stock owned
5840 I-75 South by Company
Forest Park, GA 30297
MarineMax of Treasure Cove, Inc. Delaware corporation Ohio 100% of the capital stock owned
2555 N.E. Catawba Road by Company
Port Clinton, OH 43452
MarineMax of North Carolina, Inc. North Carolina North Carolina 100% of the capital stock owned
130 Short Street corporation by Company
Wrightsville Beach, NC 28480
MarineMax Motor Yachts, Inc. Delaware corporation Florida 100% of the capital stock owned
2301 S.E. 17th Street by Company
Ft. Lauderdale, FL 33316
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
TYPE OF LOCATION OF TYPE & PERCENTAGE
NAME & ADDRESS ORGANIZATION ACTIVITIES OF OWNERSHIP
-------------- ------------ ---------- ------------
<S> <C> <C> <C>
MarineMax of New Jersey, Inc. Delaware corporation New Jersey 100% of the capital stock owned
18167 U.S. 19 N. by Company
Suite 499
Clearwater, FL 33764
MarineMax of New Jersey II, Inc. Delaware corporation New Jersey & 100% of the capital stock owned
18167 U.S. 19 N. Pennsylvania by Company
Suite 499
Clearwater, FL 33764
Harrison's Boat Center, Inc. California corporation California 100% of the capital stock owned
1928 Twin View Blvd. by Company
Redding, CA 96003
Harrison's Marine Centers of Arizona, Arizona corporation Arizona 100% of the capital stock owned
Inc. by Company
1840 East Broadway Road
Tempe, AZ 85282
MarineMax of Las Vegas, Inc. Delaware corporation Nevada 100% of the capital stock owned
3800 Boulder Highway by Company
Las Vegas, NV 89121
11502 Dumas, Inc. Nevada corporation Texas 100% of the capital stock owned
2551 S. Shore Harbour Blvd., Suite C by Company
League City, TX 77573
Dumas GP, L.L.C. Delaware limited Texas 100% of the membership interests
2551 S. Shore Harbour Blvd., Suite C liability company owned by 11502 Dumas, Inc.
League City, TX 77573
MarineMax TX, L.P. Texas limited Texas 99% of the partnership units owned
2551 S. Shore Harbour Blvd., Suite C partnership by 11502 Dumas, Inc. and 1% of the
League City, TX 77573 partnership units owned by Dumas
GP, L.L.C.
Bassett Boat Company Florida corporation Florida 100% of the capital stock owned
275 S.W. Monterey Road by Company
Stuart, FL 34994
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
TYPE OF LOCATION OF TYPE & PERCENTAGE
NAME & ADDRESS ORGANIZATION ACTIVITIES OF OWNERSHIP
-------------- ------------ ---------- ------------
<S> <C> <C> <C>
Dumas GP, Inc. Nevada corporation 100% of the capital stock owned
18167 U.S. Highway 19 N. by Company
Suite 499
Clearwater, FL 33764
MarineMax of Jacksonville, Inc. Delaware corporation 100% of the capital stock owned
18167 U.S. Highway 19 N. by Company
Suite 499
Clearwater, FL 33764
MarineMax USA, Inc. Nevada corporation 100% of the capital stock owned
18167 U.S. Highway 19 N. by Company
Suite 499
Clearwater, FL 33764
Bassett Realty, L.L.C. Delaware limited Florida 100% of the membership interests
700 South Federal Highway liability company owned by Company
Pompano Beach, FL 33062
C & N Marine Realty, L.L.C. Delaware limited Minnesota 100% of the membership interests
20300 County Road 81 liability company owned by Company
P.O. Box 250
Rogers, MN 55374
Gulfwind South Realty, L.L.C. Delaware limited Florida 100% of the membership interests
1146 6th Avenue South liability company owned by Company
Naples, FL 33940
Harrison's Realty California, L.L.C. Delaware limited California 100% of the membership interests
1928 Twin View Blvd. liability company owned by Company
Redding, CA 96003
Harrison's Realty, L.L.C. Delaware limited Arizona 100% of the membership interests
1840 East Broadway Road liability company owned by Company
Tempe, AZ 85085
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
TYPE OF LOCATION OF TYPE & PERCENTAGE
NAME & ADDRESS ORGANIZATION ACTIVITIES OF OWNERSHIP
-------------- ------------ ---------- ------------
<S> <C> <C> <C>
Marina Drive Realty I, L.L.C. Delaware limited Minnesota 100% of the membership interests
N. Hwy. 371 liability company owned by Company
P.O. Box 518
Walker, MN 56484
Marina Drive Realty II, L.L.C. Delaware limited Minnesota 100% of the membership interests
N. Hwy. 371 liability company owned by Company
P.O. Box 518
Walker, MN 56484
Walker Marina Realty, L.L.C. Delaware limited Minnesota 100% of the membership interests
#1 Marina Drive liability company owned by Company
Walker, MN 56484
</TABLE>
<PAGE> 32
Exhibit D
To
Amended and Restated Loan and Security Agreement
LIST OF LITIGATION
<PAGE> 33
MarineMax, Inc.
(a) MarineMax, Inc., plaintiff, v. Richard C. LaManna Jr., Richard C.
LaManna III, and Darrell C. LaManna, defendants, U.S. District Court for the
Middle District of Florida, Tampa Division, Cause No. 98-2429-CIV-T-25F, filed
on 11/30/98.
(b) Richard C. LaManna Jr., Richard C. LaManna III, and Darrell C.
LaManna, plaintiffs, v. MarineMax, Inc., defendant, Superior Court of Shasta
County, California, Cause No. 136666, filed on 12/21/98.
See the attached excerpt from the Company's 10K Form dated December 29, 1998,
for a further description of the litigation described above.
MarineMax TX, L.P.
Larry and Mary Brown, individually and as personal representatives of the Estate
of Christopher Brown and as next friend of Michael Brandon Brown, a minor,
plaintiffs v. Premiere Marine, Inc. and Louis DelHomme Marine, defendants,
Harris County District Court for the State of Texas, Cause No. 96-34353, filed
on 6/26/97. This is a wrongful death action which is being defended by the
insurance company.
<PAGE> 34
The following is a description of litigation contained in the Company's
10K Form dated December 29, 1998:
The Company is involved in various legal proceedings arising out of its
operations in the ordinary course of business. The Company does not believe that
such proceedings, even if determined adversely, will have a material adverse
effect on its business, financial condition, or results of operations.
On November 28, 1998, the Company terminated for cause the employment
of Richard C. LaManna Jr., Richard C. LaManna III, and Darrell C. LaManna
(collectively, the "LaMannas") under their employment agreements dated as of
March l, 1998. The Company also removed each of the LaMannas as officers of the
Company. In accordance with the terms of the employment agreements, the Company
ceased the payment of compensation to the LaMannas. The LaMannas have disputed
the termination of their employment by the Company, including the termination of
their compensation. As a result, the Company, on December 23, 1998, commenced
binding arbitration before the American Arbitration Association in Tampa,
Florida as required by the terms of the employment agreements. The Company's
Demand for Arbitration and Statement of Claims to resolve any disputes arising
out of the employment agreements was based on various breaches and acts of
misconduct by the LaMannas.
On November 30, 1998, the Company filed a lawsuit against the LaMannas
in the United States District Court for the Middle District of Florida, Tampa
Division, Case No. 98-2429-CIV-T-25F. The Company alleges that the LaMannas
engaged in activities in connection with the Company's acquisition of Harrison's
Boat Center, Inc., Harrison's Marine Center of Arizona, Inc., and related
entities (collectively, "Harrison's") that constituted breaches of the
representations and warranties in the merger documents. The complaint requests
damages, attorneys' fees and costs, and a declaratory judgment regarding the
Company's rights, status, and legal relations relative to, among other things,
the LaMannas' agreement to indemnify the Company.
On December 21, 1998, the LaMannas filed a lawsuit against the Company
and certain of its directors in the Superior Court of Shasta County, California,
Case No. 136666. The complaint alleges that the Company and certain of its
officers and directors engaged in activities during and after the Company's
acquisition of Harrison's that constituted fraud, constructive fraud, breach of
fiduciary duty, conversion, breach of contract, wrongful termination in
violation of public policy, age discrimination, discrimination based on
perceived disability, intentional and negligent infliction of emotional
distress, negligent misrepresentation, defamation, and conspiracy, all allegedly
in violation of California state law. In particular, the plaintiffs allege that
certain of the Acquired Dealers and certain of the Company's officers and
directors (i) fraudulently
<PAGE> 35
induced the plaintiffs to sign various documents, including their employment
agreements, (ii) did not treat the plaintiffs equitably in the merger valuation
process, and (iii) terminated the plaintiffs without cause. The complaint
requests damages, rescission, and punitive damages. The Company believes that
this lawsuit is substantively without merit and is procedurally defective since,
among other things, the claims set forth in the lawsuit either are subject to
binding arbitration or are properly subject to the proceeding before the United
States District Court for the Middle District of Florida. The Company intends to
vigorously defend this action and to pursue its Florida Federal District Court
action and the arbitration against the LaMannas.
<PAGE> 36
OFFICER'S CERTIFICATE
The undersigned hereby certifies that he is the Vice President of
MARINEMAX, INC., a Delaware corporation ("Company"), and that he is authorized
to execute this Certificate in connection with the Amended and Restated Loan and
Security Agreement of even date herewith, between NationsCredit Distribution
Finance, Inc., and NationsBank, N.A. and Borrowers ("Loan Agreement"). Terms are
used herein as defined in the Loan Agreement.
The undersigned further certifies as follows:
1. No Default or Event of Default exists on the date hereof to be best
of the knowledge of the undersigned.
2. The representations and warranties set forth in Article V of the
Loan Agreement are true and correct in all material respects as of the date
hereof.
3. Borrowers have complied with all agreements and conditions to be
complied with by it under the Loan Agreement on or prior to the effective date
thereof.
IN WITNESS WHEREOF, this Certificate is signed as of March 18, 1999.
/s/ Michael H. McLamb
___________________________________________
Title: Vice President
<PAGE> 1
EXHIBIT 10.17
ACCOUNTS RECEIVABLE AND INVENTORY FINANCING AGREEMENT
(MD)
THIS AGREEMENT (as from time to time amended, "THIS AGREEMENT") is dated as of
March 18, 1999 and is by and between TRANSAMERICA COMMERCIAL FINANCE
CORPORATION, a Delaware corporation with its office at 5595 Trillium Boulevard,
Hoffman Estates, Illinois 60192 ("TCFC"), and MARINEMAX, INC., A Delaware
Corporation ("MARINEMAX"), and HARRISON'S BOAT CENTER, INC., a California
corporation, HARRISON'S MARINE CENTERS OF ARIZONA, INC., an Arizona corporation,
MARINEMAX OF LAS VEGAS, INC., a Delaware corporation and MARINEMAX TX,
L.P.,(each individually a "DEALER" and collectively the "DEALERS").
RECITALS
A. MarineMax and Dealers are related entities.
B. MarineMax desires to have one common credit facility for MarineMax and
Dealers instead of separate credit facilities and MarineMax and Dealers
have requested TCFC to extend such a common credit facility.
The parties further agree as follows:
SECTION 1. DEFINITIONS.
1.1 UCC DEFINED TERMS. "ACCOUNT DEBTOR," "EQUIPMENT," "FIXTURE," "GOODS," and
"PROCEEDS" shall have the meanings assigned to such terms in Article 9, and
"PERSONS" shall have the meaning assigned to such term in Article 1, of the
Illinois Uniform Commercial Code (the "UCC") as of the date of this Agreement.
1.2 ACCOUNTING TERMS. Accounting terms used in this Agreement and not defined
herein shall have the meanings customarily given them in accordance with
generally accepted accounting principles.
1.3 OTHER DEFINED TERMS.
(a) The following terms when used herein shall have the following
meanings:
"ACCOUNTS" - means accounts, receivables, and other rights to payment
arising from the sale or lease of goods or provision of services in the ordinary
course of business, including all amounts payable by, and rights and claims
against, any manufacturer or Seller of Inventory, such as Supplier Benefits,
Approved Return Credits, advertising rebates and warranty work.
"AFFILIATE" - any Person (i) that directly or indirectly controls or is
controlled by, or is under common control with any Dealer, (ii) that directly or
beneficially owns 5% or more of the voting stock (or if any Dealer is not a
corporation, the equity) of any Dealer, (iii) that is a director, partner,
manager or officer (or Person holding an equivalent position) of any Dealer or
any Person referred to in clause (i) or (ii) above, or (iv) any natural Person
related to any Person referred to in clause (i), (ii) or (iii) above.
"APPROVED RETURN CREDITS" - collectively, all of each Dealer's rights
to credits for returns by such Dealer due from and approved by a Seller. . No
such credits shall be Approved Return Credits if (i) subject to set-off or
counterclaim; (ii) from a Seller TCFC no longer considers satisfactory for the
purposes of Loans; or (iii) disputed
"BUSINESS DAY" - a day (other than Saturday or Sunday) on which the
Federal Reserve Bank of Chicago is open for business.
"COLLATERAL" - collectively, the following property and interests in
property of each Dealer, whether now or hereafter existing, owned, licensed,
acquired or arising and wherever located: (i) Accounts, Equipment, Fixtures,
Inventory, and Supplier Benefits; all accessions, accessories, returns,
repossessions, substitutions, repairs and replacements; and all reserves,
however created, of any Dealer in the possession or control of TCFC; (ii) all
Proceeds and products of the foregoing; and (iii) all books and records relating
to the same.
"CREDIT LIMIT" - $48,000,000 in the aggregate.
"EDI" - electronic data interchange including facsimile transmission.
"INVENTORY" - Goods owned by or consigned by or to any Dealer which are
held for sale or lease or furnished or to be furnished under any agreement for
service, or which are raw materials, work in process or materials used or
consumed in any Dealer's business, Goods which were Inventory and are returned
Goods or Goods repossessed or stopped in transit by any Dealer, and all other
Goods in the possession or under the control of any Dealer which are not
Equipment.
"LAWS" - all laws, ordinances, regulations, and rules of all federal,
state, county, municipal, foreign and other governments, including, without
limitation, any instrumentality, division, agency, body, or department thereof.
"LIABILITIES" - collectively, all liabilities, obligations and
indebtedness to TCFC or to any TCFC Affiliate of any and every kind and nature,
whether heretofore, now or hereafter arising, due or payable and howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise (including obligations of performance)
and whether arising or existing under written or oral agreement or agreement
created by EDI or by operation of law including, without limitation, all
liabilities, obligations and indebtedness of MarineMax and Dealers and each of
them to TCFC under this Agreement and any Other Agreement.
1 of 16
<PAGE> 2
"LIBOR" - for any calendar month shall equal the one month London
Interbank Offered Rates (LIBOR) as published in the Wall Street Journal on the
first Business Day of such month.
"LIEN" - any lien, security interest, claim or other encumbrance,
whether arising by agreement or by operation of law.
"LOANS" - Loans made by TCFC pursuant to this Agreement.
"MATERIAL ADVERSE CHANGE" - a material adverse change in the condition
(financial or otherwise), business, operations or prospects or in the Collateral
of MarineMax and its Subsidiaries, taken as a whole..
"OTHER AGREEMENTS" - Instruments, security agreements, mortgages, deeds
of trust, guarantees, subordination agreements, powers of attorney, consents,
assignments, notices, leases, financing statements and other written agreements,
documents or EDI matter whether heretofore, now, or hereafter executed by or on
behalf of MarineMax or any Dealer and delivered to TCFC, together with all
agreements and documents referred to therein or herein or contemplated thereby
or hereby.
"PRICE PROTECTION PAYMENTS" - collectively, all of each Dealer's rights
to any rebate or credit with respect to Inventory purchased by such Dealer from
a Seller as a result of a reduction in the price of such Inventory after Dealer
orders such Inventory.
"SELLER" - any Person from whom any Dealer purchases or may purchase
Inventory or who advises TCFC that it has sold or may sell Inventory to a
Dealer.
"SUBSIDIARY" - any corporate, limited liability company or partnership
Affiliate in which MarineMax directly or indirectly owns more than 50% of the
outstanding ownership interest having ordinary voting power.
"SUPPLIER BENEFITS" - collectively, all of each Dealer's rights to any
Price Protection Payments, rebates, discounts, credits, factory holdbacks,
incentive payments and other amounts which at any time are due to such Dealer
from a Seller or other supplier of Inventory.
"TCFC AFFILIATE" - any Person that directly or indirectly controls, is
controlled by, or is under common control with TCFC.
(b) The following terms are defined in the following sections of this
Agreement:
<TABLE>
<CAPTION>
Term Section Term Section
---- ------- ---- -------
<S> <C> <C> <C>
"ERISA" 6.6
"ACH Debit" 2.6 "GAAP" 6.1
"Approvals" 2.1 "Indebtedness" 6.6
"Borrowing Base" 2.4(a) "Loan Account" 2.7
"Borrowing Base Certificate" 2.5(b)
"Capital Expenditures" 6.6 "Permitted Liens" 7.5
"Capital Leases" 6.6 "Permitted Locations" 6.4
"Records" 6.5
"Start Date" 2.9(b)
"Default" 9.1 "Subordinated Debt" 6.6
"Eligible Account" 2.4(b) "UCC" 1.1
"Eligible Inventory" 2.4(c)
</TABLE>
SECTION 2. THE CREDIT.
2.1 INTENTIONALLY LEFT BLANK.
2.2 LOANS. Subject to the terms and conditions of this Agreement, TCFC may from
time to time make Loans to MarineMax and Dealers ("LOANS"). MarineMax and each
Dealer shall be jointly and severally liable with each other for the full and
punctual payment and performance, when due, whether at maturity or earlier by
reason of acceleration or otherwise, and at all times thereafter, of all
Liabilities to TCFC, including without limitation, all obligations relating to
any representations, warranties and covenants of MarineMax and each Dealer to
TCFC and all other Liabilities of each other, whether before, during or after
any bankruptcy, reorganization or arrangement, insolvency, receivership,
dissolution or liquidation statute or other law of any jurisdiction (each, a
Bankruptcy Proceeding") with respect to MarineMax or any Dealer, including
without limitation any Liabilities arising under any guaranty agreements. All
Loans shall constitute a single obligation.
2.3 LOAN LIMITS. The aggregate principal balance of Loans shall not exceed the
lesser of the applicable Credit Limit or the Borrowing Base. If at any time the
sum of the aggregate outstanding principal balance of Loans exceeds the lesser
of the applicable Credit Limit or the Borrowing Base, MarineMax and Dealers
shall, within ten (10) days of receipt of written notice thereof to MarineMax,
(during which time TCFC shall not be obligated to make any additional Loans),
unless TCFC otherwise consents, make such payments to TCFC as shall be necessary
to eliminate such excess.
2.4 BORROWING BASE.
(a) "BORROWING BASE" means the sum of the following: (i) up to 80% of
the face amount (less maximum discounts, credits and allowances which might be
taken by or granted to Account Debtors in connection therewith) of Eligible
Accounts, (provided, however, that no more than 25% of the Credit Limit may be
utilized for outstanding Loans based on Accounts); (ii) up to the percentage or
dollar amount, if less, for each of the classes of Eligible Inventory (which
shall be mutually exclusive) determined pursuant to Schedule 2.4(a), valued on
the lower of cost (using the first-in, first-out method of inventory accounting)
or market.
(b) "ELIGIBLE ACCOUNT" means (i) Accounts due to MarineMax or a Dealer
from a Seller or manufacturer who is a resident of the United States (a) which
are not more than 30 days past due, and (b) with respect to which the Seller or
manufacturer has executed a waiver of any right of offset;
2 of 16
<PAGE> 3
(ii) accounts due from retail account debtors who are residents of the United
States who have executed retail purchase contracts with a Dealer as payment for
purchases of Inventory from MarineMax or a Dealer, which retail purchase
contracts (a) were created less than 30 days previously, and (b) have not been
financed by any other entity, or are not subject to a lien in favor of any other
entity which is senior to TCFC's lien in such retail purchase contracts; and
(iii) Accounts due to a Dealer from retail finance providers who have purchased
retail installment contracts from a Dealer but have not yet paid Dealer for such
retail installment contracts, provided such Accounts are not due from such
retail finance providers more than 30 days past the date of the underlying
retail installment contract purchased which gives rise to the Account.
(c) "ELIGIBLE INVENTORY" means Inventory which is not Ineligible
Inventory. The following is Ineligible Inventory: (i) Inventory with respect to
which TCFC does not have a first priority perfected security interest; (ii)
Inventory which is not currently usable or saleable in the ordinary course of
Dealers' business; (iii) Inventory to which Dealer does not have good title and
all licenses and rights required for the sale thereof; and (iv) Inventory not
located at a Permitted Location.
2.5 REQUESTS FOR LOANS; BORROWING BASE CERTIFICATES; OTHER INFORMATION;
Appointment of Agents.
(a) All Loans shall be requested by MarineMax in writing, by EDI or by
telephone and if by telephone, shall be confirmed in writing prior to the Loan
being made.
(b) Dealers shall provide TCFC a certificate in form satisfactory to
TCFC as to the Borrowing Base (the "BORROWING BASE CERTIFICATE") (i) by the 15th
day of each month, current as of the prior month end, no later than 12:00 P.M.
(Chicago, Illinois Time).
(c) MarineMax shall provide TCFC with certified copies of resolutions
of MarineMax's and each Dealer's Board of Directors and other documents
requested by TCFC specifying the names of Persons authorized to sign Borrowing
Base Certificates, on behalf of MarineMax and Dealers to make requests for Loans
and to otherwise act for MarineMax and Dealers, and TCFC shall be entitled to
rely upon such documentation until given notice in writing by MarineMax of any
change. TCFC shall be entitled to act on instructions of any Person identifying
him or herself as such an authorized Person by telephone, and Dealers shall be
bound thereby whether or not such Person is actually so authorized. MarineMax
and Dealers shall indemnify TCFC against any and all claims, losses,
liabilities, costs and expenses (including reasonable attorneys' fees) which may
arise or be created by the acceptance of instructions for making or paying Loans
by telephone.
(d) Appointment of Agents. Each Dealer hereby irrevocably appoints
MarineMax as its agent for receiving all notices (including without limitation
Change Notices), statements, and other communications from TCFC and for all
other matters in dealing with TCFC. Any notice, statement or other communication
given to MarineMax by TCFC shall be deemed to have been given simultaneously to
each Dealer. TCFC may deal with MarineMax as agent for all Dealers, and
MarineMax is hereby granted an irrevocable power of attorney on behalf of each
Dealer to bind each Dealer in connection with all matters relating to the
Agreement. No notice, statement or other communication given to or agreement
with MarineMax individually and as agent for the Dealers under this Agreement
need specify that such notice, statement or other communication is given to, or
such agreement is being made by MarineMax, in its individual capacity or in its
capacity as agent for Dealers and MarineMax shall be deemed to be acting on its
own behalf and as agent for all Dealers and each notice, statement or other
communication shall be deemed to be given to and received by MarineMax
individually and as agent for all Dealers, unless expressly proved to the
contrary in writing at the time of such action or notice, statement or other
communication.
2.6 DISBURSEMENT OF LOANS. TCFC, in its sole discretion, may make Loans in
excess of the Borrowing Base or any applicable Credit Limit or any other
limitation without waiving any right of TCFC to demand payments or refuse to
make further Loans. Each Loan shall be sent by Federal Reserve wire transfer as
directed by MarineMax in writing or by EDI or through acceptance of an Automated
Clearing House debit by a bank (an "ACH DEBIT").
2.7 LOAN ACCOUNTS. TCFC shall maintain loan accounts ("LOAN ACCOUNTS") in its
internal data control systems in which shall be recorded all Loans, payments,
and other appropriate debits and credits, including, without limitation, all
interest, fees, charges, and expenses. All entries in the Loan Accounts shall be
made in accordance with TCFC's customary practices in effect from time to time
and shall be presumed accurate.. MarineMax and Dealers shall pay TCFC the amount
reflected as owing by them under the Loan Accounts and all other Liabilities to
TCFC as such amounts become due or are demanded pursuant to the terms of this
Agreement or any of the Other Agreements.
2.8 STATEMENTS.
Subject to the section entitled "Savings Provisions", any statement
with respect to any Liabilities sent to Marine Max by TCFC, shall be subject to
subsequent adjustment by TCFC but shall be presumed accurate evidence of
Liabilities and information covered thereby, unless TCFC shall have received
written notice from MarineMax specifying any error within 30 days after the date
of such statement.
2.9 INTEREST.
(a) The outstanding principal balance of Loans and the other
obligations hereunder shall bear interest before maturity on the average daily
outstanding balance thereof, at a per annum rate equal to the from time to time
LIBOR rate plus one and three quarters percent (1.75%) (the "PRE-DEFAULT RATE").
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 a Default shall be due and payable monthly in
arrears for each month no later than the 15th day of the following month. Upon a
Default and for so long as such Default continues, such interest rate shall
accrue at a rate equal to 2% above the Pre-Default Rate (the "DEFAULT RATE") and
shall be payable upon demand. TCFC may provide for the payment of any unpaid
accrued interest by charging the Loan Accounts.
2.10 FEES AND CHARGES. Dealers shall pay TCFC fees and charges in such amounts
and as set forth on Schedule 2.10. Interest, fees and charges not paid when due
shall become part of the principal of Liabilities to TCFC as of the date they
become due and shall bear interest at the Default Rate. TCFC may charge the Loan
Accounts for any unpaid accrued interest, fees or charges.
2.11 REAFFIRMATION. Each request for a Loan made by MarineMax and each Borrowing
Base Certificate, schedule or report furnished by MarineMax to TCFC shall
constitute a representation and warranty by MarineMax to TCFC that all of the
representations and warranties in this Agreement are true and correct on the
date of such Loan, Borrowing Base Certificate, schedule or report to the same
extent as if then made, unless MarineMax has given TCFC written notice to the
contrary prior thereto.
3 of 16
<PAGE> 4
2.12 PAYMENTS AND COLLECTIONS. All payments hereunder shall be made, without
setoff or counterclaim, to TCFC prior to 12:00 Noon, Chicago time, on the date
due at its office in immediately available funds at Hoffman Estates, Illinois or
at such other place as may be designated by TCFC to MarineMax 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. Notwithstanding anything to the contrary herein, all
items of payment for purposes of (i) determining the occurrence of a Default
shall be deemed received upon actual receipt by TCFC at its bank the First
National Bank of Chicago or such other bank as TCFC may use as its depository
bank unless subsequently dishonored for any reason; (ii) calculating the
Borrowing Base if received before noon Chicago time shall be applied by TCFC on
the Business Day received , and if received after noon shall be applied by TCFC
against the principal of and/or interest on any Loans on the first Business Day
after receipt by TCFC at its bank the First National Bank of Chicago or such
other bank as TCFC may use as its depository bank; and (iii) calculating
interest shall be deemed to have been applied by TCFC against the principal of
and/or interest on any Loan on the first Business Day after actual receipt by
TCFC, whether by check, wire transfer, ACH Debit or any other form of payment
whatsoever.
2.13 FORBEARANCE. TCFC may, in its sole discretion, at any time and from time to
time, forbear from enforcing any or all of the restrictions imposed in Section
2, but no such forbearance shall impair TCFC's right under this Agreement to
require payment of the Loans and/or to refrain from making any Loan.
SECTION 3. COLLATERAL
3.1 GRANT OF SECURITY INTEREST. Each Dealer hereby grants to TCFC a continuing
security interest in all of the Collateral of such Dealer as security for the
payment and performance of all Liabilities to TCFC (including without limitation
all liabilities of MarineMax and each other Dealer) presently existing or
hereafter arising or created and whether arising directly or by assignment. Such
security interest shall continue in all Collateral notwithstanding any payment
for Liabilities to TCFC, in part or whole. Any lien granted to TCFC in any
Collateral by any Dealer shall continue in such Collateral and the proceeds
thereof upon a sale, exchange, consignment or other transfer or disposition of
such Collateral to MarineMax or any other Dealer, and no purchase of Collateral
by MarineMax from any Dealer or any purchase of any Collateral from any other
Dealer shall be deemed, as to TCFC, to be in the ordinary course of business,
and any contrary provision of Section 9-306 or 9-307 of the UCC or any similar
provisions of any other applicable law are hereby expressly waived by Dealer in
favor of TCFC. With respect to any Collateral purchased by or transferred to
MarineMax from any Dealer MarineMax shall take or purchase any such Collateral
subject to the liens of TCFC in such Collateral, provided however, that TCFC's
lien and security interest shall be extinguished in Accounts due to a Dealer
from a manufacturer or Seller which are transferred or sold by a Dealer to an
Affiliate of such Dealer, except for such Accounts which are part of the
Borrowing Base in which case they shall remain subject to TCFC's lien in such
Accounts. TCFC's lien and security interest in Accounts consisting of retail
installment contracts shall automatically be extinguished upon the purchase of
such retail installment contracts by retail finance providers, but such lien and
security interest shall continue in the proceeds of any such Accounts.
3.2 SCHEDULES OF ACCOUNTS. Contemporaneously with the delivery of each Borrowing
Base Certificate, MarineMax shall deliver to TCFC, in form reasonably acceptable
to TCFC, schedules of Accounts. In addition, along with each such schedule of
Accounts MarineMax shall deliver reports to TCFC which shall include current
addresses and telephone numbers of Account Debtors. MarineMax's failure to
execute and deliver the same shall not affect or limit TCFC's security interest
in Accounts. MarineMax shall also furnish TCFC an aged Accounts trial balance
along with the Borrowing Base Certificate . TCFC from time to time in its name
or the name of a nominee may contact Account Debtors with respect to Accounts
included in the Borrowing Base to verify the validity, amount and any other
matters relating to Accounts. Upon Default, MarineMax and Dealers shall deliver
to TCFC the originals of all Instruments, Chattel Paper, security agreements,
guarantees and other documents and property evidencing or securing any Accounts,
immediately upon receipt thereof and in the same form as received, with all
necessary endorsements to enable TCFC to enforce the same.
3.3 DISPUTES. MarineMax and Dealers shall notify TCFC of all material disputes
and claims with respect to Accounts. After a Default has occurred, TCFC shall
have the right, in its reasonable discretion, to settle, accept reduced amounts
and adjust disputes and claims directly with, and give releases on behalf of any
Dealer to, Account Debtors for cash, credit or otherwise, upon terms which TCFC,
in its reasonable discretion, considers advisable. In such case, TCFC will
credit the Loan Accounts with only the net amounts of cash received by TCFC in
payment of Accounts, less all costs and expenses (including reasonable
attorneys' fees) incurred by TCFC in connection with the settlement or
adjustment of such disputes and claims and the collection of such Accounts.
3.4 ACCOUNT WARRANTIES. Each Dealer represents and warrants to TCFC with respect
to each of its Accounts listed in any schedule of Accounts that: (i) such
Account is owned free and clear of any Liens other than Permitted Liens; (ii)
all statements made and all unpaid balances appearing in all documents
evidencing such Account are true and correct and all such documents and all of
such Dealer's books and records are genuine and in all respects what they
purport to be, and all signatories and endorsers have full capacity to contract;
(iii) all signatures and endorsements on all documents, Instruments and
agreements relating to such Account are genuine, and all such documents,
Instruments and agreements are legal, valid and binding obligations of such
Dealer (and to the best of such Dealer's knowledge, of the other parties
thereto), legally enforceable in accordance with their terms; (iv) MarineMax or
such Dealer has not, sold, assigned, pledged, encumbered, forgiven (completely
or partially), settled for less than payment in full, or transferred or disposed
of such Account or any other Account, or agreed to do any of the foregoing,
except for the settlement of Accounts in good faith, in the ordinary course of
business; and (v) any such Account, satisfies the definition of "Eligible
Account."
3.5 INTENTIONALLY LEFT BLANK.
3.6 INVENTORY WARRANTIES. Each Dealer represents and warrants to TCFC with
respect to each item of Inventory listed in any schedule of Inventory that such
item is owned by such Dealer free and clear of any Liens other than Permitted
Liens; and if Dealers want TCFC to consider it "Eligible Inventory" of a
specified class, satisfies the definition of Eligible Inventory and the
requirements of such class.
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3.7 INTENTIONALLY LEFT BLANK.
3.8 INVENTORY SYSTEM. MarineMax and Dealers shall maintain a perpetual inventory
system, keeping accurate records itemizing and describing the kind, type, age, ,
quantity and cost of Eligible Inventory and withdrawals and additions. Such
records shall be available for inspection during MarineMax and each Dealer's
usual business hours by TCFC upon reasonable notice or immediately if Dealer is
in Default.
3.9 REPORTS. MarineMax and Dealers shall furnish TCFC the reports required by
Schedule 3.9 and such other reports as TCFC from time to time may reasonably
request regarding MarineMax and Dealers and the Collateral, all in form
reasonably satisfactory to TCFC. All reports furnished TCFC shall be complete
and accurate in all respects at the time furnished.
3.10 NOTICE TO ACCOUNT DEBTORS. Upon request by TCFC, MarineMax and each Dealer
shall make entries on its books and records in form reasonably satisfactory to
TCFC disclosing TCFC's security interest in Accounts and shall keep a separate
account on its books of all collections received thereon. In the event of
Default, (a) MarineMax and each Dealer shall, in such form and at such times as
TCFC shall reasonably request, give notice to Account Debtors whose Accounts are
included in the Borrowing Base of TCFC's security interest in such Accounts, and
(b) TCFC may itself give such notice at any time and from time to time in TCFC's
or in MarineMax's or such Dealer's name requiring such Account Debtors (whose
Accounts are included in the Borrowing Base) to pay the Accounts directly to
TCFC.
3.11 ADDITIONAL DOCUMENTS. MarineMax and each Dealer shall, on request by TCFC,
do all things and execute all financing statements, continuation and amendments
of financing statements, security agreements, assignments, affidavits, reports,
notices, schedules of Accounts and other agreements and documents, in form and
substance reasonably satisfactory to TCFC, as TCFC may reasonably deem necessary
in order to perfect and maintain a first-priority security interest in each
Dealer's Collateral, or to otherwise protect and preserve the Collateral and
such security interest, to enforce such security interest and to consummate the
transactions contemplated under this Agreement.
SECTION 4. CONDITIONS PRECEDENT. The following are conditions to TCFC's making
of Loans :
4.1 DOCUMENTS. MarineMax and each Dealer shall have executed and delivered, or
caused to be executed and delivered, to TCFC in form and substance reasonably
satisfactory to TCFC, financial statements, certificates of insurance, loss
payee endorsements, certified resolutions and other certificates, financing
statements, debt subordinations, Instruments, consents, landlord waivers, legal
opinions, security agreements and other agreements and documents as TCFC shall
reasonably specify.
4.2 NO DEFAULTS. All of each and every of MarineMax's and each Dealer's
representations and warranties to TCFC, in this Agreement and otherwise, are
true and correct in all material respects. Neither MarineMax nor any Dealer
shall have materially breached any of its covenants or agreements with TCFC; and
no Default shall have occurred.
4.3 SECURITY INTEREST. TCFC shall have a first-priority perfected security
interest in the Collateral of each Dealer subject only to Permitted Liens.
4.4 NO MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have occurred,
and no litigation, arbitration or governmental proceeding shall be pending or
threatened which may result in a Material Adverse Change.
SECTION 5. REPRESENTATIONS AND WARRANTIES. MarineMax and each Dealer represents
and warrants that as of the date of this Agreement and for as long as any
Liabilities to TCFC are outstanding, (and for so long as this Agreement shall
continue in effect, whether or not any Liabilities to TCFC are outstanding) each
of the following representations and warranties now is and hereafter will
continue to be true and correct in all material respects:
5.1 EXISTENCE AND POWER. MarineMax and each Dealer is and will continue to be, a
corporation duly authorized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and qualified and licensed in all
jurisdictions in which the nature of its business, or the ownership or leasing
of its property, make such qualification or licensing necessary; has and will
continue to have all requisite power and authority to carry on its business as
it is now, or may hereafter be, conducted, and will continue in, and limit its
operations to, the same general line of business it presently conducts.
5.2 AUTHORITY. The execution, delivery and performance by MarineMax and each
Dealer of this Agreement and the Other Agreements have been duly authorized by
its Board of Directors and if necessary, shareholders; do not and will not
require any governmental consent, registration or approval; and do not and will
not violate any Law, or any provision of, nor be grounds for acceleration under,
MarineMax's or such Dealer's articles or certificate of incorporation or bylaws
or any material agreement, indenture, note or instrument which is binding upon
such Dealer or any of MarineMax's or such Dealer's property.
5.3 NAMES, TRADE STYLES AND PRODUCT LINES. MarineMax and each Dealer's name as
set forth in this Agreement is its correct corporate name. Each Dealer shall
provide TCFC with 30 days advance written notice before changing its name or
doing business under any other name, or before adding any new product line to
any Dealer's Inventory. Schedule 5.3 lists each prior name of MarineMax and each
Dealer and each fictitious name, trade name and trade style by which MarineMax
and each Dealer has been or is now known, or has transacted or now transacts
business.
5.4 COMPLIANCE WITH LAWS. MarineMax and each Dealer has complied and will comply
with all provisions of applicable Laws if the failure to comply would result in
a Material Adverse Change or in a material impairment of MarineMax's or each
Dealer's ability or right to carry on its business in substantially the same
manner as now conducted.
5.5 LITIGATION AND CONTINGENT OBLIGATIONS. Except as heretofore disclosed to
TCFC in writing and except for claims fully covered by insurance as to which the
insurer has admitted coverage in writing, no claim, litigation (including,
without limitation, derivative action), arbitration, governmental investigation,
proceeding or inquiry is pending or, to the best of MarineMax's knowledge,
threatened against MarineMax or any Dealer which (i) would, if adversely
determined, result in a Material Adverse Change or the ability of MarineMax to
perform its obligations in connection with this Agreement and the Other
Agreements, or (ii) relates to any of the transactions contemplated thereby, and
there is no basis known to MarineMax or any Dealer for any of the foregoing.
Other than any liability incident to such claims, litigation, proceedings or
inquiries, there are no material contingent obligations not provided for or
referred to in financial statements heretofore furnished to TCFC.
5.6 OTHER AGREEMENTS. MarineMax and each Dealer is not in material default under
any material agreement to which it is a party or by which it is bound and does
not know of any dispute regarding any agreement which, if determined adversely,
could result in a Material Adverse Change.
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5.7 ASSETS. MarineMax and each Dealer possesses all assets, licenses, patents,
copyrights, service marks, trademarks, trade names, government approvals and
other authorizations and rights necessary for MarineMax and such Dealer to
continue to conduct its business as heretofore conducted by it.
5.8 TAXES. MarineMax and each Dealer has filed all tax reports and returns
required by applicable Laws except for extensions duly obtained. MarineMax and
each Dealer has either duly paid all taxes, duties and charges indicated due on
the basis of such reports and returns or has made adequate provision for the
payment thereof, and the assessment of any material amount of additional taxes,
duties or charges in excess of those paid and reported is not reasonably
expected.
5.9 NO CHANGE IN BUSINESS. Since the most recent financial statements furnished
by MarineMax to TCFC, there has been no Material Adverse Change.
5.10 COMPLETE DISCLOSURE. There is no fact which MarineMax has not disclosed to
TCFC which could result in a Material Adverse Change or which is necessary to
disclose in order to keep the foregoing representations and warranties from
being misleading in any material respect.
SECTION 6. AFFIRMATIVE COVENANTS. Unless TCFC otherwise consents in writing,
MarineMax and each Dealer, as applicable, shall comply with the agreements in
this Section 6.
6.1 BOOKS AND RECORDS. MarineMax shall at all times maintain complete and
accurate books and records comprising a standard, modern accounting system in
accordance with United States generally accepted accounting principles ("GAAP")
which accurately record and reflect on a consolidated basis, MarineMax's income,
expenses, liabilities, operations, accounts, and ownership and location of the
Collateral, including, without limitation, adequate reserves (including without
limitation, for bad debts, depreciation and taxes) in accordance with GAAP. All
such books and records and all documents relating to any of the Collateral are
and will continue to be genuine and in all material respects what they purport
to be.
6.2 INSURANCE. MarineMax and each Dealer shall, at all times, and for such
periods of time as TCFC may require, insure all insurable Collateral, with
financially sound and reputable insurers acceptable to TCFC, with extended
coverage against loss or damage by theft, embezzlement, fire, explosion, flood,
sprinkler, and other insurable events and risks that are customarily insured
against by similarly situated Persons in similar businesses, to the extent of
the replacement value thereof. All insurance policies covering Collateral shall
name TCFC as lender loss payee, and provide that proceeds payable thereunder
shall be payable directly to TCFC as its interest may appear, and that no act or
default of MarineMax or such Dealer or any other Person shall affect the right
of TCFC to recover thereunder. Upon receipt of the proceeds of any such
insurance, TCFC may apply such proceeds to the Loans, and then to other
Liabilities to TCFC. MarineMax and each Dealer shall maintain public liability
and third party property damage insurance in such amounts and with such
deductibles as are reasonably acceptable to TCFC. MarineMax shall provide TCFC
with the original or a certificate of each policy of insurance which shall
contain a provision requiring the insurer to give not less than 30 (10 in the
case of non-payment of premiums) days advance written notice to TCFC in the
event of cancellation or termination for any reason.
6.3 FINANCIAL STATEMENTS. All financial statements of MarineMax now or hereafter
delivered to TCFC have been, and shall be, prepared in conformity with GAAP
consistently applied, and now and hereafter will completely and accurately
reflect the financial condition and results of MarineMax and its operations at
the times and for the periods therein stated. MarineMax shall deliver to TCFC
(i) quarterly, unaudited financial statements, within 45 days after the end of
the fiscal quarter to which they pertain; and (ii) annual audited financial
statements for each fiscal year, accompanied by a certificate of an independent
certified public accounting firm selected by MarineMax and reasonably acceptable
to TCFC, in scope and substance acceptable to TCFC, within 120 days after the
end of the fiscal year to which they pertain.
6.4 LOCATIONS OF COLLATERAL AND BUSINESSES. MarineMax's and each Dealer's record
respecting Accounts and chief executive office and principal place of business
are and shall continue to be located at its address set forth on its signature
page hereto; and the only other locations at which any Collateral is located are
referred to or listed on each Dealer's signature page under the heading
"Business and Warehouse locations" (together with additional "Permitted
Locations") . "PERMITTED LOCATIONS" shall mean business and warehouse locations
in the United States as set forth in Schedule 6.4, and boat shows and other
short term selling locations. The books and records of MarineMax and each Dealer
are and shall continue to be located at its principal place of business. Neither
MarineMax nor any Dealer shall make any change in the location of Collateral or
of its principal place of business, chief executive office, books and records,
without 30 days prior written notice to TCFC.
6.5 ACCESS TO COLLATERAL AND RECORDS. TCFC, and any person designated by TCFC,
shall have reasonable access to, and the right without hindrance or delay to
inspect, audit, examine and test the Collateral, wherever located, and to
inspect, audit, check, copy and make extracts from MarineMax's and each Dealer's
books, records and accounts ("RECORDS") including, but not limited to,
printouts, computer runs or discs, minute books, journals, ledgers, work papers,
financial statements, orders, receipts, correspondence and other data relating
to MarineMax's or such Dealer's business or to any transactions of MarineMax or
such Dealer, no matter how or where such Records may be maintained, generated or
stored. For such purposes, TCFC and its agents at no charge may enter into and
remain upon MarineMax's or a Dealer's premises as often and for so long as
reasonably necessary. To the extent reasonably necessary, TCFC and its agents
may use all computers and other equipment and devices which MarineMax or such
Dealer owns, leases or otherwise has available; provided that TCFC shall not
have any such rights with respect to proprietary information of third parties,
nor, unless a Default has occurred, the right to make copies of MarineMax's or
such Dealer's proprietary computer programs. After the occurrence of a Default,
TCFC shall have the right to possession of the Records, and access to the
computer systems and programs relating to the Collateral for so long as
reasonably necessary to make full use thereof in aid of TCFC's rights under this
Agreement. MarineMax and each Dealer shall permit TCFC to discuss MarineMax or
such Dealer's condition (financial or otherwise), business, operations and
prospects with employees and accountants of MarineMax. .
6.6 FINANCIAL COVENANTS. So long as any Liabilities to TCFC remain outstanding
and (even if no Liabilities to TCFC are outstanding) so long as this Agreement
remains in effect, MarineMax (on a financial basis taken together with its
Subsidiaries on a consolidated basis) shall comply with the financial covenants
in Schedule 6.6. As used in this Agreement, the following terms shall have the
following meanings:
"TANGIBLE NET WORTH" as of any date shall mean the sum of MarineMax and
its Subsidiaries on a consolidated basis (a) net worth as reflected on its last
twelve-month fiscal financial statements, (b) 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 and (c) Subordinated Debt, less the sum of MarineMax
and its Subsidiaries on a consolidated basis (i) intangible assets, including,
without limitation, , goodwill, franchises, licenses, patents, tradenames,
copyrights, service marks, brand names, and covenants not to compete; ; (ii)
franchise fees; (iii) notes, Accounts and other amounts owed to it by any
guarantor, Affiliate or employee of MarineMax or a Dealer, excluding any amounts
owed by Brunswick Corporation or its Subsidiaries; (iv) losses since the end of
such fiscal year; and (vi) interest in the cash surrender value of officer's or
shareholder's life insurance policies.
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"INDEBTEDNESS" shall mean (i) debt for borrowed money or for the
deferred purchase price of property or services in respect of which MarineMax or
any of its Subsidiaries are liable as obligor or otherwise or assures a creditor
against loss, (ii) obligations under any leases which have been or in accordance
with GAAP should be recorded as capitalized leases ("CAPITALIZED LEASES")upon
which obligations MarineMax or any of its Subsidiaries are liable, and (iii)
unfunded obligations of MarineMax or any of its Subsidiaries under a
"multiemployer plan," as such term is defined under the Employment Retirement
Security Act of 1974, as amended ("ERISA"), required to be accrued by GAAP.
"CAPITAL EXPENDITURES" shall mean all expenditures, or agreements for
expenditures, for fixed assets, improvements or replacements, or substitutions
or additions thereto, which have a useful life of more than one year, including,
without limitation, the direct or indirect acquisition of assets by way of
increased product or services charges, offset items or otherwise, and includes
payments under Capitalized Leases.
"SUBORDINATED DEBT" shall mean Indebtedness of MarineMax and its
subsidiaries on a consolidated basis which is fully subordinated to all
Liabilities to TCFC in a manner reasonably satisfactory to TCFC.
6.7 NOTICE OF CONTINGENCIES. Forthwith upon learning of the occurrence of any of
the following, MarineMax shall furnish TCFC written notice describing the same
and the steps being taken by MarineMax with respect thereto: (i) any expected
uncollectibility of, material delay in collection of, or other impairment of any
material Eligible Account, (ii) the occurrence of a material Default or an
event, which with notice or lapse of time or both, would constitute a material
Default, (iii) the institution or threatened institution of, or any adverse
determination or materially adverse development in, any litigation, arbitration,
governmental or other proceeding which, if adversely determined, would result in
a Material Adverse Change or the ability of MarineMax to perform its obligations
in connection with this Agreement or the Other Agreements, (iv) notice from a
governmental Person that MarineMax's or a Dealer's operations violate any
applicable Law in any material respect, or (v) any event which has resulted or
may result in a Material Adverse Change.
6.8 TAXES. MarineMax shall promptly file all tax returns required by Law and pay
all taxes, fees and other governmental charges for which it is liable.
6.9 ADDITIONAL AFFIRMATIVE COVENANTS. MarineMax and each Dealer shall comply
with all other covenants, if any, set forth in Schedule 6.9.
6.10 INDEMNIFICATION. To the fullest extent not prohibited by applicable Law,
MarineMax and each Dealer shall jointly and severally indemnify TCFC and each of
its officers, directors, employees and agents ("INDEMNITIES") from and against
any and all claims, losses, liabilities, costs (including, without limitation,
all documentary, recording, filing, mortgage or other stamp taxes or duties),
and expenses (including reasonable attorneys' fees) (irrespective of whether
such Indemnity is a party to the action for which indemnification is sought)
(the "INDEMNIFIED LIABILITIES"), incurred by Indemnities or any of them as a
result, or arising out of or relating to (i) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of any
Loan or involving any Loan, or (ii) the execution, delivery, performance or
enforcement of this Agreement or the Other Agreements, except for any
Indemnified Liabilities arising on account of the relevant Indemnitees' s
negligence, gross negligence or willful misconduct. Obligations provided for in
this Section 6.10 shall survive termination of this Agreement and shall not be
reduced or impaired by any investigation made by or on behalf of TCFC or any
other Indemnity.
SECTION 7. NEGATIVE COVENANTS. Unless TCFC otherwise consents in writing, each
Dealer shall comply with the agreements in this Section 7.
7.1 CORPORATE STRUCTURE. MarineMax and each Dealer may without the prior written
consent of TCFC, (i) recapitalize, dissolve or be a party to any merger or
consolidation or acquire all or substantially all of the assets of any other
Person ; or (ii) amend its certificate or articles of incorporation, (except to
effect a change in its corporate name for which it must notify TCFC pursuant to
Section 5.3 and provide TCFC with such financing statements as TCFC may request
and an exact copy of the amendment) provided that such event under subsection
(i) or (ii) above would not on a pro forma basis result in a material breach by
MarineMax or any Dealer of any other terms and provisions of this Agreement,
(and further provided, that any breach of a financial covenant hereunder would
automatically be deemed to be material for these purposes).
7.2 INDEBTEDNESS. Each Dealer shall not without the prior written consent of
TCFC, which will not be unreasonably withheld: (i) incur or permit to exist any
Indebtedness except for Liabilities to TCFC, deferred taxes, current accounts
payable arising in the ordinary course of business and not overdue, and
non-current accounts payable which such Dealer is contesting in good faith by
appropriate proceedings; or (ii) guarantee, endorse or become responsible for
obligations of any other Person or incur any contingent obligation other than
endorsements of negotiable instruments for collection in the ordinary course of
business.
7.3 DISPOSAL OF COLLATERAL. Each dealer shall not sell, lease, transfer, assign
or otherwise dispose of any of the Collateral except for (A) the sale (not
subject to a repurchase obligation or return right) of Inventory at retail in
the ordinary course of business; (B) sales or transfers of Inventory to
Affiliates (except MarineMax) , and (C) transfers of Accounts (which are due to
Dealers from Sellers or manufacturers) to Affiliates, except for Accounts which
are included in the Borrowing Base, subject to the other provisions of this
Agreement.
7.4 ENCUMBRANCES. Except for the security interest granted by each Dealer to
TCFC pursuant to this Agreement, each Dealer shall not create, incur, assume or
suffer to exist any Lien other than those set forth on Schedule 7.4 or consented
to in writing by TCFC ("PERMITTED LIENS").
SECTION 8. APPLICATION OF PAYMENTS. In the event of a Default, notwithstanding
any provision of this Agreement or in any Other Agreement, MarineMax and each
Dealer waive the right to direct the application of any and all payments
received by TCFC from MarineMax and each Dealer or with respect to any
Collateral. In the event of a Default, TCFC shall have the continuing exclusive
right to apply and reapply any and all payments received, whether with respect
to the Collateral or otherwise, against Liabilities to TCFC in such manner as
TCFC may reasonably deem advisable, notwithstanding any entry by TCFC upon any
of its books and records.
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SECTION 9. DEFAULT AND REMEDIES.
9.1 DEFAULT. The occurrence of any one or more of the following events shall
constitute a "DEFAULT:
(a) Any material warranty of MarineMax or any Dealer to TCFC is now or
hereafter materially breached or any representation, statement, report or
certificate made or delivered to TCFC by MarineMax or any of MarineMax's
officers, employees or agents is now or hereafter materially incorrect, false,
untrue or misleading in any material respect;
(b) Any failure by MarineMax or any Dealer to promptly repay any
Liabilities to TCFC when due or declared to be due and such failure is not cured
within 10 days of receipt of written notice thereof to MarineMax (during which
period following the giving of such notice TCFC shall not be obligated to make
any additional Loans hereunder);
(c) Any failure by MarineMax or any Dealer to materially perform or
comply with, or if MarineMax or any Dealer shall otherwise materially breach,
any provision of this Agreement or any Other Agreement and such failure is not
cured within 30 days of receipt of written notice thereof to MarineMax, provided
that if such failure is subject to cure and such cure is diligently being
pursued by MarineMax or such Dealer at the end of such 30 day period, then as
long as such efforts to cure continue to be diligently pursued, MarineMax and
such Dealer shall have an additional 60 days thereafter to complete such cure;
(d) MarineMax or a Dealer shall materially default under or shall fail
to promptly perform or comply with any material provision of any agreement now
or hereafter existing with any third party ; or if any such failure to perform
or comply, which, if not performed, would result in a Material Adverse Change;
or any letter of credit or other obligation of any Dealer with respect to any
Liabilities or the Collateral shall terminate or not be renewed at least 30 days
prior to its stated expiration or maturity;
(e) Any amount in excess of $1,000,000 of the Collateral shall become
the subject of a levy, assessment, attachment, seizure or Lien which impairs its
value, the prospect of payment or performance, or the priority of TCFC's
security interest, and such levy, assessment, attachment, seizure or Lien is not
cured, satisfied or discharged within 10 days, and further provided, however,
that any Collateral subject to any such levy, assessment, attachment, seizure or
Lien shall no longer be considered as an Eligible Account or Eligible Inventory
until and unless such levy, assessment, attachment, seizure or Lien is cured,
satisfied, or discharged and then only to the extent that such Collateral still
satisfies the criteria for an Eligible Account or Eligible Inventory;
(f) Dissolution, termination of existence, insolvency or business
failure of MarineMax; ; or appointment of a receiver, trustee or custodian, for
all or any part of the property of, general assignment for the benefit of
creditors by, or the commencement of any proceeding by or against MarineMax
under any reorganization, bankruptcy, insolvency, arrangement, readjustment of
debt, dissolution or liquidation law of any jurisdiction;
(g) MarineMax or any Dealer shall conceal, remove or permit to be
concealed or removed any material part of its property with intent to hinder,
delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar Law;
(h) A Material Adverse Change shall occur; or
(i) TCFC in good faith believes that prospect of payment of any
Liabilities to TCFC is impaired or deems itself insecure.
9.2 REMEDIES.
(a) Upon or at any time after the occurrence of a Default, TCFC, at its
option, may do any one or more of the following: (i) cease advancing money, or
extending credit to or for the benefit of Dealers under this Agreement and any
Other Agreement; (ii) terminate this Agreement; (iii) accelerate and declare all
or any part of the Liabilities to TCFC to be immediately due and payable, ; (iv)
take possession of any or all of the Collateral wherever it may be found, and
for that purpose MarineMax or Dealers authorize TCFC without judicial process to
enter onto any of Dealers' premises without hindrance to search for, take
possession of, and keep, store, sell or remove any or all of the Collateral; (v)
require MarineMax or Dealers to assemble any or all of the Collateral and make
it available to TCFC at a place or places designated by TCFC reasonably
convenient to TCFC and Dealers, and to remove the Collateral to such locations
as TCFC may deem advisable; (vi) complete processing or repair of all or any
portion of the Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, TCFC shall have the right to use MarineMax or
any Dealer's premises, Equipment and any and all other property without charge;
(vii) sell, ship, reclaim, lease or otherwise dispose of all or any portion of
the Collateral in its condition at the time TCFC obtains possession or after
further manufacturing, processing or repair, at any one or more public and/or
private sale(s) (including, without limitation, execution sales), in lots or in
bulk, for cash or otherwise, and any notification shall be deemed reasonably and
properly given if sent at least 10 days before a disposition of any Collateral,
(and any such notice may be given to MarineMax individually and as agent for all
Dealers) ); and Dealers agree that sale at wholesale of any of the Collateral
will be a commercially reasonable disposition and that TCFC may purchase all or
any part of the Collateral at public sale and in lieu of actual payment of such
purchase price, may set-off the amount thereof against Liabilities to TCFC;
(viii) demand payment of, and collect any Accounts and other Collateral and, in
connection therewith, each Dealer irrevocably authorizes TCFC to endorse or sign
such Dealer's name on all collections, receipts, Instruments and other
documents, to take possession of and open mail addressed to such Dealer and
remove therefrom payments made with respect to Collateral or Proceeds thereof,
and, in TCFC's sole discretion, to grant extensions of time to pay, compromise
claims and settle Accounts and the like for less than face value; and (ix) TCFC
shall have the right to obtain access to any of any MarineMax or Dealer's data
processing equipment, computer hardware and software relating to the Collateral
and, subject to the terms of any licenses with third parties, to use all of the
foregoing and information contained therein in any manner TCFC deems
appropriate.
(b) Reasonable attorneys' fees, expenses, costs, liabilities and
obligations incurred by TCFC with respect to the foregoing shall become part of
Liabilities to TCFC, be due on demand, and bear interest at the Default Rate.
(c) Anything contained herein to the contrary notwithstanding, upon the
occurrence of a Default described in Section 9.1(f) or 9.1(g), all Liabilities
to TCFC, including without limitation, accrued interest thereon shall become
immediately due and payable without notice or election by TCFC.
9.3 REMEDIES CUMULATIVE. In addition to rights and remedies set forth in this
Agreement, TCFC shall have all rights and remedies accorded a secured party
under the UCC and other applicable Laws and in any other agreement or document
now or hereafter executed by MarineMax and Dealers for TCFC's benefit. All
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by TCFC of one or more rights or remedies shall
8 of 16
<PAGE> 9
not be deemed an election, nor bar TCFC from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of TCFC to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all
Liabilities to TCFC have been fully paid and performed.
9.4 RECOVERED PAYMENTS. To the extent MarineMax or any Dealer makes a payment to
TCFC or TCFC enforces its security interest or exercises a right of setoff, and
such payment or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other Person under
any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or exercise had not occurred.
SECTION 10. POWER OF ATTORNEY.
10.1 POWER OF ATTORNEY. MarineMax and each Dealer hereby grants to TCFC an
irrevocable power of attorney coupled with an interest, authorizing and
permitting TCFC, at its option but without obligation, at MarineMax's and such
Dealer's sole expense, in such Dealer's name or otherwise, to the extent
reasonably determined by TCFC to be necessary or advisable in order to carry out
TCFC's rights or remedies to do any or all of the following: (a) execute on
behalf of any Dealer any financing statement or any continuation or amendment
thereof and any other agreement or document that TCFC may, in its reasonable
discretion, deem advisable in order to perfect or maintain TCFC's security
interest in the Collateral or other property intended to constitute Collateral;
or (b) subsequent to a Default and during the continuance of such Default, to do
any of the following: (i) 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; (ii) demand payment of Accounts, enforce
payment of Accounts constituting Collateral by legal proceedings or otherwise,
and enforce any and all rights of Dealers in Accounts; grant extensions of time
to pay, compromise claims and settle Accounts constituting Collateral for less
than face value and execute all releases and other documents in connection
therewith; (iii) 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 as they may relate to
Collateral with respect to any such policy as to and endorse MarineMax's or such
Dealer's name on any Instrument or other item of payment or the proceeds of such
policy; and (iv) take any action or pay any sum required of MarineMax or such
Dealer pursuant to this Agreement, and any other present or future agreements
between TCFC, MarineMax, and Dealers and do all acts and things which are
reasonably necessary to fulfill MarineMax or Dealers' obligations under this
Agreement. Notwithstanding the above provisions, the grant by MarineMax of a
power of attorney under this section 10.1 is limited to only those powers or
actions as described above as may be reasonably necessary for TCFC to exercise
the above described powers or perform the above described actions with respect
to Collateral.
SECTION 11. TERM AND TERMINATION.
11.1 TERM AND TERMINATION. The term of this Agreement, unless sooner terminated
as provided in this Agreement, shall be for two years from the date of this
Agreement and from year to year thereafter until terminated at the end of the
second year or any subsequent one-year renewal period of such term by either
party by at least 60 days prior written notice to the other; provided MarineMax
may terminate this Agreement at any time by at least 90 days prior written
notice to TCFC, with such notice (and such notice maybe given by MarineMax
individually and as agent for all other Dealers). Any notice given to TCFC by
MarineMax shall be on behalf of all Dealers. Upon termination of this Agreement,
all Liabilities to TCFC shall become immediately due and payable without notice
or demand. Upon any termination, MarineMax and each Dealer shall remain liable
to TCFC for all Liabilities to TCFC, including without limitation interest,
fees, charges and expenses arising prior to or after the effective date of
termination, and all of TCFC's rights and remedies and its security interest
shall continue until all Liabilities to TCFC are paid and all obligations of,
each Dealer are performed in full.
SECTION 12. GENERAL.
12.1 NOTICES. All notices to be given under this Agreement shall be in writing
and shall be served either personally or by depositing the same with a reputable
overnight courier with charges prepaid or provided for, or in the United States
mail, first-class postage prepaid, by ordinary, registered or certified mail,
addressed to TCFC or addressed to MarineMax at its respective chief executive
office shown on their respective signature page hereto or at any other address
as shall be designated by one party in a written notice to the other party. Any
such notice shall be deemed to have been given upon delivery in the case of
personal delivery, one Business Day after being so deposited with a reputable
overnight courier, or 3 Business Days after being so deposited in the United
States mail, except that any notice of change of address shall not be effective
until actually received. In addition, notice may be sent by facsimile
transmission, which shall be effective upon confirmation to the sender that such
transmission was received, provided a hard copy of such notice is sent within 24
hours of such transmission.
12.2 ATTORNEYS' FEES AND COSTS. MarineMax and Dealers shall pay TCFC the amount
of (i) all reasonable fees, costs and expenses (including reasonable attorneys'
fees of TCFC's in house and outside counsel) incurred by TCFC in collecting
Liabilities to TCFC, enforcing, protecting or perfecting TCFC's security
interest in the Collateral or in connection with any matters contemplated by or
arising out of this Agreement or any Other Agreement excluding preparation of
this Agreement or any amendment or modification of this Agreement,; (ii) all
reasonable fees, costs and expenses (including reasonable attorneys' fees)
incurred upon appeal; and (iii) all reasonable expenses, costs and charges
relating to any of the foregoing, including reasonable fees of paralegal and
other staff of TCFC's attorneys.
12.3 BENEFIT. This Agreement and documents contemplated hereby shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that neither MarineMax nor any Dealer may
assign any of its rights under this Agreement without the prior written consent
of TCFC, such consent not to be unreasonably withheld, and any prohibited
assignment shall be void. References herein to TCFC shall be deemed to refer to
TCFC and its successors and assigns. No consent by TCFC to any assignment shall
relieve MarineMax or Dealers from their respective liability for any Liabilities
to TCFC or any other obligation unless expressly granted by TCFC in writing.
12.4 NON-WAIVER BY TCFC.
(a) The failure of TCFC at any time to require MarineMax or Dealers
strictly to comply with any of the provisions of this Agreement or any Other
Agreement shall not waive or diminish any right of TCFC thereafter to demand and
receive strict compliance therewith or with any other provision; and any waiver
of any breach shall not waive or affect any other breach, whether prior or
subsequent thereto and whether of the same or a different type. None of the
provisions of this Agreement or any Other Agreement shall be deemed waived by
any act or knowledge of TCFC or its agents or employees, but only by a specific
written waiver signed by an agent of TCFC and delivered to MarineMax.
(b) TCFC shall have the right to seek recourse against any one or more
of MarineMax or Dealers , and no election by TCFC to seek recourse against less
than all such parties shall constitute a waiver of TCFC's right to seek recourse
against the others.
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<PAGE> 10
(c) Time is of the essence in the performance of all of Dealers'
obligations under this Agreement.
12.5 WAIVERS BY DEALERS.
(a) MarineMax and each Dealer waives: (i) notice of the creation,
renewal or accrual of any Liabilities to TCFC or of TCFC's reliance upon
MarineMax's or any Dealer's agreements, representations and warranties in this
Agreement; (ii) except as provided in this Agreement or any Other Agreement,
demand of payment, protest, notice of protest, notice of default or dishonor,
notice of payment, (iii) any notice of any action taken or to be taken by TCFC
unless expressly required by this Agreement or applicable law; (iv) any right of
contribution from MarineMax or any Dealer; (v) any right to require TCFC to
institute any action or suit or to exhaust TCFC's rights and remedies against
any Collateral or MarineMax or any Dealer before proceeding against MarineMax or
such Dealer; and (vi) any obligation of TCFC to marshal any assets in favor of
MarineMax or any Dealer.
(b) MarineMax and each Dealer consents that TCFC may, without in any
manner affecting MarineMax and such Dealer's joint and several liability for any
Liabilities to TCFC: (i) sell, release, surrender, modify, impair, exchange,
substitute or extend the duration or the time for the performance or payment of
any and all Collateral or other property, of any nature and from whomsoever
received, held by TCFC as security for the payment or performance of any
Liabilities to TCFC or MarineMax or any Dealer or any obligations of MarineMax
or any Dealer; and (ii) settle, adjust or compromise any of TCFC's claims
against MarineMax or such Dealer.
12.6 MARINEMAX'S AND DEALER'S COSTS; TCFC EXPENDITURES. All obligations of
MarineMax or Dealers under this Agreement and the Other Agreements shall be
performed at MarineMax or Dealers' sole cost and expense unless otherwise
indicated in this Agreement. If MarineMax or Dealers shall fail to pay taxes,
insurance, assessments, costs or expenses which MarineMax or Dealers' are
required to pay under this Agreement, or fails to keep the Collateral free from
Liens except for Permitted Liens, TCFC may, in its reasonable discretion upon 10
days prior written notice to MarineMax, make expenditures for any or all of such
purposes, and the amount so expended, together with interest thereon at the
Default Rate shall be part of the Liabilities to TCFC, payable on demand.
12.7 CUSTODY AND PRESERVATION OF COLLATERAL. TCFC shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if it takes such action for that purpose as Dealers shall request in
writing, but failure by TCFC to comply with any such request shall not of itself
be deemed a failure to exercise reasonable care, and no failure by TCFC to
preserve or protect any right with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not requested by Dealers, shall of itself be deemed a failure to exercise
reasonable care in the custody or preservation of such Collateral.
12.8 CREDIT INFORMATION. TCFC may at any time investigate or make inquiries of
former or current creditors of any Dealer or other Persons.
12.9 SEVERABILITY. If any provision of this Agreement is held by any court of
competent jurisdiction to be invalid or otherwise unenforceable, such defect
shall not affect any other provision and the remainder of this Agreement shall
be effective as though such defective provision had not been a part of this
Agreement.
12.10 SINGULAR/PLURAL MEANING. The meaning of all terms used in this Agreement
shall be equally applicable to both singular and plural forms of such terms
unless the context otherwise requires.
12.11 AMENDMENT. The provisions of this Agreement may not be waived, altered,
modified or amended except in a writing executed by duly authorized officer of
MarineMax and Dealers and a duly authorized agent or officer of TCFC.
12.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH, AND GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF ILLINOIS, EXCEPT THAT QUESTIONS AS TO PERFECTION
OF TCFC'S SECURITY INTEREST AND THE EFFECT OF PERFECTION OR NON-PERFECTION SHALL
BE GOVERNED BY THE LAW WHICH WOULD BE APPLICABLE EXCEPT FOR THIS SECTION.
12.13 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO EACH WAIVE ANY RIGHT TO A TRIAL BY JURY ON ANY CLAIM, DEMAND,
ACTION, CAUSE OF ACTION OR COUNTERCLAIM ARISING UNDER OR IN ANY WAY RELATED TO
THIS AGREEMENT, AND UNDER ANY THEORY OF LAW OR EQUITY, WHETHER NOW EXISTING OR
HEREAFTER ARISING.
12.14 SUBMISSION TO JURISDICTION; WAIVER OF BOND. MarineMax and each Dealer
consents to the non-exclusive jurisdiction of any federal, state or municipal
court located within the State of Illinois and waives any objection which
MarineMax or such Dealer may have based on improper venue or forum non
conveniens to the conduct of any proceeding in any such court. MarineMax and
each Dealer waives, to the extent permitted by law, any bond or surety or
security upon such bond which might, but for this waiver, be required of TCFC.
Nothing contained in this section shall affect the right of TCFC to bring any
action or proceeding against MarineMax or any Dealer or its property in the
courts of any other jurisdiction.
12.15 SAVINGS PROVISIONS. All agreements between TCFC and MarineMax and each
Dealer, 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
interest contracted for, charged, received, paid or agreed to be paid to TCFC
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable to TCFC 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, TCFC 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 TCFC and not
to the payment of interest, or if such excess interest exceeds the unpaid
balance of the principal amount of Liabilities to TCFC, such excess shall be
refunded to MarineMax and Dealers. All interest paid or agreed to be paid to
TCFC, 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 MarineMax and Dealers so that
interest for such full term shall not exceed the maximum amount permitted by
applicable law.
12.16 INTEGRATION. THIS AGREEMENT AND THE OTHER WRITINGS REFERRED TO HEREIN
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, EMBODY THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS
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<PAGE> 11
BETWEEN THE PARTIES. NOTWITHSTANDING THE ABOVE PROVISIONS, THIS AGREEMENT IS NOT
INTENDED TO SUPERSEDE THAT CERTAIN INVENTORY SECURITY AGREEMENT ENTERED INTO BY
AND BETWEEN TCFC AND MARINEMAX TX, L.P. DATED MARCH 18,1999.
12.17 EFFECTIVENESS. This Agreement shall not become an agreement between the
parties until accepted by TCFC in Illinois. MarineMax and Dealers waive notice
of such acceptance.
Dated: March 18,1999.
Accepted in Illinois:
TRANSAMERICA COMMERCIAL FINANCE CORPORATION
By: /s/ Christopher C. Meals
--------------------------------------------------
Its: Vice President - Credit
--------------------------------------------------
11 of 16
<PAGE> 12
SIGNATURE PAGE AS TO MARINEMAX
<TABLE>
<S> <C>
ATTEST:
(or witness)
/s/ Gilbert L. Rudolph MarineMax, Inc.
- ----------------------------------------------------------- ---------------------------------------------------------------------
Title (Name of corporation, partnership or individual)
Witness
By: /s/ Michael H. McLamb
---------------------------------------------------------
Title: Vice President and Chief Financial Officer
---------------------------------------------------------
Tax ID No:
---------------------------------------------------------
Dealer's Chief Executive Office and Principal Place of Business:
18167 US 19 North, Suite 499
---------------------------------------------------------------------
Clearwater, Fl. 33764
---------------------------------------------------------------------
---------------------------------------------------------------------
Dealer is a corporation organized and existing under the laws of the
State of Delaware.
</TABLE>
This signature page is part of the foregoing Accounts Receivable and Financing
Agreement of MarineMax and the Dealers listed therein with Transamerica
Commercial Finance Corporation dated March 18, 1999.
12 of 16
<PAGE> 13
SIGNATURE PAGE AS TO EACH DEALER
<TABLE>
<S> <C>
ATTEST: DEALER
(or witness)
/s/ Gilbert L. Rudolph Harrison's Boat Center, Inc.
- ----------------------------------------------------------- ---------------------------------------------------------------------
Title (Name of corporation, partnership or individual)
Witness
By: /s/ Michael H. McLamb
---------------------------------------------------------
Title: Assistant Treasurer
---------------------------------------------------------
Tax ID No:
---------------------------------------------------------
Dealer's Chief Executive Office and Principal Place of Business:
1928 Twin View Blvd.
---------------------------------------------------------------------
Redding, Ca. 96003
---------------------------------------------------------------------
---------------------------------------------------------------------
Dealer is a corporation organized and existing under the laws of the
State of California.
</TABLE>
This signature page is part of the foregoing Accounts Receivable and Financing
Agreement of MarineMax and the Dealers listed therein with Transamerica
Commercial Finance Corporation dated March 18, 1999.
13 of 16
<PAGE> 14
SIGNATURE PAGE AS TO EACH DEALER
<TABLE>
<S> <C>
ATTEST: DEALER
(or witness)
/s/ Gilbert L. Rudolph Harrison's Marine Center's of Arizona, Inc.
- ----------------------------------------------------------- ---------------------------------------------------------------------
Title (Name of corporation, partnership or individual)
Witness
By: /s/ Michael H. McLamb
---------------------------------------------------------
Title: Vice President
---------------------------------------------------------
Tax ID No:
---------------------------------------------------------
Dealer's Chief Executive Office and Principal Place of Business:
1840 East Broadway Rd.
---------------------------------------------------------------------
Tempe, AZ. 85282
---------------------------------------------------------------------
Dealer is a corporation organized and existing under the laws of the
State of Arizona.
</TABLE>
This signature page is part of the foregoing Accounts Receivable and Financing
Agreement of MarineMax and the Dealers listed therein with Transamerica
Commercial Finance Corporation dated March 18, 1999.
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<PAGE> 15
SIGNATURE PAGE AS TO EACH DEALER
<TABLE>
<S> <C>
ATTEST: DEALER
(or witness)
/s/ Gilbert L. Rudolph MarineMax, of Las Vegas, Inc.
- ----------------------------------------------------------- ---------------------------------------------------------------------
Title (Name of corporation, partnership or individual)
Witness
By: /s/ Michael H. McLamb
---------------------------------------------------------
Title: Assistant Treasurer
---------------------------------------------------------
Tax ID No:
---------------------------------------------------------
Dealer's Chief Executive Office and Principal Place of Business:
3800 Boulder Highway
---------------------------------------------------------------------
Las Vegas, Nevada 89121
---------------------------------------------------------------------
Dealer is a corporation organized and existing under the laws of the
State of Delaware.
</TABLE>
This signature page is part of the foregoing Accounts Receivable and Financing
Agreement of MarineMax and the Dealers listed therein with Transamerica
Commercial Finance Corporation dated March 18, 1999.
15 of 16
<PAGE> 16
SIGNATURE PAGE AS TO EACH DEALER
<TABLE>
<S> <C>
ATTEST: DEALER
(or witness)
/s/ Gilbert L. Rudolph MarineMax TX L.P., a Texas limited partnership
- ----------------------------------------------------------- ---------------------------------------------------------------------
Title (Name of corporation, partnership or individual)
Witness
By: Dumas GP, L.L.C., a Delaware limited liability company
-------------------------------------------------------------
Its: General Partner
-------------------------------------------------------------
By: 11502 Dumas, Inc. a Nevada corporation
-------------------------------------------------------------
Its: Sole Member
-------------------------------------------------------------
By: /s/ Michael H. McLamb
-------------------------------------------------------------
Name: Michael H. McLanb
Title: Vice President
-------------------------------------------------------------
Tax ID No:
----------------------------------------------------------
Dealer's Chief Executive Office and Principal Place of Business:
2551 South Shore Harbour Blvd. Suite C
---------------------------------------------------------------------
League City, TX. 77573
---------------------------------------------------------------------
Dealer is a limited liability company organized and existing under
the laws of the State of Texas.
</TABLE>
This signature page is part of the foregoing Accounts Receivable and Financing
Agreement of MarineMax and the Dealers listed therein with Transamerica
Commercial Finance Corporation dated March 18 , 1999.
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<PAGE> 17
SCHEDULE 2.4(a)
BORROWING BASE PERCENTAGES MENU
For purposes of calculating the Borrowing Base with respect to the
following classes of Eligible Inventory pursuant to Section 2.4(a), the
following percentages shall apply:
Class FS. New Inventory: (A) 100% of the cost (plus freight) of such
new Inventory which is less than 1 year old from the original date of
delivery from the manufacturer; (B) 90% of the cost (plus freight) of
such new Inventory which is between one and two years old from the
original date of delivery from the manufacturer; and (C) 72% of the
cost (plus freight) of such New Inventory which is more than two years
old from the original date of delivery from the manufacturer.
Class U. Used Inventory. Used Inventory (defined as previously sold at
retail) located on Dealer's premises: (A) the lesser of (i) the cost of
such item or (ii) 80% of the most recent wholesale NADA or BUC value
for such Inventory which has been held by MarineMax or a Dealer less
than 181 days; and (B) the lesser of (i) the cost of such item or (ii)
72% of the most recent wholesale NADA or BUC book value for such
Inventory which has been held by MarineMax or a Dealer between 181 days
and one year, (provided, however, that no more than 25% of the Credit
Limit may be utilized for outstanding Loans based upon this Class of
Inventory) . .
Class PT. Inventory of Parts. Parts Inventory, not including freight
charges: 75% of the cost (less freight) of such Class of Inventory,
(provided, however, that no more than 15% of the Credit Limit may be
utilized for outstanding Loans based upon this Class of Inventory).
<PAGE> 18
SCHEDULE 2.10
FEES AND CHARGES MENU
RETURNED CHECK FEE:
Dealer shall pay TCFC a fee equal to $25 for any check of Dealer that TCFC
submits for payment and is returned by the bank unpaid.
<PAGE> 19
SCHEDULE 3.9
REPORTS MENU
MarineMax and each Dealer shall provide TCFC with the following additional
reports, in form and substance satisfactory to TCFC, and such other reports as
TCFC may request from time to time:
Monthly Inventory reports as of the prior month end due by the 15th day
of each month. Such reports shall contain a schedule of Inventory by
cost, type, brand, model and location.
Borrowing Base Certificates shall be submitted by the 15th day of each
month, current as of the prior month end.
Business Plan for each fiscal year, submitted no later than sixty (60)
days prior to the end of the then current fiscal year. BUSINESS PLAN
shall mean the projected balance sheet and profit and loss statement
of MarineMax, prepared in accordance with GAAP, together with
appropriate supporting details and a statement of underlying
assumptions, all prepared by MarineMax's chief financial officer.
MarineMax warrants each Business Plan is and will be the best available
good faith estimate of MarineMax's management regarding the course of
MarineMax's business for the period covered thereby. MarineMax also
warrants each Business Plan, and the assumptions on which such Business
Plan is based, shall be reasonable and realistic based on the current
economic conditions.
<PAGE> 20
SCHEDULE 5.3
DEALER'S NAMES
1. Dealer: Harrison's Boat Center, Inc.
a. Legal names used in the past 5 years:
Harrison's Boat Center, Inc.
b. Trade names and trade styles used in the past 5 years:
Not Applicable.
c. Current legal name: Harrison's Boat Center, Inc.
d. Current trade names and trade styles: Not Applicable.
2. Dealer: Harrison's Marine Centers of Arizona, Inc.
a. Legal names used in the past 5 years:
Harrison's Marine Centers of Arizona, Inc.
b. Trade names and trade styles used in the past 5 years:
Harrison's Marine Centers of Arizona
c. Current legal name:
Harrison's Marine Centers of Arizona, Inc.
d. Current trade names and trade styles:
Not Applicable.
3. Dealer: MarineMax of Las Vegas, Inc.
a. Legal names used in the past 5 years:
MarineMax of Las Vegas, Inc.
b. Trade names and trade styles used in the past 5 years:
Sea Ray of Las Vegas
Ashley's SeaRay Boats
c. Current legal name: MarineMax of Las Vegas, Inc.
d. Current trade names and trade styles: Not Applicable.
4. Dealer: MarineMax TX, L.P.
a. Legal names used in the past 5 years:
MarineMax TX, L.P.
11502 Dumas, Inc.
600 Del Lago Blvd., Inc.
9149 Wallisville Road Interests, Inc.
Airtex Interests, Inc.
Delhomme Realty, Inc.
Lake Lewisville Interests, Inc.
Nasa Road Interests, Inc.
Reeder Road Interests, Inc.
South Shore Interests, Inc.
b. Trade names and trade styles used in the past 5 years:
Louis Delhomme Marine - 11502 Dumas
Louis Delhomme Marine - Del Lago
Louis Delhomme Marine - Ft. Worth
Delhomme Service Center
Louis Delhomme Marine-Airtex
Louis Delhomme Marine - Lake Lewisville
Louis Delhomme Marine - Nasa Road
Louis Delhomme Marine - Dallas
Louis Delhomme Marine - South Shore
c. Current legal name: MarineMax TX, L.P.
d. Current trade names and trade styles: Not Applicable.
<PAGE> 21
SCHEDULE 6.4
PLACE OF BUSINESS
1. Dealership - Harrison's Boat Center, Inc.
Principal Place of Business:
1928 Twin View Blvd.
Redding, CA 96003
Shasta County
Other Store/Warehouse Locations:
3753 Santa Rosa Avenue
Santa Rosa, CA 95407
Sonoma County
3765 Main Street
Oakley, CA 94561
Contra Costa County
18721 Old Oasis Road
Redding, CA 96003
Shasta County
1285 Embarcadero
Oakland, CA 94606
Alameda County
2159 El Camino Avenue
Sacramento, CA 95821
Sacramento County
1371 Garden Hwy.
Suite 150
Sacramento, CA 95833
Sacramento County
2. Dealership - Harrison's Marine Centers of Arizona, Inc.
Principal Place of Business:
1840 East Broadway Road
Tempe, AZ 85282
Maricopa County
3. Dealership - MarineMax of Las Vegas, Inc. Principal Place of Business:
3800 Boulder Highway
Las Vegas, NV 89121
Clark County
4. Dealership - MarineMax TX, L.P. Principal Place of Business:
2551 S. Shore Harbour Blvd., Suite C
League City, TX 77573
Galveston County
Dealership - MarineMax TX, L.P.
Other Store/Warehouse Locations:
<PAGE> 22
7940 West I-30
Fort Worth, TX 76108
Tarrant County
15150 North Freeway
Houston, TX 77090
Harris County
600 Del Lago Blvd.
Montgomery, TX 77356
Montgomery County
1098 E. Hill Park Road
Route 3
Lewisville, TX 75056
Denton County
2332 NASA Road One
Houston, TX 77058
Harris County
1491 E. Hill Park Road
Route 3
Lewisville, TX 75056
Denton County
9149 Wallisville Road
Houston, TX 77029
Harris County
11502 Dumas Road
Houston, TX 77034
Harris County
<PAGE> 23
SCHEDULE 6.6
FINANCIAL COVENANTS MENU
MarineMax covenants and agrees that so long as any of the Liabilities to TCFC
remain outstanding or this Agreement remains in effect, even if no Liabilities
to TCFC are outstanding (such covenants shall be determined based upon MarineMax
taken as a whole together with each of its Subsidiaries, based upon their
consolidated financial statements):
Indebtedness to Tangible Net Worth: MarineMax shall maintain a ratio of
Indebtedness to Tangible Net Worth not to exceed (a)_5.5_ to 1.0,
during the period of January through June of each calendar year, and
(b) 2.75 to 1.0 during the period of July through December of each
calendar year. Such covenant shall be measured quarterly .
Current Ratio: MarineMax shall maintain a ratio of total current assets
to total current liabilities of not less than (a) 1.1 to 1.0 during the
period of January through June of each calendar year, (b) 1.15 to 1.0
during the period of July through September of each calendar year, and
(c) 1.2 to 1.0, during the period of October through December of each
calendar year. Such covenant shall be measured quarterly .
Debt Coverage: MarineMax shall maintain a debt coverage ratio (defined
as income before interest, taxes, depreciation and amortization to
interest expense) of not less than 1.0 to 1.0, as measured on a rolling
four quarter average. Such covenant shall be measured quarterly. .
Profitibility: MarineMax shall achieve a net income after taxes,
depreciation, amortization and distributions of at least (a)
$13,500,000 for fiscal year 1999 and (b) $16,500,000 for fiscal year
2000.
<PAGE> 24
SCHEDULE 6.9
ADDITIONAL AFFIRMATIVE COVENANTS
Certificates of Compliance. MarineMax shall provide TCFC an annual
certificate from either MarineMax's chief financial officer or
president containing a computation of, and showing compliance with,
each of the financial covenants contained in Schedule 6.6 and to the
effect that the Person signing such certificate has not become aware of
any non-compliance by MarineMax, or any material Default or event,
which with notice or lapse of time or both, would constitute a material
Default.
<PAGE> 25
SCHEDULE 7.5
PERMITTED LIENS
(i) Liens to secure payment of taxes which are not yet
due and payable or which are being contested in good
faith.
(ii) Deposits under workmen's compensation, unemployment
insurance, social security and other similar laws, or
to secure statutory or performance bonds in the
ordinary course of business.
(iii) Liens which, in TCFC's reasonable determination, do
not materially impair the use or lessen the value of
the Collateral.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This exhibit contains summary financial information extracted from the
Registrant's financial statements for the period ended June 30, 1999, and is
qualified in its entirety by reference to such financial statements. This
exhibit shall not be deemed filed for purposes of Section 11 of the Securities
and Exchange Act of 1933 and Section 18 of the Securities and Exchange Act of
1934, or otherwise subject to the liability of such Sections, nor shall it be
deemed a part of any other filing which incorporates this report by reference,
unless such other filing expressly incorporates this Exhibit by reference.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 21,140,383
<SECURITIES> 0
<RECEIVABLES> 17,144,247
<ALLOWANCES> 0
<INVENTORY> 137,430,009
<CURRENT-ASSETS> 179,203,992
<PP&E> 42,243,115
<DEPRECIATION> 10,912,268
<TOTAL-ASSETS> 245,912,877
<CURRENT-LIABILITIES> 158,042,182
<BONDS> 3,421,841
0
0
<COMMON> 63,854,701
<OTHER-SE> 20,449,801
<TOTAL-LIABILITY-AND-EQUITY> 245,912,877
<SALES> 324,375,777
<TOTAL-REVENUES> 324,375,777
<CGS> 247,310,479
<TOTAL-COSTS> 247,310,479
<OTHER-EXPENSES> 56,992,947
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,364,522
<INCOME-PRETAX> 18,707,829
<INCOME-TAX> 7,464,904
<INCOME-CONTINUING> 11,242,925
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,242,925
<EPS-BASIC> 0.76
<EPS-DILUTED> 0.76
</TABLE>
