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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 DECEMBER 31, 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 33764
Clearwater, Florida (ZIP Code)
(Address of principal executive offices)
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 January 31,
2000 was 15,180,211.
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MARINEMAX, INC.
Table of Contents
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Item No. Page
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PART I FINANCIAL INFORMATION
1. Financial Statements (unaudited):
Condensed Consolidated Results of Operations
For the Three-Month Period Ended
December 31, 1998 and December 31, 1999.............................. 3
Condensed Consolidated Balance Sheets as of
September 30, 1999 and December 31, 1999............................. 4
Condensed Consolidated Statements of Cash Flows
for the Three-Month Period Ended
December 31, 1998 and December 31, 1999.............................. 5
Notes to Condensed Consolidated Financial Statements................... 6
2. Management's Discussion and Analysis of Results of Operations
and Financial Condition................................................ 8
PART II OTHER INFORMATION
1. Legal Proceedings..................................................... 11
2. Changes in Securities and Use of Proceeds............................. 11
3. Defaults Upon Senior Securities....................................... 11
4. Submission of Matters to Vote of Security Holders..................... 11
5. Other Information..................................................... 11
6. Exhibits and Reports on Form 8-K...................................... 11
7. Signatures............................................................ 12
</TABLE>
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ITEM 1. FINANCIAL STATEMENTS
MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Results of Operations
(amounts in thousands except share and per share data)
(Unaudited)
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<CAPTION>
For the Three-Month Period Ended
December 31,
-----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Revenue $ 69,264 $ 93,517
Cost of sales 52,678 72,775
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Gross profit 16,586 20,742
Selling, general and administrative
expenses 15,596 18,734
----------- -----------
Income from operations 990 2,008
Interest expense, net 468 1,180
----------- -----------
Income before income taxes 522 828
Income tax provision 241 351
----------- -----------
Net income $ 281 $ 477
=========== ===========
Basic and diluted net income per common
share: $ 0 .02 $ 0.03
=========== ===========
Shares used in computing basic and
diluted net income per common share: 14,601,634 15,180,211
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(amounts in thousands except share and per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1999
------------ ---------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,297 $ 5,711
Accounts receivable, net 14,842 11,792
Inventories 137,786 163,766
Prepaids and other current assets 2,705 3,921
Deferred tax asset 234 177
-------- --------
Total current assets 163,864 185,367
Property and equipment, net 37,780 37,890
Goodwill and other assets 34,107 35,516
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Total assets $235,751 $258,773
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,802 $ 4,174
Customer deposits 10,574 4,843
Accrued expenses 10,775 9,456
Short-term borrowings 98,150 137,889
Current maturities of long-term debt 1,210 1,035
-------- --------
Total current liabilities 135,511 157,397
Long-term debt, net of current maturities 6,310 6,335
Deferred tax liability 1,600 1,706
Other liabilities 2,096 2,257
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,
15,180,211 and 15,136,966 shares issued and outstanding at
December 31, 1999 and September 30, 1999, respectively 15 15
Additional paid-in capital 62,859 63,226
Retained earnings 27,360 27,837
-------- --------
Total stockholders' equity 90,234 91,078
-------- --------
Total liabilities and stockholders' equity $235,751 $258,773
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three-Month Periods Ended
(amounts in thousands except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
December 31, December 31,
1998 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 281 $ 477
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 589 903
Deferred income tax provision (benefit) (189) 1,746
Loss (gain) on sale of property and equipment 18 (93)
Stock Compensation 55 --
Decrease (increase) in --
Accounts receivable, net 2,420 3,050
Inventories (32,005) (23,656)
Prepaids and other assets (1,834) (1,994)
Increase (decrease) in --
Accounts payable (4,048) (10,628)
Customer deposits 1,765 (5,731)
Accrued expenses and other liabilities 1,246 (2,844)
Short-term borrowings 52,069 37,869
Settlement payable (15,000) --
-------- --------
Net cash provided by (used in)
operating activities 5,367 (901)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,100) (1,269)
Proceeds from sale of property and equipment 23 595
Cash acquired (used) in purchase of businesses (1,002) (1,221)
-------- --------
Net cash provided by (used in) investing activities (3,079) (1,895)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock under employee benefit plans -- 368
Repayments on long-term debt (71) (157)
-------- --------
Net cash provided by (used in)
financing activities (71) 211
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,217 (2,585)
CASH AND CASH EQUIVALENTS,
beginning of period 7,861 8,297
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 10,078 $ 5,712
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid for
Interest $ 615 $ 1,302
Income taxes $ 183 $ 1,871
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
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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
52 retail locations in 14 states, consisting of Arizona, California, Delaware,
Florida, Georgia, Minnesota, Nevada, New Jersey, North Carolina, Ohio,
Pennsylvania, South Carolina, Texas and Utah.
The Company is the nation's largest retailer of Sea Ray, Boston Whaler,
and other boats manufactured by Brunswick Corporation ("Brunswick"), which is
the world's largest manufacturer of recreational boats. Sales of new Brunswick
boats accounted for 91% of the Company's new boat sales in fiscal 1999, which
the Company believes represented approximately 30% of all new Sea Ray boat sales
and approximately 9% of all Brunswick marine product sales during that period.
Each of the Company's applicable Operating Subsidiaries is a party to a 10-year
dealer agreement with Brunswick covering Sea Ray products and is the exclusive
dealer of Sea Ray boats in its geographic market.
The Company is party to dealer agreements with other manufacturers
which gives the company the rights to sell various makes and models of boats
within a given geographic region. In October 1998, the Company formed a new
subsidiary, MarineMax Motor Yachts, Inc. (Motor Yachts), and entered into 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.
2. ACQUISITION
On December 31, 1999, the Company acquired the net assets of Duce
Marine, Inc. (Duce), in exchange for approximately $1.2 million of cash,
including acquisition costs. The company assumed certain liabilities including
the outstanding floor plan obligations related to boat inventories, which
primarily finance Duce Marine's Sea Ray products. The acquisition has been
accounted for under the purchase method of accounting, which resulted in the
recognition of approximately $975,000 in goodwill.
The acquisition of Duce has been reflected in the Company's financial
statements subsequent to its acquisition date. The goodwill associated with the
acquisition 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. The acquisition of Duce was not significant to the
Company's consolidated results of operations. Accordingly, pro forma results of
operations, assuming the acquisition had occurred at the beginning of the
period, have been omitted.
3. NONRECURRING SETTLEMENT
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.
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MARINEMAX, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
4. SHORT-TERM BORROWINGS:
The Company has executed agreements for working capital borrowing
facilities (the "Facilities") with four separate financial institutions
providing for combined borrowing availability of $235 million at a weighed
average interest rate of LIBOR plus 149 basis points. Borrowings under the
Facilities are pursuant to a borrowing base formula and are used primarily for
working capital and inventory financing. The Facilities have similar terms and
mature on various dates ranging from March 2001 through December 2002.
7
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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 Annual Report on
Form 10-K (Registration number 1-14173) as filed with the SEC on December 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
We are the largest recreational boat retailer in the United States with
fiscal 1999 revenue exceeding $450 million. Through 52 retail locations in 14
states, we sell new and used recreational boats and related marine products,
including engines, boats, trailers, parts, and accessories. We also arrange
related boat financing, insurance and extended warranty contracts; provide boat
repair and maintenance services; and offer boat brokerage services.
MarineMax was incorporated in January 1998. MarineMax has consummated a
series of business combinations since its formation. Certain business
combinations have been accounted for under the pooling-of-interests method of
accounting (collectively, the "Pooled Companies"). Accordingly, the financial
statements have been restated to reflect the operations as if the companies had
operated as one entity since inception. In addition, we have acquired ten
additional boat retailers, two boat brokerage operations, and companies owning
real estate used in the operations of certain of our subsidiaries (collectively,
the "Purchased Companies"). In connection with the Purchased Companies, we
issued an aggregate of 2,764,578 shares of common stock and paid an aggregate of
approximately $18.6 million in cash, resulting in the recognition of an
aggregate of $35.5 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 our financial statements subsequent
to their respective acquisition dates. Each of the Purchased Companies is
continuing its operations as a wholly owned subsidiary of our 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 our company. The
following discussion compares the three months ended December 31, 1999 to the
three months ended December 31, 1998, and should be read in conjunction with our
consolidated financial statements, including the related notes thereto,
appearing elsewhere in this Report.
CONSOLIDATED RESULTS FROM OPERATIONS
Three-Month Period Ended December 31, 1999 Compared to Three-Month Period Ended
December 31, 1998:
Revenue. Revenue increased $24.3 million, or 35.0%, to $93.5 million
for the three-month period ended December 31, 1999 from $69.2 million for the
three-month period ended December 31, 1998. Of this increase, $14.6 million was
attributable to 23% growth in comparable stores sales and $9.7 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 December
31, 1999 resulted primarily from an increase in larger boat sales, including
yachts, the Company's retailing strategies, which focus on
8
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customer service, the 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 $4.1 million, or 25.1%, to $20.7
million for the three-month period ended December 31, 1999 from $16.6 million
for the three-month period ended December 31, 1998. Gross profit as a percentage
of revenue decreased to 22.2% in 1999 from 24.0% in 1998. The decrease in gross
profit margin was attributable to increased sales of products, such as sport
yachts and yachts, which historically result in lower gross profits.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased by approximately $3.1 million, or 20.1%, to
$18.7 million for the three-month period ended December 31, 1999 from $15.6
million for the three-month period ended December 31, 1998. Selling, general,
and administrative expenses as a percentage of revenue decreased to 20.0% in
1999 from 22.5% in 1998. This decrease resulted from management's direct efforts
to reduce costs and through achieved operating efficiencies and synergies.
Interest Expense, Net. Interest expense, net increased approximately
$712,000 or 152.1%, to approximately $1.2 million in 1999 from approximately
$468,000 in 1998. Interest expense, net as a percentage of revenue increased to
1.3% in 1999 from 0.7% in 1998. The increase resulted primarily from the
increased interest rate on the Company's lines of credit and an increased level
of debt associated with the Company's current inventory and working capital
needs.
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 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 December 31, 1999, the Company's indebtedness totaled approximately
$145.3 million, of which approximately $7.4 million was associated with the
Company's real estate holdings and the remaining $137.9 million was associated
with financing the Company's current inventory level and working capital needs.
The Company has agreements for working capital borrowing facilities
(the "Facilities") with four separate financial institutions providing for
combined borrowing availability of $235 million at a weighed average interest
rate of LIBOR plus 149 basis points. Borrowings under the Facilities are
pursuant to a borrowing base formula and are used primarily for working capital
and inventory financing. The Facilities have similar terms and mature on
various dates ranging from March 2001 through December 2002.
The Company has acquired ten recreational boat dealers, two brokerage
operations and companies owning real estate used in the operations of certain
subsidiaries of the Company. In connection with these acquisitions, the Company
issued an aggregate of 2,764,578 shares of its common stock and paid an
aggregate of approximately $18.6 million in cash, resulting in the recognition
of an aggregate of $35.5 million in goodwill, which represents the excess of the
purchase price over the estimated fair value of the net assets acquired.
Except as specified in this "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and in the attached condensed
consolidated financial statements, the Company has no material commitments for
capital for the next 12 months. The Company believes that its existing capital
resources will be sufficient to finance the Company's operations for at least
the next 12 months, except for possible significant acquisitions.
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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 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 year 2000 issue results from computer programs and hardware being
written with two digits rather than four digits to define the applicable year.
As a result, there is a risk that date sensitive software may recognize a date
using "00" as the year 1900, rather than the year 2000. This potentially could
result in system failure or miscalculations causing disruptions of operations,
including a temporary inability to process transactions or engage in normal
business activities.
The Company has experienced no year 2000 adverse effects on its
internal systems and is not aware of any involved in its supply chain, including
purchasing, distribution, sales, and accounting. Also, no errors were found
related to date processing before or after January 1, 2000. The Company will
continue to evaluate year 2000 related exposures at its suppliers and customers
over the next several weeks. The Company will also continue to monitor its
hardware, software, and imbedded systems as they are added or modified to ensure
that latent defects do not manifest themselves over the next few months.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.18 Loan and Security Agreement between the Company and Deutsche
Financial Services Corporation
27.1 Financial Data Schedule
11
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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.
February 11, 2000 By: /s/ Michael H. McLamb
--------------------------------
Michael H. McLamb
Chief Financial Officer, Vice
President, Secretary and Treasurer
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Exhibit Index
10.18 Loan and Security Agreement between the Company and Deutsche
Financial Services Corporation
27.1 Financial Data Schedule
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Exhibit 10.18
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is dated as of December 15, 1999
("Effective Date"), between MARINEMAX, INC., a Delaware corporation ("Company"),
MARINEMAX OF NEW JERSEY, INC., a Delaware corporation (singularly a "Dealer",
collectively with each other entity added in the future as a Dealer, "Dealers")
(the Dealers and the Company collectively, the "Borrowers") and DEUTSCHE
FINANCIAL SERVICES CORPORATION, a Nevada corporation ("Lender").
WITNESSETH:
WHEREAS, Borrowers' have requested a credit facility up to $50,000,000
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 approved by
Lender, and which is not in default of any obligations or liabilities to Lender.
Initially, Brunswick Corporation and its SeaRay, Boston Whaler and Baja
Subsidiaries and divisions; Azimut S.P.A.; Hatteras division of Genmar
Industries; Sea Pro; and Neptunus Ltd. shall be Approved Vendors.
"Borrowers" mean the Company and the Dealers.
"Borrowing Base" means the sum of the following for the Dealers,
determined on a consolidated basis: the lesser of the Credit Facility Limit or
the sum of (a) (i) 100% of the cost (including freight charges) of Eligible New
Inventory that is aged 365 days or less from date of delivery to the Dealers,
plus (ii) 90% of the cost (including freight charges) of Eligible New Inventory
that is aged 366 days or more, 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
Value of Eligible Used Inventory that has been owned by the Dealers for not more
than 180 days, plus (ii) 72% of the NADA Value of Eligible Used Inventory that
has been owned by the Dealers for more than 180 days, but not more than 365
days, (c) the lesser of 2,500,000 or 75% of the cost (excluding freight charges)
of Eligible Parts Inventory, plus (d) the lesser of $25,000,000 or 80% of the
net book value of Eligible Accounts.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
A hereto (as modified with the consent of Lender from time to time), in form and
detail satisfactory to Lender.
"Business Day" means a day of the year on which banks are open for
business in Troy, Michigan.
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"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
twenty percent (20.0%) or more of the beneficial ownership of the voting stock
of Company, except acquisitions (a) by Richard Bassett, Louis DelHomme, William
H. McGill, Jr., Jerry Marshall, 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, subject to the terms of
this Agreement, agrees to fund a Dealer's obligations under a purchase order
submitted by a Dealer to such Approved Vendor.
"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.
"Credit Facility" has the meaning set forth in Section 2.01.
"Credit Facility Limit" means the credit limit of the Credit Facility
as approved by Lender and agreed to by Borrowers, which is $50,000,000.00 as of
the Effective Date..
"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 MarineMax of New Jersey, Inc., a Delaware corporation,
together with each other entity added in the future as a Dealer pursuant to the
execution a Joinder Amendment. 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.
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"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) (i) constitutes Retail Paper, (ii) 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 (iii)
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 Account obligor 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 discretion, (b) is
located at the Dealer's facilities listed on Exhibit E or any other location
identified to Lender in writing by a Dealer, 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, or is located
at or in transit to a boat show, (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 Parts of the Dealers that (a) are
subject to a perfected, first priority Lien in favor of Lender, free from any
other Lien other than those acceptable to Lender in its discretion, (b) are
located at any of the Dealers' facilities listed on Exhibit E or any other
location identified to Lender in writing by a Dealer, (c) do not constitute
Eligible New Inventory or Used Inventory, and (d) otherwise constitute
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 discretion, (b) is
located at the Dealer's facilities listed on Exhibit E or any other location
identified to Lender in writing by a Dealer, 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, or is located
at or in transit to a boat show, (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.
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"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 financing Inventory and Accounts
of Company and its Subsidiaries) and Capital Leases, all determined in
accordance with GAAP. This ratio shall be measured for the most recent 12 month
period.
"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 January 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 and
all documents of title therefor.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any acquisition of, or beneficial interest in, a material part
of a partnership or membership interests, capital stock or other securities of
any Person, or any advance or material capital contribution to or other material
investment in any Person (except advances to employees for moving and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business).
"Joinder Amendment" means an amendment to this Agreement to add parties
to this Agreement, in the form attached hereto as Exhibit G.
"Law" means any law, regulation, order or decree of any Governmental
Body.
"Lender" means Deutsche Financial Services Corporation, a Nevada
corporation.
"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, for any calendar month, the 30 day London Interbank
Offered Rate published in the Midwest Edition (or, to the extent not printed in
the Midwest Edition, any other edition) of the Wall Street Journal on the last
Business Day of the preceding calendar month.
"License" means any license, permit or other authorization by any
Governmental Body or third Person necessary or appropriate for Company or any of
its Subsidiaries to own or operate their businesses or Properties.
"Lien" means any security interest, lien, pledge, encumbrance, charge
or adverse claim of any kind, including without limitation any agreement to give
or not to give any lien, or any conditional sale or other title retention
agreement.
"Litigation" means any proceeding, claim or investigation by or before
any Governmental Body.
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"Loan Papers" means this Agreement, and all financing statements,
certificates, instruments and agreements delivered by any Person hereunder, as
they are modified or extended in accordance with their terms.
"Material Adverse Change" means a material and adverse change in
Company's and its Subsidiaries financial condition, revenues, Properties or
business operations taken as a whole, or ability to pay their Debts generally or
ability to pay their Debts to Lender specifically.
"Modified Borrowing Base" means the following for the Dealers,
determined on a consolidated basis, following an Event of Default if Lender
gives notice to Borrowers of the discontinuance of the Borrowing Base unless and
until Lender agrees to reinstate the Borrowing Base pursuant to Section 2.01(b):
the lesser of $25,000,000 or 80% of the net book value of Eligible Accounts.
"Modified Borrowing Base Certificate" means a certificate in the form
of Exhibit A
"NADA Value" means, (i) while the Borrowing Base is in effect, the
wholesale value published in the most recent NADA Boat Appraisal Guide, or (ii)
following an Event of Default and termination of the Borrowing Base, the low
wholesale value published in the most recent NADA Boat Appraisal Guide, but in
each case if no value is available for the boat in such guide, then it shall be
the comparable 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.
"Parts" means service and repair parts and accessories for boats and
boat trailers.
"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.
"Prime Rate" means a fluctuating interest rate per annum equal to the
highest of the prime, base or reference rates of interest announced publicly
from time to time (whether or not charged in each instance) by The Chase
Manhattan Bank (or any successor thereof) as such bank's prime, base, or
reference rate. Such Prime Rate will change and take effect on the day when such
change becomes effective.
"Property" means all types of real, personal, tangible or intangible
property.
"Reinstatement of the Borrowing Base"means Lender's consent to cease
making Advances under Section 2.01(b) and to reinstate the Borrowing Base
pursuant to Section 2.01(a) (which consent Lender shall not unreasonably
withhold) following the cure or other discontinuance of an Event of Default and
request by any Borrower for reinstatement of the Borrowing Base.
"Retail Paper" means chattel paper and other instruments arising from
Company's or any Dealer's 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
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<PAGE> 6
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 (excluding Brunswick Corporation and its
Subsidiaries), 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 December 15, 2002.
"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) owned 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 owned Inventory as "Used Inventory" only from such two year
date onward).
ARTICLE II
ADVANCES
2.01. ADVANCES.
(a) Borrowing Base Advances:
(i) 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 ("Credit Facility").
Borrowers may borrow, repay and reborrow in accordance with this Agreement. In
no event may total outstanding Advances exceed the Borrowing Base.
(ii) 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 $5,000,000 (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.
(iii) 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.
(iv) 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.
(b) Elimination of Borrowing Base. Following the occurrence of any
Event of Default and during the continuance of any Event of Default, Lender may
give Borrower notice that it intends to cease making Advances against the
Borrowing Base pursuant to Section 2.01(a) hereof and Lender will thereafter
make only Committed Advances for New Inventory, unit specific advances for
Eligible Used Inventory, and Advances against Accounts under the Modified
Borrowing Base; provided, however, Lender may not agree to make any further
Advances.
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Following any Event of Default if Lender agrees to make further Advances and if
during the continuance of such Event of Default Lender delivers a notice of the
discontinuance of the Borrowing Base, then, subject to the remainder of this
Agreement including Subsection 2.03(e), the following shall apply unless and
until Reinstatement of the Borrowing Base :
(i) the outstanding Debt owed to Lender shall be apportioned
as follows:
(A) then-owned units of Eligible New Inventory will be assigned Debt
equal to one hundred percent (100%) of Dealer's cost (including
freight);
(B) then-owned Eligible Used Inventory will be assigned Debt equal to
eighty percent (80%) of NADA Value;
(C) then-owned Eligible Parts Inventory will be assigned Debt equal to
fifty percent (50%) of the aggregate cost (excluding freight) of all
such Eligible Parts Inventory;
(D) the difference between (1) the outstanding Debt owed to Lender and
(2) the sum of the assigned Debt for then-existing Eligible New
Inventory, then-existing Eligible Used Inventory and then-existing
Parts Inventory pursuant to Subsections 2.01(b)(i)(A)-(C) above, will
be assigned as the Debt owed to Lender against the Eligible Accounts.
(ii) any additional Advances Lender may agree to make will be
as follows:
(A) Lender will make Committed Advances to Approved Vendors at one
hundred percent (100%) of the invoice price (including freight) to
Dealer of New Inventory purchased directly from Approved Vendors and
send to Borrowers a statement of transaction verifying the terms of
such Committed Advance ("Statement of Transaction") other than the
interest rate on such Committed Advances, which interest shall be as
set forth in Section 2.04 hereof, and each such Statement of
transaction will be incorporated herein by reference and constitute and
addendum hereto;
(B) Lender may make additional Advances against Eligible Used Inventory
not to exceed $25,000,000 at eighty percent (80%) of NADA Value;
(C) Lender will not make any further Advances against Parts;
(D) Lender will make Advances at eighty percent (80%) of the net book
value of Eligible Accounts under the Modified Borrowing Base.
2.02. MAKING ADVANCES. Company shall notify Lender at least one
Business Day prior to any proposed Advance; such notification may be oral, but
may be confirmed by Lender by telecopy or in writing by the date of the Advance
(and each Dealer hereby appoints the Company as its agent to make such borrowing
requests on its behalf and take all necessary actions related thereto and agrees
to be bound by such borrowing requests as if each Dealer had made such borrowing
requests itself). Following the occurrence of any Event of Default, if Lender
agrees to make further Advances as specified in Subsection 2.01(b) above, any
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 Approved 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) COLLECTIONS. Borrowers may, until receipt of notice from Lender
following an Event of Default, take and use all remittances received on
Accounts. Lender during the continuance of any Event of Default may notify any
account debtor of the assignment of Accounts and collect the same. All proceeds
received or collected by Lender with respect to Accounts shall be applied in
payment of amounts payable under the Credit Facility once such funds constitute
collected funds. Lender may release to Borrowers (rather than applying to the
payment of amounts due under the Credit Facility) such portions, or none, of
such proceeds as Lender may reasonably determine in its discretion.
(b) Borrowers may terminate the Credit Facility, upon 90 days prior
written notice to Lender, and on the date specified for termination of the
Credit Facility, all outstanding Advances, accrued interest and charges, and
other amounts owing to Lender will be due and payable in full.
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<PAGE> 8
(c) In no event may the amount of outstanding Advances (including
Committed Advances for which Dealers have received the applicable Inventory)
exceed (i) the current Borrowing Base, or, (ii) following any Event of Default,
delivery by Lender of a notice of discontinuance of the Borrowing Base and
unless and until Reinstatement of the Borrowing Base, the Credit Facility
Limit, including Advances against Eligible Accounts, which Advances against
Eligible Accounts may not exceed the Modified Borrowing Base. Concurrently with
delivery of each Borrowing Base Certificate hereunder, Borrowers shall repay a
principal amount of Advances equal to any such excess.
(d) 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 reasonable 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.
(e) Following the occurrence of any Event of Default, if Lender gives
Borrowers notice of the discontinuance of the Borrowing Base and unless and
until Reinstatement of the Borrowing Base, Borrowers will thereafter repay the
principal Debt owed to Lender: (i) on then-owned and thereafter acquired New
Inventory and Used Inventory, on the earliest occurrence of any of the following
events: (A) when such Inventory is lost, stolen or damaged; (B) when such
Inventory is sold, transferred, rented, leased, or otherwise disposed of; (C) in
strict accordance with any curtailment schedule or maturity set forth on any
Statement of Transaction for such Inventory; (D) three hundred sixty-five (365)
days after Dealer's acquisition of such Inventory; and (E) when otherwise
required under the terms of any financing program agreed to in writing between
Lender and Borrowers; (ii) on then-owned Parts, three hundred sixty-five (365)
days after the date of such notice of discontinuance of the Borrowing Base; and
(iii) on Accounts, pursuant to the Modified Borrowing Base.
2.04. INTEREST ON ADVANCES. Advances shall bear interest at a per annum
rate equal to LIBOR plus 1.75%. 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 4.75%, 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.
2.06 ASCERTAINMENT OF RATE; LIBOR UNASCERTAINABLE. If adequate and
reasonable means do not exist for ascertaining the LIBOR Rate, Lender shall
promptly give notice of such determination to Borrower, and any notice of new
Advances previously requested by Borrowers and not yet borrowed shall be deemed
a notice to make an Advance bearing interest at the Prime Rate minus
Seventy-five One-hundredths of one percent (.75%) per annum.
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 Dealer'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 in the form attached hereto as Exhibit H, 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 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.
(i) 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.
(j) Lender shall have received such documents, consents, approvals and
authorizations as Lender reasonably deems necessary in its discretion.
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 Vender) 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
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<PAGE> 10
(b) no event has occurred or exists, or would result from such
Advance, that could constitute a Default or Event of Default.
Lender may condition any Advance upon Lender's receipt, in form and substance
acceptable to it, of such other information as it may reasonably deem necessary
or appropriate. Notwithstanding the foregoing, even if the foregoing conditions
are not satisfied on the applicable disbursement date, Lender may (but shall not
be required to) fund an Advance that was agreed to 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;
(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 5.06 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
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<PAGE> 11
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 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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant that the following are true and
correct:
5.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Company and
Dealers is a corporation duly organized, validly existing and in good standing
under the laws of its state of organization. Each of Company and Dealers is
qualified to do business in all jurisdictions where the nature of its business
or Properties require such qualification.
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. 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 Dealer 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 Dealer, or any Law or
material agreement to which Company, any Dealer or any of their Properties is
subject.
5.04. FINANCIAL STATEMENTS; SOLVENCY. 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 Dealers is Solvent.
5.05. LITIGATION. Except as disclosed to Lender on Exhibit D attached
hereto, there is no pending or threatened action, suit or proceeding affecting
Company or its Subsidiaries before any court, governmental authority, arbitrator
or mediator which if adversely determined may result in a Material Adverse
Change.
5.06. PRINCIPAL PLACE OF BUSINESS. Company's chief executive office and
the principal place of business is located at 18167 US Highway 19 North, Suite
499, Clearwater, FL 33764. Dealer MarineMax of New Jersey, Inc.'s chief
executive office and principal place of business is located at 600 Bay Avenue,
Somers Point, NJ 08244.
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Borrowers' records concerning the Collateral are kept at Company's chief
executive office, or will be kept at such other place that Borrowers inform
Lender of not less than 30 days in advance of relocation.
5.07 LOCATION OF COLLATERAL. Exhibit E describes the locations where
any of the Collateral is located or stored as of the date hereof, and will be
kept at no other place other than boat shows or other locations in connection
with the marketing of Inventory by Dealer or in transit to boat shows or such
other marketing related locations, unless Borrower informs Lender not less than
10 days in advance of relocation.
5.08 REAL PROPERTY. Borrowers do not own or lease any real property,
except as set forth on Exhibit F attached hereto or as Borrowers inform Lender
from time to time in writing.
5.09 WARRANTIES AND REPRESENTATIONS-ACCOUNTS. For each Account listed
on any Borrowing Base Certificate, Borrowers warrant and represent to Lender
that at all times: (a) such Account is genuine; (b) such Account is not
evidenced by a judgment or promissory note or similar instrument or agreement;
(c) to the best of Borrower's knowledge, each such Account arising from a retail
sale of Inventory represents a bona fide transaction completed in accordance
with the terms of the invoices and purchase orders relating thereto; (d) to the
best of Borrowers' knowledge, the goods sold or services rendered to a retail
customer which resulted in the creation of such Account have been delivered or
rendered to and not rejected by the account debtor; (e) the amounts shown on the
Borrowing Base Certificate, a Dealer's books and records and all invoices and
statements delivered to Lender with respect thereto are owing to such Dealer and
are not contingent; (f) to the best of Borrowers' knowledge, there are no
offsets, counterclaims or disputes existing or asserted with respect thereto and
neither Borrower has made any agreement with the account debtor for any
deduction or discount of the sum payable thereunder except regular discounts
allowed by Borrowers in the ordinary course of their business for prompt
payment; (g) to the best of Borrowers' knowledge, there are no facts or events
which in any way impair the validity or enforceability thereof or reduce the
amount payable thereunder from the amount shown on the Borrowing Base
Certificate, any Borrower's books and records and the invoices and statements
delivered to Lender with respect thereto; (h) to the best of Borrowers'
knowledge, all persons acting on behalf of the account debtor thereon have the
authority to bind the account debtor; (i) the Accounts arising from goods sold
or transferred giving rise thereto are not subject to any Lien, claim,
encumbrance or security interest which is superior to that of Lender; (j) such
Account is subject to Lender's perfected, first priority security interest and
is not subject to any other Lien other than a Lien permitted by Lender in its
discretion; and (k) there are no proceedings or actions known to any Borrower
which are threatened or pending against the account debtor thereon which might
result in any material adverse change in such account debtor's financial
condition.
5.10 WARRANTIES AND REPRESENTATIONS-INVENTORY & PARTS. For each item of
Inventory and Parts listed by Borrowers on any Borrowing Base Certificate,
Borrowers covenant, warrant and represent to Lender that at all times: (a) all
Inventory and Parts will be kept only at the locations permitted by Section 5.07
above; (b) Borrowers now keep and will keep correct and accurate records
itemizing and describing the kind, type, quality and quantity of Inventory and
Parts, Borrower's cost therefor and the selling price thereof, the daily
withdrawals therefrom and the additions thereto; (c) Parts and Inventory are not
and will not be stored with a bailee, repairman, warehouseman or similar party
without Lender's prior written consent, which consent shall not be unreasonably
withheld; (d) Borrowers will pay all taxes, rents, business taxes, and the like
on the premises where the Inventory and Parts are located; and (e) Borrowers
will not lend, demonstrate, pledge, consign, transfer or secrete any of the
Inventory or Parts or use any of the Inventory or Parts for any purpose other
than exhibition and/or demonstration for sale to buyers in the ordinary course
of business, without Lender's prior written consent which consent shall not be
unreasonably withheld.
5.11 LAWS REGULATING INCURRENCE OF DEBT. No proceeds of any Advance
will be used directly or indirectly to acquire any securities, without the prior
written consent of Lender. No Advance will be used to purchase or carry margin
stock (as defined in applicable Federal Reserve regulations), nor to extend
credit to others to do so. None of Company or its Subsidiaries is subject to
regulation under any Law that prohibits or restricts its incurrence of Debt in
any material respect.
5.12. LICENSES, TITLE TO PROPERTIES, ETC. Each of Company and Dealers
possesses all material Licenses and is not in violation thereof in any material
respect. Each of Company and Dealers has full power, authority and
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legal right to own and operate its Properties, and to conduct its business. Each
of Company and Dealers 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 nor any Dealer 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
Dealers or any of their Properties is subject. No business or Property of
Company or any Dealer is affected by any strike, lock-out or other labor
dispute, material casualty, earthquake, embargo or act of God.
5.13. OUTSTANDING DEBT AND LIENS. Company and Dealers have no
outstanding Debt, Contingent Liabilities or Liens, except as expressly permitted
hereunder.
5.14. TAXES. Each of Company and Dealers 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 Dealers 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 Dealer of
any material deficiency in a Tax return nor asserted any material Tax liability
in excess of that already paid.
5.15. 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.
5.16. ENVIRONMENTAL LAWS. Company has delivered to Lender copies of all
environmental studies and reports conducted or received by Company or any Dealer
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 any Dealer, and no Hazardous Materials in any material
amounts are released onto any Properties of Company or any Dealer.
5.17. DISCLOSURE. None of Company nor any Dealer 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, otherwise in connection with any transactions
contemplated hereby. There is nothing known to Company or any Dealer that could
materially adversely affect Company's or any Dealer's 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.
(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.
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(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 Dealer 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, (d) Capital Leases and Debt incurred to
acquire equipment used in Company's or the Subsidiary's business (including
refinancings thereof), (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, (f) other Debt subordinated to repayment
of amounts owing hereunder on terms reasonably satisfactory to Lender, and
otherwise acceptable to Lender in its reasonable discretion, and (g) trade
payables incurred and paid in the ordinary course of business. Company and
Dealers 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 Dealers 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 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) Borrowers shall obtain and comply in all material respects with all
applicable Laws and Licenses. Borrowers shall maintain all Plans such that the
representation and warranty in Section 5.15 hereof is true at all times.
(b) Borrowers shall 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.
6.07. DISPOSITION OF ASSETS. Borrowers shall not 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 by Dealers (with the proceeds thereof being paid by Dealers to
Lender following an Event of Default and delivery by Lender of a notice of
discontinuance of the Borrowing Base for application against the outstanding
Advances), (c) transfers of Assets between wholly-owned Subsidiaries of Company
(provided however, that following an Event of Default and delivery by Lender of
a notice of discontinuance of the Borrowing Base, and unless and until
reinstatement of the Borrowing Base, a transfer of Inventory to another
wholly-owned Subsidiary of the Company that is not a Dealer shall be
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<PAGE> 15
deemed a sale for which payment is due in full), 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 to a third party for new
value, Lender's Liens in such Retail Paper shall be automatically released,
without any further action by Lender.
6.08. MERGERS; INVESTMENTS; BUSINESS. Borrowers shall not merge into,
consolidate with or make any Investment in any Person, permit any other Person
to merge into or consolidate with it, without Lender's prior written consent
(which consent shall not be unreasonably withheld), except mergers or
consolidations of a Dealer with or into Company or another wholly-owned
Subsidiary of Company. Lender expressly acknowledges that it is Company's growth
strategy to pursue strategic acquisitions that are beneficial to its business.
6.09. INSURANCE. Except as otherwise required by Section 4.03 hereof,
Borrowers shall (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 Borrowers.
6.10. INSPECTION RIGHTS; VERIFICATION OF ACCOUNTS. Borrowers shall permit
Lender, upon reasonable notice and during normal business hours, to (a) account
for and inspect all Collateral; (b) verify Borrowers' compliance with this
Agreement; and (c) review, examine, check, test and make copies of Borrowers'
books, records, files and business procedures and practices. Lender may, with
notice to Company and at any reasonable time or times hereafter (but no more
than four (4) times per calendar year absent an Event of Default), verify the
validity, amount or any other matter relating to any Account by mail, telephone,
or other means, in the name of any Borrower or Lender. Borrowers may notify
their customers that Lender may periodically verify the balance of any Account.
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 reasonable 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, (i) 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 aging,
accounts payable aging and accounts receivable aging reports, in form and
substance satisfactory to Lender and certified as true and complete by an
officer of Company, or, if applicable, a Modified 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 a detailed accounts
receivable aging report, in form and substance satisfactory to Lender and
certified as true and complete by an officer of Company (and each Dealer hereby
appoints Company as its agent to execute Borrowing Base Certificates and agrees
to be bound by such Borrowing Base Certificates as if each Dealer had executed
such Borrowing Base Certificate itself);
(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 the form attached
hereto as Exhibit I 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 business plan of Company and its Subsidiaries for such
year as a whole and by calendar month, including a projected balance sheet and
income statements, accompanied by a statement of assumptions and certified by an
officer of Company in a manner reasonably 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, a notice of the occurrence of
any material Default or 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 a 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 Dealer 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 any Dealer's financial condition,
Properties, business, affairs or prospects, and other matters, as Lender may
from time to time reasonably request.
6.13. TRANSACTIONS WITH AFFILIATES. Except as permitted herein, Company
shall not, and shall not permit any of its Subsidiaries to, enter into or be
party to a transaction with an Affiliate (except Company or a direct or indirect
wholly-owned Subsidiary of Company), except on terms no less favorable than
could be obtained on an arm's-length basis with a Person that is not an
Affiliate. Company shall not, and shall not permit any of its Subsidiaries to,
make any loans or advances to any of its officers, shareholders or other
Affiliates (except a direct or indirect wholly-owned Subsidiary of Company or to
Brunswick Corporation or any of its Subsidiaries in the ordinary course of
business), 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:
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(a) Borrowers shall fail to pay any principal of One Hundred Thousand
Dollars ($100,000.00) or greater owing hereunder within 2 Business Days after
the due date therefor; or Borrowers shall fail to pay any principal of less than
One hundred Thousand Dollars ($100,000.00) or any interest or other amounts
payable under any Loan Papers within 15 days after the due date therefor;
(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 material 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 Dealer 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 Dealer shall cease doing business as a
going concern without the consent of Lender, which consent shall not be
unreasonably withheld; (iv) Company or any Dealer 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 Dealer under any such Laws, or an order, judgment or
decree shall be entered approving such petition or appointing any trustee,
receiver or liquidator for Company or any Dealer, or any of their assets; or
(vi) any final order, judgment or decree shall be entered decreeing Company's or
any Dealer's dissolution, split-up or divestiture of assets;
(f) Any of the following shall occur: (i) 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; (ii) Company
or any Dealer 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; (iii) Company or any
Dealer 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; (iv) 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 Dealer shall fail
to make any payment when due with respect to any Debt to a manufacturer or
vendor of Inventory if Company or any Dealer 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 Dealers shall, individually or in the aggregate, 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 Dealer or any material portion of their Properties, or there shall
be damage to or destruction of a substantial part of Company's or any Dealer's
assets that is not covered by insurance, and any such events could reasonably
result in a Material Adverse Change;
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(i) Any investigation or proceeding shall be instituted against Company
or any Dealer 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, the
Credit Facility shall be terminated and all amounts owing to Lender shall, to
the extent permitted by applicable Law, become immediately due and payable
without any action by Lender, and without diligence, presentment, demand,
protest, notice of protest or intent to accelerate, or notice of any other kind,
all of which are hereby waived to the fullest extent permitted by Law. If any
other Event of Default shall occur and be continuing, Lender may do any one or
more of the following from time to time:
(a) Declare all Advances, interest and other amounts owing to Lender
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby waived to the
fullest extent permitted by Law;
(b) Terminate the Credit Facility or reduce the Credit Facility Limit
and/or cease making any Advances;
(c) Cease making Advances against the Borrowing Base and make Committed
Advances, Advances against specific units of Eligible Used Inventory and/or make
Advances against Eligible Accounts under the Modified Borrowing Base;
(d) 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
commercially 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
-18-
<PAGE> 19
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
Credit Facility or any obligations of Borrowers to Lender under this Agreement
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.
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:
Greenberg Traurig
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012-1656
-19-
<PAGE> 20
Attention: Robert S. Kant, Esq.
Fax: (602) 263-2350
(b) If to Lender:
<TABLE>
<S> <C> <C>
Deutsche Financial Services Corporation and Deutsche Financial Services Corporation
5480 Corporate Drive, Suite 300 655 Maryville Centre Drive
Troy, MI 48098 St. Louis, MO 63141
Attention: Jeffrey R. Williams Attention: General Counsel
Fax: (248) 649-9364 Fax: (314) 523-3190
</TABLE>
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 OR GROSS 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 Dealers' property or operations or property leased to Company
or Dealers, 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.
-20-
<PAGE> 21
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. MAXIMUM INTEREST. Notwithstanding any provisions to the contrary
in any of the Loan Papers, Borrower shall not be obligated to pay interest at a
rate which exceeds the maximum rate permitted by Law. If, but for this Section
8.08, Borrower would be deemed obligated to pay interest at a rate which exceeds
the maximum rate permitted by Law, or if any of the Advances is paid or becomes
payable before its originally scheduled maturity and as a result Borrower has
paid or would be obligated to pay interest at such an excessive rate, then (i)
Borrower shall not be obligated to pay interest to the extent it exceeds the
interest that would be payable at the maximum rate permitted by Law; (ii) if the
outstanding Advances have not been accelerated as provided in Section 7.02, any
such excess interest that has been paid by Borrower shall be refunded; (iii) if
the outstanding Advances been accelerated as provided in Section 7.02, any such
excess that has been paid by Borrower shall be applied to the Advances; and (iv)
the effective rate of interest shall be deemed automatically reduced to the
maximum rate permitted by Law. Any discount, rebate, bonus or credit granted to
Borrowers for any Collateral by and Approved Vendor or other third party will
not reduce the debt Borrowers owe Lender until Lender has received payment
therefor in cash. Borrowers will: (1) pay Lender even if any Collateral is
defective or fails to conform to any warranties extended by any third party; (2)
not assert against Lender any claim or defense Borrowers has against any third
party; and (3) indemnify and hold Lender harmless against all claims and
defenses asserted by any buyer of the Collateral relating to the condition of,
or any representations regarding, any of the Collateral. Borrowers waive all
rights of offset Borrowers may have against Lender.
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 ENTIRE AGREEMENT. The Loan Papers embody the entire agreement of
the parties relating to the Credit Facility. There are no promises, terms,
conditions, obligations or warranties other than those contained in the Loan
Papers. The Loan Papers supersede all prior communications, representations or
agreements, verbal or written, between the parties relating to the Credit
Facility.
8.11 HEADINGS. The headings to the sections of this Agreement are
included only for the convenience of the parties and will not have the effect of
defining, diminishing or enlarging the rights of the parties or affecting the
construction or interpretation of any portion of this Agreement.
8.12 REVERSAL OF PAYMENTS. To the extent that any Borrower makes a
payment or payments to Lender, which payment or payments or proceeds 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 party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then to the extent of such payment or proceeds received, the Credit Facility
will be revived and continue in full force and effect with respect to all
Borrowers, as if such payment or proceeds had not been received by Lender.
8.13 SURVIVAL. The grant of security interest herein to secure all
Advances, and all provisions relating to the Collateral will survive termination
of this Agreement and will remain in full force and effect until all Advances
have been paid in full and this Agreement has been terminated.
-21-
<PAGE> 22
8.14 PARTICIPATIONS; ASSIGNMENTS. Lender may, at any time and from time
to time, grant participations to lender(s) acceptable to Borrowers in Lender's
interest in this Agreement or any Loan Papers, or of any portion thereof, or
assign its interest in this Agreement or any Loan Papers, or any portion
thereof, without the consent of any Borrower, but Lender will provide Borrowers
notice as soon as practical after sale to an unaffiliated third party. Lender
shall not be required to provide notice to any Borrower of any sale or
assignment to (a) a parent company or subsidiary of Lender or (b) any entity
majority owned by Lender so long as Lender continues to service the Credit
Facility under this Agreement.
8.15 INFORMATION. Lender will use its best efforts not to provide any
credit, financial or other information on all or any Borrowers to any third
party without Company's prior written consent; provided, however, that if,
notwithstanding Lender's best efforts, Lender nevertheless provides any accurate
credit, financial or other information on any Borrowers to any third party
without Company's prior written consent. such disclosure shall not be a breach
of this Agreement nor give rise to any claim or cause of action against Lender.
8.16 RELEASE. Borrowers release Lender from all claims and causes of
action which Borrowers may now or hereafter have for any loss or damage to any
of them claimed to be caused by or arising from: (a) any failure of Lender to
protect, enforce or collect, in whole or in part, any Account; (b) Lender's
notification to any account debtors thereon of Lender's security interest in any
of the Accounts; (c) Lender's directing any account debtor to pay any sum owing
to any Borrower directly to Lender; and (d) any other act or omission to act on
the part of Lender, its officers, agents or employees, except for willful
misconduct or gross negligence. Lender will have no obligation to preserve
rights to Accounts against prior parties.
8.17 MISCELLANEOUS. Time is of the essence regarding Borrowers'
performance of its obligations to Lender notwithstanding any course of dealing
or custom on Lender's part to grant extensions of time. Borrowers' liability
under this Agreement is direct and unconditional and will not be affected by the
release or nonperfection of any security interest granted hereunder. Lender will
have the right to refrain from or postpone enforcement of this Agreement or any
other Loan Papers without prejudice and the failure to strictly enforce the Loan
Papers will not be construed as having created a course of dealing between
Lender and Borrowers contrary to the specific terms of the Loan Papers or as
having modified, released or waived the same. The express terms of this
Agreement and the other Loan Papers will not be modified by any course of
dealing, usage of trade, or custom of trade which may deviate from the terms
hereof. If any Borrower fails to pay any taxes, fees or other obligations which
may impair Lender's interest in the Collateral, or fails to keep the Collateral
insured, Lender may, but shall not be required to, pay such taxes, fees or
obligations and pay the cost to insure the Collateral, and the amounts paid will
be: (a) an additional Advance owed by Borrowers to Lender, which shall be
subject to interest as provided herein; and (b) due and payable immediately in
full.
8.18 WAIVERS BY BORROWER. Borrowers each irrevocably waive notice of:
Lender's acceptance of this Agreement, presentment, demand, protest, nonpayment,
nonperformance, and dishonor. Each Borrower and Lender irrevocably waive all
rights to claim any punitive and/or exemplary damages. Each Borrower waives all
rights of offset such Borrower may have against Lender. Each Borrower waives all
notices of default and non-payment at maturity of any or all of the Accounts.
8.19 FACSIMILES, ETC. Notwithstanding anything herein to the contrary:
(a) Lender may rely on any facsimile copy, electronic data transmission or
electronic data storage of any statement, statement of transaction, financial
statements or other reports, and (b) such facsimile copy, electronic data
transmission or electronic data storage will be deemed an original, and the best
evidence thereof for all purposes, including, without limitation, under this
Agreement or any other Loan Papers, and for all evidentiary purposes before any
court or other adjudicatory authority.
8.20 SUPPLEMENT. As of the Effective Date, this Agreement shall
simultaneously supercede that certain Agreement for Wholesale Financing executed
by and between MarineMax of New Jersey, Inc. and Lender as of an unspecified
date in 1999 (the"AWF"), and Borrowers shall automatically assume hereunder all
indebtedness owed to Lender pursuant to the AWF, waive all defenses and setoffs
to such indebtedness under the AWF and agree to pay such indebtedness pursuant
to the terms of this Agreement.
-22-
<PAGE> 23
8.21 JOINDER. If from time to time a Subsidiary of Company desires to
obtain financing from Lender substantially similar to the financing provided by
Lender to Dealers, each such Subsidiary may become a Dealer hereunder upon the
approval of Lender and execution by such Subsidiary and each Borrower of a
Joinder Amendment substantially in the form attached hereto as Exhibit G
attached hereto.
ARTICLE IX
GOVERNING LAW
9.1. GOVERNING LAW. EACH BORROWER ACKNOWLEDGES AND AGREES THAT THIS AND
ALL OTHER AGREEMENTS BETWEEN BORROWERS AND LENDER HAVE BEEN SUBSTANTIALLY
NEGOTIATED, AND WILL BE SUBSTANTIALLY PERFORMED, IN THE STATE OF MICHIGAN.
ACCORDINGLY, EACH BORROWER AGREES THAT THIS AGREEMENT AND ALL OTHER AGREEMENTS
BETWEEN LENDER AND BORROWERS WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF SUCH STATE.
9.2 JURY WAIVER. ANY LEGAL PROCEEDING WITH RESPECT TO THIS AGREEMENT
WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY.
EACH BORROWER AND LENDER WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING.
IN WITNESS WHEREOF, this Loan and Security Agreement is executed as of
the date first set forth above.
EXECUTED AT: MARINEMAX, INC.
Atlanta, Georgia By /s/ Michael H. McLamb
- ---------------- -------------------------------
Title: Vice President
EXECUTED AT: MARINEMAX OF NEW JERSEY, INC.
Atlanta, Georgia By: /s/ Michael H. McLamb
- ---------------- -------------------------------
Title: Vice President
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By /s/ Bruce VanWagoner
-------------------------------
Title Recreation Group President
----------------------------
-23-
<PAGE> 24
Exhibit A
To
Loan and Security Agreement
BORROWING BASE CERTIFICATE
-24-
<PAGE> 25
BORROWING BASE CERTIFICATE
Deutsche Financial Services Corporation
5480 Corporate Drive, Suite 300
Troy, MI 48098
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 Loan and Security
Agreement dated as of December 15, 1999, between Company, Dealers and Deutsche
Financial Services Corporation ("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:
ELIGIBLE INVENTORY:
<TABLE>
<S> <C> <C> <C>
NEW (cost plus freight charges)
< 366 days from invoice (100%) $
-----------------
> 365 but < 731 days from invoice (90%) $
-----------------
TOTAL NEW, maximum $50MM $
----------------
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 $2.5MM $
----------------
TOTAL INVENTORY - maximum $50MM $
----------------
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 $50MM $
==================
OUTSTANDING BALANCE OF ADVANCES ($ )
----------------
AVAILABILITY (SHORTAGE) $
==================
</TABLE>
Attached hereto are detailed Inventory, accounts payable aging and
accounts 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
-25-
<PAGE> 26
material respects. Any repayment of Advances required under Section 2.03(b) of
the Loan Agreement is delivered with this Certificate.
Company, on behalf of itself and the other Borrowers, represents and
warrants to Lender that, except as previously disclosed to Lender in writing,
the representations and warranties contained in the Loan and Security Agreement
are true and correct in all material respects as of the date hereof, and there
is no material Default or Event of Default on the date hereof.
MARINEMAX, INC.
By:
------------------------------
Title: Vice President
-26-
<PAGE> 27
EXHIBIT B
To
LOAN AND SECURITY AGREEMENT
MODIFIED BORROWING BASE CERTIFICATE
Deutsche Financial Services Corporation
5480 Corporate Drive, Suite 300
Troy, MI 48098
This Modified 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 Loan and
Security Agreement dated as of December 15, 1999, between Company, Dealer and
Deutsche Financial Services Corporation ("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 Modified Borrowing Base of Accounts 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:
ELIGIBLE ACCOUNTS
<TABLE>
<S> <C> <C> <C>
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 $
----------------
MODIFIED BORROWING BASE AVAILABILITY - max $25MM $
==================
OUTSTANDING BALANCE OF ADVANCES ON ACCOUNTS ($ )
----------------
AVAILABILITY (SHORTAGE) $
==================
</TABLE>
Attached hereto is the detailed accounts receivable aging report as of
close of business for the month covered by this Certificate, which report is
certified as true and complete in all material respects. Any repayment of
Advances required under Section 2.03(c) of the Loan Agreement is delivered with
this Certificate.
Company, on behalf of itself and the other Borrowers, represents and
warrants to Lender that, except as previously disclosed to Lender in writing,
the representations and warranties contained in the Loan and Security Agreement
are true and correct in all material respects as of the date hereof.
MARINEMAX, INC.
By:
------------------------------
Title: Vice President
-27-
<PAGE> 28
Exhibit C
To
Loan and Security Agreement
DEBT, LIENS AND CONTINGENT LIABILITIES
-28-
<PAGE> 29
Exhibit D
To
Loan and Security Agreement
LIST OF LITIGATION
-29-
<PAGE> 30
Exhibit E
To
Loan and Security Agreement
LOCATION OF COLLATERAL
-30-
<PAGE> 31
Exhibit F
To
Loan and Security Agreement
REAL PROPERTY OWNED AND LEASED
-31-
<PAGE> 32
Exhibit G
To
Loan and Security Agreement
JOINDER AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Joinder Amendment is hereby made to the Loan and Security
Agreement executed as of the 15th day of December, 1999 (as amended,
"Agreement") by and between Deutsche Financial Services Corporation ("Lender"),
MarineMax, Inc. (the "Company") and MarineMax of New Jersey, Inc. ("Dealer")
(the Company and Dealer collectively "Borrower").
WHEREAS, the Company wishes Lender to begin providing financing to its
Subsidiary, ___________________, a ______ corporation, ("New Dealer");
WHEREAS, New Dealer wishes to obtain financing from Lender and wishes
to be added as a party to the Agreement.
NOW, THEREFORE, in consideration of the premises and for good and
valuable consideration, Lender, Borrowers and New Dealer hereby agree as
follows:
1. JOINDER. The Agreement is amended to add _______________ ("New
Dealer") as a party to the Agreement. By signing this Joinder Amendment, New
Dealer agrees: (a) to be a party to the Agreement and to be bound and obligated
to all of the terms of the Agreement, which include, but are not limited to, the
grant of a security interest to Lender in all Collateral of New Dealer, and (b)
to perform all of the duties of a Dealer under the Agreement, and to be jointly
and severally liable with Borrowers, to the same extent as if New Dealer had
been one of the original Dealers to the Agreement. New Dealer acknowledges
receipt of a true and complete copy of the Agreement and all Amendments thereto.
2. All other terms of the Agreement are hereby ratified and shall
remain unchanged and in full force and effect.
3. This Joinder Amendment may be signed in any number of counterparts,
all of which taken together will constitute but one and the same document. Any
copy or facsimile hereof will be deemed an original and the best evidence
thereof for all purposes.
IN WITNESS WHEREOF, the authorized representatives of the parties have
executed this Joinder Amendment to Loan and Security Agreement as of the ___ day
of _______, ____.
MARINEMAX, INC. MARINEMAX OF NEW JERSEY, INC.
By:________________________________ By:____________________________________
Title:_____________________________ Title:_________________________________
Executed At: Executed At:
____________________________________ _______________________________________
____________________________________ DEUTSCHE FINANCIAL SERVICES CORPORATION
(New Dealer)
By:_________________________________ By: __________________________________
Title:______________________________ Title:________________________________
Executed At: Executed At:
____________________________________ ______________________________________
-32-
<PAGE> 33
Exhibit H
OFFICER'S CERTIFICATE
The undersigned hereby certify that they are the _____________________
of MARINEMAX, INC., a Delaware corporation ("Company") and MarineMax of New
Jersey, Inc., a Delaware corporation ("Dealer"), and that they are authorized to
execute this Certificate in connection with the Loan and Security Agreement of
even date herewith, between Deutsche Financial Services Corporation and
Borrowers ("Loan Agreement"). Terms are used herein as defined in the Loan
Agreement.
The undersigned further certify 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 December ___,
1999.
MARINEMAX, INC. MARINEMAX OF NEW JERSEY, INC.
By ______________________________ By _________________________________
Title: Vice President Title: Vice President
-33-
<PAGE> 34
Exhibit H
OFFICER'S CERTIFICATE
The undersigned hereby certify that he is the _____________________ of
MARINEMAX OF NEW JERSEY, INC., a Delaware corporation ("Company"), and that he
is authorized to execute this Certificate in connection with the Loan and
Security Agreement of even date herewith, between Deutsche Financial Services
Corporation 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 December ___,
1999.
MARINEMAX OF NEW JERSEY, INC.
By _______________________________________
Title: Vice President
-34-
<PAGE> 35
Exhibit I
COVENANT COMPLIANCE CERTIFICATE
[To be Provided by DFS]
-35-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This exhibit contains summary financial information extracted from the
Registrant's financial statements for the period ended December 31, 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> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,711,567
<SECURITIES> 0
<RECEIVABLES> 11,792,351
<ALLOWANCES> 0
<INVENTORY> 163,765,743
<CURRENT-ASSETS> 185,367,472
<PP&E> 47,694,029
<DEPRECIATION> 9,804,361
<TOTAL-ASSETS> 258,773,107
<CURRENT-LIABILITIES> 157,397,006
<BONDS> 6,335,139
0
0
<COMMON> 15,181
<OTHER-SE> 91,062,741
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<SALES> 93,516,624
<TOTAL-REVENUES> 93,516,624
<CGS> 72,774,652
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<OTHER-EXPENSES> 18,734,256
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,179,869
<INCOME-PRETAX> 827,847
<INCOME-TAX> 350,879
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 476,968
<EPS-BASIC> 0.03
<EPS-DILUTED> 0.03
</TABLE>
