-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DUQ7Tmzl3o1ax8e8sM6/wcWPiIiDP49RZH9kH8Z0OicgO+XTQfhOD74Bw++/oTFy NrGlb76gAF5P6gwTHDFjZQ== 0000950109-96-008738.txt : 19970102 0000950109-96-008738.hdr.sgml : 19970102 ACCESSION NUMBER: 0000950109-96-008738 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961231 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRAVIS BOATS & MOTORS INC CENTRAL INDEX KEY: 0001012734 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20757 FILM NUMBER: 96688472 BUSINESS ADDRESS: STREET 1: 13045 RESEARCH BLVD CITY: AUSTIN STATE: TX ZIP: 78750 BUSINESS PHONE: 5122508103 10-K 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required) For the Fiscal Year Ended September 30, 1996 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-20757 ---------------- TRAVIS BOATS & MOTORS, INC. (Exact name of registrant as specified in its charter) TEXAS 74-2024798 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Indentification Number) 13045 RESEARCH BLVD., AUSTIN, TEXAS 78750 (Address of principal executive offices) Registrant's telephone number, including area code: (512) 250-8103 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.01 PAR VALUE (Title of class) ---------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceeding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitve proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of the voting stock (which consists solely of shares of Common Stock) held by non-affiliates of the Registrant as of December 23, 1996, (based upon the last reported price of $13.00 per share) was approximately $29,654,989 on such date. The number of shares of the issuer's Common Stock, par value $.01 per share, outstanding as of December 23, 1996 was 4,136,506 of which 2,281,153 shares were held by non-affiliates. Documents Incorporated by reference: Portions of Registrant's Proxy Statement relating to the 1997 Annual Meeting of Stockholders to be held in March 1997, have been incorporated by reference herein (Part III). - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TRAVIS BOATS & MOTORS, INC. AND CONSOLIDATED SUBSIDIARIES FORM 10--K TABLE OF CONTENTS
PAGE ---- RISK FACTORS....................................................................................... 1 PART I Item 1. Business................................................................................. 6 Item 2. Properties............................................................................... 10 Item 3. Legal Proceedings........................................................................ 10 Item 4. Submission of Matters to a Vote of Security Holders...................................... 10 PART II Item 5. Market for Registrant's Common Stock and Related Shareholder Matters..................... 11 Item 6. Selected Financial Data.................................................................. 12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 13 Item 8. Financial Statements..................................................................... 19 Item 9. Changes in and Disagreements with Accountants and Financial Disclosure................... 19 PART III Item 10. Directors and Executive Officers......................................................... 20 Item 11. Executive Compensation................................................................... 20 Item 12. Security Ownership of Certain Beneficial Owners and Management........................... 20 Item 13. Certain Relationships and Related Transactions........................................... 20 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................... 21 Index to Consolidated Financial Statements............................................... 21
RISK FACTORS This 10K Report contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the factors set forth below, those discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and those discussed elsewhere in this 10K Report. Impact of Seasonality and Weather on Operations. The Company's business, as well as the entire recreational boating industry, is highly seasonal. Strong sales typically begin in January with the onset of the public boat and recreation shows, and continue through July. Over the previous six-year period, the average net sales for the quarterly periods ended March 31 and June 30 represented in excess of 27% and 37%, respectively, of the Company's average annual net sales. If, for any reason, the Company's sales were to be substantially below those normally expected during these periods, the Company's business, financial condition and results of operations would be materially and adversely affected. The Company generally realizes significantly lower sales in the quarterly period ending December 31, resulting in operating losses during that quarter. The Company's business is also significantly affected by weather patterns which may adversely impact the Company's operating results. For example, drought conditions or merely reduced rainfall levels, as well as excessive rain, may force area lakes to close or render boating dangerous or inconvenient, thereby curtailing customer demand for the Company's products. In addition, unseasonably cool weather and prolonged winter conditions may lead to a shorter selling season in certain locations. Although the Company's geographic expansion has reduced, and is expected to continue to reduce, the overall impact on the Company of adverse weather conditions in any one market area, such conditions will continue to represent potential, material adverse risks to the Company and its future financial performance. Due to the foregoing factors, among others, the Company's operating results in some future quarters may be below the expectations of stock market analysts and investors. In such event, there could be an immediate and significant adverse effect on the trading price of the Common Stock. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Impact of General Economic Conditions and Discretionary Consumer Spending. The Company's operations are dependent upon a number of factors relating to or affecting consumer spending. The Company's operations may be adversely affected by unfavorable local, regional or national economic developments or uncertainties regarding future economic prospects that reduce consumer spending in the markets served by the Company's stores. Consumer spending on non-essential goods such as recreational boats can also be adversely affected due to declines in consumer confidence levels, even if prevailing economic conditions are positive. In an economic downturn, consumer discretionary spending levels are also reduced, often resulting in disproportionately large declines in the sale of high-dollar items such as recreational boats. For example, during the Company's 1988-1990 fiscal years, the Texas economy was severely depressed due to declines in the financial, oil and gas and real estate markets. While the Company remained profitable during these periods, its operating performance declined. There can be no assurance that a similar economic downturn might not recur in Texas or any other market or that the Company could remain profitable during any such period. In fact, the State of Texas and other southern states have recently experienced severe drought conditions which, in addition to causing potential restrictions on boating activities on certain area lakes, are expected to materially and adversely impact the regional economies of the affected states. There can be no assurance that these drought conditions in the regional markets served by the Company will not have a material adverse effect on the operations of certain of the Company's locations and, accordingly, the Company's business, financial condition and results of operations. Similarly, rising interest rates could have a negative impact on consumers' ability or willingness to obtain financing from third-party lenders, which could also adversely affect the ability of the Company to sell its products. Changes in federal and state tax laws including, without limitation, the imposition or proposed adoption of luxury or similar taxes on certain consumer products, also influence consumers' decision to purchase products offered by the Company and could have a negative effect on the Company's sales. Local influences such as 1 corporate downsizing, military base closings and the Mexican peso devaluation have adversely affected and may continue to influence the Company's operations in certain markets. Dependence Upon Expansion. A significant portion of the Company's growth has resulted from, and will continue to be increasingly dependent upon, the addition of new stores and continued sales and profitability from existing stores. Since October 1991, at which time the Company operated five stores in Texas, the Company has opened or acquired ten new store locations in Texas, Arkansas, Louisiana, Alabama and Tennessee. During the time period of fiscal 1991 through fiscal 1996, these new stores collectively accounted for approximately 40.2% of the Company's aggregate net sales and approximately 47.7% of aggregate pre-tax income. Comparable store sales increased 12.2% for the twelve months ended September 30, 1995 and 4.3% in fiscal 1996. Recent rates of comparable store sales and net income growth are not necessarily indicative of the comparable store performance that may be achieved by the Company in the foreseeable future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company intends to continue to pursue a strategy of growth into new markets through acquiring existing boat retailers, converting compatible facilities to Travis Boating Centers and building new store facilities. Accomplishing these goals for expansion will depend upon a number of general factors, including the identification of new markets in which the Company can obtain approval to sell its existing or substantially similar product lines, the Company's financial capabilities, the hiring, training and retention of qualified personnel and the timely integration of new stores into existing operations. The acquisition strategy will further depend upon the Company's ability to locate suitable acquisition candidates at a reasonable cost and to dispose, timely and effectively, of the acquired entity's remaining inventory, as well as the ability of the Company to sell its Travis Edition product line to the customer base of the previous owner. There can be no assurance that the Company can identify suitable acquisition candidates or complete acquisitions on terms and conditions favorable to the Company. The strategy of growth through conversion of compatible facilities to Travis Boating Centers or the construction of new Travis Boating Centers will further depend upon the Company's ability (i) to locate and construct suitable facilities at a reasonable cost in those new markets in which the Company believes it can obtain adequate market penetration at standard operating margins without the acquisition of an existing dealer, (ii) to obtain the reliable data necessary to determine the size and product preferences of such potential markets and (iii) to introduce successfully its Travis Edition line. There can be no assurance that the Company will be able to open and operate new stores on a timely or profitable basis. Moreover, the costs associated with opening such stores may adversely affect the Company's profitability. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Management of Growth. The Company has undergone a period of rapid growth. Management has expended and expects to continue to expend significant time and effort in acquiring and opening new stores. There can be no assurance that the Company's systems, procedures and controls will be adequate to support the Company's expanding operations. The inability of the Company to manage its growth properly could have a material adverse effect on the Company's business, financial condition and results of operations. The Company has recently deployed a new management information system to improve its ability to monitor and manage its geographically dispersed stores. This system is operational in each of the Company's 15 stores. There can be no assurance that the system will function as planned or that the system can be integrated smoothly with new store openings and acquisitions. The Company's planned growth will also impose significant added responsibilities on members of senior management, including the need to identify, recruit and integrate new senior level managers, and the ability to maintain or expand Travis Edition's and Travis Boating Center's successful appeal to consumers. There is no assurance that any additions to management can be readily and successfully achieved or that the Company will be able to continue to grow its business. Reliance on Manufacturers and Other Key Vendors. The Company's success is dependent upon its relationship with, and favorable pricing arrangements from, a limited number of major manufacturers. In the 2 event these arrangements were to change or terminate for any reason, including changes in competitive, regulatory or marketing practices, the Company's business, financial condition and results of operations could be adversely affected. As is typical in the industry, the Company deals with each of its manufacturers pursuant to an annually renewable, non-exclusive, dealer agreement that does not contain any contractual provisions concerning product pricing or required purchasing levels. Pricing is generally established on a model year basis, but is subject to change at the manufacturer's sole discretion. The Company purchased 100% of its new outboard motors in 1995 and 1996 from Outboard Marine Corporation ("OMC"), the manufacturer of Johnson outboard motors. Unlike the Company's other dealer agreements, the Company's agreement with OMC is multi-year in nature. This agreement, which is in the second of three years, sets forth an established discount level from the then prevailing dealer net price over the entire term of the agreement. This dealer agreement may be canceled by either party if the volume of product purchased or available to be purchased is not maintained at pre-established levels. If the Company's contract with OMC were canceled or modified, it could have a material adverse effect on the Company's business, financial condition and results of operations. Approximately 22.7% of the Company's net purchases in fiscal 1996 were from a single boat supplier. The Company also currently purchases a high percentage of the annual production of a limited number of boat manufacturers. To ensure adequate inventory levels to support the Company's expansion, it may be necessary for such manufacturers to increase production levels or allocate a greater percentage of their production to the Company. In the event that the operations of the Company's manufacturers were interrupted or discontinued, the Company could experience temporary inventory shortfalls, or disruptions or delays with respect to any unfilled purchase orders then outstanding. Although the Company believes that adequate alternate sources would be available that could replace a manufacturer as a product resource, there can be no assurance that such alternate sources will be available at the time of any such interruption or that alternative products will be available at comparable quality and prices. The unanticipated failure of any manufacturer or supplier to meet the Company's requirements with regard to volume or design specifications, the Company's inability to locate acceptable alternative manufacturers or suppliers, the Company's failure to have dealer agreements renewed or to meet certain volume requirements with regard to purchasing, or any substantial increase in the manufacturer's pricing to the Company, could have a material adverse effect on the Company's business, financial condition and results of operations. Limitations to Market Entry. Under certain of its dealer agreements, the Company must obtain permission from its manufacturers to sell products in new markets. While the Company has received permission to sell Johnson motors and various boat lines in its immediate expansion markets, manufacturers have not granted such permission to the Company in each of its broader target markets. While the Company believes it can sell products of other manufacturers in new markets, there can be no assurance that all of the Company's current manufacturers will grant permission for the Company to sell in new markets, or if unable to obtain such permission, that the Company can obtain suitable alternative sources of supply. Unlike other states the Company has targeted for expansion, the State of Oklahoma has had restrictions on the location of competing marine dealers that limit the ability of new entrants in the retail boat industry to compete in Oklahoma. There can be no assurance that other states will not pass similar or other restrictions limiting new competition. Income from Financing, Insurance and Extended Service Contracts. A substantial portion of the Company's income results from the origination and placement of customer financing and the sale of insurance products and extended service contracts (collectively, "F&I Products"), the most significant component of which is the income resulting from the Company's origination of customer financing. For example, during fiscal 1996, F&I Products accounted for approximately 4.2% of net sales and approximately 16.5% of gross profit. The Company's lenders may choose to pursue this business directly, rather than through intermediaries such as the 3 Company. Moreover, lenders may impose terms in their boat financing arrangements with the Company that may be materially unfavorable to the Company or its customers. For these and other reasons, the Company could experience a significant reduction in income resulting from reduced demand for its customer financing programs. In addition, if profit margins are reduced on sales of F&I Products, or if these products are no longer available, it would have a material adverse effect on the Company's business, financial condition and results of operations. Furthermore, under optional extended service contracts with customers, the Company may experience significant breach of warranty claims that may, in the aggregate, be material to the Company's business. Availability of Financing. The Company currently has significant floor plan and other inventory lines of credit from financial institutions and other lenders, which the Company believes reflect competitive terms and conditions. While the Company believes it will continue to obtain comparable financing from these or other lenders, there can be no assurance that such financing will be available to the Company. The failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on the business, financial condition and results of operations of the Company. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." Dependence on Key Personnel. The Company believes its success depends, in large part, upon the continued services of key management personnel, including Mark T. Walton, Chairman of the Board and President; Ronnie L. Spradling, Executive Vice President--New Store Development; and Michael B. Perrine, Chief Financial Officer, Secretary and Treasurer; and other key employees. Although the Company has employment agreements through TBC Management, Ltd. (an affiliated partnership of the Company) with each of Messrs. Walton, Spradling and Perrine expiring in June 1999, the loss of any of these individuals could materially and adversely affect the Company, including its business expansion plans. The Company maintains and is the beneficiary of key-man life insurance policies on Messrs. Walton and Perrine in the amount of $1.0 million each, and on Mr. Spradling in the amount of $500,000. Product and Service Liability Risks. Products sold or serviced by the Company may expose it to potential liability for personal injury or property damage claims relating to the use of those products. Additionally, as a result of the Company's activities in custom packaging its Travis Edition lines, the Company may be included as a defendant in product liability claims relating to defects in manufacture or design. Historically, the resolution of product liability claims has not materially affected the Company's business. The Company generally requires manufacturers from which it purchases products to supply proof of product liability insurance. Although the Company maintains third-party product liability insurance that it believes to be adequate, there can be no assurance that the Company will not experience legal claims in excess of its insurance coverage, or claims that are ultimately not covered by insurance. Furthermore, if any significant claims are made against the Company, the Company's business, financial condition and results of operations may be adversely affected by related negative publicity. Control by Officers and Directors. The executive officers and directors of the Company own approximately 50.9% of the issued and outstanding shares of the Company's Common Stock. As a result of such ownership, such officers and directors will have the power effectively to control the Company, including the election of directors, the determination of matters requiring stockholder approval and other matters pertaining to corporate governance. Volatility of Stock Price. Prior to the Company's initial public offering in June 1996, there was no public trading market for the Company's Common Stock. There can be no assurance of an ongoing active trading market or that the market price of the Common Stock will not decline. It is anticipated that there will be limited float in the market due to the relatively low number of shares owned by the public and consequently, fluctuations in the market price for the Common Stock could be significant. Recent market conditions for newly public companies, as well as the Company's quarterly variations in operating results due to seasonality and other factors, are likely to result in significant fluctuations in the market price for the Common Stock. Future announcements concerning the Company or its competitors, including government regulations, litigation or 4 changes in earnings estimates or descriptive materials published by analysts, may also cause the market price of the Common Stock to fluctuate substantially. These fluctuations, as well as general economic, political and market conditions, such as recessions, may adversely affect the market price of the Common Stock. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Shares Eligible for Future Sale. Sales of substantial amounts of the Company's Common Stock in the public market, or the perception that such sales may occur, could have a material adverse effect on the market price of the Common Stock. The Company, its officers and directors and certain stockholders, hold, in the aggregate, 2,683,506 shares of Common Stock. No prediction can be made as to the effect, if any, that future sales of shares, or the availability of shares for future sale, will have on the market price of the Common Stock prevailing from time to time. Anti-takeover Effect of Articles and Bylaw Provisions. The Company's Articles of Incorporation provide that up to 1,000,000 shares of preferred stock may be issued by the Company from time to time in one or more series. The Board of Directors is authorized to determine the rights, preferences, privileges and restrictions granted to and imposed upon any unissued series of preferred stock and to fix the number of shares of any series of preferred stock and the designation of any such series, without any vote or action by the Company's stockholders. The Board of Directors may authorize and issue preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of Common Stock. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of the Company. The Company's Articles of Incorporation also allow the Board of Directors to fix the number of directors in the Bylaws with no minimum or maximum number of directors required. The Company's Bylaws currently provide that the Board of Directors shall be divided into three classes of two or three directors each, with each class elected for three-year terms expiring in successive years. The effect of these provisions may be to delay or prevent a tender offer or takeover attempt that a stockholder might consider to be in the stockholder's best interest, including attempts that might result in a premium over the market price for the shares held by the stockholders. 5 PART I Other than statements of historical fact, all statements contained in this 10-K Report, including statements in "Item 1. Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," may contain forward-looking statements. Forward-looking statements in this 10-K Report generally are accompanied by words such as "anticipate," "believe," "estimate," "project," "of the opinion that," "expect" or similar statements. Although the Company believes that the expectations reflected in such forward- looking statements are reasonable, no assurance can be given that such expectations are accurate. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements include the risks described under "Risk Factors." All forward- looking statements in this Prospectus are expressly qualified in their entirety by the cautionary statements in this paragraph. ITEM 1. BUSINESS General Travis Boats & Motors, Inc. ("Travis Boats" or the "Company") is a leading multi-state superstore retailer of recreational boats, motors, trailers and related marine accessories in the southern United States. The Company, which currently operates 15 superstores under the name Travis Boating Center in Texas, Arkansas, Louisiana, Alabama and Tennessee, differentiates itself from competitors by providing customers a unique superstore shopping experience that showcases a broad selection of high quality boats, motors, trailers and related marine accessories at firm, clearly posted low prices. Each superstore also offers complete customer service and support, including in-house financing programs and full-service repair facilities staffed by factory- trained mechanics. History Travis Boats was incorporated as a Texas corporation in 1979. As used herein and unless otherwise required by the context, the terms "Travis Boats" and the "Company" shall mean Travis Boats & Motors, Inc. and its direct and indirect subsidiaries. Since its founding as a single retail store in Austin, Texas, the Company has grown both through acquisitions and the establishment of new store locations. During the 1980's, the Company expanded into San Antonio, Texas with the construction of a new store facility. The Company subsequently made acquisitions of boat retailers operating within the Texas markets of Midland, Dallas and Abilene. It was during this initial period of expansion that the Company began developing the systems necessary to manage a multi-store operation and leveraging the economies of scale associated with volume purchasing. The Company's success in these areas led to the proprietary Travis Edition packaging concept and the Company's pricing philosophy. Since 1991, Travis Boats has opened or acquired (through asset purchases) ten additional store locations: Texas (3), Arkansas (2), Louisiana (2), Alabama (2) and Tennessee (1). Included in the new store acquisitions are the following transactions: Effective September 20, 1995, the Company acquired substantially all of the assets of Red River Marine, Inc. ("Red River Marine"). Red River Marine, a leading boat retailer in Arkansas, operates stores in the resort communities of Hot Springs and Heber Springs. Effective December 1, 1995, the Company acquired substantially all of the assets of Clay's Boats & Motors, Inc., the operator of a single store location in New Iberia, Louisiana. Subsequent to September 30, 1996, the Company has completed the acquisition of two corporations operating three retail boating store locations. Effective October 3, 1996, the Company acquired substantially all of the assets of North Alabama Watersports, the operator of a single store location in Florence, Alabama. 6 Effective November 1, 1996, the Company acquired substantially all of the assets of Tri-Lakes Marine, Inc., which operates store locations in Winchester, Tennessee and Huntsville, Alabama The Company sells approximately 40 different models of brand-name fishing, water-skiing and general recreational boats, along with motors, trailers, accessories and related equipment. Personal watercraft, off-shore fishing boats and cabin cruisers are also offered for sale at selected store locations. Substantially all of the boats sold range in size from 16 to 23 feet at prices ranging from $7,500 to $23,000 with gross profit margins between approximately 21% and 23%. Approximately 6% of new boat sales are personal watercraft with retail prices generally ranging from $5,000 to $8,000 and 3% of new boat sales are cruisers ranging in price from $30,000 to $100,000. The Company custom designs and pre-packages combinations of popular brand-name boats, such as Aquasport, Cajun and Larson, with Johnson outboard and other motors, trailers and numerous accessories, under its proprietary Travis Edition product line. These signature Travis Edition packages, which account for the vast majority of total new boat sales, have been designed and developed in coordination with the manufacturers and often include distinguishing features and accessories that have historically been unavailable to, or listed as optional by, many competitors. These factors enable the Company to provide the customer with an exceptional product that is conveniently packaged for immediate enjoyment and competitively priced. The Company believes that it offers a selection of boat, motor and trailer packages that fall within the price range of the majority of all boats, motors and trailers sold in the United States. The Company's product line generally consists of boat packages priced from $7,500-$23,000 with approximate even distribution within this price range. Management believes that by combining flexible financing arrangements with an even distribution of products through a broad price range, the Company is able to offer boat packages to customers with different purchasing budgets and varying income levels. Effective September 30, 1995, the Company elected to change its fiscal year end from December 31 to September 30. This change was made to establish a fiscal year that more closely conforms to the business cycle of the Company. Business Strategy Management of the Company believes it is the first to have developed a multi- state, chain superstore merchandising strategy in the recreational boating business. The Company's objective is to become the dominant retailer of recreational boats, motors, trailers and marine accessories in the southern United States. Management's merchandising strategy is based on providing customers with a comprehensive selection of quality, brand name boats and boating products in a comfortable superstore environment. The Company intends to continue to build brand identity by placing the Travis Edition name on complete boating packages. Travis Boats has developed and implemented a business strategy designed to increase its market penetration within both existing and new market areas through a variety of advertising and promotional events. The Company intends to emphasize the following key elements of its business strategy: Travis Boating Center superstore. Travis Boating Center superstores have a distinctive and stylish trade dress accented with deep blue awnings, a nautical neon building decoration, expansive glass storefronts and brightly lit interiors. The stores range in size from 6,000 to 33,200 square feet and average approximately 21,000 square feet. Each superstore presents customers with a broad array of boats and over 9,000 parts and accessories in a clean, well-stocked, air-conditioned shopping environment. All boats are typically displayed fully rigged with motor, trailer and a complete accessory package, giving a "ready to take home" impression. Professionally-trained mechanics operate service bays, providing customers with quality and reliable maintenance and repair service. Travis Edition concept. The Company uses extensive market research, combined with the design resources of its manufacturers, to develop custom Travis Edition boating packages. The Company's significant purchasing power and consequent ability to coordinate designs with manufacturers have enabled the Company to obtain products directly from the factory at the lowest prices, with favorable delivery schedules and with distinguishing 7 features and accessories that have historically been unavailable to, or listed as optional by, many competitors. The Company can also add certain additional features after receipt of the product to enhance the Company's Travis Edition packages. Each Travis Edition is a complete, full-feature package, including the boat, motor, trailer and numerous additional accessories and design features often not found on competitors' products, thus providing customers with superior value. These features often include enhanced styling such as additional exterior colors, complete instrumentation in dashboards, transoms warrantied for life, canopy tops, trolling motors, upgraded interiors with stereos, wood grain dashboards, in-dash depth finders, stainless steel motor propellers and enhanced hull design not available on other models. In addition, Travis Edition boats are identified by the Company's attractive private label logo as well as the respective manufacturer's logo. Unlike most recreational boat dealers, the Company establishes firm prices on its Travis Edition packages and generally maintains such prices for an entire season. Prices are advertised and clearly posted so that the customer receives the same price at any Travis Boating Center. The Company's selling philosophy eliminates customer anxiety associated with bargaining or negotiation and results in a price at or below prices generally available from competitors. The Company believes this pricing strategy and low-pressure sales style provide the customer with the comfort and confidence of having received a better boat with more features at a lower price. In the Company's view, this approach has promoted good customer relationships and enhanced the Company's reputation in the industry as a leading provider of quality and value. Boat Show Participation. The Company also participates in boat shows, typically held in January through March, in each of its markets and in certain markets of close proximity. These shows are normally held at convention centers, with all area dealers purchasing space to display their respective product offerings. Boat shows and other offsite promotions generate a significant amount of interest in products and often have an immediate impact on sales at a nominal incremental cost. Although total boat show sales are difficult to assess, management attributes a significant portion of second quarter net sales to such shows. F&I Products. In the Company's efforts to maintain customer service and support for customers purchasing its Travis Edition boat packages it also offers customers the ability to purchase extended service contracts and insurance coverages, including credit life and accident/disability coverages (collectively "F&I Products"). The Company also offers to assist the customer obtain financing for their boat purchase through a diversified group of financial institutions with which the Company maintains financing agreements. The Company earns commissions on these F&I Products based upon the Company's mark up over the cost of these products. These F&I Products account for a substantial portion of the Company's income, the most significant component of which is the income resulting from the Company's origination of customer financing. Operations Purchasing. The Company is the largest volume buyer in the United States of Johnson outboard motors from Outboard Marine Corporation ("OMC") and is the largest domestic volume buyer of boats from substantially all of the boat manufacturers it represents. As a result, the Company has significant access to the manufacturers and substantial input into the design process for the new boats that are introduced to the market each year by such manufacturers. In addition, the Company has designed and developed, in coordination with its manufacturers, signature Travis Edition boating packages which account for the vast majority of its total new boat sales. The Company's purchasing power allows it to purchase boats that are pre-rigged for the Company's Travis Edition lines. Approximately 20.1% and 22.7% of the Company's net purchases in fiscal 1995 and 1996, respectively, were from GenMar Industries which manufactures the AquaSport, Cajun and Larson boat lines. The Company typically deals with each of its manufacturers pursuant to an annually renewable, non-exclusive dealer agreement which does not contain any contractual provisions concerning product pricing or purchasing levels. Pricing is generally established on an annual basis, but may be changed at the manufacturer's sole discretion. The Company's agreement with OMC, unlike its other dealer agreements, is multi-year in nature. This agreement, which is in the second of three years, sets forth an established discount level from the then prevailing OMC dealer net price over the entire term of the agreement. This dealer agreement may be canceled 8 by either party if volume of product purchased or available to be purchased is not maintained at pre-established levels. OMC supplied products that represented approximately $11.0 million, or 34.5% and $20.3 million, or 38.7%, of the Company's net purchases during fiscal 1995 and 1996, respectively. Pursuant to its arrangements with certain manufacturers, the Company's right to display some product lines in certain markets may be restricted. Floor plan financing. The Company acquires a substantial portion of its inventory through floor plan financing agreements. Inventory is generally purchased under floor plan lines of credit (secured by such inventory) maintained with third party finance companies and/or commercial banks, depending upon the type of product purchased. The finance companies maintain relationships with certain manufacturers that allow the Company to obtain several months of interest-free financing, generally from August of one year through May of the following year. Management believes that these financing arrangements are standard within the industry. As of September 30, 1996, the Company and its subsidiaries owed an aggregate of approximately $3.5 million pursuant to the floor plan financing agreements. Competition. The Company operates in a highly competitive environment. In addition to facing competition generally from businesses seeking to attract discretionary spending dollars, the recreational boat industry itself is highly fragmented, resulting in intense competition for customers, access to quality products, access to boat show space in new markets and suitable store locations. The Company relies heavily on boat shows to generate sales. If the Company is impeded in its ability to participate in boat shows in its existing or targeted markets, it could have a material adverse effect on the Company's business, financial condition and results of operations. The Company competes primarily with single location boat dealers and, to a lesser degree, with national specialty marine stores, catalog retailers, sporting goods stores and mass merchants, particularly with respect to parts and accessories. Dealer competition continues to increase based on the quality of available products, the price and value of the products and attention to customer service. There is significant competition both within markets currently being served by the Company and in new markets into which the Company plans to enter. The Company competes in each of its markets with retailers of brands of boats and motors not sold by the Company in that market. Management believes that a trend in the industry is for manufacturers to include more features as standard equipment on boats and for dealers to offer packages comparable to those offered by the Company as its Travis Edition lines. In addition, several of the Company's competitors, especially those selling boating accessories, are large national or regional chains that have substantially greater financial, marketing and other resources than the Company. There can be no assurance that the Company will be able to compete successfully in the retail marine industry in the future. Impact of Environmental and Other Regulatory Issues. On October 31, 1994, the U.S. Environmental Protection Agency ("EPA") announced proposed emissions regulations for outboard marine motors. The proposed regulations would require a 75% average reduction in hydrocarbon emissions for outboard motors and set standards for carbon monoxide and nitrogen oxide emissions as well. Under the proposed regulations, manufacturers would begin phasing in low emission models in 1998 and have nine years to achieve full compliance. The EPA estimates that its proposed regulations, if enacted, will result in an increase in the average price of an outboard marine motor of $700 after full implementation of the regulations in the year 2006. Costs of comparable new models, if materially more expensive than previous models, or the manufacturer's inability to comply with EPA requirements, could have a material adverse effect on the Company's business, financial condition and results of operations. The Company, in the ordinary course of its business, is required to dispose of certain waste products that are regulated by state or federal agencies. These products include waste motor oil, tires, batteries and certain paints. It is the Company's policy to use appropriately licensed waste disposal firms to handle this refuse. If there were improper disposal of these products, it could result in potential liability for the Company. Although the Company does not own or operate any underground petroleum storage tanks, it currently maintains one above-ground tank, which is subject to registration, testing and governmental regulation. 9 Additionally, certain states have required or are considering requiring a license in order to operate a recreational boat. While such licensing requirements are not expected to be unduly restrictive, regulations may discourage potential first-time buyers, thereby limiting future sales, which could have a material adverse effect on the Company's business, financial condition and results of operations. Trademarks and service marks. The Company does not hold any registered trade or service marks at this time but has trademark applications pending with the U.S. Patent and Trademark Office for the names "Travis Boating Center" and "Travis Edition," for its corporate logo and for the overall appearance and trade dress of its Travis Boating Centers. There can be no assurance that any of these applications will be granted. However, based on a number of years of use, the Company believes it has common law rights to these marks at least in its current market areas. Employees. As of September 30, 1996, the Company's staff consisted of 232 employees, 219 of whom are full time. The full-time employees include 13 in store level management and 16 in corporate administration and management. The Company is not a party to any collective bargaining agreements and is not aware of any efforts to unionize its employees. The Company considers its relations with its employees to be good. ITEM 2. PROPERTIES The Company owns its corporate offices located in the Travis Boating Center in Austin, Texas. The Company also owns and operates Travis Boating Center locations in Abilene, Dallas, Midland and San Antonio, Texas; Baton Rouge, Louisiana; and Hot Springs, Arkansas. The remaining facilities are leased under short-term leases that generally contain multi-year renewal options. In all such cases, the Company pays a fixed rent. In substantially all of the leased locations, the Company is responsible for taxes, insurance, repairs and maintenance. The chart below reflects the status and approximate size of the various Travis Boating Centers operated as of November 30, 1996.
LOCATION SQUARE FOOTAGE* ACREAGE* OWNED OR LEASED YEAR OF MARKET ENTRY -------- --------------- -------- --------------- -------------------- Austin, Texas(1)........ 20,000 3.5 Owned 1979 San Antonio, Texas(1)... 15,500 1.9 Owned 1982 Midland, Texas(1)....... 18,750 3.8 Owned 1982 Dallas, Texas(1)........ 20,000 4.2 Owned 1983 Abilene, Texas(2)....... 24,250 3.7 Owned 1989 Houston, Texas(2)....... 15,100 2.2 Leased 1991 Baton Rouge, Louisiana(2)........... 33,200 7.5 Owned 1992 Beaumont, Texas(2)...... 25,500 6.5 Leased 1994 Arlington, Texas(3)..... 6,000 1.0 Leased 1995 Heber Springs, Arkansas(4)............ 26,000 9.0 Leased 1995 Hot Springs, Arkansas(4)............ 20,510 3.0 Owned 1995 New Iberia, Louisiana(4)........... 24,000 3.3 Leased 1995 Florence, Alabama(4)(5).......... 22,500 6.0 Leased 1996 Huntsville, Alabama(4)(5).......... 2,000 3.0 Leased 1996 Winchester, Tennessee(4)(5)........ 25,000 3.5 Leased 1996
- -------- * Square footage and acreage are approximate. (1) Newly constructed store. (2) Facility acquired and converted to superstore. (3) Temporary facility. To be relocated. (4) Acquired facility. (5) Acquired subsequent to September 30, 1996. 10 ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any material legal proceedings. The Company is, however, involved in various legal proceedings arising out of its operations in the ordinary course of business. The Company believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on its business, financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders of the Company during the fourth quarter of the fiscal year ended September 30, 1996. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock trades on the Nasdaq Stock Market under the symbol: TRVS. At December 27, 1996, the Company had 35 shareholders of record; however the Company believes its shares are beneficially owned by more than 400 shareholders. On December 23, 1996, the last reported sales price of the common stock on the NASDAQ National Market System was $13.00 per share. The following table sets forth for the period indicated, on a per share basis, the range of high and low sales prices for the Company's common stock as quoted by the NASDAQ. These price quotations reflect inter-dealer prices, without adjustment for retail mark-ups, mark-downs or commissions and may not necessarily represent actual transactions:
SALES PRICE --------------------- QUARTER ENDED HIGH LOW ENDING ------------- ------ ------ ------- June 30, 1996.......................................... $9 1/2 $ 9.00 $ 9 1/8 September 30, 1996..................................... $13.00 $8 1/4 $12 3/8
The Company has never declared or paid cash dividends on its Common Stock and presently has no plans to do so. Any change in the Company's dividend policy will be at the sole discretion of the Board of Directors and will depend on the Company's profitability, financial condition, capital needs, future loan covenants, general economic conditions, future prospects and other factors deemed relevant by the Board of Directors. The Company currently intends to retain earnings for use in the operation and expansion of the Company's business and does not anticipate paying cash dividends in the foreseeable future. Certain covenants contained in the Company's loan agreements effectively restrict the payment of any dividends without the lender's prior consent. 11 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial information should be read in conjunction with and is qualified in its entirety by reference to the consolidated financial statements of the Company and the notes thereto included elsewhere in this Form 10K:
FISCAL YEAR ENDED FISCAL YEAR TWELVE MONTHS TWELVE MONTHS FISCAL YEAR DECEMBER 31,(1) ENDED ENDED ENDED ENDED ------------------------- SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 1992 1993 1994 1995(1) 1995(3) 1995(2) 1996(1)(4) ------- ------- ------- ------------- ------------- ------------- ------------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Net sales.............. $18,317 $25,757 $37,225 $41,442 $44,617 $45,006 $64,555 Gross profit........... 4,193 5,946 8,734 10,306 10,815 11,254 16,483 Selling, general and administrative expenses.............. 3,293 4,496 6,333 6,353 7,526 7,904 10,857 Operating income....... 767 1,270 2,135 3,736 3,004 3,007 5,061 Interest expense....... 462 449 629 670 845 946 1,289 Net income............. 255 596 1,023 2,050 1,486 1,408 2,383 Net income per share... $ 0.10 $ 0.23 $ 0.39 $ 0.76 $ 0.55 $ 0.53 $ 0.78 Weighted avg. shares outstanding........... 2,564 2,564 2,600 2,672 2,663 2,675 3,043 STORE DATA: Stores open at period end................... 7 7 8 11 11 12 12 Average sales per store(5).............. $ 3,025 $ 3,679 $ 4,653 $ 4,886 $ 5,283 $ 4,946 $ 5,617 Percentage increase in comparable store sales(6).............. 7.4% 25.6% 28.4% 5.0% 12.2% 16.0% 4.3%
DECEMBER 31, ------------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 1992 1993 1994 1995 1995 1996 ----- ------ ------ ------------- ------------ ------------- CONSOLIDATED BALANCE SHEET DATA: Cash and cash equiva- lents................. $ 104 $ 139 $ 259 $ 996 $ 673 $1,533 Working capital........ 874 11 1,866 2,808 1,855 15,263 Total assets........... 9,727 14,088 17,434 23,357 35,590 31,350 Short-term debt, including current maturities of long-term debt..... 6,798 10,608 10,977 11,443 24,776 4,661 Long-term debt less current maturities.... 1,538 1,013 2,588 4,876 5,426 4,334 Stockholders' equity... 814 1,485 2,562 4,812 4,097 18,598
- -------- (1) The Company's fiscal years ended on December 31 in 1992, 1993 and 1994, and on September 30 in 1995, pursuant to a change adopted in 1995, resulting in a nine-month 1995 fiscal year. The Consolidated Statement of Operations Data for the fiscal years ended December 31, 1993 and 1994 and September 30, 1995 and 1996 has been derived from the consolidated financial statements of the Company. All other financial and store data has been derived from the Company's unaudited consolidated financial statements. (2) Reflects inclusion of nine-month audited financial statements for the fiscal year ended September 30, 1995 and the three-month unaudited financial statements for the quarter ended December 31, 1995, in order to provide a basis for comparing 12 months of operations in 1995 to prior fiscal years. (3) Reflects inclusion of nine-month audited financial statements for the fiscal year ended September 30, 1995 and the three-month unaudited financial statements for the quarter ended December 31, 1994, in order to provide a basis for comparing 12 months of operations in 1995 to fiscal 1996 operations. (4) The operations of Red River Marine, Inc. acquired in September 1995 and Clay's Boats & Motors, Inc. acquired in December 1995 are included for the fiscal 1996 period. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 4 of Notes to Consolidated Financial Statements. (5) Includes only those stores open for the entire preceeding 12-month period. (6) New stores or upgraded facilities are included in comparable store base at the beginning of the store's thirteenth complete month of operations. 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements of the Company and the notes thereto included elsewhere in the 10-K Report. The discussion in this section of the 10K Report contains forward looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section, those discussed in "Risk Factors" and those discussed elsewhere in this 10K report. Overview The Company acquired substantially all of the assets of Red River Marine, Inc. ("Red River Marine") on September 20, 1995 and also acquired substantially all of the assets of Clay's Boats & Motors, Inc. on December 1, 1995. The results of Red River Marine and Clay's Boats & Motors from their respective acquisition dates through September 30, 1996 are included in the discussion below. Effective September 30, 1995, the Company elected to change its fiscal year end from December 31 to September 30. This change was made to establish a fiscal year that more closely conforms to the business cycle of the Company. The following discussion compares fiscal year 1996 to the 12 month period ended September 30, 1995, which reflects the inclusion of the nine-month audited consolidated financial statements for the fiscal year ended September 30, 1995 and the three-month unaudited consolidated financial statements for the quarter ended December 31, 1994 in order to provide a basis for comparing 12 months of operations. The following discussion also compares fiscal 1994 to calendar year 1995, which reflects the inclusion of the nine-month audited consolidated financial statements for the fiscal year ended September 30, 1995 and the three-month unaudited consolidated financial statements for the quarter ended December 31, 1995 in order to provide a basis for comparing 12 months of operations. 13 The following table sets forth for the periods indicated certain financial data as a percentage of net sales:
FISCAL YEARS ENDED -------------------------- TWELVE MONTHS TWELVE MONTHS FISCAL YEAR ENDED ENDED ENDED DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 1994 1995 1995 1995 1996 ------------ ------------- ------------- ------------- ------------- Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% Costs of goods sold..... 76.5 75.1 75.8 75.0 74.5 ----- ----- ----- ----- ----- Gross profit............ 23.5 24.9 24.2 25.0 25.5 Selling, general and administrative expenses............... 17.0 15.3 16.9 17.6 16.8 Operating income........ 5.7 9.0 6.7 6.7 7.8 Interest expense........ 1.7 1.6 1.9 2.1 2.0 Other income............ 0.2 0.3 0.0 0.0 0.0 ----- ----- ----- ----- ----- Income before income taxes.................. 4.2 7.7 5.2 4.9 5.9 Income tax expense...... 1.5 2.8 1.9 1.9 2.2 ----- ----- ----- ----- ----- Net income.............. 2.7% 4.9% 3.3% 3.1% 3.7% ===== ===== ===== ===== =====
RESULTS OF OPERATIONS Highlights Fiscal year 1996 was a record year for the Company, which included the following achievements compared to the 12 month period ended September 30, 1995: --Net sales increased 45% to $64.6 million. --Gross profit margins increased by 1.3% from 24.2% to 25.5%. --Operating income increased as a percentage of net sales by 1.1% from 6.7% to 7.8%. --Net income increased by 60% from $1.5 million to $2.4 million. --Earnings per share increased by 42% from $.55 to $.78. FISCAL YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO THE TWELVE MONTHS ENDED SEPTEMBER 30, 1995 Net sales. Net sales increased by 45% to $64.6 million in fiscal 1996 from $44.6 million in the twelve months ended September 30, 1995. Of this increase, $780,000 was attributable to 4.3% growth in comparable store sales (4 stores in base) and $16.6 million, or 83.0% is related to the four stores acquired or newly opened in 1995 and $2.5 million, or 12.5% is related to the four store existing store locations which relocated or upgraded facilities to meet the Company's superstore standards during fiscal 1996. General growth in overall sales volume was in part the result of growth in new boating packages introduced in fiscal 1996 and in the expanded offering of boating packages introduced in 1995 along with increased sales of parts/accessories, service labor and F&I Products. Net sales also benefitted from the Company's participation in additional season-opening boat shows and a new sales program featuring weekend sales shows in the parking lots of local Sam's Clubs or certain other large retailers. The "parking lot" program which was initiated with several shows in late 1995, expanded during fiscal 1996 to include a full-time travelling sales team and participation in approximately 35 parking lot shows (primarily during the second and third fiscal quarters) which generated net sales of approximately $2.5 million. Net sales from comparable stores, which had 4 stores included in the base for calculation, increased 4.3% in fiscal 1996. The Company relocated or renovated 4 stores and acquired or opened an additional 4 stores during fiscal years 1995 and 1996 rendering such locations to be excluded from the comparable store base. The Company's planned acquisition strategy and subsequent renovation of stores to superstore standards is expected 14 to continue to negatively impact the number of stores includable in comparable store base calculations in relationship to the total number of store locations operated. See "Risk Factors--Dependence on Expansion." As such, comparable store performance is expected to remain unstable until higher percentages of the Company's stores are includable in comparable store calculations. Included within net sales is revenue that the Company earns related to F&I Products. The Company, through relationships with various national and local lenders, is able to place financing for its customers' boating purchases. These lenders allow the Company to "sell" the loan at a rate higher than a minimum rate established by each such lender and the Company earns fees based on the percentage increase in the loan rate over the lender's minimum rate. The Company sells these loans without recourse except that in certain instances the Company must return the fees earned if the customer repays the loan or defaults in the first 120-180 days. The Company also sells, as a broker, certain types of insurance (property/casualty, credit life, disability) and extended service contracts. The Company may also sell these products at amounts over a minimum established cost and earn income based upon the profit over the minimum established cost. Net sales attributable to F&I Products increased by 75.3% to $2.7 million in fiscal 1996 from $1.6 million in the twelve months ended September 30, 1995. This improvement was primarily due to higher net spreads achieved in the placement of customer financing, as well as overall increases in the percentage of customers buying these products (which is referred to as "sell-through"). This increase was enhanced by the Company's continued emphasis on training of F&I employees and achievement of established goals. Gross profit. Gross profit increased by 52.8% to $16.5 million in fiscal 1996 from $10.8 million in the twelve months ended September 30, 1995. Gross profit as a percent of sales increased to 25.5% in fiscal 1996 from 24.2% in the twelve months ended September 30, 1995. The Company generally seeks to maintain a gross profit margin of 21% to 23% on its boating packages and is able to further leverage the margin through sales of parts/accessories, service labor and F&I Products, all of which generally produce gross profit margins in excess of 25%. Net sales attributable to F&I Products, which have a significant impact on the gross profit margin, contributed $2.7 million, or 16.4%, of total gross profit in fiscal 1996, as compared to $1.6 million, or 14.8%, of total gross profit for the twelve months ended September 30, 1995. Net sales attributable to F&I Products are reported on a net basis and therefore all of such sales contribute directly to the Company's gross profit. The costs associated with the sale of F&I Products are included in selling, general and administrative expenses. Selling, general and administrative expenses. Selling, general and administrative expenses increased by 45.3% to $10.9 million in fiscal 1996 from $7.5 million for the twelve months ended September 30, 1995. Selling, general and administrative expenses as a percent of net sales decreased to 16.8% in fiscal 1996 from 16.9% for the twelve months ended September 30, 1995. The decrease in selling, general and administrative expenses as a percent of net sales was the result of the economies of operating a larger store base and regional market presence, particularly in the leveraging of advertising, insurance, rents and depreciation/amortization expenses. In terms of dollars, the increase in selling, general and administrative expenses was primarily attributable to increased expenses associated with the operation of a larger store network, the Company's participation in additional season- opening boat shows and the expenses related to completing the implementation of the Company's management information system in all of its stores operating as of September 30, 1996. Additionally, the Company's management information system has been implemented in the three store locations acquired since September 30, 1996. Interest expense. Interest expense, in actual dollars, increased by 45.7% to $1.3 million in fiscal 1996 from $845,000 in the twelve months ended September 30, 1995. However, interest expense as a percent of net sales remained flat at 1.9% and 2.0% in the 1995 and 1996 periods, respectively. The Company incurred additional debt levels in the acquisition of Red River Marine and Clay's Boats & Motors as well as higher balances on the Company's floor plan lines of credit necessary to support inventory requirements for the additional stores and actual increase in net sales. Effective with the funding of the Company's Initial Public Offering in late June of 15 1996 and an additional 140,500 shares in the over-allotment options, the Company reduced certain revolving indebtedness and certain long term indebtedness. This reduction of debt in the Company's third and fourth fiscal quarters provided for the containment of interest expense and its percentage decrease as a percent of net sales. The Company intends to reborrow under its revolving credit lines as necessary to fund future acquisitions and to support working capital needs. See "Liquidity and Capital Resources." Net income. Net income increased by 60.3% to $2.4 million in fiscal 1996 from $1.5 million in the twelve months ended September 30, 1995. Net income as a percent of sales increased to 3.7% from 3.4% during the same periods. Net income attributable to F&I Products increased by 73.8% to $810,000 in fiscal 1996 from $466,000 in the twelve months ended September 30, 1995. The calculation of net income attributable to F&I Products is based on an allocation of gross profit after adjusting for costs which management believes are directly allocable to F&I Products. CALENDAR YEAR 1995 COMPARED TO FISCAL 1994 Net sales. Net sales increased by 21.0% to $45.0 million in calendar year 1995 from $37.2 million in fiscal 1994. Of this increase, $4.4 million was attributable to 16.0% growth in comparable store sales in calendar 1995 and $3.4 million of this increase was due to the operations of stores that were built, upgraded or acquired in 1995 and therefore were not yet includable in comparable store sales. Net sales attributable to F&I Products increased by 45% to $1.6 million in calendar 1995 from $1.1 million in fiscal 1994. The increase in comparable store sales was primarily the result of the Company's introduction of several new Travis Edition boat lines appealing to customer groups previously not successfully captured by the Company. These new boat lines included a line of high performance bass boats manufactured by Viper Boats, the Aquasport line of off-shore fishing boats and the Sea Ark line of aluminum fishing boats. These lines collectively accounted for $2.7 million of calendar 1995 net sales. Notwithstanding these increases, the rate of increase in comparable store sales in 1995 reflected diminished growth from the rates of increase for fiscal 1994 and 1993. Management attributes the substantial growth in comparable store sales during fiscal 1994 and 1993 primarily to the small number of stores includable in the comparable store base and the significant increase in the number of models of Travis Edition packages made available for sale resulting from the Company having entered into sales agreements with additional new manufacturers and through the development of additional models with existing manufacturers. While the Company expects comparable store sales growth to continue due to planned enhancements in product lines, this growth is not expected to continue at historical levels. Gross profit. Gross profit increased by 29.9% to $11.3 million in calendar 1995 from $8.7 million in fiscal 1994. This increase was primarily due to the increase in net sales and because gross profit as a percent of net sales increased to 25.0% from 23.5% during the period. Gross profit attributable to sales of F&I Products was $1.6 million, or 14.2%, of total gross profit in calendar 1995 compared to $1.1 million, or 12.6%, of total gross profit in fiscal 1994. This increase was primarily due to increased revenues from the origination and placement of customer financing, partially caused by selected lenders offering more beneficial programs. Selling, general and administrative expenses. Selling, general and administrative expenses increased by approximately 25.4% to $7.9 million in calendar 1995 from $6.3 million in fiscal 1994. Selling, general and administrative expenses as a percent of net sales increased to 17.6% in calendar 1995 from 17.0% in fiscal 1994. The increase, both in terms of dollars and as a percent of net sales, was primarily the result of the increased variable expenses related to the net sales increase and, to a lesser extent, those expenses attributable to integrating the three recently acquired stores. During calendar 1995, corporate overhead expenses and store management salaries accounted for approximately $1.4 million of total selling, general and administrative expenses compared to approximately $1.1 million for fiscal 1994. The majority of Travis Boats' work force is compensated by 16 commission; accordingly, increased sales volume leads to higher commissions and payroll taxes. Due to the significant increase in net sales, however, gross wages as a percent of net sales declined to approximately 10.0% of net sales in calendar 1995 from approximately 11.4% of net sales in fiscal 1994. Interest expense. Interest expense increased by approximately 50.4% to $946,000 in calendar 1995 from $629,000 in fiscal 1994. This resulted in an increase of interest expense as a percent of net sales to 2.1% in calendar 1995 from 1.7% in fiscal 1994. The increase in interest expense was primarily the result of higher balances outstanding on the Company's floor plan lines of credit to support the increased sales levels and higher effective interest rates during calendar 1995. Interest expense was also affected by the incremental interest expense associated with the indebtedness incurred in connection with the acquisition of the new stores in Arkansas and Louisiana. Net income. Net income increased by 40.0% to $1.4 million in calendar 1995 from $1.0 million in fiscal 1994. This increase in net income was due primarily to the increased sales volume, greater sell-through of F&I Products and improved leverage of general and administrative expenses. Net income attributable to F&I Products increased by 28% to $475,000 in calendar 1995 from $371,000 in fiscal 1994. The Company's net income as a percent of net sales increased to 3.1% in calendar 1995 from 2.7% in fiscal 1994. Quarterly Data and Seasonality The following table sets forth certain unaudited quarterly financial data for each of the Company's last eight quarters and such data expressed as a percentage of the Company's net sales for the respective quarters. The information has been derived from unaudited financial statements that, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such quarterly information. The operating results for any quarter are not necessarily indicative of the results to be expected for any future period.
QUARTER ENDED FISCAL ----------------------------------------------------------------- YEAR FISCAL YEAR 1995 FISCAL YEAR 1996 1994 --------------------------- ------------------------------------ DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 ------- -------- ------- -------- ------- -------- ------- -------- (IN THOUSANDS) Net sales............... $3,175 $13,452 $17,048 $10,942 $3,564 $18,453 $26,445 $16,093 Gross profit............ 508 3,266 4,300 2,740 948 4,623 6,613 4,299 Selling, general and administrative expenses............... 1,173 2,044 2,347 1,962 1,551 2,751 3,767 2,788 Operating income (loss)................. (732) 1,152 1,883 701 (729) 1,736 2,705 1,349 Interest expense........ 174 196 265 209 276 393 424 196 Net income (loss)....... (564) 662 1,046 342 (642) 885 1,416 724 Net Income per Share.... (.21) .24 .39 .13 (.24) .32 .52 .18 Wtd. Average Shares Outstanding............ 2,636 2,648 2,684 2,684 2,684 2,684 2,741 4,097 AS A PERCENTAGE OF NET SALES -------------------------------------------------------------------------- Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Gross profit............ 16.0 24.3 25.2 25.0 26.6 25.1 25.0 26.7 Selling, general and administrative expenses............... 36.9 15.2 13.8 17.9 43.5 14.9 14.2 17.3 Operating income (loss)................. (23.1) 8.6 11.0 6.4 (20.5) 9.4 10.2 8.4 Interest expense........ 5.5 1.5 1.6 1.9 7.7 2.1 1.6 1.2 Net income (loss)....... (17.8) 4.9 6.1 3.1 (17.9) 4.8 5.4 4.5
The Company's business, as well as the sales demand for various types of boats, tends to be highly seasonal. Strong sales typically begin in January with the onset of the public boat and recreation shows, and continue 17 through July. Over the previous five-year period, the average annual net sales for the quarterly periods ended March 31 and June 30 represented in excess of 27% and 37%, respectively, of the Company's annual net sales. With regard to net income, the Company historically generates profits in three of its fiscal quarters and experiences operating losses in the quarter ended December 31 due to a broad seasonal slowdown in sales. During the quarter ended September 30, inventory reaches its lowest levels and accumulated cash reserves reach the highest levels. During the quarter ended December 31, the Company generally builds inventory levels in preparation for the upcoming selling season which begins with boat and recreation shows occurring in January and February in certain market areas in which the Company conducts business. Travis Boats' operating results would be materially and adversely affected if net sales were to fall significantly below historical levels during the months of January through June. The Company's business is also significantly affected by weather patterns. Weather conditions that are unseasonable or unusual may adversely affect the Company's results of operations. For example, drought conditions or merely reduced rainfall levels, as well as excessive rain, may affect the Company's sale of boating packages and related products and accessories. While management believes that the Company's quarterly net sales will continue to be impacted by seasonality, quarterly results may become less susceptible to certain regional weather conditions as expansion occurs throughout the southern United States. Quarterly results may fluctuate as a result of the expenses associated with new store openings or acquisitions. The Company historically has attempted to concentrate expansion during the seasonal slowdown generally occurring in the quarter ending December 31. Stores opened during this time period will generate additional operating losses, at a minimum, until the second quarter. Accordingly, the results for any quarterly period may not be indicative of the expected results for any other quarterly period. Liquidity and Capital Resources The Company's short-term cash needs are primarily for working capital to support operations including inventory requirements, off-season liquidity and store expansion. These short-term cash needs have historically been financed with cash from operations and borrowings under the Company's credit facilities. At September 30, 1996, the Company had working capital of $15.3 million, including $1.3 million in accounts receivable (primarily contracts in transit from sales) and $20.6 million in inventories, offset by approximately $1.6 of accounts payable and accrued liabilities, $3.5 million outstanding under floor plan lines of credit, approximately $500,000 under open lines of credit and $1.5 million in other short-term indebtedness including current maturities of long-term debt. Contracts in transit are amounts receivable from a customer's financial institution related to that customer's purchase of a boat. As of September 30, 1996, the aggregate maximum borrowing limits under floor plan and working capital lines of credit were approximately $30.0 million and $575,000, respectively. Operating activities provided cash flows of $2.7 million for the fiscal year ended September 30, 1995 due primarily to net income of $2.1 million and changes in working capital. In fiscal 1996, operating activities utilized cash flows of $2.1 million due primarily to increase of $6.2 million in inventories, offset partially by unearned revenue of $1.2 million relating to a volume purchase from a manufacturer (which is not expected to occur in future periods). Of the increase in inventories, approximately $4.4 million is related to stocking of the newly acquired store locations since they are generally acquired in the off-season and have little remaining inventory to be purchased. Subsequently, the Company maintains a representative level of stocking of its Travis Edition boating packages and generally over 9,000 stock keeping units in parts/accessories. Financing activities in fiscal 1996 provided $4.0 million of cash flows primarily from the net proceeds of the initial public offering of $11.4 million which were offset by the prepayment of certain amounts of in long term debt and revolving credit lines. Prior to the initial public offering increases in inventories were financed with borrowings under the Company's floor plan and working capital lines of credit. Effective December 12, 1996, the Company entered into a new $15.0 million revolving line of credit agented by NationsBank of Texas, N.A. This credit facility replaces the previously existing floor plan lines of credit and revolving credit lines totalling approximately $13.8 million with Hibernia Bank and NationsBank. The line provides for borrowing 18 pursuant to a borrowing formula based upon the certain of the Company's inventory and accounts receivable. Collateral consists of a security interest in specific inventories (and proceeds thereof), accounts receivable and contracts in transit. The line is annually renewable with the initial maturity on October 31, 1997 and pricing is at the prime rate minus .375%, with a fee of .125% on the unused portion to be assessed quarterly. A comprehensive loan agreement governs the line of credit. The agreement contains financial covenants regulating debt service coverages, tangible net worth, operating leverage and restrictions on dividends or distributions. As of December 24, 1996, $12,000,000 was drawn on the revolving line and management believes the Company to be in compliance with the terms and conditions of this loan agreement. The Company also maintains floor plan lines of credit with various finance companies totalling approximately $22 million credit limits, which generally have no stated maturity and utilize subsidies from manufacturers to provide for certain interest free periods each calendar year (usually August through May). Certain floor plan lines of credit with finance companies are governed by loan agreements containing certain financial covenants concerning, among others, minimum tangible net worth and leverage ratios. As of September 30, 1996, approximately $3.5 million was drawn under the floor plan lines and management believes the Company was in compliance with the terms and conditions of these loan agreements. Merchandise inventories were $14.3 million and $20.6 million as of September 30, 1995 and September 30, 1996, respectively. Accounts receivable increased by approximately $300,000 to $1.3 million at the end of fiscal 1996 from a year earlier. The receivables amount represents primarily contracts in transit generated from sales. Costs in excess of net assets acquired increased to by approximately $13,000 to $1.1 million in fiscal 1996 due to the acquisition of Clay's Boats & Motors in December 1995. The Company had net capital expenditures of approximately $2.8 million in the 12 months ended September 30, 1995, and approximately $1.4 million in fiscal 1996. During fiscal 1995, the Company purchased the facility previously leased in Baton Rouge, Louisiana for approximately $590,000, completed construction of the superstore in Lewisville (Dallas), Texas and acquired substantially all of the assets of Red River Marine. During fiscal 1996 the Company acquired substantially all of the assets of Clay's Boats & Motors, substantially renovated facilities in Beaumont, Houston and San Antonio to superstore standards and completed the installation of its new management information systems in its existing store locations. These capital expenditures were substantially financed with long-term debt provided by commercial banks and individuals at fixed interest rates. The Company's revolving credit facility, floor plan lines of credit and internally generated working capital should be sufficient to meet the Company's cash requirements in the near future. New Accounting Standards In March 1995, the Financial Accounting Standards Board (FASB) issues Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Statement No. 121 also addresses the accounting for long-lived assets that are held for disposition. The Company adopted Statement No. 121 effective October 1, 1995 No material impact to the Company's results of operations or financial position resulted from such adoption. In October 1995, the FASB issued statement No. 123, "Accounting for Stock- Based Compensation," which prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options. The Company must adopt the provisions of Statement No. 123 during the year ended September 30, 1997. Under such provisions, the Company may elect to expense the fair value of stock-based compensation or provide pro-forma disclosures of what net income would have been had the Company adopted the new fair value method for recognition purposes. The Company continues to evaluate the provisions of Statement No. 123 and has not determined whether it will adopt the Statement for expense recognition purposes. 19 Inflation The Company believes that inflation generally has not had a material impact on its operations or liquidity to date. ITEM 8. FINANCIAL STATEMENTS For the financial statements and supplementary data required by this Item 8, see the Index to Consolidated Financial Statements and Schedules. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS There is incorporated herein by reference that portion of the Company's proxy statement for the 1997 Annual Meeting of Stockholders which appears therein under the captions "Item 1: Election of Directors" and "Information Concerning Directors." ITEM 11. EXECUTIVE COMPENSATION There is incorporated in this Item 11 by reference that portion of the Company's definitive proxy statement for the 1997 Annual Meeting of Stockholders which appears under the caption "Executive Compensation." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT There is incorporated in this Item 12 by reference that portion of the Company's definitive proxy statement for the 1997 Annual Meeting of Stockholders which appears under the caption "Securities Holdings of Principal Stockholders, Directors, Nominees and Officers." ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There is incorporated in this Item 13 by reference that portion of the Company's definitive proxy statement for the 1997 Annual Meeting of Stockholders which appears under the captions "Certain Relationships and Related Transactions" and "Compensation Committee Interlocks and Insider Participation." 20 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The following consolidated financial statements of the Company are included following the Index to Consolidated Financial Statements and Schedules on page F-1 of this Report. Report of Ernst & Young LLP, Independent Auditors........................ F-1 Consolidated Balance Sheets.............................................. F-2 Consolidated Statements of Income........................................ F-3 Consolidated Statements of Shareholder's Equity.......................... F-4 Consolidated Statements of Cash Flows.................................... F-5 Notes to Consolidated Financial Statements............................... F-6
(A) 2. FINANCIAL STATEMENT SCHEDULES All other schedules have been omitted because they are not applicable, not required under the instructions, or the information requested is set forth in the consolidated financial statements or related notes thereto. (A) 3. EXHIBITS The following Exhibits are incorporated by reference to the filing or are included following the Index to Exhibits. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits: Except as otherwise noted, all Exhibits have been previously filed with Registrant's S-1 Dated June 1996. 3.1 Restated Articles of Incorporation of the Registrant, as amended. 3.2 Restated Bylaws of the Registrant, as amended. 10.2(a)+ Agreement dated as of August 11, 1995, between the Company and Outboard Marine Corporation. 10.2(b) Dealer Agreement dated as of October 13, 1995, between the Company and Outboard Marine Corporation. 10.3+ Dealer Agreement dated as of August 17, 1995, between the Company and Larson Boats, a division of Larson/Glastron Boats, Inc., a subsidiary of Genmar Industries, Inc. 10.4+ Dealer Agreement dated as of August 17, 1995, between the Company and Mastercrafters Corporation. 10.5(a) Inventory Security Agreement and Power of Attorney dated as of November 30, 1993, between Bombardier Capital Inc. and the Company. 10.5(b) Inventory Security Agreement and Power of Attorney dated as of November 30, 1993, between Bombardier Capital Inc. and Falcon Marine Abilene, Inc. 10.6(a) Agreement for Wholesale Financing dated as of August 17, 1995, by and among Deutsche Financial Services Corporation, the Company and its subsidiaries; and Amendment to Agreement for Wholesale Financing dated as of September 22, 1995. 10.6(b) Agreement for Wholesale Financing dated as of August 17, 1995, between Deutsche Financial Services Corporation and Travis Boats & Motors Baton Rouge, Inc. 10.7(a) Inventory Loan Agreement dated as of September 20, 1995, between TBC Arkansas, Inc. and Hibernia National Bank. 10.7(b) Commercial Security Agreement dated September 1, 1995, between TBC Arkansas, Inc. and Hibernia National Bank. 10.8(a) Inventory Loan Agreement dated as of December 17, 1992, between Travis Boats & Motors Baton Rouge, Inc. and Hibernia National Bank; and First Amendment to Inventory Loan Agreement dated as of February 7, 1994.
21 10.8(b) Promissory Note dated May 30, 1995, in the original principal amount of $100,000, payable by Travis Boats & Motors Baton Rouge, Inc. to Hibernia National Bank. 10.8(c) Promissory Note dated May 30, 1995, in the original principal amount of $800,000, payable by Travis Boats & Motors Baton Rouge, Inc. to Hibernia National Bank. 10.8(d) Promissory Note dated July 14, 1995, in the original principal amount of $480,000, payable by Travis Boats & Motors Baton Rouge, Inc. to Hibernia National Bank. 10.8(e) Business Loan Agreement dated July 14, 1995, between Travis Boats & Motors Baton Rouge, Inc. and Hibernia National Bank. 10.8(f) Commercial Security Agreement dated July 14, 1995, between Travis Boats & Motors Baton Rouge, Inc. and Hibernia National Bank. 10.8(g) Collateral Mortgage dated July 14, 1995, from Travis Boats & Motors Baton Rouge, Inc. to Hibernia National Bank. 10.8(h) Assignment of Leases and Rents dated July 14, 1995, between Travis Boats & Motors Baton Rouge, Inc. and Hibernia National Bank. 10.8(i) Pledge of Collateral Mortgage Note dated July 14, 1995, from Travis Boats & Motors Baton Rouge, Inc. to Hibernia National Bank. 10.9(a) Promissory Note dated September 1, 1995, in the original principal amount of $3,000,000, payable by TBC Arkansas, Inc. to Hibernia National Bank. 10.9(b) Commercial Guaranty dated September 1, 1995 by the Company in favor of Hibernia National Bank guarantying a $3,000,000 Promissory Note. 10.9(c) Promissory Note dated September 1, 1995, in the original principal amount of $250,000, payable by TBC Arkansas to Hibernia National Bank. 10.10(a) Amended and Restated Loan Agreement dated as of September 15, 1995, by and among NationsBank of Texas, N.A., the Company and its subsidiaries. 10.10(b) Security Agreement dated July 31, 1995, by and among NationsBank of Texas, N.A., the Company and its subsidiaries. 10.11 General Promissory Note dated August 31, 1995, in the original principal amount of $300,000, payable by the Company to Amerisure Property & Casualty, Ltd. 10.12 General Promissory Note dated August 31, 1995, in the original principal amount of $100,000, payable by the Company to Capitol Commerce Reporter, Inc. 10.13 General Promissory Note dated August 31, 1995, in the original principal amount of $75,000, payable by the Company to Capitol Commerce Reporter, Inc. 10.14 General Promissory Note dated August 31, 1995, in the original principal amount of $150,000, payable by the Company to Joe Simpson and Pat Simpson. 10.15 Asset Purchase Agreement dated as of September 20, 1995, by and among Red River Marine, Inc., Red River Marine, Inc. #2, and TBC Arkansas, Inc. 10.16 Promissory Note dated September 20, 1995, in the original principal amount of $800,000, payable by TBC Arkansas, Inc. to Benny Hargrove. 10.17(a) Promissory Note dated as of September 20, 1995, in the original principal amount of $462,145.53, payable by TBC Arkansas, Inc. to Red River Marine, Inc. #2. 10.17(b) Mortgage With Power of Sale (Realty) dated September 20, 1995, from TBC Arkansas, Inc. to Red River Marine, Inc. #2. 10.18 Promissory Note dated September 20, 1995, in the original principal amount of $230,177.16, payable by TBC Arkansas, Inc. to Red River Marine, Inc. and Red River Marine, Inc. #2. 10.19 Promissory Note dated September 20, 1995, in the original principal amount of $108,750, payable by TBC Arkansas, Inc. to Red River Marine, Inc. and Red River Marine, Inc. #2. 10.20 Travis Boats and Motors, Inc. 1995 Incentive Plan. 10.21 Form of Amended and Restated Employment Agreement dated May 7, 1996, between the Company and Mark T. Walton, Ronnie L. Spradling and Michael B. Perrine. 10.22 Form of Option Agreement dated May 17, 1995, between the Company and Michael B. Perrine, Ronnie L. Spradling and Mark T. Walton.
22 10.23 Form of Indemnification Agreement for Directors and Officers of the Company. 10.24 Management Agreement dated December 14, 1995, by and among TBC Management, Ltd., the Company and its subsidiaries. 10.25 [Intentionally left blank] 10.26(a) First Lien Promissory Note dated September 15, 1995, in the original principal amount of $679,000, payable by Travis Snowden Marine, Inc. to NationsBank of Texas, N.A. 10.26(c) First Lien Deed of Trust, Assignment, Security Agreement and Financing Statement dated September 15, 1995, from Travis Snowden Marine, Inc. to Michael F. Hord, Trustee. 10.27(a) Second Modification and Extension Agreement dated April 26, 1994, between the Company and NationsBank of Texas, N.A. 10.27(b) "504" Note dated April 28, 1994, in the original principal amount of $454,000, payable by the Company to Cen-Tex Certified Development Corporation. 10.27(c) Deed of Trust, Assignment, Security Agreement and Financing Statement dated March 5, 1993, from the Company to Michael F. Hord, Trustee. 10.27(d) Deed of Trust dated April 28, 1994, from the Company to Wm. H. Harrison, Jr., Trustee. 10.28 Trust Agreement dated December 31, 1994, by and among Ideal Insurance Company, Ltd. and the Company. 16 Letter re change in certifying accountant.
INDEX TO EXHIBITS INSERT "E" TO COME No annual report or proxy material has been sent to security holders as of the date of this Form 10-K; however, the Company anticipates sending the annual report and proxy materials on or before any applicable deadlines. When such a report and proxy materials are furnished, the Registrant will furnish copies of such materials to the Commission. - -------- + Portions of this exhibit have been omitted and are subject to an application for confidential treatment filed separately with the Commission. (b) Financial Statement Schedules: None. The following exhibits are filed herewith 10.29(a) Revolving Credit Agreement dated as of December 12, 1996, in the original principal amount of $15,000,000 by and among the Company, its Subsidiaries and NationsBank of Texas, N.A. as agent. 10.29(b) Commercial Security Agreement dated as of December 12, 1996 by and among the Company, its Subsidiaries and NationsBank of Texas, N.A. as agent 10.29(c) Promissory Note dated as of December 12, 1996 in ane original principal amount of $9,000,000 among the Company, its subsidiaries and NationsBank of Texas, N.A., as agent 10.29(d) Promissory Note dated as of December 12, 1996 in the koriginal principal amount of $6,000,000 among the Company, its subsidiaries and NationsBank of Texas, N.A. as agent. 10.30 Asset Purchase Agreement dated as of November 1, 1996 between Travis Boating Center Tennessee, Inc. and Tri-Lakes Marine, Inc. 10.31 Asset Purchase Agreement dated as of November 1, 1996 between Travis Boating Center Alabama, Inc. and Tri-Lakes Marine, Inc. 21.1 List of Subsidiaries of Registrant.
23 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. Travis Boats & Motors, Inc. /s/ Mark T. Walton By: _________________________________ CHAIRMAN OF THE BOARD AND PRESIDENT Date: December 27, 1996 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. NAME CAPACITY DATE SIGNED /s/ Mark T. Walton Chairman of the December 27, - ------------------------------------- Board, President 1996 MARK T. WALTON and Director (Principal Executive Officer) /s/ Michael B. Perrine Chief Financial December 27, - ------------------------------------- Officer, Secretary 1996 MICHAEL B. PERRINE and Treasurer (Principal Financial and Accounting Officer) /s/ Ronnie L. Spradling Executive Vice December 27, - ------------------------------------- President-New Store 1996 RONNIE L. SPRADLING Development and Director /s/ E. D. Bohls Director December 27, - ------------------------------------- 1996 E. D. BOHLS /s/ Steven W. Gurasich, Jr. Director December 27, - ------------------------------------- 1996 STEVEN W. GURASICH, JR. /s/ Zach McClendon, Jr. Director December 27, - ------------------------------------- 1996 ZACH MCCLENDON, JR. /s/ Robert C. Siddons Director December 27, - ------------------------------------- 1996 ROBERT C. SIDDONS /s/ Joseph E. Simpson Director December 27, - ------------------------------------- 1996 JOSEPH E. SIMPSON 24 REPORT OF INDEPENDENT AUDITORS The Board of Directors Travis Boats & Motors, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Travis Boats & Motors, Inc. and Subsidiaries as of September 30, 1996 and 1995 and the related consolidated statements of operations, stockholders' equity and cash flows for the year ended September 30, 1996, the nine-month period ended September 30, 1995, and the year ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Travis Boats & Motors, Inc. and Subsidiaries as of September 30, 1996 and 1995 and the consolidated results of their operations and their cash flows for the year ended September 30, 1996, the nine-month period ended September 30, 1995, and the year ended December 31, 1994 in conformity with generally accepted accounting principles. November 25, 1996, except for Note 2, as to which the date is December 23, 1996 F-1 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30 ------------------------ 1996 1995 ----------- ----------- ASSETS Current assets: Cash and cash equivalents.......................... $ 1,532,942 $ 996,058 Accounts receivable................................ 1,330,642 1,046,717 Prepaid expenses................................... 102,094 48,559 Inventories........................................ 20,554,166 14,270,312 Deferred tax asset................................. 160,815 115,375 ----------- ----------- Total current assets............................. 23,680,659 16,477,021 Property and equipment: Land............................................... 1,815,718 1,815,718 Buildings and improvements......................... 4,908,861 4,183,718 Furniture, fixture and equipment................... 1,847,086 1,351,449 ----------- ----------- 8,571,665 7,350,885 Less accumulated depreciation...................... (2,024,953) (1,559,693) ----------- ----------- 6,546,712 5,791,192 Deferred tax asset................................... 39,187 21,300 Goodwill, net of accumulated amortization of $32,037 in 1996 and $-0- in 1995............................ 806,035 750,000 Noncompete agreement, net of accumulated amortization of $42,857 in 1996 and $-0- in 1995................. 257,143 300,000 Other assets......................................... 20,672 17,150 ----------- ----------- Total assets..................................... $31,350,408 $23,356,663 =========== =========== LIABILITIES Current liabilities: Accounts payable................................... $ 239,852 $ 461,919 Accrued liabilities................................ 1,388,810 1,188,355 Federal income taxes payable....................... 953,523 576,157 Unearned revenue................................... 1,174,159 -- Current portion of notes payable and other short- term obligations.................................. 4,661,104 11,442,625 ----------- ----------- Total current liabilities........................ 8,417,448 13,669,056 Notes payable, less current portion.................. 4,334,494 4,875,745 Stockholders' equity: Serial preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued or outstanding....................................... -- -- Common stock, $.01 par value, 50,000,000 shares authorized, 4,136,506 and 2,683,506 issued and outstanding at September 30, 1996 and 1995, respectively...................................... 41,365 26,835 Paid-in capital.................................... 11,527,498 138,511 Retained earnings.................................. 7,029,603 4,646,516 ----------- ----------- Total stockholders' equity....................... 18,598,466 4,811,862 ----------- ----------- Total liabilities and stockholders' equity..... $31,350,408 $23,356,663 =========== ===========
See accompanying notes. F-2 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30 SEPTEMBER 30 DECEMBER 31 1996 1995 1994 ------------ ------------- ----------- Net sales............................ $64,555,273 $41,442,349 $37,224,643 Cost of sales........................ 48,072,499 31,136,555 28,490,216 ----------- ----------- ----------- Gross profit......................... 16,482,774 10,305,794 8,734,427 Selling, general and administrative expenses............................ 10,857,413 6,352,844 6,332,883 Depreciation and amortization........ 563,991 216,965 266,299 ----------- ----------- ----------- 11,421,404 6,569,809 6,599,182 Operating income..................... 5,061,370 3,735,985 2,135,245 Interest expense..................... (1,289,064) (670,020) (628,685) Other income......................... 60,781 133,849 61,348 ----------- ----------- ----------- Income before income taxes........... 3,833,087 3,199,814 1,567,908 Income taxes......................... 1,450,000 1,149,621 544,439 ----------- ----------- ----------- Net income........................... $ 2,383,087 $ 2,050,193 $ 1,023,469 =========== =========== =========== Net income per common share.......... $ .78 $ .76 $ .39 =========== =========== =========== Weighted average common shares outstanding......................... 3,043,329 2,672,919 2,600,098
See accompanying notes. F-3 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK NOTES ----------------- PAID-IN RETAINED RECEIVABLE-- SHARES AMOUNT CAPITAL EARNINGS STOCKHOLDERS TOTAL --------- ------- ----------- ---------- ------------ ----------- Balance at December 31, 1993................... 2,564,331 $25,643 $ 5,947 $1,572,854 $(119,225) $ 1,485,219 Issuance of common stock................ 71,534 715 60,723 -- -- 61,438 Net income............ -- -- -- 1,023,469 -- 1,023,469 Net proceeds (issuance) on notes receivable-- stockholders......... -- -- -- -- (7,899) (7,899) --------- ------- ----------- ---------- --------- ----------- Balance at December 31, 1994................... 2,635,865 26,358 66,670 2,596,323 (127,124) 2,562,227 Issuance of common stock................ 47,641 477 71,841 -- -- 72,318 Net income............ -- -- -- 2,050,193 -- 2,050,193 Net proceeds on notes receivable-- stockholders......... -- -- -- -- 127,124 127,124 --------- ------- ----------- ---------- --------- ----------- Balance at September 30, 1995................... 2,683,506 26,835 138,511 4,646,516 -- 4,811,862 Issuance of common stock................ 1,453,000 14,530 13,062,470 -- -- 13,077,000 Common stock issuance costs................ -- -- (1,673,483) -- -- (1,673,483) Net income............ -- -- -- 2,383,087 -- 2,383,087 --------- ------- ----------- ---------- --------- ----------- Balance at September 30, 1996................... 4,136,506 $41,365 $11,527,498 $7,029,603 $ -- $18,598,466 ========= ======= =========== ========== ========= ===========
See accompanying notes. F-4 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30 SEPTEMBER 30 DECEMBER 31 1996 1995 1994 ------------ ------------ ----------- OPERATING ACTIVITIES Net income........................... $ 2,383,087 $ 2,050,193 $ 1,023,469 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization...... 563,991 216,965 266,299 Loss on disposal of assets......... -- -- 19,381 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable...................... (283,925) (823,109) 151,895 (Increase) decrease in prepaid assets.......................... (53,535) 24,631 62,687 (Increase) decrease in inventories..................... (6,152,835) 349,830 (2,790,629) (Increase) decrease in other assets.......................... (3,522) 23,017 9,700 Increase in deferred tax asset... (63,327) (136,675) -- Increase (decrease) in accounts payable......................... (222,067) 265,863 (141,593) Increase in accrued liabilities.. 200,455 404,190 586,597 Increase in federal income taxes payable......................... 377,366 349,622 25,296 Increase in unearned revenue..... 1,174,159 -- -- Decrease in deferred charges..... -- -- (21,011) ----------- ----------- ----------- Net cash provided by (used in) operating activities................ (2,080,153) 2,724,527 (807,909) INVESTING ACTIVITIES Purchase of business................. (262,687) (916,345) -- Purchase of property and equipment... (1,134,967) (1,885,345) (937,004) ----------- ----------- ----------- Net cash used in investing activities.......................... (1,397,654) (2,801,690) (937,004) FINANCING ACTIVITIES Net increase (decrease) in notes payable and other short-term obligations......................... (7,388,826) 715,027 1,935,964 Net proceeds from issuance of common stock............................... 11,403,517 72,268 61,488 Redemption of preferred stock........ -- (100,000) (125,000) Net proceeds (issuance) on notes receivable--stockholders............ -- 127,174 (7,949) ----------- ----------- ----------- Net cash provided by financing activities.......................... 4,014,691 814,469 1,864,503 Increase in cash and cash equivalents......................... 536,884 737,306 119,590 Cash and cash equivalents, beginning of year............................. 996,058 258,752 139,162 ----------- ----------- ----------- Cash and cash equivalents, end of year................................ $ 1,532,942 $ 996,058 $ 258,752 =========== =========== ===========
See accompanying notes. F-5 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business and Consolidation Travis Boats & Motors, Inc. (the "Company") is a retailer of boats, motors, trailers and related watersport accessories. The Company operates 12 locations in Texas, Louisiana and Arkansas. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In 1995, the Company changed its fiscal year end from December 31 to September 30 to coincide with the seasonal cycle of its business. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all investments with maturities of ninety days or less when purchased to be cash equivalents. Inventories Inventories consist of boats, motors, trailers and related watersport parts and accessories. Inventories are carried at the lower of cost or market. Cost for boats, motors and trailers is determined using the specific identification method. Cost for parts and accessories is determined using the first-in, first-out method. Property and Equipment Property and equipment are stated at cost. Provisions for depreciation are determined using double-declining balance and straight-line methods. The Company uses estimated useful lives of 5-20 years for buildings and improvements and 5-10 years for furniture, fixtures and equipment. The Company capitalized interest of approximately $80,000 during the nine months ended September 30, 1995 in connection with the construction of a store location. No interest was capitalized in the years ended September 30, 1996 and December 31, 1994. Income Taxes In accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," deferred income taxes are provided for temporary differences between the basis of assets and liabilities for financial reporting purposes and for income tax return purposes. Intangible Assets Amounts assigned to intangible assets are amortized over the respective estimated useful lives using the straight-line method as follows: Noncompete agreement........................................ 7 years Goodwill.................................................... 15 to 25 years
F-6 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Goodwill and other intangible assets are recorded at the lower of unamortized cost or fair value. Management reviews the valuation and amortization of intangible assets on a periodic basis, taking into consideration any events or circumstances which might result in diminished fair value. If this review indicates goodwill will not be recoverable, as determined by the undiscounted cash flows of the entity acquired over the remaining amortization period, the carrying value of the goodwill is reduced by the estimated shortfall of cash flows. Accounts Receivable Accounts receivable potentially expose the Company to concentrations of credit risk, as defined by the Statement of Financial Accounting Standards No. 105, "Disclosure of Information about Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit Risk." Accounts receivable consist primarily of amounts due from financial institutions upon sales contract funding and amounts due from vendors under rebate programs. There was no allowance for doubtful accounts recorded at September 30, 1996 and 1995. Pre-opening Costs Pre-opening costs related to new store locations are expensed as incurred. Significant Suppliers The Company purchased substantially all of its new outboard motors in 1996, 1995 and 1994 from a single outboard motor manufacturer. Approximately 20% of the Company's net purchases in fiscal 1996, 1995 and 1994 were from a single boat supplier. Advertising Costs Advertising costs are expensed as incurred and were approximately $508,382, $353,000 and $334,000 during the year ended September 30, 1996, the nine months ended September 30, 1995, and the year ended December 31, 1994. Notes Payable and Other Short-Term Obligations Interest expense on notes payable and other short-term obligations is recorded as incurred. No interest expense is recorded during portions of the year on certain floor plan payables which include noninterest bearing payment terms. Net Income per Common Share Net income per common share is based on the weighted average number of common shares outstanding during the period. The effect of common stock equivalents is not significant. Unearned Revenue Amounts received from vendors in connection with agreed upon rebates or discounts are deferred until the related product is sold and such rebate or discount is earned. F-7 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Recently Issued Accounting Standards In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Statement No. 121 also addresses the accounting for long-lived assets that are held for disposition. The Company adopted Statement No. 121 effective October 1, 1995. No material impact to the Company's results of operations or financial position resulted from such adoption. In October 1995, the FASB issued Statement No. 123, "Accounting for Stock- Based Compensation," which prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options. The Company must adopt the provisions of Statement No. 123 during the year ended September 30, 1997. Under such provisions, the Company may elect to expense the fair value of stock-based compensation or provide pro forma disclosures of what net income would have been had the Company adopted the new fair value method for recognition purposes. The Company continues to evaluate the provisions of Statement No. 123 and has not determined whether it will adopt the Statement for expense recognition purposes. 2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS Notes payable and other short-term obligations consist of the following:
SEPTEMBER 30 ------------------------- 1996 1995 ----------- ------------ Floor plans payable.............................. $ 3,474,398 $ 10,302,562 Revolving lines of credit........................ 500,000 667,143 Notes payable.................................... 5,021,200 5,348,665 ----------- ------------ Total notes payable and other short-term obligations................................... 8,995,598 16,318,370 Less current portion............................. (4,661,104) (11,442,625) ----------- ------------ Total notes payable and other short-term obligations, less current portion............. $ 4,334,494 $ 4,875,745 =========== ============ Floor plans payable consist of the following: SEPTEMBER 30 ------------------------- 1996 1995 ----------- ------------ Floor plan payable to bank under a $7,500,000 revolving line of credit agreement with interest floating at prime minus .375%, maturing October 1997............................................ $ -- $ 2,163,267 Floor plan payable to bank under revolving line of credit agreements totaling $5,725,000 with interest floating at prime plus .50%, maturing August 1996 through November 1996............... -- 1,224,389 Floor plans payable to commercial finance companies under revolving line of credit agreements with interest ranging from 0% to prime plus 4.75% with no stated maturity date... 3,474,398 6,914,906 ----------- ------------ Total floor plans payable...................... $ 3,474,398 $ 10,302,562 =========== ============
The floor plans payable are secured by specific boat, motor and trailer inventory, as well as general security filings on all inventory and certain equipment. The floor plans payable to finance companies include noninterest F-8 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) bearing payment terms for part of the calendar year (typically the months of August through May). As of September 30, 1996 and 1995, the amount of noninterest bearing floor plans payable to finance companies was $3,274,781 and $6,522,829, respectively. Floor plans payable of certain of the Company's subsidiaries are guaranteed by the Company. Certain floor plans payable are guaranteed in limited dollar amounts by various stockholders of the Company. The Company is significantly limited as to annual dividends for preferred and common stock. Borrowings under revolving lines of credit consist of the following:
SEPTEMBER 30 ----------------- 1996 1995 -------- -------- Note payable to bank under a revolving line of credit agreement with interest at prime minus .375%, due October 1997..................................................... $500,000 $470,000 Note payable to bank under revolving line of credit agreements with interest at prime plus 1%, due September 1996 and November 1996................................... -- 197,143 -------- -------- Borrowings under revolving lines of credit................ $500,000 $667,143 ======== ========
The weighted average interest rate on floor plan payables and revolving lines of credit outstanding as of September 30, 1996 and 1995 is 3.7% and 5.3%, respectively. Notes payable consist of the following:
SEPTEMBER 30 --------------------- 1996 1995 ---------- ---------- Mortgage notes payable to various banks, organizations and individuals under deeds of trust with interest ranging from 5.0% to prime plus 1% due in installments ranging from $1,225 monthly including interest to $30,114 semiannually plus interest, maturing beginning in April 1998.......... $3,729,458 $3,266,475 Notes payable to various banks, a corporation and an individual for vehicles, equipment and leasehold im- provements with interest ranging from 6.99% to 9.75%, due in monthly installments ranging from $333 to $3,062, maturing beginning in December 1996...... 449,472 580,524 Notes payable to individuals with interest at prime plus 1% fixed annually, due in annual principal in- stallments of $20,000 (aggregate) plus interest, ma- turing October 1997, collateralized by approximately 90,000 shares of the Company's outstanding common stock owned by certain directors and officers of the Company............................................. -- 60,000 Notes payable (unsecured) to corporation(s) owned by various stockholders of the Company and to stock- holder's individually, with interest due quarterly at various rates at or below prime plus 1%, maturing October 1996........................................ -- 641,666 Note payable to an individual with interest at 8.75%, due in monthly principal and interest installments of $12,770, maturing November 2002.................. $ 735,582 $ 800,000 Note payable to an individual with interest at 8.75% due in monthly principal and interest installments of $3,057, maturing March 1998...................... 56,688 -- ---------- ---------- Total notes payable.................................. $5,021,200 $5,348,665 ========== ==========
F-9 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Certain notes payable are secured by assets of the Company including inventory, accounts receivable, equipment, leasehold improvements, vehicles, land and buildings. Notes payable of certain of its subsidiaries are guaranteed by the Company and certain other notes payable are guaranteed in limited dollar amounts by various stockholders of the Company. Interest paid approximates interest expense plus interest capitalized, if any, during 1996, 1995 and 1994. Aggregate maturities required on notes payable at September 30, 1996 are as follows:
YEAR ENDING SEPTEMBER 30 ------------ 1997.......................................................... $ 686,706 1998.......................................................... 657,698 1999.......................................................... 513,438 2000.......................................................... 543,004 2001.......................................................... 353,569 Thereafter.................................................... 2,266,785 ---------- $5,021,200 ==========
Effective December 12, 1996, the Company entered into a new $15.0 million revolving line of credit agreement with a bank which replaces certain previously existing floor plans payable and revolving lines of credit. 3. LEASES The Company leases various facilities under operating leases. Rent expense was $263,710 in 1996, $188,581 in 1995 and $214,421 in 1994. Generally, the leases provide for renewals for various periods at stipulated rates. Future minimum rentals due under noncancelable leases are as follows for each of the years ending September 30: 1997.............................................................. $169,566 1998.............................................................. 138,450 1999.............................................................. 140,250 2000.............................................................. 136,200 2001.............................................................. 72,000 Thereafter........................................................ --
In addition, under most of the Company's leases, the Company has renewal options at varying terms. 4. ACQUISITIONS Red River Marine, Inc. Effective September 20, 1995, the Company acquired Red River Marine, Inc. with retail store locations in Hot Springs and Heber Springs, Arkansas. This acquisition included land and building (Hot Springs location) and boat, motor and trailer inventory, as well as parts and accessories inventory of each location. The purchase price was $2,517,417, of which $1,600,000 was financed by the issuance of notes payable to the seller. The acquisition has been accounted for using the purchase method of accounting and, accordingly, the operating results of Red River Marine, Inc. have been included in the consolidated financial statements from the date of acquisition. The purchase price ($2,517,417) and liabilities assumed ($437,150) have been allocated to the tangible net assets acquired ($1,904,567) based on their respective fair values at the date of acquisition. The resulting purchase price ($1,050,000) was allocated to a noncompete agreement ($300,000) and goodwill ($750,000). F-10 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Clay's Boats and Motors, Inc. Effective December 1, 1995, the Company acquired certain assets of Clay's Boats and Motors, Inc. ("Clay's") in New Iberia, Louisiana. The assets acquired included furniture, fixtures and equipment, all parts and accessories, all leasehold improvements and certain other assets. The purchase price was $328,741, of which $262,687 was paid in cash and $66,054 was financed by the issuance of a note payable to the seller. The acquisition has been accounted for using the purchase method of accounting and, accordingly, the operating results of Clay's have been included in the consolidated financial statements from the date of acquisition. The purchase price ($328,741) has been allocated to the tangible net assets acquired ($240,669) and the resulting excess purchase price ($88,072) was assigned to goodwill. 5. INCOME TAXES In 1992, the Financial Accounting Standards Board issued Statement No. 109, "Accounting for Income Taxes." The Company adopted the provisions of the new standard in its financial statements for the year ended December 31, 1994. The cumulative effect as of January 1, 1994 of adopting the Standard was immaterial and the prior year financial statements have not been restated to reflect the change in accounting method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets are as follows:
SEPTEMBER 30 ----------------- 1996 1995 -------- -------- Deferred tax assets: Book over tax depreciation.............................. $ 39,187 $ 21,300 Accrued salaries and wages.............................. 160,815 115,375 -------- -------- Total deferred tax assets............................. 200,002 136,675 Valuation allowance for deferred tax assets............... -- -- -------- -------- Net deferred tax assets............................... $200,002 $136,675 ======== ========
Significant components of the provisions for income taxes are as follows:
NINE MONTHS YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30, 1996 1995 1994 ------------ ------------ ------------- Current expense: Federal.......................... $1,342,327 $1,243,371 $523,589 State............................ 171,000 42,925 20,850 ---------- ---------- -------- Total current expense.......... 1,513,327 1,286,296 $544,439 Deferred expense (benefit): Federal.......................... (56,171) (130,900) -- State............................ (7,156) (5,775) -- ---------- ---------- -------- Total deferred expense (benefit)..................... (63,327) (136,675) -- ---------- ---------- -------- Total provision for income taxes....................... $1,450,000 $1,149,621 $544,439 ========== ========== ========
F-11 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The differences between the effective tax rate and the U.S. federal statutory rate of 34% are reconciled as follows:
NINE MONTHS YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30 SEPTEMBER 30 DECEMBER 31 1996 1995 1994 ------------ ------------- ----------- Income tax expense at the federal statutory rate.................... $1,303,250 $1,087,937 $533,089 State income taxes................. 163,844 37,150 20,850 Other.............................. (17,094) 24,534 (9,500) ---------- ---------- -------- $1,450,000 $1,149,621 $544,439 ========== ========== ========
Income taxes paid were approximately $1,088,000, $855,000 and $528,000 in the year ended September 30, 1996, the nine months ended September 30, 1995 and the year ended December 31, 1994, respectively. 6. STOCKHOLDERS' EQUITY In March 1994, the Board of Directors of the Company approved a 199 to 1 stock dividend for stockholders of record as of March 31, 1994. In November 1995, the Board of Directors of the Company approved a 15 to 1 stock dividend for stockholders of record as of November 8, 1995. In May 1996, the Board of Directors of the Company approved a 1 for 3 stock dividend for stockholders of record as of May 3, 1996. All share amounts presented in these financial statements have been restated to retroactively reflect the above stock dividends. Effective December 14, 1995, the Company changed the stated par value of each share of common stock from $.10 to $.01. The financial statements have been restated to retroactively reflect the above changes in par value. In March 1995, the Company granted options to purchase shares of the Company's common stock to certain officers of the Company which vest over five years. Effective December 14, 1995, the Company adopted an Incentive Stock Option Plan which provides for the granting of options to directors, officers, and key employees to purchase shares of the Company's common stock. The Company has reserved 200,000 shares of common stock for issuance under such plan. F-12 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Total option activity for the year ended September 30, 1996, the nine months ended September 30, 1995 and the year ended December 31, 1994, was as follows:
NUMBER OF SHARES PRICE $ --------- ----------- Outstanding at December 31, 1994..................... -- -- Granted............................................ 133,867 $5.25 Exercised.......................................... -- -- Expired............................................ -- -- ------- Outstanding at September 30, 1995.................... 133,867 $5.25 Granted............................................ 110,999 $9.00 Exercised.......................................... -- -- Expired............................................ (13,333) $9.00 ------- Outstanding at September 30, 1996.................... 231,533 $5.25-$9.00 ======= Exercisable at September 30 1996............................................... 53,439 $5.25-$9.00 Options available for grant at September 30 1996............................................... 102,334 Common stock reserved for issuance at September 30, 1996................................................ 333,867
7. RELATED PARTY TRANSACTIONS The Company sells extended service contracts to its customers. For the period from January 1, 1994 through June 27, 1996, the obligations of the Company under these contracts were transferred to Ideal Insurance Company, Ltd. ("Ideal") pursuant to an agreement between the Company and Ideal dated as of January 1, 1994. Ideal reinsured these risks with Amerisure Property & Casualty, Ltd. ("Amerisure"), a company wholly owned by certain principal shareholders of the Company. These contracts are administered by First Extended Service Corporation ("FESC"), which contracts are insured by FESC's affiliate, FFG Insurance Co. ("FFG"). In conjunction with these agreements, the Company paid Amerisure an agreed amount for each extended service contract which is insured and, in the event of claims under any extended service contracts, Amerisure reimburses the repair facility for the amount of covered claims. Amerisure is then financially responsible for any repairs required pursuant to the extended service contract. The Company received a commission for each extended service contract that it sold. For the year ended September 30, 1996, the nine months ended September 30, 1995 and the year ended December 31, 1994, extended service contract commissions received from Amerisure totaled approximately $411,000, $448,000 and $350,000, respectively. The Company transferred the obligations under the extended service contracts sold subsequent to June 27, 1996 to entities other than Ideal and Amerisure. 8. COMMITMENTS AND CONTINGENCIES The Company is currently involved in several matters regarding pending or threatened litigation in the normal course of business. Management does not expect the ultimate resolution of these matters to have a material adverse effect on the Company's consolidated financial statements. 9. SUBSEQUENT EVENTS Effective October 3, 1996, the Company acquired certain assets of North Alabama Watersports, Inc. ("NAWS"). This acquisition included land and building and boat, motor and trailer inventory, as well as parts and accessories inventory of each location. The purchase price was $892,255, of which $79,707 was financed by the issuance of notes payable to the seller. F-13 TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The acquisition has been accounted for using the purchase method of accounting and, accordingly, the operating results of NAWS have been included in the consolidated financial statements from the date of acquisition. The purchase price ($892,255) has been allocated to the tangible net assets acquired ($687,255) based on their respective fair values at the date of acquisition. The resulting excess purchase price ($205,000) was allocated to a noncompete agreement and goodwill. Effective November 1, 1996, the Company acquired Tri-Lakes Marine, Inc. ("Tri-Lakes") with retail store locations in Tennessee and Alabama. The acquisition included land, building, furniture, fixtures and equipment, boat, motor and trailer inventory, as well as all parts and accessories. The purchase price was $1,242,924, of which $642,924 was paid in cash and $600,000 was financed by the issuance of a note payable to the seller. The acquisition has been accounted for using the purchase method of accounting and, accordingly, the operating results of Tri-Lakes have been included in the consolidated financial statements from the date of acquisition. The purchase price ($1,242,924) and liabilities assumed ($1,937,279) have been allocated to the tangible net assets acquired ($2,536,092) based on their respective fair values at the date of acquisition. The resulting excess purchase price ($644,111) was allocated to a noncompete agreement and to goodwill. F-14 EX-10.29(A) 2 REVOLVING CREDIT AGMT. EXHIBIT 10.29(a) ================================================================================ REVOLVING CREDIT AGREEMENT Dated as of December 12, 1996 among Travis Boats & Motors, Inc., Travis Snowden Marine, Inc., Travis Boating Center Arlington, Inc., Falcon Marine, Inc., Falcon Marine Abilene, Inc., Travis Boating Center Beaumont, Inc., Travis Boats & Motors Baton Rouge, Inc., TBC Arkansas, Inc., TBC Management, Ltd., TBC Management, Inc., Travis Boating Center Louisiana, Inc., Travis Boating Center Tennessee, Inc., Travis Boating Center Alabama, Inc., Red River Marine Arkansas, Inc., Travis Boating Center Little Rock, Inc., Travis Boating Center Georgia, Inc. and Travis Boating Center Florida, Inc. as Borrowers and NATIONSBANK OF TEXAS, N.A. as Agent and NATIONSBANK OF TEXAS, N.A. AND THE OTHER ENTITIES DESIGNATED HEREIN as Lenders ================================================================================ TABLE OF CONTENTS ARTICLE I
TERMS DEFINED ........................................................ 1 Section 1.1. Definitions............................................. 2 Section 1.2. Singular and Plural of Definitions...................... 17 Section 1.3. Money................................................... 17 Section 1.4. Captions; References.................................... 17 Section 1.5. Accounting Terms and Determinations..................... 17
ARTICLE II
COMMITMENT ........................................................ 17 Section 2.1. Credit Facility Commitment.............................. 17 Section 2.2. Method of Borrowing..................................... 19 Section 2.3. Fees.................................................... 21
ARTICLE III
TERMS OF CREDIT FACILITY............................................... 22 Section 3.1. Notes................................................... 22 Section 3.2. Maturity................................................ 22 Section 3.3. Interest Rate........................................... 22 Section 3.4. Mandatory Interest Payments............................. 22 Section 3.5. Payments of Advances; Reduction of Commitment Amount.................................................. 23 Section 3.6. Schedules on Notes...................................... 23 Section 3.7. General Provisions as to Payments....................... 24 Section 3.8. Application of Payments................................. 24 Section 3.9. Post-Default Interest; Past Due Principal and Interest................................................ 24 Section 3.10. Computation of Interest and Fees........................ 24 Section 3.11. Deposit of Cash Collateral.............................. 24 Section 3.12. Joint and Several Liability............................. 25 Section 3.13. Collateral; Renewal and Extension of Existing Indebtedness and Security............................... 25 Section 3.14 Title Documents......................................... 25
ARTICLE IV
CONDITIONS TO FUNDING 26 Section 4.1. Conditions Precedent.................................... 26 Section 4.2. Conditions To All Advances.............................. 27 Section 4.3. Conditions to Letters of Credit......................... 28
i ARTICLE V
REPRESENTATIONS AND WARRANTIES......................................... 29 Section 5.1. Existence, Power of Borrower............................ 29 Section 5.2. Authorization; Contravention............................ 29 Section 5.3. Enforceable Obligations................................. 29 Section 5.4. Financial Information................................... 29 Section 5.5. Litigation.............................................. 30 Section 5.6. ERISA................................................... 30 Section 5.7. Taxes and Filing of Tax Returns......................... 30 Section 5.8. Ownership or Lease of Assets............................ 31 Section 5.9. Business; Compliance.................................... 31 Section 5.10. Compliance with Law..................................... 31 Section 5.11. Full Disclosure......................................... 31 Section 5.12. Environmental Matters................................... 31 Section 5.13. Purpose of Credit....................................... 32 Section 5.14. Governmental Regulations................................ 32 Section 5.15. Indebtedness............................................ 32 Section 5.16. Insurance............................................... 32 Section 5.17. Solvency................................................ 32 Section 5.18. Subsidiaries............................................ 32 Section 5.19. Locations............................................... 32 Section 5.20. Trademarks, Tradenames, etc............................. 32 Section 5.21. Business Relationships.................................. 33
ARTICLE VI
AFFIRMATIVE COVENANTS.................................................. 33 Section 6.1. Information From Borrowers.............................. 33 Section 6.2. Business of Borrower.................................... 35 Section 6.3. Right of Inspection..................................... 35 Section 6.4. Maintenance of Insurance................................ 35 Section 6.5. Payment of Taxes, Impositions and Claims................ 36 Section 6.6. Compliance with Laws and Documents...................... 36 Section 6.7. Environmental Law Compliance and Indemnity.............. 36 Section 6.8. Covenant Compliance..................................... 37 Section 6.9. Quantity and Quality of Documents....................... 37 Section 6.10. Additional Documents.................................... 37
ii ARTICLE VII
NEGATIVE COVENANTS..................................................... 38 Section 7.1. Operating Leverage Ratio................................ 38 Section 7.2. Minimum Consolidated Tangible Net Worth................. 38 Section 7.3. Coverage Ratio.......................................... 38 Section 7.4. Limitation on Sale of Properties........................ 38 Section 7.5. Limitations on Liens.................................... 38 Section 7.6. Change in Business, Consolidations, Mergers, Sales of Assets, and Maintenance........................ 38 Section 7.7. Investments............................................. 38 Section 7.8. Distributions........................................... 39 Section 7.9. Transactions with Affiliates............................ 39 Section 7.10. Limitation on Contingent Liabilities.................... 39 Section 7.11. Employee Plans.......................................... 39 Section 7.12. Use Violations.......................................... 40 Section 7.13. Fiscal Year and Accounting Methods...................... 40 Section 7.14. Governmental Regulations................................ 40 Section 7.15. Subsidiaries............................................ 40
ARTICLE VIII
DEFAULTS AND REMEDIES.................................................. 40 Section 8.1. Events of Default....................................... 40 Section 8.2. Remedies................................................ 42 Section 8.3. Rights of Set-Off....................................... 43 Section 8.4. Remedies Cumulative, Concurrent and Non-Exclusive....... 44 Section 8.5. No Conditions Precedent to Exercise Remedies............ 44 Section 8.6. Release of and Resort to Collateral..................... 44 Section 8.7. Waivers................................................. 45 Section 8.8. Discontinuance of Proceedings........................... 45 Section 8.9. Application of Proceeds................................. 45 Section 8.10. Power of Attorney....................................... 45
ARTICLE IX
AGENT AND THE LENDERS.................................................. 46 Section 9.1. Appointment and Authorization of Agent.................. 46 Section 9.2. Possession of Instruments by Agent...................... 47 Section 9.3. Expenses................................................ 47 Section 9.4. Delegation of Duties; Reliance; Consultation............ 48 Section 9.5. Limitation of Agent's Liability......................... 48 Section 9.6. Default................................................. 49 Section 9.7. Lenders' Decision....................................... 49
iii Section 9.8. Limitation of Liability of Lenders...................... 50 Section 9.9. Relationship of Lenders................................. 50 Section 9.10. Debtor-Creditor Relationship............................ 50 Section 9.11. Credit Decisions........................................ 50 Section 9.12. Removal of Agent........................................ 50 Section 9.13. Resignation by Agent.................................... 51 Section 9.14. Sharing of Payments and Setoffs......................... 51 Section 9.15. Non-advancing Lenders................................... 52 Section 9.16. Benefit of Lenders...................................... 52
ARTICLE X
MISCELLANEOUS 53 Section 10.1. Continuing Agreement.................................... 53 Section 10.2. Notices................................................. 53 Section 10.3. No Waivers.............................................. 53 Section 10.4. Expenses; Documentary Taxes; Indemnification............ 54 Section 10.5. Amendments and Waivers; Consent to Deviation............ 54 Section 10.6. Survival................................................ 54 Section 10.7. Prior Understandings; No Defenses; Release; No Oral Agreements......................................... 54 Section 10.8. Limitation on Interest.................................. 55 Section 10.9. Invalid Provisions...................................... 55 Section 10.10. Successors and Assigns.................................. 56 Section 10.11. Senior Debt; Borrower Subordination..................... 59 Section 10.12. Revolving Loan.......................................... 59 Section 10.13. Construction............................................ 59 Section 10.14. APPLICABLE LAW.......................................... 59 Section 10.15. ARBITRATION............................................. 59 Section 10.16. JURY TRIAL WAIVER....................................... 61 Section 10.17. Counterparts............................................ 61 Section 10.18. Inconsistent Provisions................................. 61 Section 10.19. Confidentiality......................................... 61
iv EXHIBITS EXHIBIT A FORM OF NOTE EXHIBIT B BORROWING BASE CERTIFICATE EXHIBIT B-1 FORM OF REQUEST FOR ADVANCE EXHIBIT C FORM OF SUPPLEMENTAL LOAN AND SECURITY AGREEMENT EXHIBIT D FORM OF ASSIGNMENT AND ACCEPTANCE EXHIBIT E FORM OF LOC APPLICATION EXHIBIT F FORM OF COMPLIANCE CERTIFICATE SCHEDULE I PARTIES TO CREDIT AGREEMENT, NOTICE ADDRESSES AND LENDER SCHEDULE SCHEDULE II OTHER LENDER OBLIGATIONS SCHEDULE III LIENS AS OF THE CLOSING DATE SCHEDULE 5.1 JURISDICTIONS QUALIFIED TO DO BUSINESS IN SCHEDULE 5.15 DEBT SCHEDULE 5.19 LOCATIONS v REVOLVING CREDIT AGREEMENT THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is entered into as of --------- the 12th day of December, 1996, by and among Travis Boats & Motors, Inc., a Texas corporation ("TBM"), Travis Snowden Marine, Inc., a Texas corporation, --- Travis Boating Center Arlington, Inc., a Texas corporation, Falcon Marine, Inc., a Texas corporation, Falcon Marine Abilene, Inc., a Texas corporation, Travis Boating Center Beaumont, Inc., a Texas corporation, Travis Boats & Motors Baton Rouge, Inc., a Louisiana corporation, TBC Arkansas, Inc., an Arkansas corporation, TBC Management, Ltd., a Texas limited partnership, TBC Management, Inc., a Delaware corporation, Travis Boating Center Louisiana, Inc., a Louisiana corporation, Travis Boating Center Tennessee, Inc., a Texas corporation, Travis Boating Center Alabama, Inc., a Texas corporation, Red River Marine Arkansas, Inc., an Arkansas corporation, Travis Boating Center Little Rock, Inc., an Arkansas corporation, Travis Boating Center Georgia, Inc., a Texas corporation and Travis Boating Center Florida, Inc., a Texas corporation and any other entity which may become a party to this Agreement as a borrower, each of which is designated as a "Borrower" on Schedule I hereto (as modified from time to ---------- time) (hereinafter individually referred to as a "Borrower" and collectively -------- referred to as "Borrowers" or "Borrowing Group"), and NationsBank of Texas, --------- --------------- N.A., a national banking association, for itself and as agent, and the lending institutions designated as "Lenders" on Schedule I hereto (as modified from time ---------- to time). PRELIMINARY STATEMENT --------------------- NationsBank and Hibernia have respectively provided to certain of the Borrowers the Prior Credit Facilities, which are secured by the Existing Security Interests. Borrowers have requested that NationsBank and Hibernia renew, extend, modify and consolidate the Prior Credit Facilities into a single revolving credit facility from Lenders to the Borrowing Group in an aggregate amount not to exceed Fifteen Million and No/100 Dollars ($15,000,000.00), to be secured by a first and prior lien and security interest in the Collateral (in favor of Agent for the benefit of Lenders including but not limited to the renewal, extension and assignment in favor of Agent for the benefit of Lenders of the Existing Security Interests) subject only to the Permitted Encumbrances. Upon and subject to the terms of this Agreement, Lenders are willing to make such revolving credit facility available to the Borrowing Group. Accordingly, in consideration of the mutual covenants contained herein, Borrowers, Agent and Lenders agree as follows: ARTICLE I TERMS DEFINED Section 1.1. Definitions. The following terms, as used herein, have the ----------- following meanings: "Accessories" shall mean all boat, trailer and motor parts and accessories ----------- and such other items as reasonably used in watersport activities held by any Borrower for sale in the business of Borrowers. "Account" means any and all "Accounts" as that term is defined in the ------- Security Agreement. "Advance" means an advance made by Lenders to TBM, on behalf of the ------- Borrowing Group, pursuant to the terms and conditions of this Agreement, and shall include a Working Capital Advance, a Draft Advance, or any other advance made by Lenders for the account of Borrowers pursuant to the provisions of the Loan Documents. "Affiliate" means, as to any Person, any Subsidiary of such Person, or any --------- Person which, directly or indirectly, controls, is controlled by, or is under common control with such Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" means NationsBank, in its capacity as agent for the Lenders ----- hereunder, or any successor agent pursuant to Sections 9.12 and 9.13. ---------------------- "Agreement" means this Revolving Credit Agreement and all renewals, --------- extensions, modifications, amendments and rearrangements thereof. "Applicable Environmental Laws" has the meaning set forth in Section 6.7. ----------------------------- ----------- "Applicable Rate" has the meaning set forth in Section 3.3. --------------- ----------- "Assets" means all of the assets of Borrowers, real or personal, which are ------ included on a balance sheet of such Person prepared in accordance with GAAP. "Assignment and Acceptance" has the meaning set forth in Section 10.10. ------------------------- ------------- "Authorized Officer" means, as to any Person that is a corporation, any of ------------------ its Chairman, Vice-Chairman, President, Executive Vice President(s), Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Treasurer, or as to any Person, if such Person is a partnership, the partnership's general partner or other Person authorized by appropriate action to execute the Loan Documents or any other documents or certificates to be executed by such Person hereunder or in connection with any Advance or Letter of Credit. "Available Commitment" means, at any time, the aggregate amount which -------------------- Borrowers are entitled to borrow under the terms of this Agreement, which amount shall initially be Fifteen Million and No/100 Dollars ($15,000,000.00), subject to termination or adjustment as provided in this Agreement. "Book Value" means the carrying value of the respective asset or liability ---------- on the financial statements of the Borrowers, prepared in accordance with GAAP. "Borrowers" has the meaning set forth in the introductory paragraph of this --------- Agreement. "Borrowing Base" means an amount, as shown in the most recent monthly -------------- Borrowing Base Certificate, equal to the sum of: (a) eighty percent (80%) (except for the months of October, November, December, January, February and March, when the rate shall be ninety percent (90%)) of Eligible Inventory consisting of new boats, trailers and motors purchased by Borrowers (or, in the case of Eligible Inventory acquired by Borrowers in an acquisition of an additional retail store, purchased by the previous retail store owner) within the previous twelve- month period; (b) seventy percent (70%) of Eligible Inventory consisting of new boats, trailers and motors purchased by Borrowers (or, in the case of Eligible Inventory acquired by Borrowers in an acquisition of an additional retail store, purchased by the previous retail store owner) within the twelve-month period immediately preceding the twelve-month period described in (a) above; provided, however, that this item (b) may not exceed the lesser of (i) fifteen percent (15%) of Eligible Inventory or (ii) Three Million Five Hundred Thousand and No/100 dollars ($3,500,000.00); (c) fifty percent (50%) of Borrowers' Eligible Accessories, as shown in the most recent current monthly Borrowing Base Certificate; and (d) the sum of (i) fifty percent (50%) of the amount owing to Borrowers for Eligible Contract Discounts which have been outstanding less than one hundred and twenty (120) days at the date of invoice for Contract Debtors which settle on a quarterly basis, and (ii) twenty-five percent (25%) of the amount owing to Borrowers for Eligible Contract Discounts for Contract Debtors which settle on an annual basis; provided, however, that this item (d) may not exceed Five Hundred Thousand and No/100 dollars ($500,000.00). "Borrowing Base Certificate" means a certificate prepared as of each -------------------------- calendar month end, in the form attached hereto as Exhibit B, completed in all --------- appropriate respects, executed by an Authorized Officer of TBM and delivered to Agent within 30 days of such calendar month end. "Borrowing Base Schedule" means the aging report attached to the Borrowing ----------------------- Base Certificate which shows the Eligible Inventory, Eligible Accessories, and Eligible Contract Discounts by aging and by retail store or manufacturer or supplier, as appropriate. "Borrowing Group" has the meaning set forth in the introductory paragraph --------------- of this Agreement. "Business Day" means for all purposes of this definition, any day of the ------------ week, other than Saturday, Sunday or other day Agent or any Lender is required or authorized by law or executive order to close. "CERCLA" has the meaning set forth in Section 6.7. ------ ----------- "Chattel paper" has the meaning given such term in the Security Agreement. ------------- "Closing Date" means the date that this Agreement is fully executed. ------------ "Code" means the Internal Revenue Code of 1986, as amended. ---- "Collateral" has the meaning given such term in the Security Agreement, ---------- which includes but is not limited to Inventory (as defined in the Security Agreement), Receivables, Chattel Paper and Contracts, together with all records of any kind relating to any of the foregoing and all proceeds, replacements, products or substitutions of any of the above, in which a security interest has been granted to Agent for the benefit of Lenders pursuant to the Security Agreement as security for the Obligations and, to the extent of the payment in full of the Obligations, as security for the Other Lender Obligations. "Confidential Information" has the meaning set forth in Section 10.18. ------------------------ ------------- "Consequential Loss" has the meaning set forth in Section 3.6(d). ------------------ -------------- "Consolidated Debt" means at any date, all Debt which is required to be ----------------- shown as such on the financial statements of Borrowing Group on a consolidated basis, prepared in accordance with GAAP. "Consolidated Debt Service" means, for any period, the sum of (a) ------------------------- Consolidated Interest Expense plus (b) Consolidated Lease Expense plus (c) ---- Consolidated Principal Reduction. "Consolidated Funded Debt" means, as of any date, all Debt which is ------------------------ evidenced by promissory notes, loan agreements, bonds or similar instruments and having a final maturity of not less than one year, as such amount is required to be shown on the financial statements of Borrowing Group on a consolidated basis, prepared in accordance with GAAP. "Consolidated Income Available for Debt Service" means, for any period, ---------------------------------------------- determined in accordance with GAAP on a consolidated basis for Borrowing Group the sum of Consolidated Net Income plus (a) Consolidated Interest Expense, plus ---- ---- (b) Consolidated Lease Expense, plus (c) all non-cash charges each as deducted ---- in determining such Consolidated Net Income, less (d) all non-cash additions ---- each as added in determining Consolidated Net Income. "Consolidated Interest Expense" means, for any period, the interest expense ----------------------------- on Consolidated Funded Debt accruing and payable for such period. "Consolidated Lease Expense" means for any period the lease expense on any -------------------------- leases which are classified as capital leases in accordance with GAAP for Borrowing Group on a consolidated basis. "Consolidated Net Income" means, for any period, the net income after Taxes ----------------------- of Borrowing Group on a consolidated basis, determined in accordance with GAAP. "Consolidated Operating Cash Flow" means, with respect to any period, -------------------------------- determined in accordance with GAAP on a consolidated basis for Borrowing Group, the sum of (a) Consolidated Net Income minus (i) extraordinary gains or losses, ----- if any, and (ii) any write-up or write-down of any assets, plus (b) the sum of ---- (i) Taxes, plus (ii) Consolidated Interest Expense, plus (iii) all amounts ---- ---- attributable to depreciation and/or amortization of intangible and other assets of Borrowing Group, provided, that, each adjustment to Consolidated Net Income described above be made only to the extent that such amounts have been deducted or added in determining Consolidated Net Income for such period. "Consolidated Principal Reduction" means, for any period, amounts paid in -------------------------------- reduction of regularly scheduled principal maturing under any Consolidated Funded Debt. "Consolidated Tangible Net Worth" means, as of any date, the excess of (i) ------------------------------- the Assets of Borrowing Group over (ii) the liabilities of Borrowing Group as required by GAAP to be shown on the balance sheet of Borrowing Group, minus, ----- without duplication of any item already deducted from the value of Assets, the aggregate Book Value of Intangible Assets shown on the balance sheet of Borrowing Group, prepared in accordance with GAAP. "Contract Debtor" has the meaning set forth in the definition of Eligible --------------- Contract Discount. "Contracts" has the meaning given such term in the Security Agreement. --------- "Credit Facility" means the credit facility arranged by Lenders for --------------- Borrowers as evidenced by this Agreement. "Debt" of any Person means at any date, without duplication, (a) all ---- indebtedness, obligations and liabilities of such Person for borrowed money, (b) all indebtedness, obligations and liabilities of such Person evidenced by bonds, debentures, notes or other similar instruments, whether recourse or non-recourse and whether secured or unsecured, (c) all other indebtedness (including capitalized lease obligations) of such Person on which interest charges are customarily paid or accrued and (d) all obligations for indebtedness in respect of Guarantees by such Person. "Debt Coverage Ratio" means for any date of determination, the ratio of (a) ------------------- Consolidated Income Available For Debt Service for the immediately preceding four calendar quarters to (b) Consolidated Debt Service for the immediately preceding four calendar quarters. "Default" means any condition or event which constitutes an Event of ------- Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Default Rate" means the fluctuating per annum rate of interest equal to ------------ the lesser of (a) the Variable Rate plus five percent (5%) or (b) the Maximum Lawful Rate. "Designated Successor Agent" means, at any given time, the Lender other -------------------------- than Agent which has the largest Loan Percentage; provided, however, if two or more such Lenders have the same Loan Percentage at such time, then the Designated Successor Agent shall be such of those Lenders having the same Loan Percentage which has the largest net worth; and, provided further, that if the Required Lenders object to the newly named Designated Successor Agent, or if any Lender determined to be a Designated Successor Agent declines to serve as successor Agent, in writing delivered to the outgoing Agent within seven (7) Business Days after such Designated Successor Agent is determined, then the Lender other than Agent or such rejected or declining Designated Successor Agent which has the next largest Loan Percentage shall be the Designated Successor Agent. For each such Lender that is a member of a bank holding company, its net worth shall be deemed to be the consolidated net worth of its bank holding company. "Distribution" by any Person, means (a) with respect to any stock issued by ------------ such Person or any partnership or joint venture interest of such person, the retirement, redemption, repurchase, or other acquisition for value of such stock, partnership or joint venture interest, (b) the declaration or payment (without duplication) of any dividend or other distribution, whether monetary or in kind, on or with respect to any stock, partnership or joint venture of any Person, and (c) any other payment or distribution of assets of a similar nature or in respect of an equity investment. "Draft" means a draft deposited by any of the Borrowers with one of ----- NationsBank's Texas branches (or any other branch outside the state of Texas as NationsBank may from time to time approve), arising out of the sale of a boat, motor and/or trailer in form acceptable to agent which shall comply with the meaning ascribed to the term "draft" in Section 3.104 of the UCC. "Draft Advance" means an advance by NationsBank in the form of immediate ------------- credit to the account of the applicable Borrower for a Draft deposited pursuant to Section 2.2(b), and which remains outstanding until (a) NationsBank receives -------------- final payment from the respective third-party lending institution or (b) such Draft is returned to NationsBank unpaid, in whole or in part, by the third-party lending institution, at which time the amount of the unpaid portion of the applicable Draft Advance shall be debited to the account of the applicable Borrower in accordance with Section 2.1(e) hereof. -------------- "Draft Advance Exposure" means the aggregate amount of the unpaid portion ---------------------- of each Draft Advance outstanding at any time. "Eligible Accessories" means, at the time of any determination thereof, the -------------------- combined Book Value of the collective Accessories of Borrowers as to which the following requirements and conditions have been fulfilled to the reasonable satisfaction of Agent: (a) such Accessories are not subject to any Lien whatsoever (other than Liens in favor of the Agent) and any Liens on the Accessories are expressly released as collateral securing any third party creditor Debt; (b) Borrowers have legal and beneficial title to such Accessories and the absolute right to assign and grant a security interest in the same to Agent; (c) such Accessories are subject to a fully perfected, first priority security interest in favor of Agent pursuant to the Security Agreement; and (d) Agent, in its reasonable discretion, has not deemed such Accessories to be ineligible. "Eligible Contract Discount" means, at the time of any determination -------------------------- thereof, the amount owing to any of the Borrowers for rebate or volume discount programs under Contracts as to which the following requirements and conditions have been fulfilled to the reasonable satisfaction of Agent: (a) Such Contract is a valid, legally enforceable obligation of a manufacturer or supplier who is obligated under such Contract ("Contract -------- Debtor") in connection with a rebate or volume discount program; ------ (b) Such Contract has arisen from goods sold by a Contract Debtor to any of the Borrowers; (c) Such Contract represents bona fide transactions which have arisen from arm's length transactions between unrelated parties; (d) Such amounts owing for rebates and discounts under such Contracts are not subject to setoff, counterclaim, defense, allowance, dispute, or adjustment; (e) Such amounts owing for rebates and discounts under such Contracts are not subject to any Lien whatsoever (except Permitted Encumbrances and Liens in favor of the Lenders); (f) The monetary obligations of the Contract Debtor under such Contracts are payable in lawful currency of the United States of America; (g) For rebate and discount balances in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00), such amounts owing for rebates and discounts under such Contracts are not owed by a Contract Debtor for whom Agent has reasonably determined that the payment of such amounts are doubtful because of such Contract Debtor's financial condition; (h) No default shall have occurred and be continuing with respect to such Contract and it is in full force and effect, and Borrowers have the absolute right to assign and grant a security interest in such Contract to Agent; (i) Such Contract is subject to a fully perfected, first priority security interest in favor of Agent pursuant to the Security Agreement; and (j) Agent, in its reasonable discretion, has not deemed the Contract to be an ineligible Contract. "Eligible Assignee" means any of (a) a commercial bank organized under the ----------------- laws of the United States, or any State thereof or the District of Columbia; (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof or the District of Columbia; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a ---- political subdivision of any such country, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; (d) the central bank of any country which is a member of the OECD; or (e) an insurance company, pension fund, credit corporation or other finance company organized under the laws of any state of the United States; provided, however, that no institution described -------- ------- in clause (a), (b), (c), (d), or (e) above shall be an Eligible Assignee unless it has total assets in excess of $1 billion; and, provided further, that an ---------------- institution described in clause (c) or (d) above must maintain a branch or agency under the laws of the United States. "Eligible Inventory" means, at the time of any determination thereof, the ------------------ combined Book Value of the collective Inventory of Borrowers as to which the following requirements and conditions have been fulfilled to the reasonable satisfaction of Agent: (a) the boats, trailers and motors were purchased by Borrowers (or, in the case of Inventory acquired by Borrowers in an acquisition of an additional retail store, purchased by the previous retail store owner) within the previous twenty-four month period; (b) such Inventory is not subject to any Lien whatsoever (other than Liens in favor of the Agent) and any Liens on such Inventory are expressly released as collateral securing any third party creditor Debt; (c) Borrowers have legal and beneficial title to such Inventory and the absolute right to assign and grant a security interest in the same to Agent; (d) such Inventory is subject to a fully perfected, first priority security interest in favor of Agent pursuant to the Security Agreement; and (e) Agent, in its reasonable discretion, has not deemed such Inventory to be ineligible. "Employee Plan" means at any time an employee benefit plan as defined in ------------- Section 3(3) of ERISA that is now or was previously maintained, sponsored or contributed to by any of the Borrowers or by any Person that at such time is or was an ERISA Affiliate of any of the Borrowers. "Equipment" has the meaning given such term in the Security Agreement. --------- "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time, together with all regulations issued pursuant thereto. "ERISA Affiliate" means any Person that is treated as a single employer --------------- with any of the Borrowers under Section 414 of the Code. "Event of Default" has the meaning set forth in Section 8.1. ---------------- ----------- "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. ------------ "Existing Security Interests" means the security interests respectively in --------------------------- favor of NationsBank and Hibernia granted to secure the Prior Credit Facilities, the security agreements evidencing such security interests being more particularly described on Exhibit A to the Security Agreement. --------- "Facility Fee" shall mean the non-refundable fee equal to (a) 0.125% times ------------ ----- (b) the average daily unused portion of the Available Commitment, less the amount of the Draft Advance Exposure, during the calendar quarter immediately preceding the date on which such fee is to be paid. "Federal Funds Rate" means, for any day, the rate per annum (rounded ------------------ upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the federal Funds Rate for such day shall be the average rate quoted to Agent on such day on such transactions from three federal funds brokers of recognized standing. "Fiscal Year" means any fiscal year of the Borrowing Group or any Borrower, ----------- commencing on October 1 and ending on September 30. "GAAP" means generally accepted accounting principles consistently applied ---- as in effect at the time of application of the provisions hereof. "Governmental Authority" means any government, any state or other political ---------------------- subdivision thereof, or any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guaranty" by any Person means any obligation, contingent or otherwise, of -------- such Person directly or indirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions, by "comfort letter" or other similar undertaking of support or otherwise), or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guaranty shall not include endorsements for collection or deposit in the ordinary course of business. "Hibernia" means Hibernia National Bank, a national banking association, -------- and its successors. "Impositions" means all real estate and personal property taxes; charges ----------- for any easement, license or agreement maintained for the benefit of any of the real property of Borrowers, or any part thereof; and all other taxes, charges and assessments and any interest, costs or penalties with respect thereto, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever, which at any time prior to or after the execution hereof may be assessed, levied or imposed upon any of the real property of Borrowers, or any part thereof, or the ownership, use, sale, occupancy or enjoyment thereof, in each case which, if not timely paid or otherwise discharged, would materially and adversely affect (a) such ownership, use, sale, or enjoyment, or (b) the financial condition of Borrowers. "Instruments" has the meaning given such term in the Security Agreement. ----------- "Intangible Assets" of any Person means those assets of such Person which ----------------- are (a) deferred assets, other than prepaid insurance and prepaid taxes, (b) patents, copyrights, trademarks, tradenames, franchises, goodwill, experimental expenses and other similar assets which would be classified as intangible assets on a balance sheet of such Person, prepared in accordance with GAAP, and, (c) unamortized discount and expenses. "Intercreditor Agreement" means an Intercreditor Agreement executed by ----------------------- Borrowers, Agent, Lenders and each of the lenders set forth in Schedule 7.4 and ------------ any other lender which may from time to time provide secured credit to Borrowers (to the extent permitted hereunder), providing for the subordination of all liens securing such indebtedness, with the exception of those liens on items expressly referred to in such Intercreditor Agreements, to the liens in favor of Lenders, which Intercreditor Agreement(s) shall be in form acceptable to Lenders and executed and delivered in accordance with Section 6.10. ------------ "Inventory" means all boats (including personal watercraft), trailers and --------- motors held by any Borrower for sale in the business of Borrowers. "Issuing Lender" means NationsBank in its capacity as issuer of the Letters -------------- of Credit. "Law or Laws" means all applicable constitutional provisions, statutes, ----------- codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, and requirements of all Governmental Authorities. "Legal Requirements" means (a) any and all present and future judicial ------------------ decisions, Laws, rulings, permits, licenses or certificates, in any way applicable to any of the Borrowers, (b) the presently or subsequently effective bylaws, articles of incorporation and any other form of business association agreement of Borrowers, and (c) any and all leases or contracts (written or oral) of any nature that relate in any way to any Borrower's Assets, or to which any of the Borrowers may be bound, and in each case which, if violated, would materially and adversely affect (i) the present or potential ownership, use, sale, occupancy or possession of any Borrower's Assets, by such Borrower or (ii) the financial condition of any of the Borrowers. "Lenders" means each of the financial institutions listed as a "Lender" on ------- Schedule I attached hereto, as the same may be modified or amended from time to - ---------- time. "Letter of Credit Exposure" means the aggregate amount of the unfunded ------------------------- portion of each Letter of Credit outstanding at any time. "Letter of Credit Fee" has the meaning set forth in Section 2.3(b). -------------------- -------------- "Letters of Credit" means all letters of credit issued by the Issuing ----------------- lender for the account of Borrowers pursuant to this Agreement. "Lien" means with respect to any asset, any mortgage, lien, pledge, charge, ---- security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan Commitment Amount" means, with respect to each Lender, the amount ---------------------- indicated as such Lender's Loan Commitment Amount opposite the name of such Lender in Schedule I, as such amount (a) may be reduced from time to time, as a ---------- result of a reduction in the Available Commitment as provided in this Agreement, or (b) may be adjusted from time to time to account for any assignment of a Lender's interest as provided in Section 10.10. ------------- "Loan Documents" means this Agreement, the Notes, the Security Agreement, -------------- the Letters of Credit, the LOC Applications and all other agreements, security agreements, assignments, statements, certificates, documents or instruments evidencing, securing or pertaining to the Advances or Credit Facility (including the Letters of Credit) or otherwise executed and/or delivered from time to time pursuant to or in connection with this Agreement, as the same may be modified, amended, renewed, extended, rearranged, restated or replaced from time to time. "Loan Percentage" means, with respect to each Lender, the percentage --------------- indicated as such Lender's Loan Percentage opposite the name of such Lender on Schedule I, as such percentage may be adjusted from time to time to account for - ---------- any assignments of a Lender's interest as provided in Section 10.10. ------------- "LOC Application" has the meaning set forth in Section 2.2(d). --------------- -------------- "Margin Regulations" mean Regulations G, T, U and X of the Board of ------------------ Governors of the Federal Reserve System, as in effect from time to time. "Margin Stock" means "margin stock" as defined in Regulation U. ------------ "Material Adverse Effect" means any event or condition which, singly or in ----------------------- the aggregate with other events or conditions, materially and adversely affects the business, operations, or financial condition of Borrowers. "Maximum Lawful Rate" means the maximum rate (or, if the context so permits ------------------- or requires, an amount calculated at such rate) of interest which, at the time in question would not cause the interest charged on the Credit Facility at such time to exceed the maximum amount which Lenders would be allowed to contract for, charge, take, reserve, or receive under applicable federal or state law after taking into account, to the extent required by applicable law, any and all relevant payments, fees or charges under the Loan Documents. If and to the extent the laws of the State of Texas are applicable for purposes of determining the "Maximum Lawful Rate", such term shall mean the "indicated rate ceiling" from time to time in effect under Article 5069-1.04, Title 79, Revised Civil Statutes of Texas, 1925, as amended, or, if permitted by applicable law and effective upon the giving of the notices required by such Article 5069-1.04 (or effective upon any other date otherwise specified by applicable law), the "quarterly ceiling" or "annualized ceiling" from time to time in effect under such Article 5069-1.04, whichever Agent shall elect to substitute for the "indicated rate ceiling," and vice versa, each such substitution to have the ---- ----- effect provided in such Article 5069-1.04, and Agent shall be entitled to make such election from time to time and one or more times and, without notice to Borrowers, to leave any such substitute rate in effect for subsequent periods in accordance with subsection (h)(1) of such Article 5069-1.04. If under federal or state law there is no legal limitation on the amount or rate of interest that may be charged on amounts outstanding under the Credit Facility, there shall be no Maximum Lawful Rate, notwithstanding any reference thereto herein or in any of the Loan Documents. "NationsBank" means NationsBank of Texas, N.A., a national banking ----------- association, and its successors. "Note" means each promissory note in the form attached hereto as Exhibit A ---- --------- to be issued by Borrowers to each Lender in the amount of such Lender's Loan Commitment Amount pursuant to this Agreement; Notes means all of the Notes issued to Lenders ----- pursuant to this Agreement. "Obligations" means all present and future indebtedness, obligations and ----------- liabilities, or any part thereof, of Borrowers now or hereafter existing or arising under or in connection with this Agreement, the Notes or any other of the Loan Documents (specifically including, without limitation, the principal amount outstanding under the Notes), together with: (a) all interest accrued thereon; (b) all reasonable costs, expenses, and attorneys' fees of counsel to Agent incurred in the documentation of the Loan Documents and any amendments, waivers or extensions thereof, or administration, enforcement or collection thereof (specifically including, without limitation, any of the foregoing incurred in connection with any bankruptcy or other insolvency proceedings of any of the Borrowers; (c) the reimbursement and payment of all sums which might be advanced by Agent or any Lender to pay or satisfy amounts required to be paid by any of the Borrowers under this Agreement or under any other instrument, agreement or document at any time executed in connection with or as security for any part of the Credit Facility (including the Letters of Credit); and (d) all costs, charges, reasonable attorneys' fees and expenses owing and to become owing in connection with the documentation, administration, enforcement and collection of the foregoing obligations and indebtedness; regardless of whether such indebtedness, obligations and liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several or joint and several. The Obligations shall include all renewals, extensions, modifications, rearrangements and replacements of any of the above-described obligations and indebtedness. "Operating Leverage Ratio" means, for any date of determination, the ratio ------------------------ of (a) Consolidated Funded Debt as of the end of the immediately preceding calendar quarter to (b) Consolidated Operating Cash Flow for the immediately preceding four calendar quarters. "Other Lender Obligations" means any of the indebtedness, obligations, ------------------------ and/or liabilities owing by Borrowers, or any of them, to either Lender as set forth in Schedule II attached hereto. ----------- "Pension Plan" means any Employee Plan that is now or was previously ------------ covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code. "Permitted Encumbrances" means, with respect to any asset, (a) minor ---------------------- defects in title which do not secure the payment of money and otherwise have no material adverse effect on the value or operation of any material asset encumbered thereby, including, without limitation, easements, rights-of-way, servitudes, permits, surface leases, restrictions and other similar charges, encumbrances or title defects, (b) mechanic's, materialman's, warehouseman's, journeyman's, carrier's, and other similar liens arising by operation of law in the ordinary course of business, securing obligations which are not delinquent, (c) liens for taxes, assessments or other governmental charges not delinquent, (d) liens (other than any lien imposed by ERISA) incurred or deposits made in the ordinary course of business to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than capital leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances on credit or the payment of the deferred purchase price of property, (e) any attachment or judgment lien, unless the judgment it secures shall not, within thirty (30) days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within thirty (30) days after the expiration of any such stay, and (f) liens existing on the Closing Date and described on Schedule III, provided that all such liens are subordinate and inferior to the - ------------ liens and security interests in favor of Agent for the benefit of Lenders except to the extent provided in the Intercreditor Agreements. "PBGC" mean the Pension Benefit Guaranty Corporation, or its successors. ---- "Permitted Investments" means (a) U.S. Government Securities, (b) --------------------- repurchase agreements with any such commercial bank, or with broker-dealers or other institutions, that are secured by U. S. Government Securities, (c) other money market instruments, and mutual funds substantially all of the assets of which are invested in any or all of the investments described in clauses (a) above and (d) commercial paper rated A-1 by Moody's Investors Service, Inc. or P-1 by Standard & Poor's Corporation on the date of acquisition. "Person" means an individual, a corporation, a partnership, an association, ------ a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Prime Rate" means, on any date of determination, the rate of interest per ---------- annum most recently announced by Agent as its prime rate in effect at its principal office (which, in the case of NationsBank, shall mean its principal office in Dallas, Texas), automatically fluctuating upward and downward until and at the time specified in each such announcement without special notice to Borrowers or any other Person, which prime rate may not necessarily represent the lowest or best rate actually charged to a customer. "Prior Credit Facilities" means, collectively, (a) that certain Amended and ----------------------- Restated Loan Agreement dated September 15, 1995, by and among NationsBank and Travis Boats & Motors, Inc., Travis Snowden Marine, Inc., Travis Boating Center Arlington, Inc., Falcon Marine, Inc., Falcon Marine Abilene, Inc. and Travis Boating Center Beaumont, Inc., as amended by that certain First Amendment to Loan Agreement dated July 31, 1996, (b) that certain Inventory Loan Agreement dated September 20, 1995, by and between TBC Arkansas, Inc. and Hibernia, (c) that certain Inventory Loan Agreement dated November 30, 1995, by and between Travis Boating Center Louisiana, Inc. and Hibernia, (d) that certain Loan Agreement dated November 30, 1995, by and between Travis Boating Center Louisiana, Inc. and Hibernia, (e) that certain Inventory Loan Agreement dated December 17, 1992, by and between Travis Boats & Motors Baton Rouge, Inc. d/b/a Baton Rouge Boating Center and Hibernia, and (f) that certain Loan Agreement dated December 17, 1992, by and between Travis Boats & Motors Baton Rouge, Inc. d/b/a Baton Rouge Boating Center and Hibernia, as each of the above have been renewed and extended from time to time. "Receivables" has the meaning given such term in the Security Agreement. ----------- "Register" has the meaning set forth in Section 10.10 hereof. -------- ------------- "Regulation U" means Regulation U of the Board of Governors of the Federal ------------ Reserve System, as in effect from time to time and shall include any successor or other regulation or official interpretation of the Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks that is applicable to member banks of the Federal Reserve System. "Request for Advance" means a written request of an Authorized Officer of ------------------- TBM for a Working Capital Advance, substantially in the form attached hereto as Exhibit B-1, which shall (a) specify (i) the date of such an Advance, which - ----------- shall be a Business Day, (ii) the amount of such Advance, (iii) the transfer instructions with respect to such Advance and (b) contain a certification of an Authorized Officer of TBM, as of the date of such Advance, (i) that the intended use of the proceeds of such Advance does not violate the provisions of this Agreement (including, without limitation, Section 2.1 and Section 5.13) or any ----------- ------------ other Loan Document, and (ii) as to the matters set forth in Section 4.2(b) and -------------- (c). - --- "Required Lenders" means: ---------------- (a) Except as provided in clause (b) below or as expressly stated otherwise in this Agreement or in any other Loan Document, at any time and with respect to any matter hereunder or relating to the Credit Facility, Lenders holding at the time in question a portion of the Credit Facility (including participations in Letters of Credit) equal to or greater than fifty-one percent (51%) the sum of (i) the aggregate unpaid principal amount of the Notes, plus (ii) the Letter of Credit Exposure (or, if no Advances or Letters of Credit are outstanding, then Lenders holding at the time in question fifty-one percent (51%) of the aggregate Loan Commitment Amounts of all Lenders); and (b) With respect to (i) any alteration of the interest rate applicable to the Credit Facility, or (ii) any alteration of the amount of any fees payable to the Lenders under this Agreement, or (iii) any extension or acceleration of the maturity date of the Credit Facility or the due date of any installment of principal or interest or any fees on the Credit Facility, or (iv) forgiveness of any principal or interest under the Credit Facility or any waiver of the timely payment of principal or interest under the Credit Facility, or (v) any increase in the amount of the Credit Facility, or (vi) any change in the definition of Loan Percentage, or (vii) any change in the definition of Borrowing Base, or (viii) the release of any Lenders' Liens on any Collateral, or (ix) the reinstatement of the Notes and other indebtedness pursuant to the provisions in Section 8.2(a) -------------- hereof, or (x) any consent of Lenders required by Articles VI and VII and ------------------- Sections 3.9 and 10.10(a)(i) hereof, or (xi) any alteration of the ---------------------------- provisions of this definition of Required Lenders, all the Lenders. "Representatives" has the meaning set forth in Section 9.4. --------------- ----------- "Rights" means rights, remedies, powers, privileges and benefits. ------ "SEC" means the federal Securities and Exchange Commission, and its --- successors. "Security Agreement" means that certain Security Agreement, of even date ------------------ herewith, executed by Borrowers to Agent, for the benefit of Lenders, securing the payment and performance of all the Obligations, and, to the extent of the payment in full of the Obligations, the Other Lender Obligations, pari passu, and all renewals, extensions, modifications, supplements and replacements thereof, which Security Agreement shall be in form acceptable to Agent. "Subsidiary" means any corporation or other entity which is required to be ---------- included in the consolidated financial statements of Borrowing Group, prepared in accordance with GAAP. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so on). "Supplemental Loan and Security Agreement" means a supplement to this ---------------------------------------- Agreement and to the Security Agreement, in the form attached hereto as Exhibit ------- C (or such other form as Agent shall require), to be entered into by each - - Subsidiary which is created or acquired by any Borrower subsequent to the Closing Date pursuant to Section 6.1 (h). --------------- "Taxes" means all taxes, assessments, filing or other fees, levies, ----- imposts, duties, deductions, withholdings, stamp taxes, interest equalization taxes, capital transaction taxes, foreign exchange taxes or other charges of any nature whatsoever, from time to time or at any time imposed by law or any federal, state or local governmental agency. "Tax" means any one of the foregoing. "TBM" has the meaning set forth in the introductory paragraph of this --- Agreement. "Termination Date" means October 31, 1997. ---------------- "UCC" means the Uniform Commercial Code in effect under the laws of the --- State of Texas, as amended, or, if stated with reference to another jurisdiction, the Uniform Commercial Code as adopted in the relevant jurisdiction. "Uncollected Draft Advance Fee" shall mean the non-refundable fee equal to ----------------------------- (a) the Prime Rate times (b) the average daily uncollected portion of all ----- outstanding Draft Advances. "U.S. Government Securities" means (a) securities that are (i) direct -------------------------- obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the full and timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which in either case are not callable or redeemable at the option of the issuer thereof or (b) any depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933) as custodian with respect to any U.S. Government Securities specified in clause (a) or a specific payment of principal of or interest on any U.S. Government Securities specified in clause (a) held by such bank for the account of the holder of such depository receipt, provided that (except as required by law) -------- such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Securities or the specific payment of principal of or interest on the U.S. Government Securities evidenced by such depository receipt. "Variable Rate" means a fluctuating rate of interest equal to (a) the Prime ------------- Rate minus three-eighths of one percent (0.375%); provided, that the Variable Rate is subject to adjustment as provided in Section 3.3 hereof. ----------- "Working Capital Advance" means an Advance of the Credit Facility made ----------------------- pursuant to Section 2.2(a). -------------- Section 1.2. Singular and Plural of Definitions. Each term defined in the ---------------------------------- singular form in Section 1.1 shall mean the plural thereof when the plural form ----------- of such term is used in this Agreement, and each term defined in the plural form in Section 1.1 shall mean the singular thereof when the singular form of such ----------- term is used in this Agreement. Section 1.3. Money. Unless stipulated otherwise, all references herein or ----- in any of the Loan Documents to "Dollars," "$," "money", "cash", "payments" or other similar financial or monetary terms are references to lawful money of the United States of America. Section 1.4. Captions; References. The captions in this Agreement and in -------------------- the table of contents hereof are for convenience of reference only and shall not define, affect or limit any of the terms or provisions hereof. All references herein to Articles and Sections are, unless specified otherwise, references to articles and sections of this Agreement. Unless specifically indicated otherwise, all references herein to an "Exhibit," "Annex" or "Schedule" are references to exhibits, annexes or schedules attached hereto, all of which are incorporated herein and made a part hereof for all purposes, the same as if set forth fully herein, it being understood that if any exhibit, annex or schedule attached hereto which is to be executed and delivered contains blanks, the same shall be completed correctly and in accordance with this Agreement prior to or at the time of the execution and delivery thereof. The words "herein," "hereof," "hereunder" and other similar compounds of the word "here" when used in this Agreement shall refer to the entire Agreement and not to any particular provision or section unless specifically indicated otherwise. Section 1.5. Accounting Terms and Determinations. Unless otherwise ----------------------------------- specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP. ARTICLE II COMMITMENT Section 2.1. Credit Facility Commitment. Each Lender severally agrees, -------------------------- subject to and upon the terms, covenants and conditions of this Agreement, to make Working Capital Advances to TBM, for the benefit of Borrowers, or with respect to Letters of Credit, to cause the Issuing Lender to issue Letters of Credit for the account of Borrowers, and NationsBank agrees, subject and upon the terms, covenants and conditions of this Agreement, to make Draft Advances to the Borrowers, acting through TBM, shall be entitled to obtain Working Capital Advances, Draft Advances and Letters of Credit, on the terms and conditions as described below and in the manner set forth in Section 2.2: ----------- (a) Working Capital Advances. One or more Working Capital Advances ------------------------ for the acquisition of Inventory by Borrowers and other business and working capital needs, which, subject to the Loan Documents, Borrowers may borrow, repay, and reborrow under this Agreement; provided, that, (i) each such Working Capital Advance must occur on a Business Day and the obligations of Lenders to make Working Capital Advances shall terminate on the day immediately prior to the Termination Date; and (ii) each such Working Capital Advance must be in an amount not less than the limitations provided in Section 2.2(a). -------------- (b) Draft Advances. Draft Advances issued by NationsBank to the -------------- account of any Borrower, for any of the purposes for which Borrowers can obtain a Working Capital Advance; provided, that (i) each such Draft Advance shall be issued on a Business Day and the obligation of NationsBank to make Draft Advances shall terminate on the day immediately prior to the Termination Date; and (ii) after the issuance of any such Draft Advance, the Draft Advance Exposure shall not exceed One Million and No/100 Dollars ($1,000,000.00); and (iii) in no event shall NationsBank be required to make any Draft Advance if, after the issuance of such Draft Advance, the aggregate amount of the unpaid portions of the Draft Advances plus ---- NationsBank's Loan Percentage of the outstanding balance of (A) the Working Capital Advances and (B) the Letter of Credit Exposure would exceed NationsBank's Loan Commitment Amount. (c) Letters of Credit. Letters of Credit issued by the Issuing ----------------- Lender for the account of any Borrower for any of the purposes for which Borrowers can obtain a Working Capital Advance; provided, that (i) each such Letter of Credit shall be issued on a Business Day; (ii) after the issuance of any such Letter of Credit, the Letter of Credit Exposure shall not exceed Five Hundred Thousand and No/100 Dollars ($500,000.00); and (iii) each such Letter of Credit must have an expiration date not later than the Termination Date. To the extent that funds are ever drawn under any of the Letters of Credit, each such draw will be paid by the Issuing Lender, and each of the Lenders will make a Working Capital Advance in the amount of such Lender's Loan Percentage of the amount so paid by the Issuing Lender to reimburse the Issuing Lender for such draw. (d) All Advances and Letters of Credit. In no event shall any Lender ---------------------------------- be required to make any Advances in excess of such Lender's Loan Percentage of the amount required to be advanced by the Lenders under the above provisions of this Section 2.1 or which would cause any Lender to have made ----------- Advances in excess of such Lender's Loan Commitment Amount. On any date of determination and after the issuance of any Advance or Letter of Credit, (i) the aggregate outstanding balances of the Working Capital Advances plus ---- the Draft Advance Exposure plus the Letter of Credit Exposure shall never ---- exceed the Available Commitment and (ii) the aggregate outstanding balance of the Working Capital Advances plus the Letter of Credit Exposure shall ---- never exceed the then effective Borrowing Base. (e) Returned Draft Advances. In the event NationsBank shall receive ----------------------- a Draft returned unpaid, in whole or in part, by a third-party lending institution, then the amount of such unpaid portion of the applicable Draft Advance shall be debited to the account of the applicable Borrower. If funds in the account are insufficient to repay NationsBank in full for the amount of the unpaid Draft Advance, then, to the extent of such insufficiency, such unpaid Draft Advance shall be automatically accelerated and immediately due and payable. Section 2.2. Method of Borrowing. Borrowers shall be entitled to obtain ------------------- Advances and Letters of Credit from Lenders pursuant to Section 2.1 in the ----------- following manner: (a) Working Capital Advances. In the case of any Working Capital ------------------------ Advance, Borrowers, through an Authorized Officer of TBM, shall give Agent at least one Business Day prior to the date of such Advance an irrevocable Request for Advance specifying their intention to borrow such Working Capital Advance hereunder. Notice shall be given to Agent prior to 2:00 p.m., San Antonio, Texas time, in order for such Business Day to count toward the minimum number of Business Days required. Such Request for Advance shall be accompanied by the documents required to be delivered pursuant to Article IV. Any Working Capital Advance shall be in an amount ---------- not less than One Hundred Thousand and No/100 Dollars ($100,000.00) or greater whole multiples of Fifty Thousand and No/100 Dollars ($50,000.00). (b) Draft Advances. In the case of any Draft Advance, any Borrower -------------- shall deposit with NationsBank, at any of its Texas branches (or any other branch outside the state of Texas as NationsBank may from time to time approve), a Draft not later than the established and announced time for the close of business at such receiving branch, on any Business Day, accompanied by supporting documentation reasonably satisfactory to NationsBank. NationsBank shall immediately credit the account of the applicable Borrower in the amount of such Draft. (c) Notice To Lenders. Agent shall promptly notify Lenders of each ----------------- notice received from an Authorized Officer of TBM pursuant to this Section ------- 2.2(a). Each Lender shall, not later than noon, San Antonio, Texas time, ------ on the date of any Working Capital Advance, deliver to Agent, at its address set forth herein, such Lender's Loan Percentage of such Working Capital Advance in immediately available funds in accordance with Agent's instructions. Prior to 2:00 p.m., San Antonio, Texas time, on the date of any Working Capital Advance hereunder Agent shall, subject to satisfaction of the conditions set forth in Article IV, disburse the amounts made ---------- available to Agent by the Lenders by transferring such amounts by wire transfer pursuant to TBM's instructions or crediting such amounts to the account of TBM maintained with Agent as directed by an Authorized Officer of TBM. All Working Capital Advances shall be made by each Lender according to its Loan Percentage; provided, that if any Lender shall fail to make available its share of any Working Capital Advance required to be made by Lenders under this Agreement, Agent shall fund such amount as contemplated by Section 9.15 hereof. ------------ (d) Method of Issuing Letters of Credit. Not less than three (3) ----------------------------------- Business Days prior to the requested date of issuance of any Letter of Credit, Borrowers shall execute and deliver to the Issuing Lender the customary letter of credit application and agreement used by the Issuing Lender in substantially the form of Exhibit E attached hereto (the "LOC --------- --- Application"). Nothing in this Agreement shall prohibit the Issuing Lender ----------- from modifying the form of LOC Application in effect from time to time in connection with the issuance of any Letter of Credit, provided that, such modification does not substantially modify this Agreement to the detriment of Borrowers. In the event of a direct conflict between the provisions of the LOC Application and this Agreement, the provisions of this Agreement shall govern. In no event shall a Letter of Credit have an expiration date which is later than the earlier of (i) one year from the date of issuance thereof or (ii) the Termination Date. Letters of Credit may be standby letters of credit only and be issued on behalf of any of the Borrower. Upon satisfaction of the applicable conditions precedent set forth in Article IV, and subject to the other terms and conditions of this ---------- Agreement, the Issuing Lender shall issue Letters of Credit for the account of any of the Borrowers within three (3) Business Days from receipt by the Issuing Lender of the fully-executed LOC Application (so long as the requested terms of such Letter of Credit are acceptable to the Issuing Lender in its reasonable discretion). Any of the Borrowers may, through an Authorized Borrowing Officer of TBM, request the issuance of Letters of Credit under this Section 2.2(d), repay any Advances resulting from -------------- drawings thereunder pursuant to Section 2.2(f) and request the issuance of -------------- additional Letters of Credit under this Section 2.2(d). -------------- (e) Letter of Credit Participations. Immediately upon the issuance of ------------------------------- each Letter of Credit, the Issuing Lender shall be deemed to have sold and transferred to each Lender, and each Lender shall be deemed to have purchased and received from the Issuing Lender, in each case irrevocably and without any further action by any party, an undivided interest and participation in such Letter of Credit, each drawing thereunder and the obligations of Borrowers under this Agreement in respect thereof in an amount equal to the product of (x) such Lender's Loan Percentage times (y) the maximum amount available to be drawn under such Letter of Credit (assuming compliance with all conditions to drawing). (f) Advances for Repayment of Letters of Credit. The payment by the ------------------------------------------- Issuing Lender of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Lender of a Working Capital Advance, which shall bear interest at the Variable Rate in effect, in the amount of such draft (but without any requirement for compliance with the conditions set forth in Article IV hereof). In the ---------- event that a drawing under any Letter of Credit is not reimbursed by Borrowers by 10:00 a.m. (San Antonio time) on the first Business Day after such drawing, the Issuing Lender shall promptly notify Agent and each other Lender. Each such Lender shall, on the first Business Day following such notification, make a Working Capital Advance which Advance shall be used to repay the applicable portion of the Issuing Lender's Advance with respect to such Letter of Credit, in an amount equal to the amount of its participation in such drawing for application to reimburse the Issuing Lender (but without any requirement for compliance with the applicable conditions set forth in Article IV hereof) and shall make available to ---------- Agent for the account of the Issuing Lender, by deposit at Agent's office, in same day funds, the amount of such Advance. In the event that any Lender fails to make available to Agent for the account of the Issuing Lender the amount of such Advance, the Issuing Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at a rate per annum equal to the lesser of (i) the Maximum Lawful Rate or (ii) the Federal Funds Rate. Section 2.3. Fees. ---- (a) Facility Fees. In consideration of Lenders making available the ------------- Available Commitment, Borrowers agree to pay to Agent for the benefit of the Lenders, commencing on the first day of the first calendar quarter after the Closing Date and continuing on the first day of each calendar quarter thereafter during the term of the Credit Facility, the Facility Fee. The Facility Fee is to be computed based on the number of actual days elapsed, assuming each calendar year consisted of 360 days, subject, however, to proportionate adjustments if the Closing Date occurs or the term of the Credit Facility ends other than at the beginning or end of a calendar quarter or if there is an increase or decrease in the Credit Facility during such calendar quarter. The Facility Fee is to be paid by Agent to each Lender in accordance with its Loan Percentage. (b) Letter of Credit Fees. Borrowers shall pay to Agent for the --------------------- benefit of the lenders a letter of credit fee (the "Letter of Credit Fee") -------------------- as a condition to the issuance of any Letter of Credit at the rate determined by Agent upon each request by Borrowers for the issuance of a Letter of Credit to be applied to the amount of the Letter of Credit so issued. Subject to Section 10.8 hereof, ------------ such fee shall be computed on the basis of the actual number of days elapsed. The Letter of Credit Fee is to be paid to each Lender in accordance with its Loan Percentage and shall be payable in four (4) equal installments with the first such payment being due and payable on the date of issuance of the applicable Letter of Credit and the remaining portion of the applicable Letter of Credit Fee to be paid on the immediately following interest payment date; provided, that, any Letter of Credit Fee remaining unpaid on the Termination Date shall be paid on such date. (c) Uncollected Draft Advance Fees. The applicable Borrower shall ------------------------------ pay to NationsBank, by means of NationsBank's periodic account analysis and settlement system, a $10.00 processing charge for each Draft Advance made under this Agreement plus the uncollected Draft Advance Fee. Such fees shall be calculated on a 365/366 day per year basis. ARTICLE III TERMS OF CREDIT FACILITY Section 3.1. Notes. The Credit Facility shall be evidenced by the Notes. ----- Each Lender shall receive an originally executed Note in an amount equal to such Lender's Loan Commitment Amount. Section 3.2. Maturity. All outstanding principal of the Notes, together -------- with all accrued but unpaid interest and other amounts owed with respect thereto, shall be due and payable in full on the Termination Date. Section 3.3. Interest Rate. Interest on the Working Capital Advances ------------- shall accrue at a rate per annum equal to the lesser of (a) at Borrowers' option, the Variable Rate, subject, however, to the provisions of Section 10.8 ------------ (the "Applicable Rate"), or (b) the Maximum Lawful Rate; provided, however, if --------------- at any time the Applicable Rate exceeds the Maximum Lawful Rate, resulting in the charging of interest hereunder to be limited to the Maximum Lawful Rate, then any subsequent reduction in the Applicable Rate shall not reduce the rate of interest below the Maximum Lawful Rate until the total amount of interest accrued on the indebtedness evidenced hereby equals the amount of interest which would have accrued on such indebtedness if the Applicable Rate had at all times been in effect. Without notice to Borrowers or anyone else, the Variable Rate and the Maximum Lawful Rate shall each automatically fluctuate upward and downward as and in the amount by which the Prime Rate and Maximum Lawful Rate, respectively, fluctuate, subject always to limitations contained in this Agreement. Section 3.4. Mandatory Interest Payments. Interest on the Notes, computed --------------------------- as provided in Section 3.10, shall be due and payable in arrears on the first ------------ day of each April, July, October and January commencing on April 1, 1997, and on the Termination Date, so long as any principal of any Note remains unpaid. Section 3.5. Payments of Advances; Reduction of Commitment Amount. ---------------------------------------------------- (a) At any time, Borrowers may by notice to Agent, with at least one Business Day prior notice to the date on which prepayment under this Section 3.5 is to be made, voluntarily prepay outstanding Advances from ----------- time to time and at any time, in whole or in part; provided, that each such partial payment must be in a minimum amount of at least One Hundred Thousand and No/100 Dollars ($100,000.00) or any whole multiple of Fifty Thousand and No/100 Dollars ($50,000.00) in excess thereof. Each such optional prepayment shall be applied ratably in accordance with Section 3.8 ----------- to pay the amounts owed to each Lender under the Credit Facility. (b) If the outstanding principal balance of (i) the Working Capital Advances plus the Letter of Credit Exposure plus the Draft Advance Exposure ---- ---- ever exceeds the Available Commitment or (ii) the Working Capital Advances plus the Letter of Credit Exposure ever exceeds the then effective ---- Borrowing Base, Borrowers shall make a mandatory prepayment on the principal amount of the Credit Facility in at least the amount of such excess. At such time as NationsBank receives payment for a Draft, such payment shall be applied, or shall be deemed to have been applied to the repayment of amounts outstanding under the Draft Advance made with respect to such paid Draft. (c) Borrowers may reduce the Available Commitment for the Credit Facility at any time and from time to time provided that (i) notice of such reduction must be received by Agent by 10:00 a.m. San Antonio, Texas, time on the third Business Day preceding the effective date of such reduction, (ii) each such reduction in the Available Commitment must be in a minimum amount of One Million and No/100 Dollars ($1,000,000.00) or any whole multiple of One Hundred Thousand and No/100 Dollars ($100,000.00) in excess thereof, (iii) if the aggregate outstanding principal balance of the Working Capital Advances plus the Letter of Credit Exposure plus the Draft ---- ---- Advance Exposure exceeds the Available Commitment as so reduced, Borrowers shall make a mandatory prepayment on the principal amount of the Credit Facility in at least the amount of such excess (iv) Borrowers shall not be entitled to reduce the Available Commitment of the Credit Facility to an amount which is less than the Letter of Credit Exposure plus the Draft ---- Advance Exposure at such time, (v) Borrowers shall not be entitled to an increase in the Available Commitment once it has been so reduced, and (vi) in no event shall Borrowers be entitled to so reduce the Available Commitment below Ten Million and No/100 Dollars ($10,000,000.00), unless Borrowers have elected to terminate the Available Commitment. Section 3.6. Schedules on Notes. Each Lender is hereby authorized to ------------------ record the date and amount of the initial principal balance of its Note and the date and amount of each Advance and repayment of principal on such Note, and to attach any such recording as a schedule to the Note whereupon such schedule shall constitute a part of such Note for all purposes. Any such recording shall constitute prima facie evidence of the ----- ----- accuracy of the information so recorded; provided that the absence or inaccuracy of any such schedule or notation thereon shall not limit or otherwise affect the liability of Borrowers for the repayment of all amounts outstanding under the Notes together with interest thereon. Section 3.7. General Provisions as to Payments. Borrowers shall make each --------------------------------- payment of principal and interest on the Credit Facility and all fees payable hereunder or under any other Loan Document not later than 12:00 noon (San Antonio time) on the date when due, in Federal or other funds immediately available in San Antonio, Texas, to Agent at Agent's address for payments set forth in Schedule I. Agent will promptly (and if such payment is received by ---------- Agent by 12:00 noon (San Antonio, Texas time), and otherwise if reasonably possible, on the same Business Day, and in any event not later than the next Business Day after receipt of such payment) distribute to each Lender a payment on the applicable Note, such Lender's pro rata share of each such payment received by Agent for the account of Lenders. For purposes of calculating accrued interest on the Credit Facility, any payment received by Agent as aforesaid by 12:00 noon (San Antonio, Texas time) on any Business Day shall be deemed made on such day; otherwise, such payment shall be deemed made on the next Business Day after receipt by Agent. Whenever any payment of principal or interest on the Credit Facility, or any fees under the Loan Documents, shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. Section 3.8. Application of Payments. All payments made on the Credit ----------------------- Facility or process realized from the exercise of any right of setoff or the exercise of any remedies with respect to the collateral shall be ratably paid to each Lender in accordance with its Loan Percentage, subject to the provisions of Article IX and any provision in the Loan Documents or agreements among the - ---------- Lenders providing for the application of such proceeds against expenses or other similar amounts. Except as (a) to principal payments made pursuant to Section ------- 3.5, and (b) otherwise specifically provided in this Agreement or in any Loan - --- Document, all prepayments on the Credit Facility shall be applied against accrued but unpaid interest and then against the principal portion of the Credit Facility. Section 3.9. Post-Default Interest; Past Due Principal and Interest. ------------------------------------------------------ After maturity of the Notes or the occurrence of an Event of Default, the outstanding principal balance of the Notes shall, at the option of the Required Lenders, bear interest at the Default Rate. Any past due principal of and, to the extent permitted by law, past due interest on the Notes shall bear interest, payable as it accrues on demand, for each day until paid at the Default Rate. Such interest shall continue to accrue at the Default Rate notwithstanding the entry of a judgment with respect to any of the Obligations, except as otherwise provided by applicable law. Section 3.10. Computation of Interest and Fees. Subject to the provisions -------------------------------- hereof limiting interest to the maximum permitted by applicable law, all interest payable on Advances or the amount of any fees hereunder shall be computed based on the number of days elapsed and 360- days per year or in the case of interest accruing at the Maximum Lawful Rate, 365/366 days per year. Section 3.11. Deposit of Cash Collateral. Upon the occurrence of a -------------------------- monetary Event of Default which Borrower has not cured in accordance with the applicable provisions hereof, Borrowers shall, on the next succeeding Business Day, deposit in a segregated, interest bearing account with Agent such funds as Agent may request, up to a maximum amount equal to the aggregate existing Letter of Credit Exposure. Any funds so deposited shall be held by Agent as security for the Credit Facility (including the Letters of Credit) and Borrowers will, in connection therewith, execute and deliver such assignments and security agreements in form and substance satisfactory to Agent which Agent may, in its discretion, require. As drafts or demands for payment are presented under any Letter of Credit, Borrowers hereby irrevocably direct Agent to apply such funds to satisfy such drafts or demands. When all Letters of Credit have expired and the Notes have been repaid in full (and Lenders have no obligation to make further Advances or issue Letters of Credit hereunder) or such Event of Default has been cured to the satisfaction of Agent, Agent shall release to Borrowers any remaining funds deposited under this Section 3.11. Whenever Borrowers are ------------ required to make deposits under this Section 3.11 and fail to do so on the day ------------ such deposit is due, Lenders may make such deposit using any funds of Borrowers then available to any Lender. Section 3.12. Joint and Several Liability. Each member, and all of the --------------------------- members, of the Borrowing Group are hereby deemed jointly and severally liable for the payment of the Notes and the satisfaction and fulfillment of all of the Obligations hereunder and pursuant to any other Loan Document of Borrowers, individually and as a group. Section 3.13. Collateral; Renewal and Extension of Existing Indebtedness ---------------------------------------------------------- and Security. The Obligations shall be secured by a first and prior security - ------------ interest in all of Borrowers' Collateral pursuant to the terms of the Security Agreement and such other documents or agreements required by Agent. It is acknowledged and agreed that the outstanding indebtedness and obligations evidenced by the Prior Credit Facilities are hereby renewed, extended and consolidated by this Agreement and the Other Loan Documents, and the Existing Security Interests, which are hereby respectively assigned by NationsBank and Hibernia to Agent for the benefit of Lenders, are renewed, extended and continued in full force and effect under the Security Agreement as security for the Obligations. Section 3.14 Title Documents. All original manufacturer's invoices, --------------- certificates of origin and all other title documents evidencing Borrowers' ownership of all of their Inventory shall be maintained in safekeeping by Borrowers in a manner reasonably acceptable to Agent, including, without limitation, Borrowers' current practices, unless and until a request is made therefor by Agent upon the occurrence of a monetary Event of Default which Borrower has not cured in accordance with the applicable provisions hereof. In such event, within five Business Days of the request by Agent, Borrowers shall deliver to Agent all original manufacturer's invoices, certificates of origin and all other title documents in Borrowers' possession, whether at the time of such request or thereafter, to Agent, and Agent shall retain or hold all such original documents received by Agent after such request; provided, however, Borrowers may retain or hold all such original documents relating to Inventory covered by liens expressly excluded from the subordination of an Intercreditor Agreement which is in full force and effect at the time of Agent's request under this Section 1.04. ------------ Thereafter, all original manufacturer's invoices, certificates of origin and all other title documents shall remain in Agent's possession until the Note and the Obligations are paid and performed in full, provided that, if the original title documents have been delivered to Agent as provided for herein and if no Event of Default has occurred and is then existing, upon the sale of an item of Inventory by a Borrower, Agent shall promptly deliver to the respective Borrower the original title documents pertaining to the item of Inventory which has been sold; and further provided, that, upon the happening of an Event of Default and during the continuance thereof, Agent may transfer, as applicable, title documents delivered to it pursuant to this Section 3.14 in connection with its ------------ sale of Inventory which constitute Collateral in accordance with its rights provided for in this Agreement. ARTICLE IV CONDITIONS TO FUNDING Section 4.1. Conditions Precedent . The obligation of Lenders as provided --------------------- herein is subject to the satisfaction of the following conditions and requirements: (a) receipt by Agent of (i) this Agreement, properly executed by Borrowers, and (ii) evidence acceptable to Agent that Borrowers have paid all fees and expenses required to be paid by Borrowers as of the date of such Advance or issuance; (b) receipt by each Lender of its Note, properly executed by Borrowers; (c) receipt by Agent of the Security Agreement properly executed by Borrowers; (d) receipt by Agent of such UCC-1 financing statements as Agent may require to be executed by the proper Persons to perfect Lenders' security interests in the Collateral; (e) receipt by Agent of an opinion of counsel for Borrowers, opining as to the due organization, existence and authority of Borrowers, the enforceability and of each of the Loan Documents, compliance by Borrowers with applicable Laws as Lenders may require, and such other matters as Agent may reasonably request, in form and substance satisfactory to Agent; (f) receipt by Agent of all resolutions, certificates or documents it may reasonably request relating to the formation, existence and good standing of each of the Borrowers, on the date hereof, partnership and corporate authority for the execution and validity of this Agreement and the other Loan Documents from, as applicable, each of the Borrowers, and any other matters relevant to this Agreement, all in form and substance satisfactory to Agent, which resolutions, certificates and documents shall include, without limitation, (i) the articles of incorporation and bylaws of each of the Page 26 Borrowers, (ii) certified resolutions of the board of directors of each of the Borrowers authorizing the execution of the Loan Documents on behalf of each of the Borrowers, (iii) certificates of incumbency for the officers of each of the Borrowers, and (iv) certificates of existence and good standing issued by the state of organization of each of the Borrowers, and from the appropriate governmental authority of each state in which any such party is required by applicable law to be qualified, including but not limited to the states listed on Schedule 5.1 attached hereto; ------------ (g) receipt by Agent of unaudited consolidated financial statements of Borrowing Group for the fiscal quarter ending June 30, 1996, certified by the chief financial officer or chief accounting officer of TBM as to fairness of presentation and as to whether such financial statements fairly reflect the financial condition of Borrowing Group as of the date of delivery, subject to year-end adjustments; (h) receipt by agent of filing officer certificates (or commercial reports similar thereto, if satisfactory to Agent) under Section 9-407(2) of the UCC, releases or partial releases of liens or financing statements, and other evidence satisfactory to Agent that there are no Liens on any assets of Borrowers, except Permitted Encumbrances and those identified in Section 7.5; ----------- (i) receipt by Agent of an opinion of (i) Friday, Eldredge & Clark, (ii) Kizer, Hood & Morgan, L.L.P., (iii) Sherrad & Roe, PLC and (iv) Bradley, Arant, Rose & White opining as to the enforceability and perfection of Lenders' security interest in the Collateral and such other matters as Agent may reasonably request, in form and substance satisfactory to Agent under Arkansas, Louisiana, Tennessee and Alabama law, respectively; (j) completion of a financial, legal and factual due diligence review by the Lenders and their respective legal counsel, the results of which shall be, respect to all matters of any nature, satisfactory to all of the Lenders in their sole discretion and no Material Adverse Effect shall have arisen with respect to the documents, certificates, financial statements and other information delivered to Lenders by Borrowers; (k) all other documents, instruments, certificates and information as Agent shall reasonably deem necessary; (l) satisfaction of all conditions contained in Section 4.2 if an ----------- Advance is being made, or satisfaction of all conditions contained in Section 4.3 if a Letter of Credit is being issued; and ----------- (m) the repayment of the entire principal amount of any Debt outstanding under the Prior Credit Facilities, together with accrued interest, fees and other amounts in respect thereof, which repayment may be made with the proceeds of the initial Advance. All the documents, instruments, certificates, information, evidences and opinions referred to in this Section 4.1 shall be delivered to Agent (unless ----------- Agent has waived delivery) no later than the Page 27 Closing Date, and Lenders shall not be bound by or obligated hereunder until Agent has received all such items. Borrowers and Lenders hereby agree that the commitments under the Prior Credit Facilities, and any related guaranties, shall terminate automatically upon and simultaneously with the effectiveness of this Agreement without further action by any party. Section 4.2. Conditions To All Advances. The obligation of Lenders to -------------------------- fund any Advance as provided herein is subject to the satisfaction by Borrowers of the following conditions and requirements: (a) timely receipt by Agent of a Request For Advance or, with respect to a Draft Advance, a Draft and accompanying supporting documentation satisfactory to NationsBank, each in accordance with Section 2.2; ----------- (b) immediately before and after giving effect to such Advance, no Default shall have occurred and be continuing and the making of such Advance shall not cause a Default; (c) the representations and warranties contained in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance, except that all representations and warranties that speak as of a particular date shall only be required on the date of each such Advance to be true and correct in all material respects as of the date to which such representation or warranty speaks and not as of any subsequent date; (d) such other information and documentation as Agent shall reasonably deem necessary in connection with the funding of such Advance. Section 4.3. Conditions to Letters of Credit. The obligation of the ------------------------------- Issuing Lender to issue any Letter of Credit as provided herein is subject to the satisfaction by the applicable Borrowers of the following conditions and requirements: (a) timely receipt by the Issuing Lender of a fully completed LOC Application; (b) immediately before and after the issuance of such Letter of Credit, no Default shall have occurred and be continuing and the issuance of any Letter of Credit shall not cause a Default; (c) the representations and warranties contained in this Agreement and in the other Loan Documents shall be true in all material respects on and as of the date of issuance of such Letter of Credit, except that all representations and warranties that speak as of a particular date shall only be required on the date of issuance of each such Letter of Credit to be true and correct in all material respects as of the date to which such representation or warranty speaks and not as of any subsequent date; Page 28 (d) timely receipt by Agent (on behalf of Lenders) of the Letter of Credit Fee and (on behalf of the Issuing Lender) of the usual and customary administrative fees charged by the Issuing Lender for the issuance of letters of credit; and (e) such other information and documentation as Agent or the Issuing Lender shall reasonably deem necessary in connection with the issuance of such Letter of Credit. ARTICLE V REPRESENTATIONS AND WARRANTIES Borrowers represent and warrant to Lenders that: Section 5.1. Existence, Power of Borrowers and Foreign Qualification. ------------------------------------------------------- Each of the Borrowers (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and is or will be qualified and in good standing under the laws of each state where such qualification is necessary for such Borrower to conduct its business, (ii) has all corporate power and authority and all governmental licenses, permits, authorizations, consents and approvals and has made all filings with governmental authorities required to carry on its business as now conducted and as contemplated to be conducted, and (iii) is qualified and in good standing to do business as a foreign corporation in each of the states listed by such Borrower's name on Schedule 5.1 hereto, which states are the only jurisdictions ------------ where the character of the properties owned or held under lease by it, or the nature of the business conducted by it, makes such qualification necessary. Section 5.2. Authorization; Contravention. The execution, delivery and ---------------------------- performance of this Agreement, the Notes, the LOC Applications and the other Loan Documents by Borrowers, as applicable, (a) are within each Borrower's corporate powers, (b) have been duly authorized by all necessary action, (c) require no action by or in respect of, or filing with, any governmental body, agency or official and (d) do not contravene, or constitute a default under, (i) any certificate of incorporation, bylaws or agreement of limited partnership of any Borrower, or (ii) of applicable law or regulation or any agreement, judgment, injunction, order, decree or other instrument binding upon any Borrower or result in the creation or imposition of any Lien on any asset of any Borrower. Section 5.3. Enforceable Obligations. This Agreement, the Notes, the LOC ----------------------- Applications and the other Loan Documents each constitutes a valid and binding agreement of such of the Borrowers which are parties thereto, enforceable in accordance with its terms, except as (a) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer or similar laws affecting creditors rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general applicability. Page 29 Section 5.4. Financial Information. --------------------- (a) The current financial statements of Borrowers and all the other financial reports and information of Borrowers that have been delivered to Lenders are true and correct in all material respects as of the date of such current financial statements and other reports and information. (b) Since the later of June 30, 1996, or the date of the most recent quarterly financial statements delivered to Agent, there has been no material adverse change in the business, financial position or results of operations of Borrowers; and, there exists no condition, event or occurrence that could reasonably be expected to result in a material adverse change in the business, financial position, results of operations, projections or prospects of Borrowers. Section 5.5. Litigation. There is no action, suit or proceeding pending ---------- against, or to the knowledge of Borrowers, threatened against or affecting Borrowers, before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, financial position or results of operations of the Borrowers, or which could in any manner draw into question the validity of the Loan Documents. Section 5.6. ERISA. ----- (a) Each Employee Plan has been maintained and administered in substantial compliance with the applicable requirements of the Code and ERISA. No circumstances exist with respect to any Employee Plan that could have a Material Adverse Effect. (b) With respect to each Pension Plan, (i) no accumulated funding deficiency (within the meaning of Section 412(a) of the Code), whether waived or unwaived, exists; (ii) the present value of accrued benefits (based on the most recent actuarial valuation prepared for each such plan, if any, in accordance with ongoing assumptions) does not exceed the current value of plan assets allocable to such benefits by a material amount; (iii) no reportable event (within the meaning of Section 4043 of ERISA) has occurred other than a reportable event with respect to which the 30-day notice requirement has been waived by regulation; (iv) no uncorrected prohibited transactions (within the meaning of Section 4975 of the Code) exist which could have a Material Adverse Effect and for which there exists no statutory or regulatory exception; (v) to the extent such plan is covered by PBGC, no material liability to the PBGC exists and no circumstances exist that could reasonably be expected to result in any such liability; and (vi) no material withdrawal liability (within the meaning of Section 4201(a) of ERISA) exists and no circumstances exist that could reasonably be expected to result in any such liability. (c) As of the date hereof, none of the Borrowers has any obligation under any Employee Plan to provide post-employment health care benefits to any of its current or former employees, except as may be required by Section 4980B of the Code or otherwise required by law. Page 30 Section 5.7. Taxes and Filing of Tax Returns. Each of the Borrowers has ------------------------------- filed all material tax returns required to have been filed and has paid or has made adequate provision for payment of all Taxes shown to be due and payable on such returns, including interest and penalties, and all other Taxes which are payable by such party, to the extent the same have become due and payable other than Taxes with respect to which a failure to pay would not have a Material Adverse Effect. Borrowers have no knowledge of any proposed Tax assessment against any Borrower other than customary ad valorem taxes or other Taxes to become due in the normal course of business, and all Tax liabilities of each Borrower is adequately provided for. No income tax liability of any Borrower has been asserted by the Internal Revenue Service for Taxes in excess of those already paid, the payment of which would have a Material Adverse Effect. Section 5.8. Ownership or Lease of Assets. Borrowers have good and ---------------------------- indefeasible title to all of the Collateral. Borrowers own or lease all of the assets necessary to continue their businesses as conducted prior to the execution of this Agreement. There is no Lien on any of the Collateral other than Permitted Encumbrances and the Liens described in Section 7.5 and the ----------- execution, delivery, performance or observance of the Loan Documents will not require or result in the creation of any other Lien on any Borrower's assets. The Collateral is not and will not become subject to set off, counterclaim, defense, allowance, or adjustment (other than warranty claims, the aggregate amount of which shall not be material); there is no financing statement, or similar statement or instrument of registration under the laws of any jurisdiction, covering or purporting to cover any interest of any kind in the Collateral or its proceeds on file or registered in any public office other than a financing statement in favor of Lenders covering the Collateral; there is no other financing arrangement with any party other than Lenders with respect to the Collateral; the Collateral is free from damage caused by fire or other casualty. Section 5.9. Business; Compliance. Each of the Borrowers has performed -------------------- and abided by all obligations required to be performed by it under any license, permit, order, authorization, grant, contract, agreement, or regulation to which it is a party or by which it or any of its assets are bound and which, if any such Person were to fail to perform or abide by, such failure would have a Material Adverse Effect. Section 5.10. Compliance with Law. The business and operations of each ------------------- Borrower have been and are being conducted in accordance with all applicable laws, rules and regulations of all Governmental Authorities, other than violations which would not (either individually or collectively) have a Material Adverse Effect. Section 5.11. Full Disclosure. All information heretofore furnished by --------------- Borrowers, (or any other party on Borrowers' behalf) to Agent and Lenders for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by Borrowers to Agent and any Lender will be, true and accurate in every material respect, there have been no material adverse changes in such information and shall be, to the best of the knowledge and belief of the party furnishing such information, without material omission. Other than general industry trends which are not specific to Borrowers, Borrowers have, to the best of their knowledge, disclosed to Agent in writing any and all facts which might reasonably be expected to materially and adversely affect the business, operations, prospects or Page 31 condition, financial or otherwise, of Borrowers, taken as a whole, or the ability of Borrowers to perform their obligations under this Agreement or the other Loan Documents. Section 5.12. Environmental Matters. Borrowers (i) do not know of any --------------------- environmental condition or circumstance, such as the presence of any hazardous substance (as defined in Section 6.7), adversely affecting the properties or ----------- operation of Borrowers, (ii) have not received any report of a violation by Borrowers of any Applicable Environmental Law, or (iii) do not know that Borrowers are under any obligation to remedy any violation of any Applicable Environmental Law. Section 5.13. Purpose of Credit. Borrowers will use the proceeds of the ----------------- Credit Facility for the purposes stated in Section 2.1 hereof. No part of the ----------- proceeds of the Credit Facility will be used, directly or indirectly, for a purpose which violates any law, rule or regulation. Borrowers will not, directly or indirectly, use any of the proceeds of the Credit Facility for the purpose of purchasing or carrying, or retiring any Debt which was originally incurred to purchase or carry, any "margin stock" as defined in the Margin Regulations, or to purchase or carry any "security that is publicly-held" within the meaning of Regulation T of the Board of Governors of the Federal Reserve System, or otherwise take or permit any action which would involve a violation of such Margin Regulations or any other regulation of such Board of Governors. Borrowers will not engage principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning of the Margin Regulations. Section 5.14. Governmental Regulations. Borrowers are not subject to ------------------------ regulation under (a) the Investment Advisers Act of 1940, as amended, (b) the Investment Company Act of 1940, as amended, (c) the Public Utility Holding Company Act of 1935, as amended, (d) any Margin Regulations, or (e) any other law, rule or regulation which regulates the incurrence of Debt. Section 5.15. Indebtedness. As of the Closing Date, none of the Borrowers ------------ are an obligor on any Debt other than (a) the Other Lender Obligations and (b) the Debt described on Schedule 5.15 hereto. ------------- Section 5.16. Insurance. Each Borrower maintains with financially sound, --------- responsible and reputable insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance fund or by self- insurance authorized by the jurisdictions in which it operates) insurance concerning its properties and business against such casualties and contingencies and of such types and in such amounts (and with co-insurance and deductibles) as is customary for the same or similar businesses. Section 5.17. Solvency. With respect to each Borrower and on a -------- consolidated basis (a) the aggregate fair market value of assets exceeds the aggregate amount of Debts (whether contingent, subordinated, unmatured, unliquidated, or otherwise), (b) the Borrowers, individually and taken as a whole, have sufficient cash flow to enable them to pay their Debts as they mature, and (c) Borrowers, individually and as a whole, have a reasonable amount of capital to conduct their business as presently contemplated. Page 32 Section 5.18. Subsidiaries. Other than the members of the Borrowing ------------ Group, TBM and the Borrowers have no other Subsidiaries. Section 5.19. Locations. The business, storage and distribution locations --------- of each of the Borrowers are as listed on Schedule 5.19 hereto. The chief ------------- executive office of each of the Borrowers, and the office where all the material records and books of account of such Borrowers are kept, are and shall be at the locations identified in Schedule 5.19 hereto. ------------- Section 5.20. Trademarks, Tradenames, etc. Borrowers have common law ---------------------------- interest, own or are licensed to use all trademarks, tradenames, copyrights, technology, know-how, and processes necessary to conduct all business material to its condition, financial or otherwise, business, or operations as such business is currently conducted. No claim has been asserted or is pending by any Person with respect to the use by any of the Borrowers of any such trademarks, tradenames, copyrights, technology, know-how, and processes. Section 5.21. Business Relationships. There exists no actual or ---------------------- threatened termination, cancellation, or limitation of, or any modification or change in, the business relationship between any of the Borrowers with any customer or any group of customers whose purchases individually or in the aggregate are material to the business of Borrowers, or with any material supplier for whom Borrowers do not have a readily available alternative supplier acceptable to Borrowers in their reasonable discretion. ARTICLE VI AFFIRMATIVE COVENANTS Borrowers covenant and agree that without the prior written consent of the Required Lenders, so long as Lenders' commitment to make Advances under the Credit Facility remains in effect, or any Letters of Credit remain outstanding or any of the other Obligations remain unpaid: Section 6.1. Information From Borrowers. Borrowers will deliver, or cause -------------------------- to be delivered, to Agent on behalf of Lenders: (a) As soon as available and in any event within ninety (90) days after the end of Borrowers' Fiscal Year, a consolidated balance sheet of the Borrowers as of the end of such Fiscal Year and the related statements of income and cash flow for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported by Borrowers in accordance with GAAP and audited by such independent public accountants reasonably acceptable to Agent. (b) As soon as available and in any event within forty-five (45) days after the end of each calendar quarter, a balance sheet and related statement of income of the Borrowers as of the end of such quarter and year-to-date on a consolidated basis and by individual retail store, all certified by the chief financial officer or the chief accounting officer of TBM as to fairness of presentation and as to whether such financial statements Page 33 fairly reflect the financial condition of Borrowers as of the date of delivery thereof, subject to year-end adjustments. Such financial statements shall be prepared in conformity with GAAP, except that certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP may be condensed or omitted provided that the disclosures made are adequate to make the information presented not misleading, and GAAP shall be applied on a basis consistent with the financial statements referred to in Section 6.1(a). -------------- (c) As soon as available and in any event within thirty (30) days after the end of each calendar month, a Borrowing Base Certificate, together with a Borrowing Base Schedule as of the end of such month. (d) Simultaneously with the delivery of each set of financial statements referred to in Sections 6.1(a) and (b) a certificate of an ----------------------- Authorized Officer of TBM in the form attached hereto as Exhibit F (i) --------- setting forth in reasonable detail the calculations required to establish compliance with the requirements of Section 3.5(b) and Sections 7.1 through -------------- ------------ and including Section 7.3, on the date of such financial statements, (ii) ----------- attesting to compliance with the terms of the Loan Documents, and (iii) with respect only to the financial statements delivered pursuant to Sections 6.1(a) and (b), stating, to the best of such Authorized Officer's ----------------------- knowledge and belief, whether or not such financial statements fairly reflect in all material respects the financial condition of the Borrowers and results of the Borrowers operations as of the date of the delivery of such financial statements. (e) Immediately upon an Authorized Officer becoming aware of the occurrence of any Default, a certificate of an Authorized Officer of TBM setting forth the details thereof and the action which Borrowers are taking or propose to take with respect thereto. (f) Prompt notification of (i) any material adverse change in the financial condition of Borrowers, including, without limitation, the occurrence of any litigation, in each case which could reasonably be expected to have a Material Adverse Effect, or (ii) the occurrence of any acceleration of the maturity of any indebtedness owing by any of the Borrowers, or any default under any indenture, mortgage, agreement, contract or other instrument to which any of the Borrowers is a party or by which any of the Borrowers or any properties of any of the Borrowers is bound, if such default or acceleration might have a Material Adverse Effect, or (iii) the receipt by any of the Borrowers, or when any of the Borrowers becomes aware thereof, of notice of the occurrence of a default by any of the Borrowers under, or acceleration of, any Debt of any of the Borrowers under any indenture, mortgage, agreement, contract or other instrument. Nothing contained in this Section 6.1(f) shall be deemed a -------------- waiver or modification in any manner of any restrictions on the right of Borrowers to incur Debt or encumber its Assets contained in this Agreement or in any of the Loan Documents. (g) At such time as such reports are filed with the SEC, true and complete copies of TBM's annual 10-K report, quarterly 10-Q report and all other filings and reports which it makes to the SEC. Page 34 (h) Contemporaneously with the creation or acquisition (in accordance with the provisions of Section 7.15) of any new Subsidiary, or the acquisition ------------ of any new retail store, by any member of the Borrowing Group, TBM will notify the Agent of such Subsidiary's name, its tax indentification number and the address of its chief executive offices or the address of such new retail store. With respect to a new Subsidiary, no later than fifteen (15) Business Days following the later to occur of (a) the creation of such new Subsidiary or (b) receipt by TBM or such new Subsidiary from the Agent of forms of the Loan Documents (including a Supplemental Loan and Security Agreement) to which such new Subsidiary is to be a party, or appropriate amendments to this Agreement or the Intercreditor Agreements, as well as forms of acceptable legal opinions and other documents necessary to demonstrate the due authorization, execution and delivery by such new Subsidiary of such Loan Documents or amendments thereto, and the perfection of the security interests to be created pursuant thereto, shall cause such new Subsidiary to deliver executed counterparts of such Loan Documents, amendments, landlord lien waivers, financing statements, legal opinions and other documents to the Agent. Upon such delivery of such executed counterparts of such Loan Documents, amendments, landlord lien waivers, financing statements, legal opinions and other documents to the Agent, (y) such new Subsidiary shall comply with and be bound by all of the terms and conditions of the Loan Documents (including the Intercreditor Agreements) as a Borrower thereunder, and (z) TBM shall cause such new Subsidiary to take all actions, which it would have been required to make or take had it been a Borrower on the Closing Date including, without limitation, making all representations and warranties as a Borrower under each of the Loan Documents to which it is a party as of the date such representations and warranties are made. With respect to a new retail store purchased by an existing Borrower, TBM shall cause legal opinions demonstrating the perfection of security interests, landlord lien waivers and financing statements to be delivered to Agent within fifteen (15) Business Days of the closing of such acquisition. (i) From time to time such additional information regarding the financial position or business of any of the Borrowers as Agent, at the request of any Lender, may reasonably request, including, without limitation, information concerning the insurance being maintained by Borrowers. Section 6.2. Business of Borrower. The primary business of Borrowers is -------------------- and Borrowers covenant that it shall remain, the retail sale of boats, trailers and motors, and parts and accessories appropriate thereto, and the ownership and maintenance of assets related thereto. Section 6.3. Right of Inspection. Borrowers will permit Agent or any ------------------- Lender, or any officer, employee or agent of any such party, to visit and inspect any of the assets of Borrowers at the expense of Borrowers (prior to the occurrence of a Default, Agent and Lenders shall be entitled to make only two such visits or inspections, not including a Fiscal Year Audit, in a twelve-month period) examine the books of record and accounts of Borrowers, take copies and extracts therefrom, and discuss the affairs, finances and accounts of Borrowers with the respective officers, accountants and auditors of Borrowers (all at such reasonable times as often as Agent or any Lender may reasonably require). Page 35 Section 6.4. Maintenance of Insurance. (a) Each of the Borrowers will at ------------------------ all times maintain or cause to be maintained insurance covering its respective risks in such coverage amounts as are customarily carried by businesses similarly situated including, without limitation, the following: (i) workmen's compensation insurance; (ii) comprehensive general public liability and property damage insurance in respect of all activities in which such Person might incur personal liability for the death or injury of an employee or third person, or damage to or destruction of another's property; (iii) insurance against loss or damage by fire, lightning, hail, tornado, explosion and other similar risk; and (iv) comprehensive automobile liability insurance. Section 6.5. Payment of Taxes, Impositions and Claims. Each of the ---------------------------------------- Borrowers shall pay (a) all Taxes imposed upon it or any of its assets or the Collateral with respect to any of its franchises, business, income or profits, and all Impositions not later than the due date thereof, or before any material penalty or interest may accrue thereon and (b) all claims (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or might become a Lien on any of its assets; provided, however, payment of Taxes, Impositions or claims shall not be required if and for so long as (i) the amount, applicability or validity thereof is currently being contested in good faith by appropriate action promptly initiated and diligently conducted in accordance with good business practices and no material part of the property or assets of such Person are subject to levy or execution, (ii) such Person, as required in accordance with GAAP, shall have set aside on its books reserves (segregated to the extent required by GAAP) deemed by it to be adequate with respect thereto, and (iii) Borrowers have notified Agent of such circumstances, in detail satisfactory to Agent, and, provided further, that the applicable Person shall pay any such Tax, Imposition or claim if such contest is not successful and in any event prior to the commencement of any action to realize upon or foreclose any lien against any of such Person's Assets. Section 6.6. Compliance with Laws and Documents. Each Borrowers shall at ---------------------------------- all times observe and comply with all Legal Requirements. Each of the Borrowers shall maintain all certificates, franchises, permits, licenses, and authorizations necessary to the conduct of its business or the operation of its properties, except when the failure to maintain such items would not have a Material Adverse Effect. Section 6.7. Environmental Law Compliance and Indemnity. Each of the ------------------------------------------ Borrowers agree to promptly pay and discharge when due all debts, claims, liabilities and obligations with respect to any clean-up measures necessary for such Borrower to comply with Applicable Environmental Laws affecting such Borrower. Borrowers hereby, jointly and severally, indemnify and agree to defend and hold Agent and each Lender and its successors and assigns harmless from and against any and all claims, demands, causes of action, loss, damage, liabilities, costs and expenses (including reasonable attorneys' fees and court costs) of any and every kind or character, known or unknown, fixed or contingent, asserted against or incurred by Agent or any Lender at any time and from time to time related to any violation or purported violation of any Applicable Environmental Laws, including, without limitation, those asserted or arising subsequent to the payment or other satisfaction of the Notes, by reason of, arising out of or related in any way to Agent's and Lenders' entering into this Agreement and the transactions herein contemplated, INCLUDING MATTERS ARISING OUT OF THE ORDINARY NEGLIGENCE OF AGENT OR ANY LENDER, BUT EXCLUDING MATTERS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL Page 36 MISCONDUCT OF AGENT OR ANY LENDER. It shall not be a defense to the covenant of Borrowers to indemnify that the act, omission, event or circumstance did not constitute a violation of any Applicable Environmental Law at the time of its existence or occurrence. The terms "hazardous substance" and "release" shall ------------------- ------- have the meanings specified in the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), and the terms "solid waste" and "disposed" shall have the ---- ----------- -------- meanings specified in the Resource Conservation and Recovery Act of 1976 ("RCRA"); provided, to the extent that any other applicable laws of the United ---- States of America or political subdivision thereof establish a meaning for "hazardous substance," "release," "solid waste," or "disposed" which is broader than that specified in either SARA or RCRA, such broader meaning shall apply. As used in this Agreement, "Applicable Environmental Law" shall mean and include ---------------------------- the singular, and "Applicable Environmental Laws" shall mean and include the ----------------------------- collective aggregate of the following: Any law, statute, ordinance, rule, regulation, order or determination of any governmental authority or any board of fire underwriters (or other body exercising similar functions), or any restrictive covenant or deed restriction (recorded or otherwise) affecting Borrowers pertaining to health, safety or the environment, including, without limitation, all applicable flood disaster laws and health, safety and environmental laws and regulations pertaining to health, safety or the environment, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), the Resource ------ Conservation and Recovery Act of 1976, the Superfund Amendments and Reauthorization Act of 1986, the Occupational Safety and Health Act, the Texas Water Code, the Texas Solid Waste Disposal Act, the Texas Workers' Compensation Laws, and any federal, state or municipal laws, ordinances, regulations or law which may now or hereafter require removal of asbestos or other hazardous wastes from any property of Borrowers or impose any liability on Agent or any Lender related to asbestos or other hazardous wastes in any property of Borrowers. The provisions of this Section 6.7 shall survive the repayment of the Notes and ----------- expiration of the Letters of Credit. In the event of the transfer of the Notes or any portion thereof, each Lender or any prior holder of the Notes and any participants shall continue to be benefitted by this indemnity and agreement with respect to the period of such holding of the Notes. Section 6.8. Covenant Compliance. Each of the Borrowers shall perform and ------------------- comply with all covenants, obligations and agreements contained in this Agreement and in the Loan Documents applicable to such Person. Section 6.9. Quantity and Quality of Documents. All certificates, --------------------------------- opinions, reports and documents to be delivered from time to time hereunder shall be in such number of counterparts as Agent may reasonably request and in form reasonably acceptable to Agent, and counterpart signature pages to any such documents may be attached to and shall, together with all counterparts, constitute one and the same document. Section 6.10. Additional Documents. Each of the Borrowers shall execute -------------------- and deliver or cause to be executed and delivered to Agent upon Agent's request such other and further instruments or documents as in the judgment of Agent may be required to better effectuate the transactions contemplated herein or to conform, create, evidence, perfect, preserve or maintain the Lenders' rights hereunder or under the Loan Documents, including without limitation, each of the Borrowers shall, within sixty (60) days following the Closing Date, execute and deliver Page 37 an Intercreditor Agreement properly executed by each of Borrowers' existing lenders identified on Schedule 5.15 hereto. ------------- ARTICLE VII NEGATIVE COVENANTS Borrowers covenant and agree that without the prior written consent of the Required Lenders, so long as Lenders' commitment to make Advances under the Credit Facility remains in effect, any Letters of Credit remain outstanding or any of the Obligations remain unpaid: Section 7.1. Operating Leverage Ratio. As of the end of the fiscal ------------------------ quarters of the Borrowing Group ending June 30 and September 30 of each year, Borrowers shall not cause or permit the Operating Leverage Ratio to be less than 3.50 to 1.00. Section 7.2. Minimum Consolidated Tangible Net Worth. As of the end of --------------------------------------- any fiscal quarter of the Borrowing Group, Borrowers shall not cause or permit Consolidated Tangible Net Worth to be less than $12,000,000.00. Section 7.3. Coverage Ratio. As of the end of any fiscal quarter of the -------------- Borrowing Group, Borrowers shall not cause or permit the Debt Coverage Ratio to be less than 1.5 to 1.00. Section 7.4. Limitation on Sale of Properties. None of the Borrowers -------------------------------- shall sell, assign, convey, exchange, lease or otherwise dispose of any of its Collateral, properties, rights, assets or business, whether now owned or hereafter acquired, except (a) in the ordinary course of its business, and (b) obsolete or worn out property, or equipment sold in contemplation of the acquisition of replacement equipment of at least equal value or utility. Section 7.5. Limitations on Liens. None of the Borrowers shall create, -------------------- incur, assume or suffer to exist any Lien upon any of its assets other than (a) the Permitted Encumbrances, (b) Liens existing on any asset prior to the acquisition thereof by any of the Borrowers or created on real property or capital assets in contemplation of the acquisition of additional retail stores, (c) Liens arising out of the refinancing, extension or renewal or refunding of any debt secured by any lien permitted under this Section 7.5, (d) liens related ----------- to capitalized lease obligations and (e) Liens in favor of the Agent and the Lenders. Section 7.6. Change in Business, Consolidations, Mergers, Sales of Assets, ------------------------------------------------------------- and Maintenance. None of the Borrowers shall, without prior approval of the - --------------- Required Lenders, (a) make any material change in the nature of its business, (b) consolidate or merge with or into any other Person, (c) sell, lease, abandon or otherwise transfer all or any material part of its assets to any Person, in one or a series of related transactions, or (d) terminate, or fail to maintain, its good standing and qualification to transact business in all jurisdictions. Section 7.7. Investments. None of the Borrowers, shall directly or ----------- indirectly, make any loans, advances, extensions of credit or capital contributions to, make any investment in, or Page 38 purchase any stock or securities of, or interest in, any Person, except for (a) Permitted Investments, (b) investments in the form of loans, advances or other obligations owed by any of the Borrowers to any other Borrower (c) loans, advances or extensions of credit made in the ordinary course of business and (d) investments in the form of loans or advances made by any of the Borrowers to any employee under employee stock option or retirement plans. Section 7.8. Distributions. None of the Borrowers shall make or declare ------------- any Distributions until the Obligations have been paid in full except for: (a) payments in respect of redemptions or repurchases of Borrowers' stock, provided that the maximum payments in respect thereof shall not exceed $1,000,000.00 in the aggregate and (b) Distributions by any of the Borrowers to any other Borrower. Section 7.9. Transactions with Affiliates. Except in connection with any ---------------------------- acquisition permitted hereunder or approved by Lenders, none of the Borrowers shall engage in any transaction with an Affiliate of any Borrower unless such transaction is generally as favorable to such Borrower as could be obtained in an arm's length transaction with an unaffiliated Person in accordance with prevailing industry customs and practices. Section 7.10. Limitation on Contingent Liabilities. None of the Borrowers ------------------------------------ shall create, incur, assume or suffer to exist any contingent liabilities, except for (a) litigation claims which do not result in a violation of Section ------- 8.1(l), and (b) contingent liabilities which are related to, and not in an - ------ amount which exceeds, Debt otherwise permitted to exist under the terms of this Agreement. TBM shall notify Agent upon the occurrence of all actual or contingent liabilities exceeding Five Hundred Thousand and No/100 Dollars ($500,000.00). Section 7.11. Employee Plans. -------------- (a) None of the Borrowers shall permit or suffer to exist any circumstances with respect to any Employee Plan that is likely to have a Material Adverse Effect. Each of the Borrowers shall use its best efforts to maintain and administer, and to cause each member of its Controlled Group (as that term is defined in the Code) to maintain and administer, any Employee Plan in accordance with the applicable requirements of the Code and ERISA. (b) With respect to any Pension Plan, none of the Borrowers shall (i) permit any accumulated funding deficiency (within the meaning of Section 412(a) of the Code), whether waived or unwaived, to exist; (ii) permit the present value of accrued benefits (based on the most recent actuarial valuation prepared for each such plan, if any, in accordance with ongoing actuarial assumptions) to exceed the current value of plan assets allocable to such benefits by a material amount; (iii) permit any reportable event (within the meaning of Section 4043 of ERISA) to occur, other than a reportable event with respect to which the 30-day notice requirement has been waived by regulation; (iv) permit a prohibited transaction (within the meaning of Section 4975 of the Code) for which there exists no statutory or regulatory exception to occur which has or could have a Material Adverse Effect; (v) incur any material liability to the PBGC; or (vi) incur any material withdrawal liability (within the meaning of Section 4201(a) of ERISA). Page 39 (c) None of the Borrowers shall incur a material obligation to provide post-employment health care benefits to any of its current or former employees, except as may be required by Section 4980B of the Code or otherwise required by law. Section 7.12. Use Violations. None of the Borrowers shall use, maintain, -------------- operate or occupy, or allow the use, maintenance, operation or occupancy of, any of its properties in any manner which (a) violates any Legal Requirement unless such violation would not have a Material Adverse Effect, (b) constitutes a public or private nuisance, or (c) makes void, voidable or cancelable any insurance then in force with respect thereto. Section 7.13. Fiscal Year and Accounting Methods. None of the Borrowers ---------------------------------- will change its Fiscal Year or its method of accounting other than changes as are concurred with by such Person's independent public accountants as being required by GAAP. Section 7.14. Governmental Regulations. None of the Borrowers will ------------------------ conduct its business in such a way that it will become subject to regulation under the Investment Advisers Act of 1940, as amended. None of the Borrowers will conduct its business in such a way that it will become subject to regulation under the Investment Company Act of 1940, as amended, or the Public Utility Holding Company Act of 1935, as amended, or any other laws, rules or regulations which regulate the incurrence of Debt. Section 7.15. Subsidiaries. Any Subsidiary created or acquired Subsidiary ------------ shall become a party to this Agreement and the other Loan Documents by its execution and delivery of the Supplemental Loan and Security Agreement, together with, in respect of the new Subsidiary, the satisfaction of all the conditions and requirements of Section 4.1, with the exception of Section 4.1(j) and (m), ----------- and the other conditions and requirements set forth in Section 6.1(h). ARTICLE VIII DEFAULTS AND REMEDIES Section 8.1. Events of Default. The term "Event of Default" as used in ----------------- ----------------- this Agreement, shall mean any one of the following: (a) The failure of Borrowers to pay when due any principal of the Notes; (b) The failure of Borrowers to pay when due any interest on the Notes, or any fees, charges or any other amounts payable to Agent or any Lender hereunder or under any of the Notes or other Loan Documents and the continuance of such failure, refusal or neglect for a period of ten (10) days after the date such amount is due; (c) The failure, refusal or neglect of Borrowers to observe, perform or comply with any covenant or agreement contained in Article VI and ---------- Article VII (other than Sections 6.4, 6.5, 6.6, 6.7, 7.1, 7.2, 7.3, 7.7 and ----------- ----------------------------------------------- 7.15 which are covered by Section 8.1(d) or Section 6.1 which is covered by ---- -------------- ----------- Section 8.1(e)); -------------- Page 40 (d) The failure, refusal or neglect of Borrowers to properly observe, perform or comply with any covenant, agreement or obligation contained in this Agreement, or any of the other Loan Documents (other than those covered by Sections 8.1(a), (b), (c) and (e)) and the continuance of such --------------------------------- failure, refusal or neglect for a period of thirty (30) days after written notice thereof has been given to TBM, on behalf of Borrowers, by Agent or a representative of Agent; (e) The failure, refusal or neglect of Borrowers to properly observe, perform or comply with the covenants, agreements or obligations contained in Section 6.1 of this Agreement and the continuance of such failure, ----------- refusal or neglect for a period of five (5) days after written notice thereof has been given to TBM, on behalf of Borrowers, by Agent or a representative of Agent; (f) Any representation, warranty, certification or statement made by Borrowers (either for themselves or for any other Person) in this Agreement or by Borrowers or any other Person on behalf of Borrowers in any certificate, financial statement or other document delivered pursuant to this Agreement or any other Loan Document shall prove to have been untrue in any material respect when made or deemed to have been made; (g) The occurrence of any default under the Security Agreement or any of the other Loan Documents; (h) The occurrence of any event or condition which constitutes a default (which default has not been cured in accordance with any applicable period of grace or cure) under or with respect to any Debt of any of the Borrowers (including, without limitations, the Other Lender Obligations of the Borrowers) and the continuance of such default or condition constituting such default for a period of thirty (30) days after written notice thereof has been given to TBM, on behalf of Borrowers, by Agent or a representative of Agent; (i) The filing or commencement by any of the Borrowers of a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or any of the Borrowers shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (j) The filing or commencement of an involuntary case or other proceeding against any of the Borrowers seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of thirty (30) days; or an order for relief shall be entered against Borrowers under the federal bankruptcy laws as now or hereafter in effect; (k) The liquidation or dissolution of any of the Borrowers; (l) One or more judgments or orders for the payment of money aggregating in excess of $250,000 (net of insurance proceeds) shall be rendered against any of the Borrowers and such judgment or order (A) shall continue unsatisfied and unstayed (unless bonded with a supersedeas bond at least equal to such judgment or order) for a period of thirty (30) days; or (m) Mark Walton, President of TBM, or Mike Perrine, Chief Financial Officer of TBM, are terminated, dismissed or otherwise cease to serve in such capacities and person(s) approved by Agent have not been employed by TBM in replacement thereof within sixty (60) days of such termination, dismissal or cessation of service. It is understood and agreed by Borrowers that any of the foregoing "Events of Default" shall constitute an Event of Default under each of the Notes, and that such "Events of Default" are cumulative and in addition to any default or events of default contained in any of the other Loan Documents, and that in the event of any discrepancy or inconsistency between any Event of Default hereunder and any default or event of default contained in any other Loan Document, the description of the Event of Default stated herein shall control. Section 8.2. Remedies. Upon the occurrence of an Event of Default, Agent, -------- at the direction and election of the Required Lenders, acting by or through any of its agents, trustees or other Persons, without notice (unless expressly provided for herein), demand or presentment (including, without limitation, notice of default, notice of intent to accelerate or of acceleration) all of which are hereby waived, and in addition to any other provision of this Agreement or any other Loan Document, to exercise any or all of the following rights, remedies and recourses: (a) Declare the unpaid principal balance of each of the Notes, the accrued and unpaid interest thereon and any other accrued but unpaid portion of the Obligations to be immediately due and payable, without notice (other than notice of the occurrence of an Event of Default sent by Agent to TBM simultaneously with such acceleration of the Obligations) (expressly including, but not limited to, notice of default, notice of intent to accelerate or of acceleration), except any notice that is expressly required by the terms of this Agreement, or presentment, protest, demand or action of any nature whatsoever, each of which hereby is expressly waived by Borrowers, whereupon the same shall become immediately due and payable. Notwithstanding the foregoing or anything to the contrary contained herein or in any Loan Document, upon the occurrence of an Event of Default described in Section 8.1(i) or Section 8.1(j) by Borrowers, the -------------- -------------- entire unpaid principal balance of the Notes, and all accrued, unpaid interest thereon shall automatically be accelerated and immediately be due and payable in full, without notice (expressly including, but not limited to, notice of default, intent to accelerate or of acceleration), presentment, protest, demand or action of any nature whatsoever, each of which hereby is expressly waived by Borrowers; provided, however, that if -------- accelerated automatically pursuant to this sentence, the Notes and all such indebtedness may be reinstated at the option and upon the written approval of the Required Lenders. (b) Sell or offer for sale the Collateral, or any part thereof, in such portions and order as Agent may determine in accordance with the provisions of the applicable Loan Documents and applicable Legal Requirements. (c) Make application to a court of competent jurisdiction, as a matter of strict right and, except as otherwise provided by applicable law, without notice to any of the Borrowers or without regard to the adequacy of the Collateral for the payment of the Obligations, for the appointment of a receiver of the Collateral, or any part thereof, and to the extent permitted by applicable law, each Borrower does hereby irrevocably consent to such appointment. Any such receiver shall have all the usual powers and duties of receivers in similar cases, including the full power to sell, dispose and otherwise deal with the Collateral, or any part thereof, upon such terms that may be approved by the court, and shall apply all proceeds from the Collateral in accordance with the provisions of Section 8.9 ----------- hereof. (d) Exercise any and all other rights, remedies and recourses granted hereunder or under the Loan Documents or otherwise now or hereafter existing in equity, at law, by virtue of statute or otherwise. Section 8.3. Rights of Set-Off. ----------------- (a) Borrowers hereby expressly grant to Lenders the right of setoff against all deposits and other sums at any time held or credited by or due from any Lender to any Borrower, in accordance with the provisions of this Section 8.3. The rights of each Lender under this Section 8.3 are in ----------- ----------- addition to other rights and remedies (including, without limitation, other rights of setoff under law or equity) which such Lender may have under law or by agreement. (b) Upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, at its option, without notice or demand and without liability, to set off and apply any and all deposits (general or special, time or demand, provisional or final, excepting, however, any fiduciary or escrow accounts established by Borrowers into which only funds of unrelated third-parties are deposited, and provided that Borrowers have informed such Lender and Agent of the nature of such accounts) at any time held, and other indebtedness at any time owing, by any Lender to or for the credit or the account of Borrowers against any and all of the Obligations now or hereafter existing under this Agreement, the Notes and the other Loan Documents, in such order and manner as such Lender may determine, subject, however, to the agreements contained in Section 9.14 hereof, regardless of whether such Lender shall have made any ------------ demand under this Agreement or the Notes and although such obligations may be unmatured. (c) Each of the Borrowers agree, to the fullest extent it may effectively do so under applicable law, that each Lender and any holder of a participation in any of the Notes (with the appropriate consent of such Lender) may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Borrower in the amount of such participation. Section 8.4. Remedies Cumulative, Concurrent and Non-Exclusive. Lenders ------------------------------------------------- shall have all rights, remedies and recourses granted in the Loan Documents, and available at law or equity and same (a) shall be cumulative and concurrent, (b) may be pursued separately, successively or concurrently against any of the Borrowers or any others obligated under any of the Notes, or against any one or more of them, at the sole discretion of Lenders, (c) may be exercised as often as the occasion therefor shall arise, it being agreed by Borrowers that the exercise or failure to exercise any of same shall in no event be construed as a waiver or release thereof or of any other right, remedy or recourse, and (d) are intended to be, and shall be, non-exclusive. Section 8.5. No Conditions Precedent to Exercise Remedies. Borrowers, and -------------------------------------------- any other Person hereafter obligated for payment or fulfillment of all or any part of the Obligations shall not, except as otherwise provided by applicable law, be relieved of such obligation by reason of (a) the failure of a trustee to comply with any request of any Borrower, or any other person so obligated to enforce any provisions of the Loan Documents, (b) the release, regardless of consideration, of any Person obligated with respect to the Obligations, or of the Collateral or any part thereof, or the additions of any Collateral in the future, and (c) any other act or occurrence, save and except the complete payment of the Obligations. Each of the Borrowers waives any right to require Lenders to proceed against any other Person, exhaust any Collateral or pursue any other remedy in Lenders' power. All dealings between any Borrower and any Lender, whether or not resulting in the creation of the Obligations, shall conclusively be presumed to have been had or consummated upon reliance upon this Agreement. Each Borrower authorizes Lenders, without notice or demand and without any reservation of rights against such Borrower and without affecting liability hereunder or on the Obligations, from time to time, to (i) renew, extend for any period, accelerate, modify, compromise, settle, or release the obligation of any other Person that may be obligated with respect to any or all of the Obligations or Collateral; (ii) take and hold any property as collateral, other than the Collateral, for the payment of any or all of the Obligations, and exchange, enforce, waive and release any or all of the Collateral or other property; and (iii) after the occurrence of an Event of Default, apply the Collateral or other property and direct the order or manner of sale thereof in accordance with the terms of this Agreement and the other Loan Documents. Section 8.6. Release of and Resort to Collateral. The release or ----------------------------------- substitution of all or any part of the Collateral, regardless of consideration, shall not in any way impair, affect, subordinate, or release the Lenders' Liens or their status as first and prior Liens in and to any remaining Collateral. For payment and performance of the Obligations, Lenders may resort to any other security therefor held by a trustee in such order and manner as Required Lenders may elect. Section 8.7. Waivers. To the full extent permitted by law, each of the ------- Borrowers hereby irrevocably and unconditionally waives and releases (a) all benefit that might accrue to any Borrower by virtue of any present or future law exempting the Collateral from attachment, levy or sale on execution or providing for the appraisement, evaluation, stay of execution, exemption from civil process, redemption or extension of time for payment, (b) except as specifically provided for herein, all notices of any Default or Event of Default or of any trustee's or Lenders' election to exercise or his or their actual exercise of any right, remedy or recourse provided for under the Loan Documents, (c) any right to a marshalling of assets with respect to the Notes or the Letters of Credit or any of the Collateral or any Debt of any Borrower, or a sale in inverse order of alienation and (d) except as specifically provided for herein, any and all right to receive demand, grace, notice, presentment for payment, protest, notice of intention to accelerate the Obligations or notice of acceleration of the Obligations. Section 8.8. Discontinuance of Proceedings. In case Agent shall have ----------------------------- proceeded to invoke any right, remedy or recourse permitted under the Loan Documents and shall thereafter elect to discontinue or abandon same for any reason, Agent shall have the unqualified right to do so and, in such event, each of the Borrowers and Lenders shall be restored to their former positions with respect to the Obligations, the Loan Documents, and otherwise, and the rights, remedies, recourses and powers of Agent and Lenders shall continue as if same had never been invoked. Section 8.9. Application of Proceeds. All payments on the Notes or the ----------------------- Letters of Credit received by any Lender during the existence of an Event of Default (unless otherwise elected by Lenders), and the proceeds of any sale or disposition of, and all proceeds generated by, the Collateral during the existence of an Event of Default and upon the exercise of Lenders' rights and remedies hereunder or under any of the Loan Documents, shall be applied by Lenders, the applicable trustee or the receiver, if one is appointed, to the extent that funds are so available therefrom, as determined by the Required Lenders (provided that, as among themselves, Lenders agree that any such proceeds shall be applied as contemplated by Article IX hereof). ---------- Section 8.10. Power of Attorney. Each of the Borrowers hereby irrevocably ----------------- appoints Agent, acting for all the Lenders, as the true and lawful attorney of such Borrower with full power of substitution for, and on behalf of such Borrower, and in its name, upon the request and instruction of such Borrower and in any event after the occurrence of an Event of Default, to take any action to preserve, maintain, protect or enforce the rights and interests of such Borrower with respect to the Collateral, including, without limitation, to (i) enforce, cure any default or otherwise act with respect to any leases, service contracts, management or marketing contracts or any other agreements which are part of, pertain to or affect any of the Collateral, (ii) take all such action and to execute all such documents as Agent deems necessary or desirable to preserve or protect all Accounts included in the Collateral, and (iii) sue for, demand or collect any sums owing to any Borrower under any Accounts or under leases or other agreements included in the Collateral. The power so vested in Agent under this Section 8.10 is one coupled with an interest and shall be irrevocable, ------------ except by written instrument executed jointly by each of the Borrowers and Agent and filed for record in the Office of the County Clerk of Travis County, Texas. Notwithstanding the foregoing, Agent shall be under no obligation to exercise any of the foregoing rights or take any action necessary to preserve any right in any asset subject to the Lenders' Liens against any other Person, and Agent, to the extent permitted herein or by applicable law, may exercise any of the foregoing rights without incurring any responsibility or liability to any Borrower or any other Person and without in any way affecting the Obligations or any other obligations of any Borrower to Lenders. Borrowers, jointly and severally, agree to reimburse Agent and Lenders upon demand for any costs and expenses, including, without limitation, reasonable attorneys' fees and collection costs, that Agent or any Lender may incur while acting as the attorney-in-fact of each Borrower as provided hereunder (or pursuant to the attorney-in-fact herein created), all of which costs and expenses shall be included in the Obligations. ARTICLE IX AGENT AND THE LENDERS Section 9.1. Appointment and Authorization of Agent. -------------------------------------- (a) Each Lender hereby irrevocably appoints and authorizes Agent as its nominee and agent, in its name and on its behalf: (i) to act as nominee for and on behalf of such Lender in and under all Loan Documents; (ii) to arrange the means whereby the funds of the Lenders are to be made available to Borrowers under the Loan Documents; (iii) to take such action as may be requested by any Lender under the Loan Documents (when such Lender is entitled to make such request under the Loan Documents and after such requesting Lender has obtained the concurrence of such other Lenders as may be required under the Loan Documents); (iv) to receive all documents and items to be furnished to the Lenders under the Loan Documents; (v) to promptly distribute to each Lender the material information, requests, documents and items received from Borrowers under the Loan Documents; (vi) to promptly distribute to each Lender such Lender's Loan Percentage of each payment or prepayment in accordance with the terms of the Loan Documents; and (vii) to deliver to the appropriate Persons requests, demands, approvals and consents received from the Lenders. (b) The obligations of Agent hereunder are only those expressly set forth herein. Each Lender and each Borrower agrees that Agent is not a fiduciary for the Lenders or for any of the Borrowers but simply is acting in the capacity described herein to alleviate administrative burdens for both Borrowers and the Lenders and that Agent has no duties or responsibilities to the Lenders or Borrowers except those expressly set forth herein. Without limiting the generality of the foregoing, Agent shall not be required to take any action or exercise any right or remedy with respect to any Default or Event of Default, except if requested by the Required Lenders. Notwithstanding the administrative authority delegated to Agent, Agent shall not cause or permit any modification of the Loan Documents or take other action relating to the Credit Facility specifically requiring the consent or approval of the Required Lenders without such consent or approval. Action taken by Agent including, without limitation, any exercise of remedies or initiation of suit or other legal proceedings made in accordance with the instructions of the Required Lenders or as otherwise permitted by this Article IX, shall be binding upon each of the Lenders. ---------- (c) Agent, in its capacity as a Lender, shall have the same Rights under the Loan Documents as any other Lender and may exercise the same as though it were not acting as Agent, and any resignation by Agent hereunder shall not impair or otherwise affect any Rights which it has or may have in its capacity as an individual Lender. (d) Agent may now or hereafter be engaged in one or more loan, letter of credit, leasing, or other financing transactions with any of the Borrowers, act as trustee or depositary for any of the Borrowers, or otherwise be engaged in other transactions with any of the Borrowers and/or their Affiliates (collectively, the "other activities") not the subject of the Loan Documents. Without limiting the Rights of the Lenders specifically set forth in the Loan Documents, Agent shall not be responsible to account to the Lenders for such other activities, and no Lender shall have any interest in any other activities, any present or future guaranties by or for the account of any of the Borrowers which are not contemplated or included in the Loan Documents (any present or future offset exercised by Agent in respect of such other activities), any present or future property taken as security for any such other activities, or any property now or hereafter in the possession or control of Agent which may be or become security for the Obligations by reason of the general description of indebtedness secured or of property contained in any other agreements, documents or instruments related to any such other activities; provided that, if any payments in respect of such guaranties, such property or the proceeds thereof or any offset shall be applied to reduction of the Obligations in priority to any indebtedness arising out of any such other activities, and each Lender shall be entitled to share in such application according to its Loan Percentage thereof. Section 9.2. Possession of Instruments by Agent. Agent shall exercise all ---------------------------------- rights and remedies under the Loan Documents and take all actions with respect thereto in accordance with the request or direction of the Required Lenders, or otherwise as and to the extent provided herein or in the other Loan Documents; provided, however, that Agent may take such actions in its name without the joinder of the Lenders, and each of the Borrowers and all third parties shall be entitled to rely on the actions taken by Agent with respect to the execution by Agent of any and all agreements, financing statements, affidavits, notices or any other type of document or instrument pertaining thereto, including, without limitation, in connection with the exercise of any rights or remedies of the Lenders under the Loan Documents, and the same shall be binding upon all the Lenders as to any third party relying on such actions of Agent. Section 9.3. Expenses. Each Lender shall pay its Loan Percentage of any -------- reasonable expenses (including, without limitation, court costs, reasonable attorneys' fees and other costs of collection) incurred by Agent in connection with any of the Loan Documents if Agent does not receive reimbursement therefor from other sources within thirty (30) days after incurred; provided that, and subject to the terms and conditions of Section 10.4, each Lender shall be ------------ entitled to receive its Loan Percentage of any reimbursement for such expenses, or part thereof, which Agent subsequently receives from such other sources. Section 9.4. Delegation of Duties; Reliance; Consultation. Lenders may -------------------------------------------- perform any of their duties or exercise any of their Rights under the Loan Documents by or through Agent, and Lenders and Agent may perform any of their duties or exercise any of their Rights under the Loan Documents by or through their respective officers, directors, employees, attorneys, agents, or other representatives (collectively, "Representatives"). Agent, Lenders, and their --------------- respective Representatives shall (a) be entitled to rely upon (and shall be protected in relying upon) any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telecopy, telegram, telex or teletype message, statement, order or other documents or conversation believed by any of them to be genuine and correct and to have been signed or made by the proper Person and, with respect to legal matters, upon opinion of counsel selected by Agent or such Lender, (b) be entitled to deem and treat each Lender as the owner and holder of its Loan Percentage for all purposes until, subject to Section 10.10, written notice of the assignment or transfer thereof shall have - ------------- been given to and received by Agent (and, any request, authorization, consent or approval of any Lender shall be conclusive and binding on each subsequent holder, assignee, or transferee of such Lender's Loan Percentage or participant therein until such notice is given and received), and (c) not be deemed to have notice of the occurrence of a Default or an Event of Default unless notified thereof by another Lender or Borrowers. Agent may consult with legal counsel, independent public accountants, consultants, appraisers and other experts selected by Agent, and shall not be liable for any action taken or omitted to be taken by Agent in good faith in accordance with the advice of such counsel, accountants or experts. Any such counsel, accountants or other experts shall be engaged to represent and render services to all Lenders as a group unless otherwise specified by Agent. Section 9.5. Limitation of Agent's Liability. ------------------------------- (a) Neither Agent nor any of its Representatives shall be liable for any action taken or omitted to be taken by it or them under the Loan Documents in good faith and believed by it or them to be within the discretion or power conferred upon it or them by the Loan Documents or be responsible for the consequences of any error of judgment or negligence, except for gross negligence or willful misconduct, and neither Agent nor any of its Representatives has a fiduciary relationship with any Lender by virtue of the Loan Documents (provided that nothing herein shall negate the obligation of Agent to account for funds received by it for the account of any Lender). (b) Unless indemnified to its satisfaction against loss, cost, liability, and expense, Agent shall not be compelled to do any act under the Loan Documents or to take any action toward the execution or enforcement of the powers thereby created or to prosecute or defend any suit in respect of the Loan Documents. If Agent requests instructions from the Lenders with respect to any act or action (including, but not limited to, any failure to act) in connection with any Loan Document, Agent shall be entitled (but shall not be required) to refrain (without incurring any liability to any Person by so refraining) from such act or action unless and until it has received such instructions. In no event, however, shall Agent or any of its Representatives be required to take any action which it or they reasonably determine could incur for it or them criminal or civil liability. (c) Agent shall not be responsible in any manner to any Lender or any participant of a Lender for, and each Lender represents and warrants that it has not relied upon Agent in respect of, (i) the creditworthiness of Borrowers and the risks involved to such Lender, (ii) the effectiveness, enforceability, genuineness, validity, or the due execution of any Loan Document, (iii) any representation, warranty, document, certificate, report, or statement made therein or furnished thereunder or in connection therewith, or (iv) the observation of or compliance with any of the terms, covenants, or conditions of any Loan Document on the part of any Borrower. Each Lender jointly and severally agrees to indemnify Agent and hold it harmless from and against (but limited to such Lender's Loan Percentage of) any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses, and reasonable disbursements of any kind or nature whatsoever (including counsel fees and disbursements) which may be imposed on, asserted against, or incurred by Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by Agent under the Loan Documents (provided that, although Agent shall have the right to be indemnified for its ordinary negligence, Agent shall not have the right to be indemnified hereunder for its own fraud, gross negligence, or willful misconduct). Section 9.6. Default. Upon the occurrence and continuance of a Default or ------- an Event of Default, Agent shall make a recommendation to Lenders of any actions to be taken and each of the Lenders agrees to promptly confer in order that Lenders can consider such course of action or any other actions to be taken for the enforcement of the Rights of Lenders; provided that Agent shall be entitled (but not obligated) to proceed to take any actions necessary in its reasonable judgment to preserve Rights, pending agreement by Lenders on the course of action to be taken. If the Required Lenders cannot agree on a course of action to be taken within sixty (60) days following Agent's initial recommendation, Agent shall thereafter take such action as Agent deems advisable to enforce the Rights of Lenders. Any action directed or approved by the Required Lenders, including without limitation, any exercise of remedies or initiation of suit or other legal proceedings, shall be binding upon each Lender. In actions with respect to any property of any Borrower, Agent is acting for the account of each Lender to the extent of each Lender's Loan Percentage. Any and all agreements to subordinate (whether made heretofore or hereafter) other indebtedness or obligations of any of the Borrowers to the Obligations shall be construed as being for the benefit of each Lender to the extent of its respective Loan Percentage. If Agent acquires any security for the Obligations or any guaranty of the Obligations, the same shall be held for the benefit of each Lender in proportion to such Lender's respective Loan Percentage. Lenders agree, among themselves, that unless otherwise agreed to by Agent and the Required Lenders, all monies collected or received by Agent in respect of the Credit Facility, directly or indirectly, shall be applied to all costs of collection and then to interest or principal as recommended by Agent and approved by the Required Lenders. Section 9.7. Lenders' Decision. Lenders agree as among themselves that ----------------- any decisions or elections to be made by Lenders (and not Agent) under this Agreement and the other Loan Documents shall be made by the Required Lenders, except in the case, if any, where a specific different number or percentage of Lenders is expressly required under this Agreement or any other Loan Documents (use of the terms "Lenders" in any of the Loan Documents, without an express provision for different voting rights other than as set forth in the definition of Required Lenders, does not imply that unanimous consent is thereby required). Agent may, at its election, request any determination, vote, consent or approval by Lenders in writing or orally (by telephone or in person). In addition, if any request by Agent for Lenders' determination or approval hereunder is made in writing and such writing contains written notice to Lenders requesting a response within five Business Days, or longer, from the date Lenders are deemed to have received notice as herein provided (and setting forth the actual date of the last day of the Lender reply period), then Lenders shall use reasonable efforts to reply within the applicable reply period, provided, that if any such Lender does not reply within the applicable reply period, such Lender shall be deemed not to have approved of or consented to or concurred with such recommendation or determination. Section 9.8. Limitation of Liability of Lenders. To the extent permitted ---------------------------------- by law, (a) neither Agent nor any Lender or participant of a Lender shall incur any liability to any other Lender or participant of a Lender except for acts or omissions in bad faith, and (b) neither Agent nor any Lender or participant of a Lender shall incur any liability to any of the Borrowers or any other Person for any act or omission of any other Lender or any participant. Section 9.9. Relationship of Lenders. Nothing herein shall be construed ----------------------- as creating a partnership or venture among Agent and Lenders or among Lenders. Section 9.10. Debtor-Creditor Relationship. Each Lender has and shall ---------------------------- maintain a direct creditor-debtor relationship with Borrowers and will have direct recourse, singly or in the aggregate, against Borrowers, subject to the terms and conditions of the Loan Documents. Notwithstanding the foregoing, any right, remedy, action, omission or waiver respecting this Agreement, the Notes, and the other Loan Documents shall only be exercised, made, taken, or permitted by Agent, acting upon the direction of the Required Lenders, as the agent for all Lenders; provided, however, that if the Required Lenders have elected and directed Agent to institute suit against any of the Borrowers for payment of any past due amounts under the Notes or any other Obligations for which Lenders have recourse against any of the Borrowers, or in the event of any bankruptcy proceedings or other legal proceedings relating to this Agreement against any of the Borrowers, each Lender shall be entitled, at its option, to bring or join in such proceedings in its own name. Section 9.11. Credit Decisions. Each Lender acknowledges that it has, ---------------- independently and without reliance upon Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and each of the other Loan Documents to which it is a party or to which Agent is a party for its benefit. Each Lender also acknowledges that it will, independently and with out reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement or with respect to the Credit Facility. Section 9.12. Removal of Agent. Lenders, acting by written notice to ---------------- Agent from and agreed to by all of the Lenders other than Agent, may remove for cause the then current Agent, as Agent, and appoint one of the other Lenders as the successor Agent. Upon the appointment of a successor Agent, the removed Agent and the successor Agent shall execute such documents as any Lender may reasonably request to reflect such appointment of a successor Agent and shall notify Borrowers of such change in the Agent. The successor Agent shall be vested with all rights, powers and privileges and be bound to all duties, obligations and responsibilities of Agent in and under this Agreement and the other Loan Documents; provided, however, that until such time as Borrowers are notified in writing signed by both the removed and successor Agents as to the appointment of the successor Agent, Borrowers shall be entitled to rely on any decision, approval or other act by the removed Agent as binding on Lenders, and may pay to Agent any amounts due or owing by Borrowers under the Loan Documents. Section 9.13. Resignation by Agent. An Agent's status as Agent under this -------------------- Agreement shall automatically terminate fifteen (15) days after the closing or liquidation of such Agent or fifteen (15) days after such Agent is adjudicated insolvent. Additionally, Agent may resign its position as Agent at any time by giving at least thirty (30) days written notice thereof to Borrowers and the other Lenders. Upon any such occurrence causing a termination of Agent or the delivery of such notice of resignation from Agent, the Required Lenders and Borrowers shall select a successor Agent. If the Required Lenders and Borrowers cannot agree upon the choice of the successor Agent within ten (10) days after the occurrence causing a termination in the case of a termination of Agent, or ten (10) days prior to the effective resignation date set forth in Agent's resignation notice in the case of a resignation by Agent, then the Designated Successor Agent shall become the successor Agent. Borrowers shall be entitled to participate in the selection of the replacement Agent only prior to the occurrence of a Default. Upon any such termination or resignation, (a) the successor Agent shall automatically be vested with all rights, powers and privileges and be bound to all duties, obligations and responsibilities of Agent in and under this Agreement and the other Loan Documents and shall thereafter be deemed the "Agent" for all purposes under the Loan Documents and (b) such terminating or resigning Agent shall act only in a custodial capacity for the holding by it of any funds theretofore received from Borrowers and any such funds shall be held in trust for the benefit of the Lenders or Borrowers, as the case may be. Additionally, upon the successor Agent becoming Agent as provided in this Section 9.13, the terminating or resigning Agent and the new Agent shall ------------ execute such documents as any Lender may reasonably request to reflect such succession. All costs incurred in connection with the execution of such documents shall be paid by Lenders in proportion to each Lender's Loan Percentage. Section 9.14. Sharing of Payments and Setoffs. Each Lender agrees that if ------------------------------- it should receive any amount (whether by voluntary payment, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents or otherwise) which is applicable to the payment of the principal of or interest on the Credit Facility, of a sum which with respect to the related sum or sums received by the other Lenders exceeds such Lender's Loan Percentage, then such Lender receiving such excess payment shall purchase without recourse or warranty from the other Lenders an interest in the indebtedness of Borrowers to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. This Section 9.14 shall not impair the right of any Lender to exercise any right of - ------------ setoff or counterclaim it may have with respect to any funds in an account pledged to such Lender to secure only indebtedness other than the Obligations, and to apply the amount received or subject to such exercise to the payment of such other indebtedness, it being expressly agreed by all the Lenders, however, that until the Obligations are paid and satisfied in full, any and all amounts received by any Lender from offset of any account of any Borrower shall be applied to the Obligations, and not to any other indebtedness of such Borrower to such Lender, except in the case of a certificate of deposit or other designated account (but in no event any operating account of such Borrower) that is specifically pledged or assigned to a Lender as security for indebtedness other than the Obligations. Section 9.15. Non-advancing Lenders. In the event that any Lender shall --------------------- fail or refuse to advance its Loan Percentage of any payment or reimbursement by the Lenders as required hereunder, or of any amount to be funded pursuant to Section 9.3, when it is obligated to do so, Agent shall notify the other Lenders - ----------- of such failure, and such remaining Lenders, or any of them, may elect, at their sole option and discretion (without any obligation whatsoever to do so), to advance such non-advancing Lender's portion, pro rata in accordance with the proportion that the Loan Percentage of each Lender electing to make such advance bears to the Loan Percentages of all Lenders electing to make such advance. Upon making any such advance, and notwithstanding anything to the contrary expressed or implied herein or in the Notes or any Loan Document, all subsequent payments made on the Credit Facility or from the exercise of right of setoff or other remedies under this Agreement or the other Loan Documents, shall be applied, in the manner described below, only to Lenders other than the non- advancing Lender (and the non-advancing Lender shall not be entitled to receive the same), until the amounts advanced by such advancing Lenders on behalf of the non-advancing Lender (together with the interest earned thereon pursuant to this Agreement and the Notes), have been repaid in full. As among Lenders other than the non-advancing Lender, Lenders that advanced funds on behalf of the non- advancing Lender shall receive the portion the non-advancing Lender would have been entitled to receive had it advanced (together with the interest earned thereon pursuant to this Agreement and the Notes), to be applied pro rata in accordance with the amounts advanced by each such advancing Lender, until the amounts advanced by such Lenders on behalf of the non-advancing Lender (together with the interest earned thereon pursuant to this Agreement and the Notes), have been repaid in full; any Lender that advanced only on its own behalf based on its Loan Percentage shall be repaid based on such Loan Percentage. In addition, any Lenders that advance funds on behalf of a non-advancing Lender pursuant to this Section 9.15 shall have a claim against such non-advancing Lender for the ------------ amounts so advanced and shall be entitled to all rights and remedies at law or in equity to recover any unpaid amounts. A non-advancing Lender shall not be entitled to vote on any matters hereunder or related to the Credit Facility (and its interest shall be excluded for purposes of determining the requisite percentage or number of Lenders for a vote) so long as such Lender remains a non-advancing Lender. Section 9.16. Benefit of Lenders. All terms, conditions and agreements ------------------ set forth in this Article IX, other than those provisions expressly made for the ---------- benefit of Borrowers, are for the sole and exclusive benefit of Lenders, and neither Borrowers nor any other Person shall be entitled to rely on or seek the benefit of such provisions; provided, however, that Borrowers shall be entitled to rely on any decision, approval or other act by Agent as binding Lenders. ARTICLE X MISCELLANEOUS Section 10.1. Continuing Agreement. This is a continuing Agreement and -------------------- all the rights, powers and remedies of Lenders hereunder and all agreements and obligations of Borrowers and Lenders hereunder, shall continue to exist until all Advances have been paid in full, the commitment of Lenders to make Advances hereunder has been terminated, all Letters of Credit have been terminated and all other Obligations have been paid in full. Section 10.2. Notices. All notices, requests and other communications to ------- any party hereunder shall be in writing (including bank wire, telecopy or similar writing), except for any telephone notices as specifically provided for herein, may be personally served or sent by telecopier, mail or the express mail service of the United States Postal Service, Federal Express or other equivalent overnight or expedited delivery service, and (a) if given by personal service or telecopier (confirmed by telephone), it shall be deemed to have been given upon receipt; (b) if sent by telecopier without telephone confirmation, it shall be deemed to have been given twenty-four (24) hours after being given; (c) if sent by mail, it shall be deemed to have been given upon the earlier of (i) actual receipt, or (ii) three (3) Business Days after deposit in a depository of the United States Postal Service, first class mail, postage prepaid; (d) if sent by Federal Express, the express mail service of the United States Postal Service or other equivalent overnight or expedited delivery service, it shall be deemed given upon the earlier of (i) actual receipt or (ii) twenty-four (24) hours after delivery to such overnight or expedited delivery service, delivery charges prepaid, and properly addressed to the applicable Borrower or Lender; provided that notices to Agent under Articles II, III and IV shall not be effective until ----------------------- received. For purposes hereof, the address of the parties to this Agreement shall be as set forth in Schedule I attached hereto. Any party may, by proper ---------- written notice hereunder to the other parties, change the address to which notices shall thereafter be sent to it. Notwithstanding anything to the contrary implied or expressed herein, the notice requirements herein (including the method, timing or deemed giving of any notice) are not intended to and shall not be deemed to increase the number of days or to modify the method of notice or to otherwise supplement or affect the requirements for any notice required or sent pursuant to any Legal Requirement (including, without limitation, any applicable statutory or law requirement), or otherwise given hereunder, that is not required under this Agreement or the other Loan Documents. The provisions of this Section 10.2 shall control over any conflicting contractual notice ------------ provisions contained in the Loan Documents. Section 10.3. No Waivers. No failure or delay by Agent or any Lender in ---------- exercising any right, power or privilege hereunder or under the Notes or any other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law or in any of the other Loan Documents. Section 10.4. Expenses; Documentary Taxes; Indemnification. Each -------------------------------------------- Borrower, jointly and severally, agrees to pay (a) all expenses of Agent and the reasonable fees and disbursements of legal counsel for Agent in connection with the negotiation, documentation and closing of the Credit Facility, and in connection with any waiver or consent hereunder or under the Loan Documents or any amendment, supplement or replacement of any of the Loan Documents; and (b) if a Default or an Event of Default occurs, all out-of-pocket expenses incurred by Agent or Lenders, including fees and disbursements of legal counsel in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom (including, without limitation, any bankruptcy or other insolvency proceedings), fees of auditors and consultants incurred in connection therewith and investigation expenses incurred by Lenders in connection therewith. Each Borrower shall indemnify Agent and each Lender against any Taxes (other than Taxes on the income of any Lender) imposed by reason of the execution and delivery of this Agreement or the Notes. Each Borrower further shall, jointly and severally, indemnify Agent and each Lender and hold Agent and each Lender harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of counsel for Agent and Lenders in connection with any investigative, administrative or judicial proceeding, whether or not Agent or Lenders shall be designated a party thereto) which may be incurred by Agent or any Lender relating to or arising out of this Agreement or any actual or proposed use of proceeds of the Notes; PROVIDED THAT -------- ---- NEITHER AGENT NOR ANY LENDER SHALL HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE INTENTION HEREBY THAT AGENT AND EACH LENDER SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS NEGLIGENCE. Section 10.5. Amendments and Waivers; Consent to Deviation. Any provision -------------------------------------------- of this Agreement, the Notes or the other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by Borrowers and Required Lenders. Section 10.6. Survival. All representations, warranties and covenants -------- made by each Borrower herein or in any certificate or other instrument delivered by it or on its behalf under the Loan Documents shall be considered to have been relied upon by Lenders and shall survive the delivery to Agent or Lenders of such Loan Documents or the extension of any of the Notes (or any part thereof), regardless of any investigation made by or on behalf of Agent or any Lender. Section 10.7. Prior Understandings; No Defenses; Release; No Oral --------------------------------------------------- Agreements. This Agreement supersedes all other prior understandings and - ---------- agreements, whether written or not, between the parties hereto relating specifically to the transactions provided for herein. Each Borrower confirms that there are no existing defenses, claims, counterclaims or rights of offset against any Lender in connection with the negotiation, preparation, execution, performance or any other matters related to this Agreement or any of the other Loan Documents executed as of the date hereof and any of the transactions contemplated thereby, and each Borrower hereby expressly releases and discharges each Lender, and its officers and representatives, from any and all such claims, known or unknown. Each Borrower further confirms that none of the Lenders has made any agreements with, or commitments or representations to, any Borrower (either in writing or orally) other than as expressly stated herein or in the other Loan Documents executed as of the date hereof. THIS WRITTEN CREDIT AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. To the fullest extent applicable, each Borrower and Lender acknowledges and agrees that this Agreement and each of the Loan Documents shall be subject to Section 26.02 of the Texas Business and Commerce Code. Section 10.8. Limitation on Interest. It is expressly stipulated and ---------------------- agreed to be the intent of Borrowers, Agent and Lenders at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with the Obligations. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under the Notes or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to any of the or if acceleration of the maturity of the Obligations, any prepayment by Borrowers, or any other circumstance whatsoever, results in Agent or any Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Borrowers, Agent and Lenders that all excess amounts theretofore collected by Agent and/or Lenders be credited on the principal balance of the Obligations (or, if the Obligations have been or would thereby be paid in full, refunded to Borrowers), and the provisions of the Notes and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of the Notes does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and neither Agent nor Lenders intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Agent and Lenders for the use, forbearance or detention of the indebtedness evidenced by the Loan Documents shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate or maximum amount of interest permitted under applicable law. The term "applicable law" as used herein shall mean the laws of the State of Texas, or - --------------- any other applicable United States federal law to the extent that it permits Lenders to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law. The provisions of this Section 10.8 shall ------------ control all agreements between Borrowers, Agent and Lenders. Section 10.9. Invalid Provisions. If any provision of the Loan Documents ------------------ is held to be illegal, invalid, or unenforceable under present or future laws effective during the term thereof, such provision shall be fully severable, the Loan Documents shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part thereof, and the remaining provisions thereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as a part of the Loan Documents a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid and enforceable. Section 10.10. Successors and Assigns. ---------------------- (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that (i) no Borrower shall directly or indirectly, assign -------- ---- or transfer, or attempt to assign or transfer, any of its rights, duties or obligations under this Agreement without the express prior written consent of the Required Lenders, (ii) the Lenders may not assign or transfer any of their rights or interests in this Agreement, the Notes or the other Loan Documents, other than to an Affiliate of such Lender, except in accordance with this Section 10.10, and (iii) Agent may not assign or transfer more ------------- than forty-nine percent (49%) of its rights or interests in this Agreement, the Notes or the Loan Documents, without the express prior written consent of Borrowers, which consent will not be unreasonably withheld and will only be required prior to the occurrence of a Default; provided, that Agent may sell, assign or transfer participations in this Agreement, the Notes or the other Loan Documents in excess of forty-nine percent (49%) of its rights or interests. (b) Each Lender shall have the right, at any time and from time to time, to assign all or a part of its rights, interests and obligations under this Agreement and to sell or transfer to any Person a participation interest in such Lender's portion of the Credit Facility, subject to and in accordance with the following provisions: (i) In the case of a participation, such Lender shall remain the "Lender" for all purposes under the Loan Documents (including without limitation any votes, elections or other decisions of the Lenders hereunder) and shall remain fully liable for its obligations hereunder, and Agent shall continue to deal directly and solely with such Lender under the Loan Documents and shall have no duty or obligation to deal with any participant in any manner (including without limitation, delivery of information or distribution of any funds to any participant). (ii) Borrowers and Agent shall have given their prior written consent for such assignment or participation; provided that Borrowers' consent shall not be unreasonably withheld or delayed, and shall not be required during the continuance of a Default. (iii) Any such assignment or participation must be to an Eligible Assignee and in an amount equal to or in excess of Three Million and No/100 Dollars ($3,000,000.00). (c) In addition to the conditions and requirements set forth in Section 10.10(b), any assignment by any Lender shall be subject to the ---------------- following conditions: (i) Each assignment shall be of a constant, and not a varying, percentage of all of the assigning Lender's rights and obligations under this Agreement. (ii) The parties to any assignment shall execute and deliver to the Agent, for recording in the Register (as hereinafter defined), with a copy there of to Borrowers, an Assignment and Acceptance, substantially in the form of Exhibit D hereto (an "Assignment and --------- -------------- Acceptance"), together with any of the Notes subject to such ---------- assignment. Upon execution of an Assignment and Acceptance, delivery by the transferor Lender of an executed copy thereof to Borrowers and Agent (together with notice that payment of the purchase price, as hereinafter provided, shall have been made), and payment by such purchaser to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such purchaser, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance (which effective date shall be at least five Business Days after the execution thereof), (A) the assignee thereunder shall be a party to this Agreement as a "Lender" hereunder and, to the extent provided in such Assignment and Acceptance, shall have the rights and obligations of a Lender hereunder, and (B) the assigning Lender shall, to the extent provided in such assignment and upon payment to the Agent of the registration fee referred to in Section 10.10(e), be released from its ---------------- obligations under this Agreement, except for any obligations which by their nature should survive any such assignment. (d) By executing and delivering an Assignment and Acceptance, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the claim, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto; (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by any Borrower or any other Person primarily or secondarily liable in respect of any of the Obligations or any of their Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements delivered to Lenders by each Borrower and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the assigning Lender, the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee represents and warrants that it is an Eligible Assignee;(vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender; and (viii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance. (e) Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register or similar list (the "Register") for the -------- recordation of the names and addresses of the Lenders and the Loan Percentages of, and principal amount of the Credit Facility owing to the Lenders from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrowers and the Lenders at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation, the assigning Lender agrees to pay to the Agent a registration fee in the sum of $3,500.00. (f) Upon its receipt of an Assignment and Acceptance executed by the parties to such assignment, together with each Note subject to such assignment, the Agent shall (i) record the information contained therein in the Register, and (ii) give prompt notice thereof to Borrowers and the Lenders (other than the assigning Lender), and Schedule I shall ---------- automatically be deemed revised to reflect the name, address, Loan Amount and Loan Percentage of the new Lender and the deletion of or changed information for the assigning Lender, and Agent shall deliver to Borrowers and the Lenders, upon request by Borrowers or any Lender, an amended Schedule I reflecting such changes. Within five (5) Business Days after ---------- receipt of such notice, Borrowers, at the Lenders' expense, shall execute and deliver to the Agent, in exchange for each surrendered Note, a new Note payable to the order of such Eligible Assignee in an amount equal to the amount assigned to such Eligible Assignee pursuant to such Assignment and Acceptance and, if the assigning Lender has retained some portion of its obligations hereunder, a new Note payable to the order of the assigning Lender in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes. The surrendered Notes shall be cancelled and returned to any Borrower. (g) Any Lender may at any time pledge all or any portion of its interest and rights under this Agreement (including all or any portion of its Note) to any of the twelve Federal Reserve Banks organized under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)1341. No such pledge or the enforcement thereof shall release the pledgor Lender from its obligations hereunder or under any of the other Loan Documents. (h) Notwithstanding anything to the contrary contained herein, a Lender may not sell or participate any of its interests for a purchase price which, directly or indirectly, reflects a discount from face value (i.e., the aggregate outstanding principal portion of the Credit Facility to be sold or participated plus accrued and unpaid interest thereon), without first offering such sale or participation at such discounted price to the other Lenders on a pro rata basis, in which event such other Lenders shall have thirty (30) days in which to elect whether to purchase the interest to be sold. Section 10.11. Senior Debt; Borrower Subordination. The indebtedness of ----------------------------------- Borrowers hereunder and under the Notes and all of the Obligations is intended to be and shall be senior to any subordinated indebtedness of Borrowers secured by a Lien on any portion of the Collateral (the foregoing shall not in any way imply Lenders' consent to any such subordinate debt which is not otherwise permitted by this Agreement). The Notes and any other amounts advanced to or on behalf of Borrowers or any other Person pursuant to the terms of this Agreement or any other Loan Document, shall never be in a position subordinate to any Debt of Borrowers owing to any other Person, except with the knowledge and written consent of Lenders. Section 10.12. Revolving Loan. Borrowers warrant and represent to Lenders, -------------- and to all other holders of any debt evidenced by the Notes that the Advances are and shall be for business, commercial, investment, or other similar purpose and not primarily for personal, family, household, or agricultural use. Borrowers and Lenders hereby agree that, except for Section 15.10(b) thereof, the provisions of Art. 5069-15.01 et seq. of the Revised Civil Statues of Texas, 1925, as amended (regulating certain revolving credit loans and revolving triparty accounts) shall not govern or in any manner apply to the Notes, the Letters of Credit or the other Loan Documents. Section 10.13. Construction. The parties hereto acknowledge and agree that ------------ neither this Agreement nor any other Loan Document shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiations and preparation of this Agreement and the other Loan Documents. Section 10.14. APPLICABLE LAW. THIS AGREEMENT, THE NOTES AND ALL THE LOAN -------------- DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES, RELATED TO ANY PART OF BORROWER'S ASSETS OR TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 10.8 OR OTHERWISE. ------------ Section 10.15. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE ----------- PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED NOTES OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OR JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THE AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. (A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF BORROWER'S DOMICILE AT THE TIME OF THE AGREEMENT'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS. (B) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE LENDERS OF THE PROTECTION AFFORDED TO IT BY 12. U.S.C. (S)91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDERS HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDERS MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. Section 10.16. JURY TRIAL WAIVER. BORROWERS AND LENDERS EACH HEREBY WAIVE ----------------- ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY MATTER ARISING OR RELATING TO THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. Section 10.17. Counterparts. This Agreement and all amendments hereto, and ------------ all the other Loan Documents may be executed in any number of original counterparts, each of which when so executed and delivered shall be an original, and all of which, collectively, shall constitute one and the same agreement, it being understood and agreed that the signature pages may be detached from one or more counterparts and combined with the signature pages from any other counterpart in order that one or more fully executed originals may be assembled. Section 10.18. Inconsistent Provisions. In the event of any conflict or ----------------------- inconsistency between the terms of this Agreement and the terms of the other Loan Documents, the terms of this Agreement shall control. Section 10.19. Confidentiality. The Agent and the Lenders will maintain --------------- the confidentiality of any non-public information relating to any of the Borrowers which have been identified in writing as confidential on the information itself or otherwise (the "Confidential Information") and, except as ------------------------ provided below, will exercise the same degree of care that each of the Agent and the Lenders exercise with respect to its own proprietary information to prevent the unauthorized disclosure of the Confidential Information to third parties. Confidential Information shall not include information that either: (a) is in the public domain including, without limitation, information contained in any annual report, or any Form 10-K, Form 10-Q or Form 8-K reports which have been delivered to the SEC or any other annual or quarterly reports to stockholders subject to the reporting requirements of the Exchange Act, as amended, proxy material delivered to stockholders or any report delivered to the SEC, or in the knowledge or possession of the Agent or the Lenders when disclosed to the Agent or the Lenders, or becomes part of the public domain after disclosure to the Agent or the Lenders through no fault of the Agent or such Lenders; or (b) is disclosed to the Agent or the Lenders by a third party, provided that the Agent or the Lenders do not have actual knowledge that such third party is prohibited from disclosing such information. The terms of this section shall not apply to disclosure of Confidential Information by the Agent or the Lenders that is in their good faith opinion, compelled by laws, regulations, rules, orders or legal process or proceedings or as disclosed to: (i) any party, including a prospective participant or assignee, who has signed a confidentiality agreement containing terms substantially similar to those contained herein; (ii) legal counsel, examiners, auditors and directors of the Agent or the Lenders and examiners, auditors and investigators having regulatory authority over the Agent or the Lenders; or (iii) any party in connection with the exercise of remedies by the Agent or the Lenders after the occurrence of an Event of Default. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers effective as of the date first written above. BORROWERS: --------- TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., A Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation By: /s/ Mark T. Walton ----------------------------------------- Name: Mark T. Walton Title: President TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation and TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation By: /s/ Mark T. Walton ------------------------------------------ Name: Mark T. Walton Title: President TBC ARKANSAS, INC., an Arkansas corporation, RED RIVER MARINE ARKANSAS, INC., a Arkansas corporation and TRAVIS BOATING CENTER LITTLE ROCK, INC., a Arkansas corporation By: /s/ Mark T. Walton ------------------------------------------ Name: Mark T. Walton Title: President TBC MANAGEMENT, INC., a Delaware corporation By: /s/ Mark T. Walton ------------------------------------------- Name: Mark T. Walton Title: President TBC MANAGEMENT, LTD., a Texas limited partnership By: TRAVIS BOATS & MOTORS, INC., a Texas corporation, as General Partner By: /s/ Mark T. Walton -------------------------------------- Name: Mark T. Walton Title: President AGENT: ----- NATIONSBANK OF TEXAS, N.A., a national banking association, as Agent for Lenders By: /s/ R. Mark Bearfield ------------------------------------------- Name: R. Mark Bearfield Title: Vice President LENDERS: ------- NATIONSBANK OF TEXAS, N.A., a national banking association By: /s/ R. Mark Bearfield ------------------------------------------- Name: R. Mark Bearfield Title: Vice President HIBERNIA NATIONAL BANK, a national banking association By: /s/ Wade Carwile ------------------------------------------- Name: Wade Carwile Title: Assistant Vice President EXHIBIT A --------- REVOLVING NOTE $____________ San Antonio, Texas December __, 1996 FOR VALUE RECEIVED, TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., a Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation, TBC ARKANSAS, INC., an Arkansas corporation, TBC MANAGEMENT, Ltd., a Texas limited partnership, TBC MANAGEMENT, INC., a Delaware corporation, TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, RED RIVER MARINE ARKANSAS, INC., an Arkansas corporation, TRAVIS BOATING CENTER LITTLE ROCK, INC., an Arkansas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation (collectively "Borrowers"), --------- hereby, jointly and severally, promise to pay to the order of ____________________________, a national banking association ("Lender"), at the ------ offices of NationsBank of Texas, N.A., a national banking association (the "Agent") at 300 Convent Street, San Antonio, Texas 78205, the principal sum of - ------ ___________________ Million and No/100 Dollars ($_______________) (or the unpaid balance of all principal advanced against this Note, if that amount is less), on or before the Termination Date for this Note (as established by the Agreement), in lawful money of the United States of America, together with interest on the unpaid principal balance of this Note from day to day outstanding, in accordance with the terms and provisions of the Agreement; provided, however, that in no event shall interest accrue hereunder at a rate in excess of the Maximum Lawful Rate. Subject to the provisions hereof limiting interest to the Maximum Lawful Rate, interest on Advances shall be computed based on the number of days elapsed and 360-days per year or in the case of interest accruing at the Maximum Lawful Rate, 365/366 days per year. Advances of the principal indebtedness evidenced by this Note shall be made pursuant to the Credit Agreement (as herein defined), which amounts may be borrowed, repaid and reborrowed as provided in and subject to the terms of the Credit Agreement. Each Advance made by Lender to Borrowers pursuant to the Credit Agreement may be recorded by lender and, with respect to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. Any failure by Lender to endorse the grid attached hereto shall not impair the obligation of Borrowers to pay any amount due and owing hereunder. All capitalized terms used herein, but not specifically defined, shall have the same meanings set forth in the Agreement. Principal and all accrued interest hereunder shall be due and payable upon the terms and on the dates provided for in the Credit Agreement. After maturity of this Note or the occurrence of an Event of Default, the outstanding principal balance of this Note shall, at the option of the Required Lenders, bear interest at the Default Rate, as provided in the Agreement. If at any time the Applicable Rate shall be limited to the Maximum Lawful Rate, any subsequent reductions in the Applicable Rate shall not reduce the rate of interest on this Note below the Maximum Lawful Rate until the total amount of interest accrued equals the amount of interest which would have accrued if the Applicable Rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at the final payment of the Credit Facility, the total amount of interest paid or accrued on the Credit Facility is less than the amount of interest which would have accrued if the Applicable Rate had at all times been in effect with respect thereto, then at such time, to the extent permitted by law, Borrowers shall pay to Agent, for the ratable benefit of the Lenders, an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if the Applicable Rate had at all times been in effect and the amount of interest which would have accrued if the Maximum Lawful Rate had at all times been in effect, and (b) the amount of interest actually paid on the Credit Facility. This Note has been executed and delivered pursuant to the terms of that certain Revolving Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "Credit Agreement") ---------------- dated as of December ___, 1996, executed by and among Borrowers, Agent and the Lenders (which includes the payee of this Note) and is one of the notes defined therein as a "Note", the terms and provisions of the Credit Agreement related to ---- this Note being incorporated herein by reference for all purposes. The terms of the Credit Agreement shall govern in the case of any inconsistency between such terms and the terms hereof. This Note is secured by the Security Agreement and all the other Loan Documents, and all liens and security interests created or evidenced thereby. Any holder shall be entitled to all benefits and remedies and security set forth in the Credit Agreement and all the other Loan Documents. The occurrence of a Default or an Event of Default, under and as defined in the Credit Agreement, shall constitute, respectively, a Default or an Event of Default under this Note, and the unpaid principal of and accrued interest on this Note may be declared due and payable in the manner and with the effect provided in the Credit Agreement. Each Borrower and all sureties, endorsers, guarantors and any other party now or hereafter liable for the payment of this Note in whole or in part, hereby severally (i) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notice (except only for any notice that is specifically required by the terms of the Credit Agreement or any other Loan Document), filing of suit and diligence in collecting this Note or enforcing any of the security herefor; (ii) agree to any substitution, subordination, exchange or release of any such security or the release of any party primarily or secondarily liable hereon; (iii) agree that the holder hereof shall not be required first to institute suit or exhaust its remedies against any Borrower or others liable or to become liable hereon or to enforce its rights against them or any security herefor; (iv) consent to any extension or postponement of time of payment of this Note for any period or periods of time and to any partial payments, before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; and (v) submit (and waive all rights to object) to personal jurisdiction in the State of Texas, and venue in Bexar County, Texas, for the enforcement of any and all obligations under the Loan Documents. If any holder of this Note retains an attorney in connection with any default or at maturity or to collect, enforce or defend this Note or any other Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or if any Borrower sues any holder of this Note in connection with this Note or any other Loan Document and does not prevail, then Borrowers agree to pay to each such holder, in addition to principal and interest, all costs and expenses incurred by such holder in trying to collect this Note or in any such suit or proceeding, including reasonable attorneys' fees as and to the extent provided in the Credit Agreement. Notwithstanding anything herein or in any other Loan Documents, expressed or implied, to the contrary, in no event shall any interest rate charged hereunder or under any of the other Loan Documents, or any interest contracted for, collected or received by Lender or any holder hereof, exceed the Maximum Lawful Rate. It is expressly stipulated and agreed to be the intent of Borrowers and Lender at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to this Note, or if acceleration of the maturity of this Note, any prepayment by Borrowers, or any other circumstance whatsoever, results in Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Borrowers and Lender that all excess amounts theretofore collected by Lender be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to Borrowers), and the provisions of this Note and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the indebtedness evidenced hereby or by any other Loan Document shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate. The term "applicable law" -------------- as used herein shall mean the laws of the State of Texas, or any applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law. The provisions of this paragraph shall control all agreements between Borrowers and Lender. Borrowers acknowledge and agree that the holder of this Note may, at any time and from time to time, assign all or a portion of its interest in the Credit Facility or transfer to an Eligible Assignee a participation interest in the Credit Facility, subject to and in accordance with the terms and conditions of the Credit Agreement, including Section 10.10 thereof. ------------- ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS NOTE OR ANY RELATED NOTES OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OR JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THE NOTE MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS NOTE APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. (A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF BORROWER'S DOMICILE AT THE TIME OF THE NOTE'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS. (B) RESERVATION OF RIGHTS. NOTHING IN THIS NOTE SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12. U.S.C. (S)91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES RELATED TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 10.8 OF THE Credit Agreement OR OTHERWISE. ------------ IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first above written. BORROWERS: --------- TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., A Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation By: ________________________________ Name: ________________________________ Title: ________________________________ TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation and TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation By: ________________________________ Name: ________________________________ Title: ________________________________ TBC ARKANSAS, INC., an Arkansas corporation, RED RIVER MARINE ARKANSAS, INC., a Arkansas corporation and TRAVIS BOATING CENTER LITTLE ROCK, INC., a Arkansas corporation By: ________________________________ Name: ________________________________ Title: ________________________________ TBC MANAGEMENT, INC., a Delaware corporation By: ________________________________ Name: ________________________________ Title: ________________________________ TBC MANAGEMENT, LTD., a Texas limited partnership By: TRAVIS BOATS & MOTORS, INC., a Texas corporation, as General Partner By: ____________________________ Name: ____________________________ Title: ____________________________ EXHIBIT B --------- BORROWING BASE CERTIFICATE In accordance with the terms of the Revolving Credit Agreement dated December ___, 1996 (the "Agreement"), executed by Borrowers, NationsBank of Texas, N.A., as Agent, and the Lenders, as therein defined, the undersigned hereby certifies, in his/her capacity as the Authorized Officer of TBM, that attached hereto is a current Borrowing Base Schedule and the information set forth therein is true and correct in all material respects to the best of my knowledge. Unless defined herein or indicated otherwise, each capitalized term used herein and in the attached Borrowing Base Schedule shall have the meaning given to such term in the Agreement. IN WITNESS WHEREOF, I have executed this Certificate as of the ______ day of _________________, 19___. TRAVIS BOATS & MOTORS, INC. By:_____________________________ Name:___________________________ Title:__________________________ BORROWING BASE SCHEDULE ----------------------- The Borrowing Base as of the date hereof is $_____________. The Borrowing Base is determined as follows: I. Total Eligible Inventory of Borrowers, per the attached Eligible Inventory Report $____________ A. Eligible Inventory of Borrowers purchased by Borrowers (or, in the case of Eligible Inventory acquired by Borrowers in an acquisition of an additional retail store, purchased by the previous retail store owner) within the previous twelve-month period $____________ B. Eligible Inventory of Borrowers purchased by Borrowers (or, in the case of Eligible Inventory acquired by Borrowers in an acquisition of an additional retail store, purchased by the previous retail store owner) within the previous twelve-month period immediately preceding the twelve-month period described in A above $____________ C. 80% of Item I.A. (or 90% of Item I.A. for the months of October, November, December, January, February and March) $____________ D. 70% of Item I.B. (not to exceed the lesser of (i) 15% of Item I. above or (ii) $3,500,000.00) $____________ E. Borrowing Base from Eligible Inventory (sum of Item I.C. & I.D.) $____________ II. Total Eligible Accessories of Borrowers, per the attached Eligible Accessories Report $____________ A. Borrowing Base from Eligible Accessories (50% of Item II.) $____________ III. Total Eligible Contract Discounts of Borrowers, per the attached Eligible Contract Discount Report $____________ A. Eligible Contract Discounts which have been outstanding less than one hundred and twenty (120) days at the date of invoice for Contract Debtors which settle on a quarterly basis $____________ B. Eligible Contract Discounts for Contract Debtors which settle on an annual basis $____________ Borrowing Base Schedule (continued) C. 50% of Item III.A. $____________ D. 25% of Item III.B. $____________ E. Borrowing Base from Eligible Contract Discounts (sum of Item III.C. & III.D.) (not to exceed $500,000.00) $____________ IV. Total Borrowing Base (sum of I.E., II.A. and III.E.) $____________ V. Total of outstanding balances of Working Capital Advances and Letter of Credit Exposure as of the date of the report $____________ EXHIBIT B-1 ----------- FORM OF REQUEST FOR ADVANCE This Request for Advance is being delivered by Travis Boats & Motors, Inc., a Texas corporation ("TBM"), for and on behalf of the "Borrowers" as defined in --- that certain Revolving Credit Agreement (the "Agreement"), dated as of December --------- ___, 1996, executed by Borrowers, NationsBank of Texas, N.A., as Agent, and the Lenders, as therein defined. Unless defined herein or indicated otherwise, each capitalized term used herein and in the attached Schedule I shall have the meaning given to such term in the Agreement. 1. Borrowers hereby request a Working Capital Advance in an amount equal to $____________ to be made on _____________, 19__. Borrowers represent and warrant to Lenders that the Working Capital Advance herein requested does not exceed the amount which Borrowers are entitled to receive pursuant to Section 2.1 (or any other provisions) of the Credit Agreement. 2. Borrowers request that $___________ of the Working Capital Advance requested hereby be transferred to [specify account to be credited/other ------------------------------------ transfer directions] and $_____________ be transferred to [specify account to be - ------------------- --------------------- credited/other transfer directions]. - ---------------------------------- 3. Borrowers hereby certify, represent and warrant to Lenders that: (a) This Request for Advance has been duly authorized by all necessary action on the part of Borrowers. (b) The representations and warranties contained in the Agreement and the other Loan Documents remain true and correct on and as of the date hereof (except to the extent any representation or warranty is made as of a particular date) with the same force and effect as though made on the date hereof. (c) No Default or Event of Default has occurred and is continuing, and the making of the Working Capital Advance requested hereby shall not constitute a Default or Event of Default. (d) Each Borrower has performed and complied with all agreements and conditions in the Agreement and the other Loan Documents required to be performed or complied with by such Borrower on or prior to the date hereof, and each of the conditions precedent contained in the Agreement applicable to the Working Capital Advance requested hereby has been satisfied. (e) The proceeds of the Working Capital Advance herein requested will not be used in violation of any provision of the Agreement or any other Loan Document. 6. Borrowers acknowledge and agree that the making of the Working Capital Advance requested hereby shall not constitute a waiver of any condition precedent to the obligation of Lenders to make further Advances or arrange for the issuance of Letters of Credit. 7. Attached hereto as Schedule I is a true and correct copy of the current Borrowing Base Schedule. EXECUTED as of ____________, 19__. AUTHORIZED BORROWING OFFICER: ---------------------------- TRAVIS BOATS & MOTORS, INC., a Texas corporation By:___________________________ Name:_________________________ Title:________________________ EXHIBIT C --------- SUPPLEMENTAL CREDIT AND SECURITY AGREEMENT This Supplemental Credit and Security Agreement (this "Supplement") is ---------- being executed as of the ____ day of ___________________, ____, pursuant to that certain Revolving Credit Agreement (as amended and modified from time to time, the "Credit Agreement"), dated as of December ___, 1996, by and among Travis ---------------- Boats & Motors, Inc., a Texas corporation, and the other entities named therein as "Borrowers" ("Borrowers"), NationsBank of Texas, N.A. ("Agent"), as agent for --------- ----- itself and the other lenders named therein, and such other lenders (collectively, the "Lenders"). All terms used but not defined herein shall have ------- the meanings set forth in the Credit Agreement. WHEREAS, Borrowers have entered into the Credit Agreement for the purpose of obtaining Advances and/or Letters of Credit in accordance with and pursuant to the terms and conditions of the Credit Agreement; and WHEREAS, to further evidence the Obligations of Borrowers under the Credit Agreement, Borrowers have executed the Notes respectively in favor of the Lenders; and WHEREAS, to secure the Obligations of Borrowers under the Credit Agreement, the Notes and the other Loan Documents, Borrowers granted to Agent, for the benefit of Lenders, a first priority security interest in the Collateral pursuant to that certain Security Agreement (so called herein), of even date with the Credit Agreement, by and among the Borrowers and the Agent for the benefit of the Lenders; and WHEREAS, each of the undersigned additional borrowers (collectively, the "Additional Borrower") is a Subsidiary of a Borrower and has been formed or - -------------------- acquired by such Borrower since the date of the Credit Agreement; and WHEREAS, in order to obtain Advances or Letters of Credit from time to time under the Credit Agreement, in furtherance of the direct and indirect benefits to be obtained by the Additional Borrower as a Subsidiary, and pursuant to the provisions and conditions of the Credit Agreement, Additional Borrower desires to become a Borrower under the Credit Agreement and a Debtor under the Security Agreement; and WHEREAS, the failure of Additional Borrower to enter into this Supplement would constitute an Event of Default. NOW, THEREFORE, for and in consideration of the premises and mutual promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the undersigned parties hereby agree as follows: 1. From and after the effective date of this Supplement, the Additional Borrower shall be and become (a) a "Borrower" under and pursuant to the terms of the Credit Agreement, the Notes and the other Loan Documents to which the Borrowers are a party, and (b) a "Debtor" under and pursuant to the terms of the Security Agreement. As such, the Additional Borrower, jointly and severally with all the Borrowers, agrees to pay when due all of the Obligations now or hereafter existing and to be bound by all of the terms and provisions of the Credit Agreement (including, without limitation, Sections 3.14 ------------- and 3.15 thereof), the Notes, the Security Agreement and the other Loan ---- Documents, to the same extent as if the Additional Borrower were an original party thereto. 2. Agent and Lenders hereby acknowledge and agree that from and after the effective date of this Supplement, the Additional Borrower shall be entitled to all of the rights and benefits of a "Borrower" under the Credit Agreement and the other Loan Documents to which the Borrowers are a party, including, without limitation, the right to obtain Working Capital Advances, Draft Advances and Letters of Credit pursuant to the terms and conditions of the Credit Agreement and the other Loan Documents. 3. All of the Loan Documents, including without limitation, the Security Agreement, are hereby modified and amended to include the Additional Borrower as a "Borrower," "Debtor," or any other defined term used for the Borrowers thereunder to the same extent as the other Borrowers are parties thereto, without any further action being taken or further documents required to be executed by any party. Schedule I to the Credit Agreement is hereby modified to include the Additional Borrower as a Borrower, with the address for notices to the Additional Borrower being as set forth in Schedule I attached hereto. ---------- Notwithstanding the foregoing, each Additional Borrower hereby agrees to execute and deliver to Agent on or before the date hereof, unless a longer period of time is set forth below, any and all other documents and agreements reasonably requested by Agent to further evidence the agreements contained in this Supplement, including, without limitation, any and all financing statements in order to perfect or evidence Lenders' security interest in the Collateral, the opinion of counsel referenced in Paragraph 4 below, and such intercreditor agreements, promissory notes, assignments, resolutions, corporate or partnership documentation, certificates of good standing and other certificates or information concerning Additional Borrower. 4. Contemporaneously with the execution hereof, each Additional Borrower shall deliver to Agent all authority documents required under Sections 6.1(h) --------------- and 4.1 of the Credit Agreement and represents and warrants to Agent and Lenders --- that (a) it is a limited partnership or corporation, as applicable, duly created, presently existing and in good standing under the laws of the state under which it is organized, (b) it has all limited partnership or corporate, as applicable, powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and as contemplated to be conducted, except where the failure to have any such item would not have a material adverse effect on the Additional Borrower's business and financial condition, (c) the execution, delivery and performance of this Supplement and any other documents executed in connection herewith have been duly authorized by all necessary partnership or corporate action, as applicable, require no action by or in respect of, or filing with, any governmental body, agency or office and do not contravene, or constitute a default under, any provision of applicable law or regulations or of the limited partnership agreement, certificate of incorporation or bylaws, as applicable, of the Additional Borrower or any other agreement binding on the Additional Borrower, (d) this Supplement, and as a result of the execution hereof, the Notes, the Security Agreement and the other Loan Documents to which the Borrowers are a party each constitute a valid and binding agreement of the Additional Borrower, which is a party thereto, enforceable in accordance with the terms thereof except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, fraudulent transfer or similar laws affecting creditor rights generally, and (ii) the availability of equitable principles of general applicability, and (e) each Additional Borrower (i) is executing this Supplement for its direct or indirect benefit, (ii) has reviewed and is satisfied with the rights of contribution or subrogation to which it may be entitled with respect to all other Borrowers (and such other Borrower's ability to perform thereon), and (iii) has determined that entering into the Credit Agreement and the other Loan Documents enables it to obtain substantial benefits which it would not otherwise have using solely its own financial abilities to obtain credit. 5. This Supplement shall be binding upon, and inure to the benefit of, the parties hereto and their successors and assigns, subject to any provisions under the Credit Agreement. Effective for all purposes as of _____________, __________. ADDITIONAL BORROWERS: -------------------- By: ____________________________ Name: __________________________ Title: _________________________ EXISTING BORROWERS: ------------------ -------------------------------- By: ____________________________ Name: __________________________ Title: _________________________ AGENT: ----- NATIONSBANK OF TEXAS, N.A., a national banking association, as Agent for itself and the other Lenders By: ____________________________ Name: __________________________ Title: _________________________ SCHEDULE I ---------- Additional Borrower's
Locations of Storage and Additional Borrower Chief Executive Office Address for Notice Places of Business Distribution Facilities - ------------------- ---------------------- ------------------ ------------------ ---------------------------
EXHIBIT D --------- FORM OF ASSIGNMENT AND ACCEPTANCE Dated as of ____________, 19__ Reference is made to that certain Revolving Credit Agreement dated as of December ___, 1996 (as amended and in effect from time to time, the "Agreement"), executed by Borrowers, NationsBank of Texas, N.A., for itself and --------- as Agent, and the Lenders, as therein defined. Unless defined herein or indicated otherwise, each capitalized term used herein and in the attached Schedule I shall have the meaning given to such term in the Agreement. [Name of Assigning Lender] (the "Assignor") and [Name of Assignee] (the -------- "Assignee") hereby agree as follows: - --------- 1. The Assignor hereby sells and assigns to the Assignee and the Assignee hereby purchases and assumes from the Assignor, a _________ percent (___%) interest in all of the Assignor's rights and obligations under the Agreement as of the Assignment Date (as defined in paragraph 4 below), including, without limitation, the Assignor's interest in all unpaid interest and fees accrued as of the Assignment Date. 2. (a) The Assignor (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) represents that as of the date hereof, before giving effect to the assignment contemplated hereby, its Loan Amount is $___________; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document or any other instrument or document furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of its obligations under the other Loan Documents to which it is a party or any other instrument or document delivered or executed pursuant thereto; and (v) attaches to the copy hereof forwarded to the Agent the Note held by it. (b) The Assignor requests that the Agent exchange its Note for new Note(s) executed by the Borrowers and payable to each of the Assignor and the Assignee as follows: Notes Payable to the Order of: Amount of Note ---------------- -------------- [Assignor] $_____________ [Assignee] $_____________ 3. The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance and that it is an Eligible Assignee; (b) confirms that it has received a copy of the Loan Documents, together with copies of such financial statements of Borrowers and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it will, independently and without reliance upon the Assignor, any other Lender, or the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers as are reasonably incidental thereto pursuant to the terms of the Loan Documents; (e) agrees that it will perform in accordance with their terms all the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; and (f) agrees not to disclose any financial information of the Borrowers as and to the extent provided in the Agreement. 4. The effective date for this Assignment and Acceptance shall be ______________, 19__ (the "Assignment Date"), determined in accordance with --------------- Section 10.8 of the Agreement. Following the execution of this Assignment and - ------------ Acceptance, each party hereto and each Person consenting hereto shall deliver its duly executed counterpart hereof to the Agent for acceptance and recording in the Register by the Agent. 5. Upon such acceptance and recording, from and after the Assignment Date, (i) the Assignee shall be a party to the Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder, and (ii) the Assignor shall, with respect to that portion of its interest under the Agreement assigned hereunder, relinquish its rights and be released from its obligations under the Agreement, subject to Section 10.10 ------------- of the Agreement. 6. Upon such acceptance and recording, from and after the Assignment Date, the Agent shall make all payments in respect of the rights and interests assigned hereby (including payments of principal, interest, fees and other amounts) to the Assignee. On the Assignment Date, the Assignee will pay to the Agent for the pro rata account of the Assignor an amount equal to the percentage --- ---- of the Assignor's interest assigned to the Assignee hereunder, times the aggregate Loan Amount of the Assignor. 7. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REFERENCE TO CONFLICT OF LAWS). 8. This Assignment and Acceptance may be executed in any number of counterparts which shall together constitute but one and the same agreement. 9. The Assignee hereby acknowledges and consents to comply with the confidentiality provision in Section 10.18 of the Agreement. ------------- IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this Assignment and Acceptance to be executed on its behalf by its officer thereunto duly authorized, as of the date first above written. [ASSIGNOR] By:________________________________ Title: [ASSIGNEE] By:________________________________ Title: CONSENTED TO: - ------------ NATIONSBANK OF TEXAS, N.A., as Agent By:___________________________ Title: EXHIBIT E --------- FORM OF LOC APPLICATION
NationsBank Application and Agreement for Standby Letter of Credit - --------------------------------------------------------------------------------------------------- Letter of Credit Department Letter of Credit Number Date Please issue an Irrevocable Letter (For NationsBank use only) of Credit in favor of the Beneficiary substantially as shown below and deliver the Credit by [_] Regular Mail [_] Courier [_] Teletransmission - --------------------------------------------------------------------------------------------------- Applicant (Full name and mailing address) Beneficiary (full name and mailing address; if courier delivery is requested full street address must be provided) For Account of (if different from Applicant) - --------------------------------------------------------------------------------------------------- Advising Bank (if left blank, NationsBank will Amount (in figures and words) choose as appropriate) Currency (if left blank, U.S. dollars will apply) ------------------------------------------ Expiry Date (draft must be presented to drawee or for negotiation (when negotiable) on or before): - --------------------------------------------------------------------------------------------------- Available by draft(s) at Sight drawn, at NationsBank's option, on NationsBank or NationsBank's correspondent when accompanied by the following document(s): (Please check the documents and fill in the blanks below as applicable) [_] A written statement purportedly signed by (if left blank the Beneficiary) ---------------------- with the following wording Quote ---------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- Close Quote - --------------------------------------------------------------------------------------- [_] Other: - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- [_] Issue Credit as per attached exhibit marked exhibit (exhibit is an ------------------------ integral part of the Agreement).
Note: If the Credit provides for automatic renewal without amendment, Applicant agrees that it will notify NationsBank in writing at least sixty (60) days prior to the last day specified in the Credit by which NationsBank must give notice of nonrenewal as to whether or not it wishes the Credit to be renewed. Any decision to renew or not renew the Credit shall be in NationsBank's sole discretion. Applicant hereby acknowledges that in the event NationsBank notifies the Beneficiary of the Credit that it has elected not to renew the Credit, the Credit may be drawn on if permitted by the terms of the Credit and further acknowledges and agrees that Applicant shall have no claim or cause of action against NationsBank or defense against payment under the Agreement for NationsBank's renewal or non-renewal of the Credit in the exercise of NationsBank's discretion as set forth above. Multiple Drawings [_] Prohibited (permitted if left blank) - -------------------------------------------------------------------------------- Special Instructions to NationsBank Not to be included in the Credit (if any): - -------------------------------------------------------------------------------- The terms and conditions set out above and below, and any attached exhibits, supplements or schedules referred to in this Application, have been reviewed by Applicant, and by Applicant's signature below and for good and valuable consideration. Applicant agrees to the same and to be obligated and liable under the Agreement. In the event this Application requests an Account Party different from Applicant, then such party may sign below as Co-Applicant, but the failure of such Account Party to become a Co-applicant shall not affect the obligations of Applicant under the Agreement. Completion and submittal of this application by Applicant does not obligate NationsBank to enter into the Agreement or issue the requested Credit. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. - -------------------------------------- ---------------------------------------- Name of Company, or signature if Name of Company, or signature if Applicant is an individual Co-Applicant is an individual By By ------------------------------------ -------------------------------------- Authorized Signature/Title Authorized Signature/Title - -------------------------------------- ---------------------------------------- Address Address - -------------------------------------- ---------------------------------------- - -------------------------------------- ---------------------------------------- - -------------------------------------- ---------------------------------------- Telephone Fax Telephone Fax - --------------- ---------------------- --------------- ------------------------ Date Federal Tax ID Number Date Federal Tax ID Number - -------------------------------------------------------------------------------- Bank Use Only - -------------------------------------------------------------------------------- Approving Bank Officer - Approving Bank Officer - Officer Number Signature Printed - -------------------------------------------------------------------------------- Officer - Title Officer - Interoffice Address Cost Center Number - -------------------------------------------------------------------------------- Officer Phone Number Purpose Code Officer Fax Number (area code and number) (area code and number) - -------------------------------------------------------------------------------- Page 2 1. Definitions In the Agreement: (1) "Agreement" means the Application, the terms and conditions set out above and below, and the Credit, together with any and all modifications, amendments and extensions of any thereof. (2) "Applicable Interest Rate" means, unless otherwise defined in and governed by a separate agreement between NationsBank and Applicant, the lesser of the maximum lawful rate permitted by applicable law or a per annum rate (calculated on the basis of a 360 day year) equal to the sum of the prime rate of interest established by NationsBank from time to time (which is not necessarily the lowest or best rate of interest charged by NationsBank to any of its customers) plus three percent. (3) "Applicant" means singularly or collectively, and, if more than one, jointly and severally, each person or entity who has executed the Application as Applicant or Co-Applicant. (4) "Application" means the foregoing application of Applicant relating to the Credit as such application may be amended or modified from time to time in accordance herewith. (5) "Credit" or "Letter of Credit" means the letter of credit issued pursuant to the Application as it may be amended or modified from time to time in accordance herewith. (6) "Instrument" means the Credit or any draft, receipt, acceptance or written demand (to include teletransmissions) for payment under the Credit. (7) "NationsBank" means the banking subsidiary of NationsBank Corporation that issues the Credit in the sole discretion of NationsBank. (8) "property" means goods and any and all documents related thereto, securities, funds, choses in action, and any and all other forms of property, whether real, personal or mixed and any right or interest therein. 2. Promise to Pay. (a) As to instruments drawn under or purporting to be drawn under the Credit, which are payable in United States currency: (i) in the case of each sight instrument, Applicant will reimburse NationsBank, at the address specified by NationsBank to Applicant, on demand, in United States currency, the amount paid thereon, or, if so demanded by NationsBank, will pay to NationsBank in advance the amount required to pay the same; and (ii) in the case of each time instrument, Applicant will pay to NationsBank, at the address specified by NationsBank to Applicant, in United States currency, the amount thereof, on demand but in any event not later than one business day prior to maturity of such time instrument at the place specified by the Credit for payment. (b) As to instruments drawn under or purporting to be drawn under the Credit, which are payable in currency other than United States currency: (i) in the case of a sight instrument. Applicant will reimburse NationsBank, at the address specified by NationsBank to Applicant, on demand, in United States currency, the equivalent of the amount paid under the instrument (together will all taxes, levies, imposts, duties, charges and fees of any nature imposed by any government or other taxing authority including interest and penalties in connection therewith (collectively "F/X Taxes") at NationsBank's selling rate of exchange at the time of payment under the instrument, for teletransmission to the place of payment in the currency in which such instrument is payable, or, if so demanded by NationsBank will pay to NationsBank in advance, in United States currency, the equivalent of the amount required to pay the same; and (ii) in the case of each time instrument, Applicant pay to NationsBank at the address specified by NationsBank to Applicant, on demand, but in any event sufficiently in advance of maturity of such time instrument enable NationsBank to arrange for cover to reach the place of payment not later than three business days prior to maturity, the equivalent of the time instrument together with all F/X taxes in United States currency at NationsBank's selling rate of exchange at the time of provision of cover, for teletransmission to the place of payment in the currency in which such instrument is payable. If for any cause whatsoever there exists at the time in question no rate of exchange generally current for affecting transfers as above described, or such currency is not available for purchase by NationsBank, Applicant agrees to pay NationsBank on demand at NationsBank's election, (i) an amount in United States currency equivalent to the actual cost of NationsBank of settlement of NationsBank's obligation to the holder of the instrument or other person, together with all F/X taxes however, and whenever such settlement shall be made by NationsBank or (ii) an amount in United States currency equivalent to the estimated cost to NationsBank, as projected by NationsBank, of the future settlement of NationsBank's obligation to the holder of the instrument or other person, together with all F/X taxes provided that upon the actual settlement of NationsBank's obligation, however and whenever occurring, NationsBank shall reimburse Applicant or Applicant shall pay to NationsBank, as the case may be, an amount in United States currency equal to the difference between the initial estimated payment by Applicant to NationsBank and the actual settlement amount paid by NationsBank. (c) NationsBank may accept or pay any instrument presented to it, regardless of when drawn and whether or not negotiated, if such instrument, the other required documents and any transmittal advice are dated on or before the expiration date of the Credit, and NationsBank may honor, as complying with the terms of the Credit and of the Agreement, any instruments or other documents otherwise in order signed or issued by any person who is, or is in good faith believed by NationsBank to be, an administrator, executor, trustee in bankruptcy, debtor in possession, conservator, assignee for the benefit of creditors, liquidator, receiver other legal representative or successor by operation of law of the party authorized under the Credit to draw or issue such instruments or other documents. 3. Promise to Pay Interest and Fees. (a) Applicant will pay NationsBank, on demand: (i) NationsBank's commission at the rate set forth in a separate written agreement between NationsBank and Applicant or, in the absence of a separate agreement, at such rule as NationsBank may determine to be proper, (ii) unless actually paid or reimbursed to NationsBank by Beneficiary or another person or entity, all charges and expenses paid or incurred by NationsBank in connection with the Credit, including without limitation, reasonable attorneys fees for the enforcement of any rights hereunder and any charges of other banks not paid for by the Beneficiary or another party, and (iii) interest on any amounts due by Applicant to NationsBank hereunder from the date due to the date of payment at the Applicable Interest Rate. (b) No provisions of the Agreement shall require the payment or permit the collection of interest in excess of the maximum rate permitted by applicable law. 4. Clean Advances. If the Application requests inclusion in the Credit of any provision for clean advances to the Beneficiary, NationsBank may place in the credit such a provision in that respect as NationsBank may deem appropriate under which any bank entitled to negotiate drafts under the Credit, acting in its discretion in each instance and upon the receipt of a request in writing from the Beneficiary, may make one or more clean advances at any time on a prior to the date by which drafts are to be negotiated under the Credit. The aggregate of such advances shall in no event be more than the amount specified in the Application for clean advances, and whether or not specified therein in no event shall any such advance exceed the amount remaining available under the Credit at the time of the advance. While it is expected by Applicant that each such advance will be repaid by the Beneficiary to the bank that made the advance from the proceeds of any drafts drawn under the Credit, should any such advance not be thus repaid, Applicant will on demand pay NationsBank the amount thereof as if such advances was evidenced by drafts drawn under the Credit. It is understood and neither NationsBank nor any bank which may make such advances shall be obligated to inquire into the use that may be made thereof by the Beneficiary and that NationsBank and each such bank shall be without liability for any wrongful use that may be made by the Beneficiary of any funds so advanced. 5. Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits, as published as of the date of issue of the Credit by the International Chamber of Commerce (the "UCP"), shall in all respects be deemed a part hereof as fully as if incorporated herein and shall apply to the credit. Unless expressly provided otherwise in the Credit, in the event any provision of the UCP is or is construed to vary from or be in conflict with the laws of the United States of America or any state thereof, as from time to time amended and in force, the UCP shall prevail, provided, however, that this Section shall not be interpreted to require Nationsbank to take any action or fail to take action if such would cause NationsBank to violate applicable law or regulation. 6. Licenses and Compliance. Applicant will procure promptly any necessary licenses for the services performed or the import, export or shipping of property shipped under or pursuant or in connection with the Credit, and will comply with all foreign and domestic laws, rules and regulations now or hereafter applicable to the transaction related to the Credit or applicable to the execution, delivery and performance by Applicant of the Agreement. Applicant further agrees to furnish to NationsBank such evidence in respect of the above as NationsBank may at any time require. 7. Insurance. Applicant shall keep such property as may be the subject of the Credit adequately covered by insurance in amounts, against risks and with companies satisfactory to NationsBank Applicant hereby irrevocably grants its power of attorney to NationsBank and any of its officers, with the power of substitution, to endorse any check in the name of Applicant received in payment of any loss or adjustment covered by such insurance. 8. Default (a) In the event of the happening of any one or more of the following events any such event being hereinafter called an "Event of Default"), namely: (i) the nonpayment of any obligation of Applicant to NationsBank (under the Agreement or otherwise, or to any other person or entity, now or hereafter existing, when due, or (ii) the failure of Applicant to perform or observe any other term or covenant of the Agreement, or (iii) the dissolution or termination of existence of Applicant or (iv) the institution by or against Applicant of any proceeding seeking to adjudicate Applicant a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of Applicant or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief of the appointment of a receiver, trustee, custodian. or other similar official for Applicant or for any substantial part of its property, or (v) any seizure, vesting or intervention by or under authority of a government by which the management of Applicant is displaced or its authority in the control of its business is curtailed, or (vi) the attachment of or restraint as to any substantial funds or other property which may be in, or come into, the possession or control of NationsBank, or of any third party acting on NationsBank's behalf, for the account or benefit of Applicant, or the issuance of any order of court or other legal process against the same, or (vii) the occurrence of any of the above events with respect to any person or entity which has guaranteed, or signed a comfort letter, support agreement or similar document with respect to, any obligations of Applicant to NationsBank (under the Agreement or otherwise), or (viii) any representation, warranty, certification or statement made or submitted by the Applicant to NationsBank shall be false, misleading or incorrect in any material respect when made or deemed made; or (ix) any person or entity which has guaranteed, or signed a comfort letter, support agreement or similar document with respect to, any obligations of Applicant to NationsBank (under this Agreement or otherwise) shall default under the terms of, or deny the validity, binding effect or enforceability of, such guarantee, comfort letter, support agreement or similar document; then, or at any time after the happening of such event, the amount of the Credit, as well as any and all other obligations of Applicant under the Agreement, shall, at NationsBank's option, and whether or not otherwise then due and payable become due and payable immediately without demand upon or notice to Applicant. (b) Upon the occurrence and during the continuance of any Event of Default, NationsBank is hereby authorized to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by NationsBank or any subsidiary or affiliate of NationsBank to or for the credit or the account of Applicant against any and all of Applicant's obligations to NationsBank under the Agreement, whether or not NationsBank shall have made any demand under the Agreement and although such deposits, indebtedness or obligations may be unmatured or contingent. NationsBank's rights under this Section 8(b) are in addition to other rights and remedies (including, without limitation, other rights of set-off which NationsBank may have. 9. Security. (a) As collateral for the payment of any and all obligations of Applicant to NationsBank under the Agreement, Applicant hereby grants to NationsBank a security interest in (i) any and all documents of title, policies or certificates of insurance and other documents accompanying or related to instruments drawn under the Credit, and any and all other property shipped under or in connection with the Credit or in any way related thereto or to any of the instruments drawn thereunder (whether or not such documents or property are released to or upon the order of Applicant in trust or otherwise) and (ii) any and all proceeds and products of the foregoing. Also to secure the payment of any and all obligations of Applicant under the Agreement, NationsBank shall be subrogated to the rights of Applicant in respect of any transaction to which the Credit relates. Insofar as any property which may be held by NationsBank or for NationsBank's account as collateral hereunder may be released to or upon the order of Applicant, Applicant hereby acknowledges that such delivery of property is in trust pending satisfaction of Applicant's obligations to NationsBank under the agreement, and hereby agrees to execute and/or file such receipts, agreements, forms or other documents as NationsBank may request to further evidence NationsBank interests in such property, it being understood that NationsBank's rights as specified therein shall be in furtherance of and in addition to (but not in limitation of) NationsBank's rights hereunder. If at any time and from time to time NationsBank in good faith deems itself insecure and requires collateral (or additional collateral), Applicant will, on demand, assign and deliver to NationsBank as security for any and all obligations of Applicant under the Agreement, collateral of a type and value satisfactory to NationsBank or make such cash payment as NationsBank may require. NationsBank is hereby authorized, at its option at any time and with or without notice to Applicant, to transfer to or register in its name or the name of any Nationsbank's nominees all or any part of the property subject to any of the security interest granted under or contemplated by the Agreement. NationsBank is also authorized, at its option, to file financing statements without the signature of Applicant with respect to all or any part of such property. Applicant will pay the cost of any such filing and, upon the request of NationsBank, sign such instruments, documents or other papers, and take such other action, as NationsBank may reasonably require to perfect such security interests. (b) If any Event of Default shall have occurred and be continuing NationsBank may exercise in respect of the property subject to any of the security interests granted under or contemplated by the Agreement all the rights and remedies of a secured party on default under the applicable Uniform Commercial Code or any other applicable law, and also may, without notice except as specified below, sell such property or any part thereof in one or more parcels at public or private sale, at any NationsBank office or elsewhere, for cash, or credit or for future delivery, and upon such other terms as NationsBank may deem commercially reasonable. To the extent notice of sale of such property shall be required by law, reasonable notification shall be satisfied by written notice mailed or delivered to Applicant at the address specified above at least five business days prior to the date of public sale or prior to the date after which private sale is to be made. Applicant will pay to NationsBank on demand all costs and expenses (including, without limitation, reasonable attorney's fees and legal expenses) related or incidental to the custody preservation or sale of, or collection from, or other realization upon any of such property or related or incidental to the establishment, preservation or enforcement, of the rights of NationsBank in respect of any such property. In the event of sale of, collection from, or other realization upon all or any part of such property. NationsBank may, in its discretion, hold the proceeds thereof to as additional collateral hereunder or then or at any time thereafter apply the proceeds thereof to the payment of such of the costs and expenses referred to above and such of the obligations of Applicant under the Agreement, whether or not then due, as NationsBank may determine in its discretion, any surplus to be paid over to Applicant or to whomever may be lawfully entitled to receive such surplus. 10. Indemnity. Applicant will indemnify and hold NationsBank (such term to include for purposes of this paragraph its affiliates and its and its affiliates' officers, directors, employees and agents) harmless from and against (i) all loss or damage arising out of the issuance of, or any other action taken by any such indemnified party in connection with, the Credit other than loss or damage resulting from the gross negligence or willful misconduct of the party seeking indemnification, and (ii) all costs and expenses (including reasonable attorney's fees and legal expenses) of all claims or legal proceedings arising out of NationsBank's issuance of the Credit or incident to the collection of amounts owed by Applicant hereunder or the enforcement of the rights of NationsBank hereunder, including without limitation, legal proceedings related to any court order, injunction, or other process or decree restraining or seeking to restrain NationsBank from paying any amount under the Credit. Additionally, Applicant will indemnify and hold NationsBank harmless from and against all claims, losses, damages, suits, costs or expenses arising out of Applicant's failure to timely procure licenses or comply with applicable laws, regulations or rules, or any other conduct or failure of Applicant relating to or affecting the Credit. 11. Effect of Waivers. No delay, extension of time, renewal, compromise or other indulgence which may occur or be granted by NationsBank shall impair the rights or powers of NationsBank hereunder. NationsBank shall not be deemed to have waived any of its rights hereunder, unless NationsBank or its authorized agent shall have signed such waiver in writing. 12. Agency. If Applicant is a financial institution (the "Financial Institution") and is requesting the issuance of the Credit for its customer (the "Customer"), the Financial Institution hereby irrevocably appoints NationsBank as its agent and attorney-in-fact to issue the Credit in accordance with, and subject to, the Agreement. The Financial Institution shall pay NationsBank all amounts owed by the Customer under the Agreement when due, whether or not the Financial Institution has received payment from the Customer and shall pay to NationsBank its fees and expenses according to its fee schedule from time to time in effect. The Financial Institution hereby grants to NationsBank a security interest in all of the property in which the Customer has heretofore granted or m??? hereafter grant to the Financial Institution a security interest to secure the obligations of the Customer under the Agreement. 13. Miscellaneous. (a) Any notice from NationsBank to Applicant shall be deemed given when mailed, postage paid, or when delivered to a courier, fee paid by shipper, address to Applicant at the last business address furnished by Applicant to NationsBank, or when confirmed by electronic confirmation to NationsBank as having been delivered via facsimile or other teletransmission. Any notice from Applicant to NationsBank shall be sent to the address of NationsBank specified by NationsBank to Applicant and shall be effective upon receipt by NationsBank. (b) Each provision of the Agreement shall be interpreted in such manner as to be effective and valid under applicable law but if any provision of the Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of the Agreement. (c) If any law, treaty, regulation or the interpretation thereof by any court or administrative or governmental authority shall impose, modify or deem applicable any capital, reserve, insurance premium or similar requirement against letters of credit issued by NationsBank and the result thereof shall be to increase the cost to NationsBank of making any payment under or issuing or maintaining the Credit or to reduce the yield to NationsBank in connection with the Credit or the Agreement, then, on demand, Applicant will pay to NationsBank, from time to time, such additional amounts as NationsBank may in good faith determine to be necessary to compensate NationsBank for such increased cost or reduced yield. (d) Any and all payments made to NationsBank hereunder shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, excluding taxes imposed on net income and all income and franchise taxes of the United States and any political subdivisions thereof (such nonexcluded taxes being herein called "Taxes"). If Applicant shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 13(d)). NationsBank shall receive an amount equal to the sum NationsBank would have received had no such deductions been made, (ii) Applicant shall make such deductions, and (iii) Applicant shall pay the full amount deducted to the relevant authority in accordance with applicable law. Applicant will indemnify NationsBank for the full amount of Taxes (including without limitation, any Taxes imposed by any jurisdiction on amounts payable under this Section 13(d)) paid by NationsBank and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date NationsBank makes written demand therefor. Within 30 days after the date of any payment of Taxes, Applicant will furnish to NationsBank the original or a certified copy of a receipt evidencing payment thereof. (e) The Agreement shall be binding upon Applicant, its successors and assigns, and shall inure to the benefit of NationsBank, its successors, transferees and assigns; provided that any assignment by Applicant of any of its rights or obligations under the Agreement without the prior written consent of NationsBank shall be void. (f) Applicant hereby authorizes NationsBank, in NationsBank's discretion, to set forth the terms of the Application in the Credit in such language as NationsBank deems appropriate, with variations not materially inconsistent with the Application. (g) Any action, inaction, waiver or omission taken or suffered by NationsBank or by any of its correspondents under or in connection with the Credit or any related instruments, services or property. If in good faith and in conformity with foreign or domestic laws, regulations or customs applicable thereto, shall be binding upon Applicant and shall not place NationsBank or any of its correspondents under any resulting liability to Applicant. Without limiting the generality of the foregoing. NationsBank and its correspondents may act in reliance upon any written, oral, telephonic, telegraphic, facsimile or other requests or notice, believed in good faith to have been authorized, whether or not given or signed by an authorized person. (h) In the event of any change or modification, with the consent of Applicant, relative to the Credit or any instrument called for thereunder, including any waiver made or in good faith believed by NationsBank to have been made by Applicant of any term hereof or the noncompliance of any such instruments with the terms of the Credit, the Agreement shall be binding upon Applicant with regard to the Credit as so changed or modified, and to any action taken by NationsBank or any of its correspondents relative thereto. No term or provision of the Agreement can be changed orally, and no executory agreement shall be effective to modify or to discharge the Agreement unless such executory agreement is in writing and signed by NationsBank. 14. Jurisdiction and Waiver. Applicant hereby irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in the city, county, or district in which the principal office of NationsBank is located over any action or proceeding arising out of or relating to the Agreement, and Applicant hereby irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined in such State or Federal court. Applicant hereby irrevocably waives to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding and the lack of personal jurisdiction,. To the fullest extent it may lawfully and effectively do so, each of Applicant and NationsBank waives the right to trial by jury. Applicant irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to Applicant at the last business address furnished by Applicant to NationsBank. Applicant agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing, however, in this Section 14, shall affect the right of NationsBank to serve legal process in any other manner permitted by law or affect the right of NationsBank to bring any action or proceeding against Applicant or its property in the courts of any other jurisdiction. Moreover, to the extent that Applicant has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect to itself or its property. Applicant hereby irrevocably waives such immunity in respect of its obligations under the Agreement. 15. Automatic Payment [_] Applicant has elected to authorize NationsBank to effect payment of sums due by Applicant under the Agreement by means of debiting Applicant's account number . This authorization shall not affect the obligation of Applicant to pay such sums when due, without notice, if there are insufficient funds in such accounts to make such payment in full when due, or if NationsBank fails to debit the account. EXHIBIT F --------- FORM OF COMPLIANCE CERTIFICATE This Compliance Certificate is delivered pursuant to Section 6.1(d) of that certain Revolving Credit Agreement dated as of December ___, 1996 (as amended and in effect from time to time, the "Agreement"), executed by Borrowers, --------- NationsBank of Texas, N.A., as Agent, and the Lenders, as therein defined. Unless defined herein or indicated otherwise, each capitalized term used herein (and in any attachments) shall have the meaning given to such term in the Agreement. The undersigned, being the duly elected, qualified and acting Chief Financial Officer of TBM, a Texas corporation ("TBM"), on behalf of the --- Borrowers and solely in his capacity as an officer of TBM, hereby certifies and warrants that: (i) he is an Authorized Officer (as defined in the Agreement) and (ii) he is authorized to execute this Certificate on behalf of TBM and the Borrowers. This Certificate is submitted on a quarterly basis on or before the forty-fifth (45th) day following the end of the Borrowers' fiscal quarter for the period ended _________________, 19__. The undersigned hereby further certifies to the following as of the date set forth below: 1. The representations and warranties of Borrowers under the Agreement are true and complete in all material respects. 2. No event has occurred which constitutes a Default or Event of Default. 3. As of __________________, 19___ (being the last day of the Borrowers' most recently ended fiscal quarter) the Borrowers, on a consolidated basis, are in compliance with the financial covenants contained in Section 7.1, 7.2 and 7.3 ------------------------ of the Agreement and the following information is true, accurate and complete as of such date: A. Pertinent Information (a) Consolidated Funded Debt as of the end of the immediately preceding calendar quarter is $___________. (b) Consolidated Operating Cash Flow for the immediately preceding four calendar quarters is $____________, as computed on Attachment 1 hereto. (c) Consolidated Income Available For Debt Service for the immediately preceding four calendar quarter is $____________, as computed on Attachment 2 hereto. (d) Consolidated Debt Service for the immediately preceding four calendar quarter is $____________, as computed on Attachment 3 hereto. B. Covenants (a) Operating Leverage Ratio is ___ to 1.00 (not applicable for any fiscal quarter ending December 31) (such ratio not permitted to be less than 3.50 to 1.00). (b) Consolidated Tangible Net Worth is $________________ (such tangible net worth not permitted to be less than $12,000,000.00). (c) Debt Coverage Ratio is _____ to 1.00 (such ratio not permitted to be less than 1.50 to 1.00). 4. I hereby certify, in my capacity as the Chief Financial Officer (or other officer indicated below) of TBM, and on behalf of the Borrowers, that the information set forth herein and on the attachments hereto is true and correct in all material respects to the best of my knowledge and prepared in accordance with GAAP. 5. I hereby certify that, to the best of my knowledge and belief, the financial statements of the Borrowers being delivered herewith fairly reflect in all material respects the financial condition of the Borrowers and the results of the Borrowers' operations as of the date of delivery of such financial statements. IN WITNESS WHEREOF, I have executed this Certificate as of the ______ day of _________________, 19___. By:________________________________ Name:______________________________ Title:_____________________________ ATTACHMENT 1 Period Ending: ___________, 19__ Consolidated Operating Cash Flow equals: Consolidated Net Income $____________ minus ----- (i) extraordinary gains or losses $____________ (ii) write-up or write-down of any assets $____________ plus ---- (i) Taxes $____________ (ii) Consolidated Interest Expense $____________ (iii) all amounts attributable to depreciation and/or amortization of intangible and other assets of Borrowing Group $____________ Consolidated Operating Cash Flow $____________ Each adjustment to Consolidated Net Income described above be made only to the extent that such amounts have been deducted or added in determining Consolidated Net Income for such period. ATTACHMENT 2 Period Ending: ___________, 19__ Consolidated Income Available For Debt Service: Consolidated Net Income $____________ plus ---- (i) Consolidated Interest Expense $____________ (ii) Consolidated Lease Expense $____________ (iii) All non-cash charges each as deducted in determining such Consolidated Net Income $____________ less ---- (i) All non-cash additions each as added in determining Consolidated Net Income $____________ Consolidated Income Available For Debt Service $____________ ATTACHMENT 3 Period Ending: ___________, 19__ Consolidated Debt Service: (A) Consolidated Interest Expense $____________ plus ---- (B) Consolidated Lease Expense $____________ plus ---- (C) Consolidated Principal Reduction $____________ Consolidated Debt Service $____________ SCHEDULE I ---------- PARTIES TO CREDIT AGREEMENT, NOTICE ADDRESSES AND LENDER SCHEDULE I. BORROWERS --------- Travis Boats & Motors, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Snowden Marine, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Arlington, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Falcon Marine, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Falcon Marine Abilene, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Beaumont, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boats & Motors Baton Rouge, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton TBC Arkansas, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton I. BORROWERS (continued) --------- TBC Management, Ltd. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton TBC Management, Inc. 1209 Orange Street Wilmington, Delaware 19801-1134 Attn: Mark T. Walton Travis Boating Center Louisiana, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Tennessee, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Alabama, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Red River Marine Arkansas,Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Little Rock, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Georgia, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton Travis Boating Center Florida, Inc. 13045 Research Blvd. Austin, Texas 78750 Attn: Mark T. Walton II. AGENT AND LENDERS ----------------- A. AGENT: NationsBank of Texas, N.A. 300 Convent San Antonio, Texas 78205 Attn: Mark Bearfield B. LENDERS: NationsBank of Texas, N.A. Commercial Banking Group 300 Convent San Antonio, Texas 78205 Attn: Mark Bearfield Hibernia National Bank 440 Third Street Baton Rouge, Louisiana 70802 Attn: Wade Carwile III. LENDER SCHEDULE ---------------
=============================================== Loan Commitment Loan Lender Amount Percentage ------ ------ ---------- ----------------------------------------------- NationsBank $9,000,000.00 60% ----------------------------------------------- Hibernia $6,000,000.00 40% ===============================================
SCHEDULE II ----------- OTHER LENDER OBLIGATIONS
================================================================================ NATIONSBANK OF TEXAS, N.A. - -------------------------------------------------------------------------------- Borrower/Guarantor Loan No. Commitment Outstanding Maturity/Repayment - -------------------------------------------------------------------------------- Travis Boats & 4963153 $540,300 $540,300 4/26/04 Motors, Inc. - -------------------------------------------------------------------------------- Travis Boats & 4218244 $271,318 $271,318 2/28/04 Motors, Inc. - -------------------------------------------------------------------------------- Travis Boating Center, 5105754 $ 25,000 $ 25,000 4/14/98 Arlington, Inc. - -------------------------------------------------------------------------------- Travis Snowden 5207816 $641,278 $641,287 12/31/05 Marine, Inc. - -------------------------------------------------------------------------------- Travis Boats & 5179205 $111,520 $111,520 5/31/04 Motors, Inc. et al - -------------------------------------------------------------------------------- Travis Boating Center 5081245 $ 13,066 $ 13,066 2/9/00 Arlington, Inc. - -------------------------------------------------------------------------------- Travis Boats & 5121504 $ 43,303 $ 43,303 5/17/99 Motors, Inc./Travis Snowden Marine/Travis Boating Center/Beaumont - -------------------------------------------------------------------------------- Travis Boats & 5234448 $119,438 $119,438 1/26/96 Motors, Inc. etal ===============================================================================
================================================================================ HIBERNIA NATIONAL BANK - -------------------------------------------------------------------------------- Borrower/Guarantor Loan No. Commitment Outstanding Maturity/Repayment ---------- - -------------------------------------------------------------------------------- Travis Boats & 9146962 $480,000 $452,392.38 7/14/02 Motors Baton Rouge, Inc. - -------------------------------------------------------------------------------- Travis Boats & 9146962 $ 70,000 $ 52,670.12 7/14/02 Motors Baton Rouge, Inc. - -------------------------------------------------------------------------------- Travis Boating 9147268 $100,000 $ 72,907.84 11/30/98 Center Louisiana, Inc. ================================================================================
SCHEDULE III ------------ LIENS AS OF THE CLOSING DATE See attached. EXISTING LIENS WITH TRANSAMERICA COMMERCIAL FINANCE CORPORATION AS SECURED PARTY I. TRAVIS BOATS AND MOTORS (Tx. Secretary of State) DEBTOR: Travis Boats and Motors, Inc. (San Antonio, Houston and Austin stores) SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 89-00073228 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. at 12300 IH10W, San Antonio, Tx. 78230, 7530 North Freeway, Houston, Texas, and 9185 Research Blvd., Austin, Tx. DATE: 4/3/89 DEBTOR: Travis Boats and Motors, Inc. 9185 Research Blvd. Austin, Texas SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 90-00259257 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 12/14/90 II. TRAVIS BOATS AND MOTORS BATON ROUGE, INC. (Louisiana Sec. of State) DEBTOR: Travis Boats and Motors Baton Rouge, Inc. SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 17-1082387 COLLATERAL DESCRIPTION: Inventory, Accounts, Chattel paper, Documents, etc. FILED IN: East Baton Rouge Parish, La. DATE: 11/23/92 III. RED RIVER MARINE (Arkansas Sec. of State) DEBTOR: Red River Marine, Inc. 2001 Hwy. 25 North Route 2 Heber Springs, Arkansas 72543 SECURED PARTY: Borg-Warner Acceptance Corp. (changed to Transamerica Commercial Finance Corporation by amendment 4/5/93) FINANCING STATEMENT #: 128302 COLLATERAL DESCRIPTION: Inventory only DATE: 4/5/73 1 EXISTING LIENS (cont.) DEBTOR: Red River Marine, Inc. 2001 Hwy. 25 North Heber Springs, Arkansas 72543 SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 713224 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 6/11/90 DEBTOR: Red River Marine, Inc. #2 3734 Albert Pike Hwy. Hot Springs, Ark. 71903 SECURED PARTY: General Electric Capital Corporation assigned to Transamerica Commercial Finance Corporation by amendment 10/5/92 FINANCING STATEMENT #: 768487 COLLATERAL DESCRIPTION: Inventory only DATE: 9/16/91 DEBTOR: Red River Marine, Inc. #2 3734 Albert Pike Hwy. Hot Springs, Arkansas SECURED PARTY: General Electric Capital Corporation assigned to Transamerica Commerical Finance Corporation by amendment 10/5/92 FINANCING STATEMENT #: 769586 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 9/24/91 IV. RED RIVER MARINE (Garland County) DEBTOR: Red River Marine, Inc., #2 3734 Albert Pike Hwy. Hot Springs, Ark. 71903 SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 15166 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 10/29/96 V. RED RIVER MARINE (Cleburne County) DEBTOR: Red River Marine, Inc. 2001 Hwy. 25 North Heber Springs, Ark. 72543 SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 90-450 COLLATERAL DESCRIPTION: All Inventory, Equipment, Accounts, etc. DATE: 6/8/90 2 EXISTING LIENS (cont.) VI. TBC ARKANSAS, INC. (Arkansas Sec. of State) DEBTOR: TBC Arkansas, Inc. SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 982583 COLLATERAL DESCRIPTION: Inventory, equipment, accounts, etc. DATE: 9/28/95 VII. TBC ARKANSAS, INC. (Garland County) DEBTOR: TBC Arkansas, Inc. SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 22402 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 10/2/95 VIII. TBC ARKANSAS, INC. (Cleburne County) DEBTOR: TBC Arkansas, Inc. SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 95-829 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 9/29/95 IX. TRAVIS SNOWDEN MARINE, INC. (Tx. Secretary of State) DEBTOR: Travis Snowden Marine, Inc. 9300 Harry Hines Dallas, Texas 75235 SECURED PARTY: Transamerica Commercial Finance Corporation FINANCING STATEMENT #: 87-00252513 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 9/30/87 DEBTOR: Travis Snowden Marine, Inc. 9300 Harry Hines Dallas, Texas 75235 SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 90-00259254 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 12/14/90 3 EXISTING LIENS (cont.) X. TRAVIS BOATING CENTER ARLINGTON, INC. (Tx. Secretary of State) DEBTOR: Travis Boating Center Arlington, Inc. 1725 W. Division St. Arlington, Tx. 76012 SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 95-00039954 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 3/3/95 XI. FALCON MARINE (Tx. Secretary of State) DEBTOR: Falcon Marine, Inc. 1920 N. Loop 250 West Midland, Texas 78707 SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 90-00259256 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 12/14/90 XII. FALCON MARINE ABILENE, INC. (Tx. Secretary of State) DEBTOR: Falcon Marine Abilene, Inc. 1300 S. Clack Abilene, Texas 79605 SECURED PARTY: Transamerica Commercial Finance Corp. FINANCING STATEMENT #: 90-00259255 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 12/14/90 XIII. TRAVIS BOATING CENTER BEAUMONT, INC. (Tx. Secretary of State) DEBTOR: Travis Boating Center Beaumont, Inc. 2949 College St. Beaumont, Texas 77701 SECURED PARTY: Transamerica Commerical Finance Corporation FINANCING STATEMENT #: 93-00231447 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 12/6/93 4 EXISTING LIENS WITH DEUTSCHE FINANCIAL SERVICES CORPORATION AS SECURED PARTY I. TRAVIS BOATS AND MOTORS (Tx. Secretary of State) DEBTOR: Travis Boats and Motors, Inc. 13045 Research Austin, Texas 78750 SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 95-00164268 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corporation which bears the trademark or trade name of Johnson DATE: 8/21/95 II. TRAVIS BOATS AND MOTORS BATON ROUGE, INC. (Louisiana Sec. of State) DEBTOR: Travis Boats and Motors Baton Rouge, Inc. SECURED PARTY: Deutsche Business Services Corporation FINANCING STATEMENT #: 17-1110191 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corp. which bears the trademark or trade name of Johnson FILED IN: East Baton Rouge Parish, La. DATE: 8/21/95 III. TRAVIS BOATING CENTER LOUISIANA (Louisiana Sec. of State) DEBTOR: Travis Boating Center Louisiana, Inc. SECURED PARTY: Deutsche Business Services Corp. FINANCING STATEMENT #: 23-95-1867 COLLATERAL DESCRIPTION: Inventory and equipment which is manufactured or sold by Outboard Marine Corp. which bears the trademark or trade name of Johnson FILED IN: New Iberia Parish, Louisiana DATED: 12/15/95 1 EXISTING LIENS (cont.) IV. TBC ARKANSAS, INC. (Arkansas Sec. of State) DEBTOR: TBC Arkansas, Inc. SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 1028061 COLLATERAL DESCRIPTION: Inventory manufactured or sold by Outboard Marine Corporation or which bears the trademark or trade name of Johnson now owned or hereafter acquired and all equipment and attachments; and all inventory financing by Deutsche Financial Services Corporation, now or hereafter acquired and all attachments DATE: 7/16/96 V. TBC ARKANSAS, INC. (Cleburne County) DEBTOR: TBC Arkansas, Inc. SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 95-776 COLLATERAL DESCRIPTION: Inventory manufactured by Outboard Marine Corp. DATE: 9/11/95 VI. TRAVIS SNOWDEN MARINE, INC. (Tx. Secretary of State) DEBTOR: Travis Snowden Marine, Inc. 2620 N. I-36 Carrollton, Tx. 75010 SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 95-00164271 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corporation which bears the trademark or trade name of Johnson DATE: 8/21/95 VII. TRAVIS BOATING CENTER ARLINGTON, INC. (Tx. Secretary of State) DEBTOR: Travis Boating Center Arlington, Inc. 1725 W. Division Arlington, Tx. 76012 SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 95-164270 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corporation which bears the trademark of Johnson DATE: 8/21/95 2 EXISTING LIENS (cont.) VIII. FALCON MARINE (Tx. Secretary of State) DEBTOR: Falcon Marine, Inc. 1920 N. Loop 250 West Midland, Texas 78707 SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 86-00260912 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. DATE: 9/5/86 DEBTOR: Falcon Marine, Inc. 1920 N. Loop 250 West Midland, Texas 78707 SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 95-00164269 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corporation which bears the trademark or trade name of Johnson DATE: 8/21/95 IX. FALCON MARINE ABILENE, INC. (Tx. Secretary of State) DEBTOR: Falcon Marine Abilene, Inc. 1201 E. Hwy. 80 Abilene, Tx. SECURED PARTY: Deutsche Financial Corporation FINANCING STATEMENT #: 95-00164272 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corp. which bears the trademark or trade name of Johnson DATE: 8/21/95 X. TRAVIS BOATING CENTER BEAUMONT, INC. (Tx. Secretary of State) DEBTOR: Travis Boating Center Beaumont, Inc. 2949 College St. Beaumont, Texas 77701 SECURED PARTY: Deutsche Financial Services Corporation FINANCING STATEMENT #: 95-00164267 COLLATERAL DESCRIPTION: Inventory and equipment manufactured or sold by Outboard Marine Corporation and which bears any trademark or trade name of Johnson DATE: 8/21/95 3 EXISTING LIENS WITH BOMBARDIER CAPITAL, INC. AS SECURED PARTY I. TRAVIS BOATS AND MOTORS (Tx. Secretary of State) DEBTOR: Travis Boats and Motors, Inc. 12300 IH 10 W. San Antonio, Texas SECURED PARTY: Bombardier Capital, Inc. FINANCING STATEMENT #: 93-00231988 COLLATERAL DESCRIPTION: Inventory only DATE: 12/6/93 II. FALCON MARINE ABILENE, INC. (Tx. Secretary of State) DEBTOR: Falcon Marine Abilene, Inc. 1201 E. Hwy. 80 Abilene, Tx. SECURED PARTY: Bombardier Capital, Inc. FINANCING STATEMENT #: 93-00230630 COLLATERAL DESCRIPTION: Inventory only DATE: 12/3/93 EXISTING LIENS HELD BY ----------------------- NATIONSBANK OF TEXAS, N.A. OR ----------------------------- HIBERNIA NATIONAL BANK ---------------------- THAT COVER REAL ESTATE COLLATERAL --------------------------------- 1. DEBTOR: Travis Boats and Motors, Inc. 12718 IH 10 W. San Antonio, Texas 78230 SECURED PARTY: NationsBank of Texas, N.A. FINANCING STATEMENT #: 86-00311056 COLLATERAL DESCRIPTION: All inventory, equipment, accts. for Lot 17, NCB 14862, Stonehill 7 Subdivision, City of S.A., Bexar County, Texas DATE: 10/27/86 2. DEBTOR: Travis Boats & Motors, Inc. 9185 Research Blvd. Austin, Texas SECURED PARTY: NationsBank of Texas, N.A. FINANCING STATEMENT #: 93-00062895 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts for 3.423 acre out of Henry Rhodes survey Abstract 522, situated in Williamson County, Texas DATE: 4/1/93 3. DEBTOR: Travis Boats & Motors, Inc. 9185 Research Blvd. Austin, Texas SECURED PARTY: NationsBank of Texas, N.A. FINANCING STATEMENT #: 94-00130500 COLLATERAL DESCRIPTION: Inventory, Equipment, Accounts, etc. for 3.423 acres in Williamson County, Texas DATE: 7/1/94 4. DEBTOR: Travis Snowden Marine, Inc. 13045 Research Blvd. Austin, Texas 78750 SECURED PARTY: NationsBank of Texas, N.A. FINANCING STATEMENT #: 95-234802 COLLATERAL DESCRIPTION: All equipment, fixtures and articles of personal property now or herefter attached to or used in connection with two tracts of land located in Denton, County. DATE: 12/7/95 5. DEBTOR: Travis Snowden Marine, Inc. 13045 Research Blvd. Austin, Texas 78750 SECURED PARTY: NationsBank of Texas, N.A. (second lien) FINANCING STATEMENT #: 95-234803 COLLATERAL DESCRIPTION: All equipment, fixtures and articles of personal property now or herefter attached to or used in connection with two tracts of land located in Denton, County. DATE: 12/7/95 6. DEBTOR: Travis Boating Center Louisiana, Inc. SECURED PARTY: Hibernia National Bank FINANCING STATEMENT #: 17-1113883 COLLATERAL DESCRIPTION: All equipment and fixtures, accounts, chattel relating to an approximately 3.3 acre tract located in New Iberia, Louisiana DATE: 12/20/95 7. Also an Assignment of Leases and Rents that was filed in East Baton Rouge Parish, La. with Hibernia National Bank as the Lender, and Travis Boats & Motors Baton Rouge, Inc., as Borrower. This Assignment references a promissory note in the amount of $480,000.00 that was issued by Hibernia National Bank to Travis Boats & Motors Baton Rouge, Inc. on 7/14/95 and which promissory note was collateralized by the property located at 14369 Florida Blvd., Baton Rouge, La. 70819 SCHEDULE 5.1 ------------ JURISDICTIONS QUALIFIED TO DO BUSINESS IN
================================================================== Borrower Jurisdiction Qualified to do Business In - ------------------------------------------------------------------ Travis Boats & Motors, Inc. Texas - ------------------------------------------------------------------ Travis Snowden Marine, Inc. Texas - ------------------------------------------------------------------ Travis Boating Center Arlington, Inc. Texas - ------------------------------------------------------------------ Falcon Marine, Inc. Texas - ------------------------------------------------------------------ Falcon Marine Abilene, Inc. Texas - ------------------------------------------------------------------ Travis Boating Center Beaumont, Inc. Texas - ------------------------------------------------------------------ Travis Boats & Motors Baton Rouge, Inc. Louisiana - ------------------------------------------------------------------ TBC Arkansas, Inc. Arkansas - ------------------------------------------------------------------ TBC Management, Ltd. Texas - ------------------------------------------------------------------ TBC Management, Inc. Delaware - ------------------------------------------------------------------ Travis Boating Center Louisiana, Inc. Louisiana - ------------------------------------------------------------------ Travis Boating Center Tennessee, Inc. Texas; Tennessee - ------------------------------------------------------------------ Travis Boating Center Alabama, Inc. Texas; Alabama - ------------------------------------------------------------------ Red River Marine Arkansas, Inc. Arkansas - ------------------------------------------------------------------ Travis Boating Center Little Rock, Inc. Arkansas - ------------------------------------------------------------------ Travis Boating Center Georgia, Inc. Texas - ------------------------------------------------------------------ Travis Boating Center Florida, Inc. Texas ==================================================================
SCHEDULE 5.15 ------------- DEBT
========================================================================== Borrower Lender Original Maturity Balance Date - -------------------------------------------------------------------------- Travis Boating Center Tri-Lakes Marine, $ 90,000.00 April 30, 2002 Alabama, Inc. Inc. - -------------------------------------------------------------------------- Travis Boating Center Charles Bondurant $ 28,000.00 April 30, 2002 Alabama, Inc. - -------------------------------------------------------------------------- Travis Boating Center Joe Bondurant $ 28,000.00 April 30, 2002 Alabama, Inc. - -------------------------------------------------------------------------- Travis Boating Center Tom Bondurant $ 14,000.00 April 30, 2002 Alabama, Inc. - -------------------------------------------------------------------------- Travis Boating Center Tri-Lakes Marine, $270,000.00 April 30, 2002 Tennessee, Inc. Inc. - -------------------------------------------------------------------------- Travis Boating Center Charles Bondurant $ 68,000.00 April 30, 2002 Tennessee, Inc. - -------------------------------------------------------------------------- Travis Boating Center Joe Bondurant $ 68,000.00 April 30, 2002 Tennessee, Inc. - -------------------------------------------------------------------------- Travis Boating Center Tom Bondurant $ 34,000.00 April 30, 2002 Tennessee, Inc. - -------------------------------------------------------------------------- Travis Boating Center Norht Alabama $ 79,706.97 February 28, Alabama, Inc. Water Sports, Inc. 1999 ==========================================================================
SEE ATTACHED SCHEDULE OF CURRENT MATURITIES OF LONG TERM DEBT FOR ADDITIONAL DEBT OUTSTANDING AS OF THE CLOSING DATE. SCHEDULE OF CURRENT MATURITIES OF LONG TERM DEBT TRAVIS BOATS & MOTORS, INC. & SUBSIDIARIES
10/XX X/97 10/X7 X/XX 10/93 9/XX 10/XX X/00 10/00 9/01 1 Austin RE 1ST lien-NationsBank 28,004.00 27,872.00 50,308.00 50,X81.00 55,X28.00 2 Austin RE 2ND lien-OBA 11,012.00 12,858.00 14,470.00 14,XX2.00 16,178.00 3 Austin Pickup-UnitedBank & Trust 3,774.52 4,038.00 1,528.05 0.00 0.00 4 Austin Suburban-United Bank & Trust 5,263.30 5,657.00 1,434.88 0.00 0.00 5 San Antonio RE 1ST lien-NationsBank 58,588.00 38,088.00 38,998.00 58,098.00 38,998.00 6 San Antonio RE 2ND lien-NationsBank 14,708.00 14,708.00 14,708.00 14,708.00 14,708.00 7 Midlan RE 1ST lien-TCB 52,748.00 52,748.00 52,748.00 172,08X.32 0.00 8 Midlan RE 1ND lien-Jeff Barber XX,284.35 84,001.25 64,007.05 0.00 0.00 9 Abilene RE !ST lien-VFW Post 12,183.88 12,837.48 15,733.41 14,XX2.58 10,402.00 10 Abilene Pickup-First National Bank 4,488.00 3,100.00 0.00 0.00 0.00 11 Arlington Pickup-NationsBank 4,020.00 4,020.00 4,020.00 1,676.24 0.00 12 Arlington Improvements-NationsBank 18,089.00 9,722.46 0.00 0.00 0.00 13 BA, Beaumont, Dallas Trucks-NationsBank 18,492.00 18,997.00 12,080.14 0.00 0.00 14 Houston improvement Note-NationsBank X6,750.00 XX,760.00 X6,780.00 12,250.16 0.00 15 Beaumont improvement Note-Bank One 100,000.00 0.00 0.00 0.00 0.00 16 Dallas RE 1ST lien-NationsBank 45,287.00 45,287.00 45,287.00 48,287.00 48,287.00 17 Baton Rouge Bldg 1ST lien-Hibernia 21,178.00 23,228.00 28,463.00 27,021.00 30,818.00 18 Baton Rouge Bldg Improvement-Hibernia 18,407.00 14,701.00 18,120.00 10,57X.84 0.00 19 Baton Rouge Truck-Hibernia 4,829.00 4,874.00 5,253.00 1,828.49 0.00 20 New Iberia Improvement Note-Hibernia 38,798.00 35,982.00 9,388.07 0.00 0.00 21 New Iberia Truck Note Hibernia X,XXX.09 3,662.00 6,380.00 2,780.72 0.00 22 New Iberia Non-Compete-Clay Poltis 55,753.09 18,022.49 0.00 0.00 0.00 23 Huber Springs Truck Note-HSB Bank 5,278.00 6,814.00 8,407.00 7,080.00 1,248.78 24 Hot Springs Truck Loan-ABT 5,518.00 5,618.00 6,359.00 825.84 0.00 25 Arkansas Non-Compete-Benny Hargrove 92,030.00 100.078.00 110,174.00 120,114.00 121,188.00 26 Hot Springs RE-Benny Hargrove 16,886.00 18,424.00 20,108.00 23,020.00 28,102.00 27 Hot Springs RE- ABT 31,826.00 108,586.00 0.00 0.00 0.00 YEARLY CURRENT MATURITIES 622,445.83 857,607.08 514,439.80 543,008.79 885,XXX.K75 Later TOTAL NOTES 1 Austin RE 1ST lien-NationsBank XX1,707.20 844,XX7.20 Ballons 4/28/2004 2 Austin RE 2ND lien-OBA X59,062.88 42X,XXX.XX Full Pay-off 6/1/2014 3 Austin Pickup-UnitedBank & Trust 0.00 X,137.27 Full Pay-off 1/8/98 4 Austin Suburban-United Bank & Trust 0.00 12,039.88 Full Pay-off 12/16/98 5 San Antonio RE 1ST lien-NationsBank x9,411.45 270,401.48 Balloons 2/28/2004 6 San Antonio RE 2ND lien-NationsBank 36,191.04 109,881.04 Full Pay-off 5/21/2004 7 Midlan RE 1ST lien-TCB 0.00 270,32X.XX Balloons 12/31/XX 8 Midlan RE 1ND lien-Jeff Barber 0.00 171.782.09 Full Pay-off 9/20/89 9 Abilene RE !ST lien-VFW Post 113,239.46 182,162.78 Full Pay-off 9/1/07 10 Abilene Pickup-First National Bank 0.00 7,843.XX Full Pay-off X/1/08 11 Arlington Pickup-NationsBank 0.00 13,706.24 Full Pay-off X/X/2000 12 Arlington Improvements-NationsBank 0.00 27,772.48 Full Pay-off 4/14/XX 13 BA, Beaumont, Dallas Trucks-NationsBank 0.00 44,539.14 Full Pay-off 5/17/XX 14 Houston improvement Note-NationsBank 0.00 122,500.18 Full Pay-off 15 Beaumont improvement Note-Bank One 0.00 100,000.00 Full Pay-off 12/XX/XX 16 Dallas RE 1ST lien-NationsBank 422,487.24 848,822.24 Balloons 12/31/2008 17 Baton Rouge Bldg 1ST lien-Hibernia 387,181.92 458,521.62 Balloons 7/7/2002 18 Baton Rouge Bldg Improvement-Hibernia 0.00 94,807.54 Full Pay-off 7/7/2000 19 Baton Rouge Truck-Hibernia 0.00 19,278.49 Full Pay-off 7/19/2000 20 New Iberia Improvement Note-Hibernia 0.00 70,148.07 Full Pay-off 11/30/XX 21 New Iberia Truck Note Hibernia 0.00 80,078.72 Full Pay-off 2/27/2000 22 New Iberia Non-Compete-Clay Poltis 0.00 49,775.49 Full Pay-off 3/31/XX 23 Huber Springs Truck Note-HSB Bank 0.00 25,802.79 Full Pay-off 11/15/2000 24 Hot Springs Truck Loan-ABT 0.00 18,012.64 Full Pay-off 10/23/XX 25 Arkansas Non-Compete-Benny Hargrove 180,007.25 735,882.23 Full Pay-off 11/15/2001 26 Hot Springs RE-Benny Hargrove 348,XX3.42 452.422.42 Full Pay-off 11/15/2010 27 Hot Springs RE- ABT 0.00 148,21X.00 Balloons 4/28/XX YEARLY CURRENT MATURITIES 2,2XX,784.10 8,018,XXX.XX ERR
EX-10.29(B) 3 SECURITY AGMT. EXHIBIT 10.29(b) SECURITY AGREEMENT ------------------ THIS SECURITY AGREEMENT (this "Security Agreement") is executed and ------------------ effective as of the 12th day of December, 1996, by TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., a Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation, TBC ARKANSAS, INC., an Arkansas corporation, TBC MANAGEMENT, LTD., a Texas limited partnership, TBC MANAGEMENT, INC., a Delaware corporation, TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, RED RIVER MARINE ARKANSAS, INC., an Arkansas corporation, TRAVIS BOATING CENTER LITTLE ROCK, INC., an Arkansas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation and any other entity which may hereafter execute this Security Agreement as a "Debtor" or be added to the Agreement (as herein defined) as a "Borrower" (collectively, "Debtor"), in favor of NATIONSBANK OF TEXAS, N.A., a national banking - ------- association, as agent (in such capacity, "Agent") and for itself as a lender and ----- such other lenders as may from time to time be a "Lender" under the Agreement (hereinafter defined) (all such lenders are collectively referred to herein as the "Lenders"). ------- W I T N E S S E T H: ------------------- WHEREAS, pursuant to that certain Revolving Credit Agreement (as modified from time to time, the "Agreement") dated as of December 12, 1996, by and among --------- Agent, the Lenders and Debtor, as borrowers, the Lenders have agreed to make the Credit Facility available to Debtor upon the terms and conditions set forth therein (unless otherwise defined herein, each term used herein with its initial letter capitalized shall have the meaning given to such term in the Agreement); and WHEREAS, the Credit Facility is given in renewal, extension, modification and consolidation of the Prior Credit Facility, the indebtedness of which is respectively secured by security interests granted by certain of the Borrowers in favor of the Lender thereunder, as more particularly described on Exhibit A --------- attached hereto (the "Existing Security Interests", as referenced in the --------------------------- Agreement), which security interests have been respectively assigned by Lenders to Agent for the benefit of Lenders pursuant to the Agreement; and WHEREAS, as a condition to and in consideration for the agreement of the Lenders to make monies available to Debtor and in order to provide collateral security for the Obligations Page 1 and the Other Lender Obligations, the Lenders have requested and Debtor has agreed to enter into this Agreement pursuant to which Debtor will grant to Agent on behalf of the Lenders a first priority security interest in the Collateral (as hereafter defined) and amend and restate the security agreements giving rise to the Existing Security Interests. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, Debtor agrees with Agent for the benefit of the Lenders as follows: ARTICLE I GRANT ----- 1.01. Assignment and Grant of Security. Debtor hereby grants, pledges and assigns to Agent a security interest in the following assets of Debtor, and all rights, titles and interests of Debtor therein, wherever located and whether now owned or hereafter acquired by Debtor or in which Debtor now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"): - ----------- (a) all inventory now owned or hereafter acquired by Debtor, including, without limitation, any and all boat motor, trailer and parts inventory and accessories ("Inventory"), and all related documents, goods, general intangibles --------- and other property in which a security interest may be created under Chapter 9 of the Uniform Commercial Code as from time to time in effect in the State of Texas or other applicable jurisdictions (the "UCC"), including, without --- limitation, any bills of lading, invoices, warehouse receipts, documents of title, bills of sale, certificates of title, manufacturer's certifies of origin, certificates of origin, dealer reassignments of title, trust receipts, and other documents, all monies received from manufacturers by way of credits, refunds, or otherwise, and/or the proceeds of all repurchases payable to Debtor, and all returned or repossessed goods; and (b) any right to payment for services rendered or for goods sold or leased, which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance ("Accounts"), and all of Debtor's rights to any goods -------- represented by any of the foregoing (including returned, refused or repossessed goods and unpaid seller's rights) ; all general intangibles and other obligations of any kind owing to Debtor (including under any trade names), now or hereafter owned, existing, received or acquired, arising out of or in connection with the sale or lease of goods or the rendering of services or otherwise (including, without limitation, any such obligations that would be characterized as an account, general intangible or chattel paper under the UCC) (any and all such Accounts, general intangibles and obligations described in this Section 1.01(a) being sometimes referred to herein collectively as the --------------- "Receivables"); - ------------ Page 2 (c) all now owned or existing or hereafter received or acquired writings which evidence both a monetary obligation and a security interest in or a lease of specific goods (collectively, the "Chattel Paper"); ------------- (d) all now owned or existing or hereafter received or acquired contracts and agreements relating to any property described in this Section 1.10 to which ------------ Debtor is a party or to which Debtor has any rights, together with all modifications, amendments or replacements of any of the foregoing (collectively, the "Contracts"), including, without limitation, (i) all of Debtor's rights in, --------- to and under all purchase orders or contracts by it for goods or services, and all of Debtor's rights to any goods represented by any of the foregoing (including returned, refused or repossessed goods and unpaid seller's rights), (ii) all rights of Debtor to receive moneys due and to become due to it thereunder or in connection therewith, whether or not yet earned by performance (including, without limitation, all discounts or rebates on goods or inventory purchased), (iii) all rights in and to all security agreements, leases, guarantees and other contracts securing or otherwise relating to any such Contracts, (iv) all rights of Debtor to damages arising out of, or for, breach or default in respect thereof, and (v) all rights of Debtor to perform and to exercise all remedies thereunder; (e) the balance of every bank account and deposit account of Debtor, including without limitation all accounts on deposit with or under the control of any Lender or any affiliate of any Lender, and any other claim of Debtor against any Lender, now or hereafter existing, liquidated or unliquidated, and all money, instruments, securities, documents, chattel paper, credits, claims, demands, income, and any other property, rights and interests of Debtor which at any time shall come into the possession or custody or under the control of any Lender or any agent, affiliate or correspondent of any Lender, for any purpose, and the proceeds thereof (Agent shall be deemed to have possession of any of the Collateral in transit to or set apart for Agent, any Lender or any of their respective agents, affiliates or correspondents); (f) all customer lists, subscription lists, invoices, agings, verification reports and other records relating in any way to any property described in this Section 1.01, and all insurance policies and bonds and claims relating to any - ------------ property described in this Section 1.01 and payments thereunder; ------------ (g) all rights, claims and benefits of Debtor against any Person arising out of, relating to or in connection with any property described in this Section ------- 1.01; - ---- (h) all accessions to, all substitutions for and replacements of, and all cash or no-cash proceeds, products of and property receivable for any and all of the foregoing Collateral arising from their sale or other disposition (including, without limitation, proceeds which constitute property of the types described in this Section 1.01) and, to the extent not otherwise included, all ------------ payments under insurance (whether or not Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral. Page 3 1.02. Description of Obligations. This Security Agreement creates a security interest in the Collateral securing the payment and performance of the Obligations, which includes, without limitation, all obligations and indebtedness arising under or pursuant to the Agreement, the Notes and the other Loan Documents and, to the extent of the payment in full of the Obligations, the Other Lender Obligations, pari passu. 1.03. Debtor Remains Liable. Anything herein to the contrary notwithstanding, (a) each Debtor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Security Agreement had not been executed, (b) the exercise by Agent or any Lender of any of the Rights hereunder shall not release any Debtor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) neither Agent nor any Lender shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Security Agreement, nor shall Agent or any Lender be obligated to perform any of the obligations or duties of Debtor thereunder or to take any action to correct or enforce any claim for payment assigned hereunder, make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account or other receivable (or any agreement giving rise thereto) or under any contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 1.04. Delivery of Security Collateral. All original manufacturer's invoices, certificates of origin and all other title documents evidencing Borrowers' ownership of all of their Inventory shall be maintained in safekeeping by Borrowers in a manner reasonably acceptable to Agent, including, without limitation, Borrowers' current practices, unless and until a request is made therefor by Agent upon the occurrence of a monetary Event of Default which Borrower has not cured in accordance with the applicable provisions of the Agreement. In such event, within five Business Days of the request by Agent, Borrowers shall deliver to Agent all original manufacturer's invoices, certificates of origin and all other title documents in Borrowers' possession, whether at the time of such request or thereafter, to Agent, and Agent shall retain or hold all such original documents received by Agent after such request; provided, however, Borrowers may retain or hold all such original documents relating to Inventory covered by liens expressly excluded from the subordination of an Intercreditor Agreement which is in full force and effect at the time of Agent's request under this Section 1.04. Thereafter, all original ------------ manufacturer's invoices, certificates of origin and all other title documents shall remain in Agent's possession until the Note and the Obligations are paid and performed in full, provided that, if the original title documents have been delivered to Agent as provided for herein and if no Event of Default has occurred and is then existing, upon the sale of an item of Inventory by a Borrower, Agent shall promptly deliver to the respective Borrower the original title documents pertaining to the item of Inventory which has been sold; and further provided, that, upon the happening of an Event of Default and during the continuance thereof, Agent may transfer, as applicable, title documents delivered to it pursuant to this Section 1.04 in connection with its sale of ------------ Inventory which constitute Collateral in accordance with its rights provided for in this Page 4 Agreement. Except as noted above in this Section 1.04 all certificates or ------------ instruments representing or evidencing the Collateral shall be delivered to and held by or on behalf of Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Agent. After the occurrence of an Event of Default, Agent shall have the right, at any time in its discretion and without notice to Debtor, to transfer to or to register in the name of Agent or any of its nominees any or all of the Collateral. In addition, after the occurrence of any Event of Default, Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations. ARTICLE II REPRESENTATIONS AND WARRANTIES ------------------------------ 2.01. Representations and Warranties. Debtor represents and warrants, with respect to itself and the Collateral, as follows: (a) The chief places of business and chief executive offices of Debtor, the storage and distribution facilities and the office where Debtor keeps all of its records concerning the Inventory and other Collateral are located at the addresses specified in Schedule 1 hereto. All of the Inventory and other ---------- Collateral pledged by Debtor hereunder is located at the places specified on Schedule 1 hereto or in transit to a place specified on Schedule 1 hereto, or in - ---------- ---------- transit for sale to a third-party purchaser in the ordinary course of Debtor's business. All promissory notes or other instruments evidencing the Accounts have been delivered and pledged to Agent duly endorsed and accompanied by such duly executed instruments of transfer or assignment as are necessary for such pledge, to be held as pledged collateral. Debtor has possession and control of the Collateral pledged by it hereunder. (b) Debtor is the legal and beneficial owner of all the Collateral free and clear of any lien or security interest, option or other charge or encumbrance except for (i) the security interest created by this Security Agreement and (ii) any Liens permitted by the Agreement ("Permitted Liens"). No effective --------------- financing statement or other similar document used to perfect and preserve a security interest under the Laws of any jurisdiction covering all or any part of the Collateral is on file in any recording office, except (i) such as may have been filed in favor of Agent relating to this Security Agreement, and (ii) such as may have been filed in connection with Permitted Liens. (c) As of the date hereof, Debtor has the trade names set forth on Schedule -------- 2 and no others. - - (d) This Security Agreement and the pledge of the Collateral pursuant hereto creates a valid first priority security interest (subject only to such Permitted Liens as may cover the Collateral) in the Collateral securing the payment of the Obligations and, to the extent of the Page 5 payment in full of the Obligations, the Other Lender Obligations, pari passu, and upon filing of financing statements in accordance with the UCC, and any other necessary actions to perfect such security interest, such first priority security interest in such Collateral will be duly perfected; and all filings and other actions necessary or desirable to perfect and protect such security interest and such priority have been duly taken (or will be taken). (e) The amount represented by Debtor to Agent from time to time as owing by each account debtor or by all account debtors in respect of the Accounts will at such time be the correct amount actually owing by such account debtor or debtors thereunder. Each Account held as Collateral will represent a valid and legally enforceable obligation of third parties. No amount payable to Debtor under or in connection with any Accounts is evidenced by any Chattel Paper that has not been delivered to Agent. (f) No consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority is required (i) for the pledge by Debtor of the Collateral pledged by it hereunder, for the grant by Debtor of the security interest granted hereby or for the execution, delivery or performance of this Security Agreement by Debtor, (ii) for the perfection or maintenance of the pledge, assignment and security interest created hereby (including the first priority nature of such pledge, assignment and security interest) except for UCC filings or any other action required by the UCC or other applicable perfection statutes, or (iii) for the exercise by Agent or any Lender of the Rights provided for in this Security Agreement or the remedies in respect of the Collateral pursuant to this Security Agreement. (g) Debtor has the corporate or partnership power and authority and the legal right to execute and deliver, to perform its obligations under, and to grant the security interest in the Collateral pursuant to, this Security Agreement, and Debtor has taken all necessary corporate or partnership action to authorize its execution, delivery and performance of, and grant of the security interest in the Collateral pursuant to this Security Agreement. (h) This Security Agreement constitutes a legal, valid and binding obligation of Debtor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. (i) The execution, delivery and performance of this Security Agreement will not violate any provision of any applicable law, rule, regulation or contractual obligations of Debtor and will not result in the creation or imposition of any lien on any of the properties or revenues of Debtor pursuant to any applicable law, rule, regulation or contractual obligations of Debtor, except as contemplated hereby and except as would not have a Material Adverse Effect. (j) No action, suit or proceeding of or before any court, arbitrator or any governmental body, agency or official is pending or, to the knowledge of Debtor, threatened by or against Debtor or against any of its properties or revenues with respect to this Security Agreement or any of the transactions contemplated hereby. Page 6 ARTICLE III COVENANTS --------- 3.01. Further Assurances. (a) Debtor agrees that, where any agreement existing as of the date hereof or hereafter to which Debtor is a party contains any restriction prohibiting Debtor from granting any security interest under this Security Agreement, Debtor will obtain or use its best efforts to obtain the necessary consent to or waiver of such restriction from any Person so as to enable Debtor to effectively grant to Agent such security interest under this Security Agreement. (b) Debtor will from time to time at its expense promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary, or that Agent may reasonably request, in order to perfect and protect any pledge, assignment or security interest granted or purported to be granted hereby, and the priority thereof, or to create or preserve the full benefits of this Security Agreement and the rights and powers of Agent herein granted, or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral. Without limiting the generality of the foregoing, upon written request by Agent, Debtor will: (i) mark conspicuously each item of Chattel Paper included in Accounts: THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO A SECURITY AGREEMENT (AS THE SAME MAY BE MODIFIED OR RESTATED) MADE BY ____________, IN FAVOR OF NATIONSBANK OF TEXAS, N.A., AS AGENT or such other legend, in form and substance satisfactory to and as specified by Agent, indicating that such item of Chattel Paper is subject to the pledge, assignment and security interest granted hereby; (ii) if any Collateral shall be evidenced by a promissory note or other instrument or be Chattel Paper, deliver to Agent such note, instrument or Chattel Paper, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Agent; and (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as Agent may request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby with respect to any and all the Collateral. (c) Debtor hereby authorizes Agent to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of Debtor where and to the extent permitted by applicable law. A photocopy or other reproduction of this Security Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where and to the extent permitted by applicable law. Page 7 (d) Debtor will furnish to Agent from time to time, upon the written request of Agent, statements and schedules further identifying and describing the Collateral, and such other reports in connection with the Collateral, as Agent may reasonably request. (e) In addition to such other information as shall be specifically provided for herein, Debtor shall furnish to Agent such other information with respect to the Collateral as Agent may reasonably request from time to time in connection with the Collateral, or the protection, preservation, maintenance or enforcement of the security interest or the Collateral, including, without limitation, all documents and things in Debtor's possession, or subject to its demand for possession, related to the Collateral. (f) If an Event of Default shall occur and be continuing, Debtor shall, if any of the monies or property pledged or required to be pledged under Section ------- 1.01 are received by Debtor, forthwith transfer and deliver to Agent such money - ---- or property received by Debtor, all of which thereafter shall be held by Agent, pursuant to the terms of this Agreement, as part of the Collateral. 3.02. Inventory and Equipment. (a) Debtor shall keep all of the Inventory (other than Inventory sold or displayed in the ordinary course of business) at the place or places specified therefor in Section 2.01(a) or, upon thirty days' prior written notice to Agent, --------------- at such other places in such jurisdiction where all action required by Section ------- 3.01 shall have been taken with respect to such transferred Inventory. - ---- (b) Debtor shall pay all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against the Collateral pledged by it hereunder as provided in the Agreement. 3.03. Insurance. Debtor will, at its own expense, maintain, or cause to be maintained, insurance on the Collateral as provided in the Agreement, with Agent (on behalf of the Lenders) being named as loss payee and additional insured on all insurance policies which pertain to the Collateral. If Debtor fails to perform or observe any applicable covenants as to insurance on any of such Collateral, Agent may, upon notice to Debtor, at its own option obtain insurance on such Collateral, and any premium therefor paid by Agent shall become part of the Obligations and shall bear interest prior to the occurrence of an Event of Default at the interest rate then applicable to the Credit Facility and after the occurrence of an Event of Default, at the Default Rate in effect under the Credit Facility. In the event Agent maintains such substitute insurance, the additional premium for such insurance shall be due on demand and payable by Debtor to Agent in accordance with any notice delivered to Debtor by Agent. Debtor hereby grants Agent a security interest in any refunds of unearned premiums in connection with any cancellation, adjustment or termination of any policy of insurance required by Agent and in all proceeds of such insurance and hereby appoints Agent its attorney-in-fact to, after the occurrence and during the continuance of an Event of Default, endorse any check or draft that may be payable to Page 8 Debtor in order to collect such refunds or proceeds. Any such sums collected by Agent shall be credited, except to the extent applied to the purchase by Agent of similar insurance, to any amounts then owing on the Obligations. 3.04. Place of Perfection; Records; Collection of Receivables and Chattel Paper. (a) Debtor will not (i) change the location of its chief executive office from that specified in Schedule 1, or (ii) change its name, identity, tax ---------- identification number or corporate structure to such an extent that any financing statement filed by Agent in connection with this Security Agreement would become seriously misleading, or (iii) use any trade name other than those listed on Schedule 2, unless Debtor shall have given prior written notice as ---------- soon as practicable thereof, and prior to effecting any such change Debtor shall have taken such steps as Agent may deem necessary or advisable to continue the perfection and priority of the security interest granted pursuant hereto. (b) Except as otherwise provided in this Section 3.04(b) or in any of the --------------- other Loan Documents, Debtor shall continue to collect, at its own expense, all amounts due or to become due Debtor under the Receivables and Chattel Paper. In connection with such collections, Debtor may take such action as Debtor or Agent may deem reasonably necessary or advisable to enforce collection of the Receivables and Chattel Paper; provided, however, that Agent shall have the -------- ------- right upon the occurrence of an Event of Default (without notice to Debtor) to notify the account debtors or obligors under any or all of the Collateral of the assignment of such Collateral to Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to Debtor thereunder directly to Agent and, after the occurrence of an Event of Default, at the expense of Debtor, to enforce collection of any such Collateral and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as Debtor shall have been entitled. All amounts and proceeds received by Debtor in respect of the Collateral after the occurrence of and during the continuance of an Event of Default shall be received in trust for the benefit of Agent hereunder, shall be segregated from other funds of Debtor and shall be forthwith paid over to Agent in the same form as received (with any necessary endorsement) to be held as collateral or applied to the Obligations, or the Other Lender Obligations, as appropriate. Except prior to the occurrence of an Event of Default and in accordance with Debtor's normal business policies and practices in effect on the date hereof, Debtor shall not adjust, settle or compromise the amount or payment of any Receivable or Chattel Paper, release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon. 3.05. Other Liens. Debtor shall not create or permit to exist any lien, security interest, option or other charge or encumbrance upon or with respect to any of the Collateral, except for the security interests in favor of Agent under this Security Agreement or any lien permitted under the Agreement. 3.06. Rights to Distributions. If Debtor shall become entitled to receive or shall receive any interest in or certificate (including, without limitation, any interest in or certificate Page 9 representing a distribution in connection with any reclassification, increase, or reduction of capital, or issued in connection with any reorganization), or any option or rights arising from or relating to any of the Collateral, whether as an addition to, in substitution of, as a conversion of, or in exchange for any of the Collateral, or otherwise, Debtor agrees to accept the same as Agent's agent and to hold the same in trust on behalf of and for the benefit of Agent, and to deliver the same immediately to Agent in the exact form received, with appropriate undated stock or similar powers, duly executed in blank, to be held by Agent, subject to the terms hereof, as Collateral. Agent shall be entitled to all distributions, and to any sums paid upon or in respect of any Collateral, upon the liquidation, dissolution, or reorganization of the issuer thereof which shall be paid to Agent to be held by it as additional collateral security for the Obligations and the Other Lender Obligations and application to the Obligations and the Other Lender Obligations at the discretion of Agent. All distributions paid or distributed in respect of the Collateral which are received by Debtor in violation of this Security Agreement shall, until paid or delivered to Agent, be held by Debtor in trust as additional Collateral for the Obligation and the Other Lender Obligations. 3.07. Maintenance of Records. Debtor will keep and maintain at its own cost and expense complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to Receivables. 3.08. Right of Inspection. Each of the Agent and Lenders and its officers, agents and representatives shall have the right to inspect, Debtor's books and records upon request of Agent or Lenders and during normal business hours. Upon notice to Debtor, not more than twice per year, not including a Fiscal Year Audit, prior to the occurrence of an Event of Default, each of the Agent and Lenders and its officers, agents and representatives shall, at the expense of Debtor, at all reasonable times also have the right to enter into and upon any premises where any of the Inventory is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. 3.09. Compliance with Terms of Contracts, etc. Debtor will perform and comply in all material respects with all its obligations under all its other contractual obligations relating to the Collateral. 3.10. Payment of Obligations. Debtor will pay promptly when due all taxes and claims with respect to the Collateral, or in respect of its income or profits therefrom as provided in the Agreement. 3.11. Limitations on Dispositions of Collateral. Debtor will not sell, transfer, assign (by operation of law or otherwise), lease, abandon or otherwise dispose of, or grant an option with respect to, any of the Collateral, or attempt, offer or contract to do so, except for sales of Inventory in the ordinary course of business and for full and fair consideration as provided in the Agreement. Page 10 3.12. Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts and Contracts. Debtor will not (i) amend, modify, terminate or waive any provision of any contract or any agreement giving rise to a Receivable in any manner, except in the ordinary course of business or (ii) fail to exercise promptly and diligently each and every material right which it may have under each contract and each agreement giving rise to a Receivable. ARTICLE IV RIGHTS AND POWERS OF AGENT -------------------------- 4.01. Agent May Perform. If Debtor fails to perform any agreement contained herein, Agent may, after the occurrence of an Event of Default, itself perform, or cause performance of, such agreement, and the expenses of Agent incurred in connection therewith shall be payable by Debtor as provided in Section 4.05. - ------------ 4.02. Limitation on Agent's Duties. The powers conferred on Agent hereunder are solely to protect the interests of Agent and the Lenders in the Collateral and shall not impose any duty upon Agent or any Lender to exercise any such powers. Except for the safe custody of any Collateral in the possession of Agent or any Lender and the accounting for monies actually received by Agent or any Lender hereunder, neither Agent nor any Lender shall have any duty as to any of the Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not Agent or any Lender has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any reasonable care in the custody and preservation of any Collateral in the possession of Agent or any Lender. Except as provided in this Section 4.02, ------------ neither Agent nor any Lender shall have any duty or liability to protect or preserve any Collateral or to preserve rights pertaining thereto. Nothing contained in this Security Agreement shall be construed as requiring or obligating Agent or any Lender, and neither Agent nor any Lender shall be required or obligated, to (a) present or file any claim or notice or take any action, with respect to any Collateral or in connection therewith or (b) notify Debtor of any decline in the value of any Collateral. The sole duty of Agent with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9.207 of the UCC or otherwise, shall be to deal with it in the same manner as Agent deals with similar property for its own account. Neither Agent nor any Lender, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Debtor or otherwise. 4.03. Agent's Appointment as Attorney-in-Fact. (a) Powers. Debtor hereby irrevocably constitutes and appoints Agent and ------ any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or Page 11 in its own name, after the occurrence of an Event of Default, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement, and, without limiting the generality of the foregoing, Debtor hereby gives Agent after the occurrence and during the continuance of an Event of Default the power and right, on behalf of Debtor, without notice to or assent by Debtor, to do the following: (1) in the case of any Collateral, in the name of Debtor or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under, or with respect to, any Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Agent for the purpose of collecting any and all such moneys due or with respect to such Collateral whenever payable; (2) to pay or discharge taxes and liens levied or placed on or threatened against the Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and (3) (i) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to Agent or as Agent shall direct; (ii) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (iii) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (iv) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (v) to defend any suit, action or proceeding brought against Debtor with respect to any Collateral; (vi) to settle, compromise or adjust any suit, action or proceeding described in the preceding clause and, in connection therewith, to give such discharges or releases as Agent may deem appropriate; and (vii) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, and to do, at Agent's option and Debtor's expense, at any time, or from time to time, all acts and things which Agent deems necessary to protect, preserve or realize upon the Collateral and the liens of Agent thereon and to effect the intent of this Security Agreement, all as fully and effectively as Debtor might do. This power of attorney is power coupled with an interest and shall be irrevocable until the Obligations shall have been paid in full or this Security Agreement shall have been terminated. Page 12 (b) Other Powers. Debtor also authorizes Agent after the occurrence of and ------------ during the continuance of an Event of Default, at any time and from time to time, to execute, in connection with any sale provided for in Section 4.04, any ------------ endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral. (c) No Duty on the Part of Agent. The powers conferred on Agent hereunder ---------------------------- are solely to protect the interests of Agent in the Collateral and shall not impose any duty upon Agent to exercise any such powers. Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Debtor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct, IT BEING THE INTENT OF THE PARTIES HERETO THAT AGENT SHALL NOT BE ACCOUNTABLE FOR ITS OWN NEGLIGENCE. 4.04. Remedies. (a) If an Event of Default shall occur and be continuing, Agent may exercise, in addition to all other rights and remedies granted to Agent or the Lenders in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the UCC. Without limiting the generality of the foregoing, Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon Debtor or any other Person (all and each of which demands, offenses, advertisements and notices are hereby waived), may in such circumstances forthwith take possession of, assemble, collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in Debtor, which right or equity is hereby waived and released. Debtor further agrees, at Agent's request, to assemble the Collateral and make it available to Agent at Debtor's premises. Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the possession, assembly, preparation for sale or other disposition, care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of Agent hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as Agent may elect, and, to the extent of the payment in full of the Obligations, the Other Lender Obligations, pari passu, and only after such application and after the payment by Agent of any other amount required by any provision of law, need Agent account for the surplus, if any, to Debtor. To the extent permitted by applicable law, Debtor waives all claims, damages and demands it may acquire against Agent or any Lender arising out of the exercise of any rights hereunder. It shall not be necessary that Page 13 Agent take possession of the Collateral or any part thereof prior to the time that any sale pursuant to the provisions of this Section 4.04 is conducted, and ------------ it shall not be necessary that the Collateral or any part thereof be present at the location of such sale. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. Debtor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by Agent to collect such deficiency. (b) Louisiana proceedings. In the event that Agent elects to commence --------------------- appropriate Louisiana foreclosure proceedings under this Security Agreement after an Event of Default has occurred, Agent may cause the Collateral, or any part or parts thereof, provided such Collateral is located within the state of Louisiana, to be immediately seized wherever found, and sold, whether in term of court or in vacation, under ordinary or executory process, in accordance with applicable Louisiana law, to the highest bidder for cash, with or without appraisement, and without the necessity of making additional demand upon or notifying Debtor or placing Debtor in default, all of which are expressly waived. For purposes of foreclosure under Louisiana executory process procedures, Debtor confesses judgment and acknowledges to be indebted unto and in favor of Agent, in the full amount of all sums secured by this Security Agreement, including principal, interest, costs, expenses, attorneys' fees, other fees and charges, and all additional Advances that Agent may make on Debtor's behalf pursuant to this Security Agreement. To the extent permitted under applicable Louisiana law, Debtor additionally waives (a) the benefit of appraisal as provided in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws with regard to appraisal upon judicial sale; (b) the demand and three (3) days' delay as provided under Articles 2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the notice of seizure as provided under Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three (3) days' delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (e) all other benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code of Civil Procedure and all other Articles not specifically mentioned above. Should any or all of the Collateral be seized as an incident to an action for the recognition or enforcement of this Security Agreement, by executory process, sequestration, attachment, writ of fieri facias or otherwise, Debtor hereby agrees that the court issuing any or any person or entity named by Agent at the time such seizure is requested, or any time thereafter, as keeper of the Collateral ("Keeper") as provided under La.-R.S. 9:5136, et.seq. The Keeper shall be entitled to reasonable compensation. Debtor agrees to pay the reasonable fees of the Keeper, which are hereby fixed at $150.00 per hour, which compensation to the Keeper shall also be secured by this Security Agreement in the form of an additional advance as provided herein. In the event that it should become necessary for Agent to conduct a search for any of the Collateral in connection with any foreclosure action, or should it be necessary to remove the Collateral, or any part or parts thereof, from the premises in which or on which the Collateral is then located, and/or to store and/or refurbish such Collateral, Debtor agrees to reimburse Agent for the reasonable cost of conducting such a search and/or removing and/or storing and/or refurbishing such Collateral, which additional expense shall also be secured by the lien of this Security Agreement. Page 14 4.05. Indemnity and Expenses. (a) Debtor agrees to indemnify Agent and the Lenders from and against any and all claims, damages, losses, liabilities, costs and expenses of any kind (including reasonable attorneys' fees) arising out of or resulting from this Security Agreement or the security interest granted herein, or any of the Collateral (including, without limitation, enforcement of this Agreement), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES OR LIABILITIES ARISING OUT OF THE NEGLIGENCE OF AGENT OR ANY LENDER, except claims, losses or liabilities resulting from the gross negligence or willful misconduct of Agent or any Lender. (b) Debtor will upon demand pay to Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which Agent or, as to the matters described in clauses (iii) or (iv) below, the Lenders may incur in connection with (i) the administration of this Security Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of Agent or the Lenders hereunder or (iv) the failure by Debtor to perform or observe any of the provisions hereof. Any such amounts so made shall be a part of the Obligation, shall be payable upon demand, and if not paid upon demand shall bear interest at the Default Rate in effect under the Credit Facility. ARTICLE V MISCELLANEOUS ------------- 5.01. Cumulative Rights. All Rights of Agent and the Lenders under the Loan Documents are cumulative of each other and of every other Right which Agent or the Lenders may otherwise have at Law or in equity or under any other contract or other writing for the enforcement of the security interest herein or the collection of the Obligations. The exercise of one or more Rights shall not prejudice or impair the concurrent or subsequent exercise of other Rights. 5.02. Modifications; Amendments; Schedules; Etc. No amendment or waiver of any provision of this Security Agreement, and no consent to any departure by Debtor herefrom, shall in any event be effective unless the same shall be in writing and signed by Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Upon any change in any information disclosed on any Schedule hereto, Debtor shall promptly prepare and deliver to Agent a replacement schedule, indicating its effective date, in form and substance satisfactory to Agent, and amendments to and additional financing statements as Agent may require to preserve and perfect a first priority security interest in the Collateral. 5.03. Continuing Security Interest. This Security Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the later of (i) the final payment in full of the Obligations and all amounts payable under this Security Agreement and (ii) the expiration or termination of the obligations of the Lenders to extend Page 15 credit to Debtor. Upon any such termination, Agent will, at Debtor's expense, execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence such termination. 5.04. GOVERNING LAW; TERMS. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. UNLESS OTHERWISE DEFINED HEREIN OR IN THE AGREEMENT, TERMS USED IN ARTICLE 9 OF THE UCC ARE USED HEREIN AS THEREIN DEFINED. 5.05 ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY RELATED NOTES OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OR JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THE SECURITY AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS SECURITY AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. (A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF BORROWER'S DOMICILE AT THE TIME OF THE SECURITY AGREEMENT'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS. (B) RESERVATION OF RIGHTS. NOTHING IN THIS SECURITY AGREEMENT SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS Page 16 CONTAINED IN THIS SECURITY AGREEMENT; OR (II) BE A WAIVER BY THE LENDERS OF THE PROTECTION AFFORDED TO IT BY 12. U.S.C. (S)91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDERS HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDERS MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS SECURITY AGREEMENT. NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. 5.06 WAIVER OF JURY TRIAL. DEBTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER. 5.07. Right to Use Agents. Agent and the Lenders may exercise their Rights under or with respect to this Security Agreement through an agent, representative, attorney or other designee. 5.08. No Interference, Compensation or Expense. Agent and the Lenders may exercise their Rights under or with respect to this Security Agreement (a) without resistance or interference by Debtor and (b) without payment of any license fee or compensation of any kind to Debtor. 5.09. Waivers of Rights Inhibiting Enforcement. Debtor waives (a) any claim that a public sale, in and of itself, of all or any part of the Collateral is not a commercially reasonable method of sale for such Collateral, (b) except as otherwise provided in this Security Agreement, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY SUCH RIGHT THAT DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE WITH RESPECT TO THE ENFORCEMENT OF AGENT'S AND ALL OTHER RIGHTS HEREUNDER and (c) all rights of redemption, appraisal or valuation. Page 17 5.10. Notices and Deliveries. (a) Manner of Delivery. All notices, communications and materials to be given or delivered pursuant to this Security Agreement shall be delivered in accordance with Section 10.2 of the Agreement. ------------ 5.11. ENTIRE AGREEMENT. THIS SECURITY AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES. 5.12. Successors and Assigns. All of the provisions of this Security Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns as and to the extent provided in the Agreement. 5.13. Loan Document. This Security Agreement is a Loan Document executed pursuant to the Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof. 5.14. Severability. If any provision of this Security Agreement is held to be illegal, invalid, or unenforceable under present or future Laws during the term hereof, such provision shall be fully severable, this Security Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as a part of this Security Agreement a legal, valid, and enforceable provision as similar in terms to the illegal, invalid, or unenforceable provision as may be possible. 5.15. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Page 18 IN WITNESS WHEREOF, Debtor and Agent have duly executed and delivered this Security Agreement effective as of the date first above written. DEBTOR: TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., A Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation By: /s/ Mark T. Walton ------------------------------------------------ Name: Mark T. Walton Title: President TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation and TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation By: /s/ Mark T. Walton ------------------------------------------------ Name: Mark T. Walton Title: President TBC ARKANSAS, INC., an Arkansas corporation, RED RIVER MARINE ARKANSAS, INC., a Arkansas corporation and TRAVIS BOATING CENTER LITTLE ROCK, INC., a Arkansas corporation By: /s/ Mark T. Walton ------------------------------------------------ Name: Mark T. Walton Title: President Page 19 TBC MANAGEMENT, INC., a Delaware corporation By: /s/ Mark T. Walton ---------------------------------------------- Name: Mark T. Walton Title: President TBC MANAGEMENT, LTD., a Texas limited partnership By: TRAVIS BOATS & MOTORS, INC., a Texas corporation, as General Partner By: /s/ Mark T. Walton ----------------------------------------- Name: Mark T. Walton Title: President Address of Agent: AGENT: NationsBank Plaza NATIONSBANK OF TEXAS, N.A., as Agent for 300 Convent Street the Lenders San Antonio, Texas 78205 Attention: Commercial Banking By: /s/ R. Mark Bearfield Department ----------------------------------------- Telecopy No.: (210) 270-5374 Name: R. Mark Bearfield Title: Vice President Page 20 EXHIBIT A --------- EXISTING SECURITY AGREEMENTS A. WITH NATIONSBANK OF TEXAS, N.A. AS LENDER 1. Security Agreement dated May 29, 1992 by and between Travis Boats & Motors, Inc., Falcon Marine, Inc. and Falcon Marine Abilene, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 2. Security Agreement dated June 30, 1992 by and between Travis Boats & Motors, Inc., Falcon Marine, Inc. and Falcon Marine Abilene, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 3. Security Agreement dated June 21, 1993 by and between Travis Snowden Marine, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 4. Security Agreement dated July 30, 1993 by and between Travis Boats & Motors, Inc., Falcon Marine, Inc., Falcon Marine Abilene, Inc. and Travis Snowden Marine, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 5. Security Agreement dated December 6, 1993 by and between Travis Boats & Motors, Inc., Falcon Marine, Inc., Falcon Marine Abilene, Inc., Travis Snowden Marine, Inc. and Travis Boating Center Beaumont, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 6. Security Agreement dated January 7, 1995 by and between Travis Boats & Motors, Inc., Falcon Marine, Inc, Falcon Marine Abilene, Inc., Travis Snowden Marine, Inc., Travis Boating Center Beaumont, Inc. and Travis Boating Center Arlington, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 7. Security Agreement dated July 31, 1995 by and between Travis Boats & Motors, Inc., Falcon Marine, Inc., Falcon Marine Abilene, Inc., Travis Snowden Marine, Inc., Travis Boating Center Beaumont, Inc., Travis Boating Center Arlington, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. 8. Security Agreement dated January 26, 1996 by and between Travis Boats & Motors, Inc., as Debtor, and NationsBank of Texas, N.A., as Secured Party, with the collateral being described therein. B. WITH HIBERNIA NATIONAL BANK AS LENDER 1. Commercial Security Agreement dated November 24, 1994 by and between Travis Boats and Motors Baton Rouge, Inc. d/b/a Baton Rouge Boating Centre, as Borrower, and Hibernia National Bank, as Lender, with the collateral being described therein. 2. Commercial Security Agreement dated September 1, 1995 by and between TBC Arkansas, Inc., as Borrower, and Hibernia National Bank, as Lender, with the collateral being described therein. 3. Commercial Security Agreement dated November 30, 1995 by and between Travis Boating Center Louisiana, Inc., as Borrower, and Hibernia National Bank, as Lender, with the collateral being described therein. SCHEDULE 1 ---------- Collateral Locations
CHIEF EXECUTIVE OFFICE AND LOCATION BUSINESS STORAGE AND OF MATERIAL RECORDS COMPANY DISTRIBUTION LOCATIONS AND BOOKS OF ACCT. Travis Boats & Motors, Inc. 13045 Research Blvd. 13045 Research Blvd. Austin, Texas 78750 Austin, Texas 78750 Travis Boats & Motors, Inc. 12300 IH 10 West 13045 Research Blvd. San Antonio, Texas 78230 Austin, Texas 78750 Travis Boats & Motors, Inc. 7530 North Freeway 13045 Research Blvd. Houston, Texas 77037 Austin, Texas 78750 Travis Snowden Marine, Inc. 1320 S. Stemmons 13045 Research Blvd. Lewisville, Texas 75067 Austin, Texas 78750 Travis Boating Center 1725 W. Division 13045 Research Blvd. Arlington, Inc. Arlington, Texas 76012 Austin, Texas 78750 Falcon Marine, Inc. 1920 North Loop 250 W. 13045 Research Blvd. Midland, Texas 79707 Austin, Texas 78750 Falcon Marine Abilene, Inc. 1021 E. Highway 80 13045 Research Blvd. Abilene, Texas 79601 Austin, Texas 78750 Travis Boating Center 7660 College Street 13045 Research Blvd. Beaumont, Inc. Beaumont, Texas 77707 Austin, Texas 78750 Travis Boats & Motors Baton 14369 Florida Blvd. 13045 Research Blvd. Rouge, Inc. Baton Rouge, Louisiana 70819 Austin, Texas 78750 TBC Arkansas, Inc. 2001 Hwy. 25 North 13045 Research Blvd. Heber Springs, Arkansas 72543 Austin, Texas 78750 TBC Arkansas, Inc. 3034 Albert Pike 13045 Research Blvd. Hot Springs, Arkansas 71913 Austin, Texas 78750 TBC Management, Ltd., 13045 Research Blvd. 13045 Research Blvd. Austin, Texas 78750 Austin, Texas 78750 TBC Management, Inc. 1209 Orange Street 1209 Orange Street Wilmington, Delaware 19801-1134 Wilmington, Delaware 19801-1134 Travis Boating Center 1700 East Main Street 13045 Research Blvd. Louisiana, Inc. New Iberia, Louisiana 70560 Austin, Texas 78750 Travis Boating Center 38 Marina Lane 13045 Research Blvd. Tennessee, Inc. Winchester, Tennessee 37398 Austin, Texas 78750
SCHEDULE 1 ---------- Collateral Locations (cont.) Travis Boating Center Alabama, 2006 Fisher Street 13045 Research Blvd. Inc. Huntsville, Alabama 35803 Austin, Texas 78750 Travis Boating Center Alabama, Route 7, Box 1 13045 Research Blvd. Inc. Florence, Alabama 35630 Austin, Texas 78750 Red River Marine Arkansas, Inc. 13045 Research Blvd. Austin, Texas 78750 Travis Boating Center Little Rock, Inc. 13045 Research Blvd. Austin, Texas 78750 Travis Boating Center Georgia, Inc. 13045 Research Blvd. Austin, Texas 78750 Travis Boating Center Florida, Inc. 13045 Research Blvd.
SCHEDULE 2 ---------- Trade Names - -------------------------------------------------------------------------------- The following trade names are used by Debtor: Travis Boating Center Red River Marine Baton Rouge Boating Centre EX-10.29(C) 4 REVOLVING NOTE EXHIBIT 10.29 (C) REVOLVING NOTE $9,000,000 San Antonio, Texas December 12, 1996 FOR VALUE RECEIVED, TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., a Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation, TBC ARKANSAS, INC., an Arkansas corporation, TBC MANAGEMENT, Ltd., a Texas limited partnership, TBC MANAGEMENT, INC., a Delaware corporation, TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, RED RIVER MARINE ARKANSAS, INC., an Arkansas corporation, TRAVIS BOATING CENTER LITTLE ROCK, INC., an Arkansas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation (collectively "Borrowers"), --------- hereby, jointly and severally, promise to pay to the order of NATIONSBANK OF TEXAS, N.A., a national banking association ("Lender"), at the offices of ------ NATIONSBANK OF TEXAS, N.A., a national banking association (the "Agent") at 300 ----- Convent Street, San Antonio, Texas 78205, the principal sum of Nine Million and No/100 Dollars ($9,000,000.00) (or the unpaid balance of all principal advanced against this Note, if that amount is less), on or before the Termination Date for this Note (as established by the Agreement), in lawful money of the United States of America, together with interest on the unpaid principal balance of this Note from day to day outstanding, in accordance with the terms and provisions of the Agreement; provided, however, that in no event shall interest accrue hereunder at a rate in excess of the Maximum Lawful Rate. Subject to the provisions hereof limiting interest to the Maximum Lawful Rate, interest on Advances shall be computed based on the number of days elapsed and 360-days per year or in the case of interest accruing at the Maximum Lawful Rate, 365/366 days per year. Advances of the principal indebtedness evidenced by this Note shall be made pursuant to the Credit Agreement (as herein defined), which amounts may be borrowed, repaid and reborrowed as provided in and subject to the terms of the Credit Agreement. Each Advance made by Lender to Borrowers pursuant to the Credit Agreement may be recorded by lender and, with respect to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. Any failure by Lender to endorse the grid attached hereto shall not impair the obligation of Borrowers to pay any amount due and owing hereunder. All capitalized terms used herein, but not specifically defined, shall have the same meanings set forth in the Agreement. Principal and all accrued interest hereunder shall be due and payable upon the terms and on the dates provided for in the Credit Agreement. After maturity of this Note or the occurrence of an Event of Default, the outstanding principal balance of this Note shall, at the option of the Required Lenders, bear interest at the Default Rate, as provided in the Agreement. If at any time the Applicable Rate shall be limited to the Maximum Lawful Rate, any subsequent reductions in the Applicable Rate shall not reduce the rate of interest on this Note below the Maximum Lawful Rate until the total amount of interest accrued equals the amount of interest which would have accrued if the Applicable Rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at the final payment of the Credit Facility, the total amount of interest paid or accrued on the Credit Facility is less than the amount of interest which would have accrued if the Applicable Rate had at all times been in effect with respect thereto, then at such time, to the extent permitted by law, Borrowers shall pay to Agent, for the ratable benefit of the Lenders, an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if the Applicable Rate had at all times been in effect and the amount of interest which would have accrued if the Maximum Lawful Rate had at all times been in effect, and (b) the amount of interest actually paid on the Credit Facility. This Note has been executed and delivered pursuant to the terms of that certain Revolving Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "Credit Agreement") ---------------- dated as of December 12, 1996, executed by and among Borrowers, Agent and the Lenders (which includes the payee of this Note) and is one of the notes defined therein as a "Note", the terms and provisions of the Credit Agreement related to ---- this Note being incorporated herein by reference for all purposes. The terms of the Credit Agreement shall govern in the case of any inconsistency between such terms and the terms hereof. This Note is secured by the Security Agreement and all the other Loan Documents, and all liens and security interests created or evidenced thereby. Any holder shall be entitled to all benefits and remedies and security set forth in the Credit Agreement and all the other Loan Documents. The occurrence of a Default or an Event of Default, under and as defined in the Credit Agreement, shall constitute, respectively, a Default or an Event of Default under this Note, and the unpaid principal of and accrued interest on this Note may be declared due and payable in the manner and with the effect provided in the Credit Agreement. Each Borrower and all sureties, endorsers, guarantors and any other party now or hereafter liable for the payment of this Note in whole or in part, hereby severally (i) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notice (except only for any notice that is specifically required by the terms of the Credit Agreement or any other Loan Document), filing of suit and diligence in collecting this Note or enforcing any of the security herefor; (ii) agree to any substitution, subordination, exchange or release of any such security or the release of any party primarily or secondarily liable hereon; (iii) agree that the holder hereof shall not be required first to institute suit or exhaust its remedies against any Borrower or others liable or to become liable hereon or to enforce its rights against them or any security herefor; (iv) consent to any extension or postponement of time of payment of this Note for any period or periods of time and to any partial payments, before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; and (v) submit (and waive all rights to object) to personal jurisdiction in the State of Texas, and venue in Bexar County, Texas, for the enforcement of any and all obligations under the Loan Documents. If any holder of this Note retains an attorney in connection with any default or at maturity or to collect, enforce or defend this Note or any other Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or if any Borrower sues any holder of this Note in connection with this Note or any other Loan Document and does not prevail, then Borrowers agree to pay to each such holder, in addition to principal and interest, all costs and expenses incurred by such holder in trying to collect this Note or in any such suit or proceeding, including reasonable attorneys' fees as and to the extent provided in the Credit Agreement. Notwithstanding anything herein or in any other Loan Documents, expressed or implied, to the contrary, in no event shall any interest rate charged hereunder or under any of the other Loan Documents, or any interest contracted for, collected or received by Lender or any holder hereof, exceed the Maximum Lawful Rate. It is expressly stipulated and agreed to be the intent of Borrowers and Lender at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to this Note, or if acceleration of the maturity of this Note, any prepayment by Borrowers, or any other circumstance whatsoever, results in Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Borrowers and Lender that all excess amounts theretofore collected by Lender be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to Borrowers), and the provisions of this Note and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the indebtedness evidenced hereby or by any other Loan Document shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate. The term "applicable law" -------------- as used herein shall mean the laws of the State of Texas, or any applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law. The provisions of this paragraph shall control all agreements between Borrowers and Lender. Borrowers acknowledge and agree that the holder of this Note may, at any time and from time to time, assign all or a portion of its interest in the Credit Facility or transfer to an Eligible Assignee a participation interest in the Credit Facility, subject to and in accordance with the terms and conditions of the Credit Agreement, including Section 10.10 thereof. - ------------- ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS NOTE OR ANY RELATED NOTES OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OR JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THE NOTE MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS NOTE APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. (A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF BORROWER'S DOMICILE AT THE TIME OF THE NOTE'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS. (B) RESERVATION OF RIGHTS. NOTHING IN THIS NOTE SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12. U.S.C. (S)91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES RELATED TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 10.8 OF THE Credit Agreement OR ------------ OTHERWISE. IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first above written. BORROWERS: --------- TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., A Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation By: /s/ Mark T. Walton ------------------------ Name: Mark T. Walton Title: President TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation and TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TBC ARKANSAS, INC., an Arkansas corporation, RED RIVER MARINE ARKANSAS, INC., a Arkansas corporation and TRAVIS BOATING CENTER LITTLE ROCK, INC., a Arkansas corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TBC MANAGEMENT, INC., a Delaware corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TBC MANAGEMENT, LTD., a Texas limited partnership By: TRAVIS BOATS & MOTORS, INC., a Texas corporation, as General Partner By: /s/ Mark T. Walton -------------------------- Name: Mark T. Walton Title: President 1523490 EXHIBIT 10.29(d) REVOLVING NOTE $6,000,000 San Antonio, Texas December 12, 1996 FOR VALUE RECEIVED, TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., a Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation, TBC ARKANSAS, INC., an Arkansas corporation, TBC MANAGEMENT, Ltd., a Texas limited partnership, TBC MANAGEMENT, INC., a Delaware corporation, TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, RED RIVER MARINE ARKANSAS, INC., an Arkansas corporation, TRAVIS BOATING CENTER LITTLE ROCK, INC., an Arkansas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation (collectively "Borrowers"), --------- hereby, jointly and severally, promise to pay to the order of HIBERNIA NATIONAL BANK, a national banking association ("Lender"), at the offices of NATIONSBANK ------ OF TEXAS, N.A., a national banking association (the "Agent") at 300 Convent ----- Street, San Antonio, Texas 78205, the principal sum of Six Million and No/100 Dollars ($6,000,000.00) (or the unpaid balance of all principal advanced against this Note, if that amount is less), on or before the Termination Date for this Note (as established by the Agreement), in lawful money of the United States of America, together with interest on the unpaid principal balance of this Note from day to day outstanding, in accordance with the terms and provisions of the Agreement; provided, however, that in no event shall interest accrue hereunder at a rate in excess of the Maximum Lawful Rate. Subject to the provisions hereof limiting interest to the Maximum Lawful Rate, interest on Advances shall be computed based on the number of days elapsed and 360-days per year or in the case of interest accruing at the Maximum Lawful Rate, 365/366 days per year. Advances of the principal indebtedness evidenced by this Note shall be made pursuant to the Credit Agreement (as herein defined), which amounts may be borrowed, repaid and reborrowed as provided in and subject to the terms of the Credit Agreement. Each Advance made by Lender to Borrowers pursuant to the Credit Agreement may be recorded by lender and, with respect to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. Any failure by Lender to endorse the grid attached hereto shall not impair the obligation of Borrowers to pay any amount due and owing hereunder. All capitalized terms used herein, but not specifically defined, shall have the same meanings set forth in the Agreement. Principal and all accrued interest hereunder shall be due and payable upon the terms and on the dates provided for in the Credit Agreement. After maturity of this Note or the occurrence of an Event of Default, the outstanding principal balance of this Note shall, at the option of the Required Lenders, bear interest at the Default Rate, as provided in the Agreement. If at any time the Applicable Rate shall be limited to the Maximum Lawful Rate, any subsequent reductions in the Applicable Rate shall not reduce the rate of interest on this Note below the Maximum Lawful Rate until the total amount of interest accrued equals the amount of interest which would have accrued if the Applicable Rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at the final payment of the Credit Facility, the total amount of interest paid or accrued on the Credit Facility is less than the amount of interest which would have accrued if the Applicable Rate had at all times been in effect with respect thereto, then at such time, to the extent permitted by law, Borrowers shall pay to Agent, for the ratable benefit of the Lenders, an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if the Applicable Rate had at all times been in effect and the amount of interest which would have accrued if the Maximum Lawful Rate had at all times been in effect, and (b) the amount of interest actually paid on the Credit Facility. This Note has been executed and delivered pursuant to the terms of that certain Revolving Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "Credit Agreement") ---------------- dated as of December 12, 1996, executed by and among Borrowers, Agent and the Lenders (which includes the payee of this Note) and is one of the notes defined therein as a "Note", the terms and provisions of the Credit Agreement related to ---- this Note being incorporated herein by reference for all purposes. The terms of the Credit Agreement shall govern in the case of any inconsistency between such terms and the terms hereof. This Note is secured by the Security Agreement and all the other Loan Documents, and all liens and security interests created or evidenced thereby. Any holder shall be entitled to all benefits and remedies and security set forth in the Credit Agreement and all the other Loan Documents. The occurrence of a Default or an Event of Default, under and as defined in the Credit Agreement, shall constitute, respectively, a Default or an Event of Default under this Note, and the unpaid principal of and accrued interest on this Note may be declared due and payable in the manner and with the effect provided in the Credit Agreement. Each Borrower and all sureties, endorsers, guarantors and any other party now or hereafter liable for the payment of this Note in whole or in part, hereby severally (i) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notice (except only for any notice that is specifically required by the terms of the Credit Agreement or any other Loan Document), filing of suit and diligence in collecting this Note or enforcing any of the security herefor; (ii) agree to any substitution, subordination, exchange or release of any such security or the release of any party primarily or secondarily liable hereon; (iii) agree that the holder hereof shall not be required first to institute suit or exhaust its remedies against any Borrower or others liable or to become liable hereon or to enforce its rights against them or any security herefor; (iv) consent to any extension or postponement of time of payment of this Note for any period or periods of time and to any partial payments, before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; and (v) submit (and waive all rights to object) to personal jurisdiction in the State of Texas, and venue in Bexar County, Texas, for the enforcement of any and all obligations under the Loan Documents. If any holder of this Note retains an attorney in connection with any default or at maturity or to collect, enforce or defend this Note or any other Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or if any Borrower sues any holder of this Note in connection with this Note or any other Loan Document and does not prevail, then Borrowers agree to pay to each such holder, in addition to principal and interest, all costs and expenses incurred by such holder in trying to collect this Note or in any such suit or proceeding, including reasonable attorneys' fees as and to the extent provided in the Credit Agreement. Notwithstanding anything herein or in any other Loan Documents, expressed or implied, to the contrary, in no event shall any interest rate charged hereunder or under any of the other Loan Documents, or any interest contracted for, collected or received by Lender or any holder hereof, exceed the Maximum Lawful Rate. It is expressly stipulated and agreed to be the intent of Borrowers and Lender at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to this Note, or if acceleration of the maturity of this Note, any prepayment by Borrowers, or any other circumstance whatsoever, results in Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Borrowers and Lender that all excess amounts theretofore collected by Lender be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to Borrowers), and the provisions of this Note and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the indebtedness evidenced hereby or by any other Loan Document shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate. The term "applicable law" -------------- as used herein shall mean the laws of the State of Texas, or any applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law. The provisions of this paragraph shall control all agreements between Borrowers and Lender. Borrowers acknowledge and agree that the holder of this Note may, at any time and from time to time, assign all or a portion of its interest in the Credit Facility or transfer to an Eligible Assignee a participation interest in the Credit Facility, subject to and in accordance with the terms and conditions of the Credit Agreement, including Section 10.10 thereof. - ------------- ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS NOTE OR ANY RELATED NOTES OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OR JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THE NOTE MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS NOTE APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. (A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF BORROWER'S DOMICILE AT THE TIME OF THE NOTE'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS. (B) RESERVATION OF RIGHTS. NOTHING IN THIS NOTE SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS NOTE; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY 12. U.S.C. (S)91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER THE EXERCISE OR SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE REMEDIES RELATED TO ANY PART OF THE COLLATERAL, OR TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 10.8 OF THE Credit Agreement OR ------------ OTHERWISE. IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first above written. BORROWERS: --------- TRAVIS BOATS & MOTORS, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., A Texas corporation, TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation, FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation, TRAVIS BOATING CENTER GEORGIA, INC., a Texas corporation and TRAVIS BOATING CENTER FLORIDA, INC., a Texas corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TRAVIS BOATS & MOTORS BATON ROUGE, INC., a Louisiana corporation and TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TBC ARKANSAS, INC., an Arkansas corporation, RED RIVER MARINE ARKANSAS, INC., a Arkansas corporation and TRAVIS BOATING CENTER LITTLE ROCK, INC., a Arkansas corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TBC MANAGEMENT, INC., a Delaware corporation By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President TBC MANAGEMENT, LTD., a Texas limited partnership By: TRAVIS BOATS & MOTORS, INC., a Texas corporation, as General Partner By: /s/ Mark T. Walton ------------------------- Name: Mark T. Walton Title: President 1523494 EX-10.30 5 ASSET PURCHASE AGMT. EXHIBIT 10.30 ================================================================================ ASSET PURCHASE AGREEMENT BY AND AMONG TRAVIS BOATING CENTER TENNESSEE, INC., TRI-LAKES MARINE, INC., CHARLES R. BONDURANT, JOE BONDURANT AND TOM ED BONDURANT DATED AS OF NOVEMBER 1, 1996 ================================================================================ TABLE OF CONTENTS Page ---- Section 1. Sale of Assets............................................... 1 1.1 Purchase and Sale of Assets.................................. 1 --------------------------- Section 2. Consideration................................................ 1 2.1 Purchase Price............................................... 1 -------------- 2.2 Post-Closing Liquidation..................................... 2 ------------------------ 2.3 Allocation of Consideration.................................. 2 --------------------------- 2.4 Bulk Sales Act............................................... 2 -------------- Section 3. Assumed Liabilities and Excluded Assets...................... 2 3.1 Assignment and Assumption.................................... 2 ------------------------- 3.2 Excluded Assets.............................................. 2 --------------- Section 4. Representations and Warranties of Seller..................... 3 4.1 Organization and Qualification............................... 3 ----------------------------- 4.2 Authority and Validity....................................... 3 ---------------------- 4.3 No Breach or Violation....................................... 3 ---------------------- 4.4 Assets....................................................... 3 ------ 4.5 Contracts and Commitments.................................... 4 ------------------------- 4.6 Compliance with Law.......................................... 4 ------------------- 4.7 Financial Statements......................................... 4 -------------------- 4.8 Legal Proceedings............................................ 4 ----------------- 4.9 Tax Returns; Other Reports................................... 4 -------------------------- 4.10 Employment Matters........................................... 4 ------------------ 4.11 Environmental Matters........................................ 5 --------------------- 4.12 Finders and Brokers.......................................... 5 ------------------- 4.13 Access and Notice............................................ 5 ----------------- 4.14 Disclosure................................................... 5 ---------- Section 5. Representations and Warranties of Buyer...................... 6 5.1 Organization and Qualification............................... 6 ------------------------------ 5.2 Authority and Validity....................................... 6 ---------------------- 5.3 No Breach or Violation....................................... 6 ---------------------- Section 6. Closing...................................................... 6 6.1 Closing; Effective Date...................................... 6 ----------------------- Section 7. Conditions to Closing........................................ 6 7.1 Conditions to the Obligations of Buyer and Seller............ 6 ------------------------------------------------- 7.2 Conditions to Obligations of Buyer........................... 7 ---------------------------------- 7.3 Conditions to Obligations of Seller.......................... 7 ----------------------------------- 7.4 Waiver of Conditions......................................... 8 -------------------- Section 8. Survival of Representations and Warranties; Indemnification.. 8 8.1 Survival of Representations and Warranties................... 8 ------------------------------------------ 8.2 Indemnification by Seller.................................... 8 ------------------------- 8.3 Indemnification by Buyer..................................... 9 ------------------------ 8.4 Third Party Claims........................................... 9 ------------------ 8.5 Offset....................................................... 9 ------ Section 9. Post-Closing Covenants....................................... 10 TABLE OF CONTENTS ----------------- (Continued) Page ---- 9.1 Transfer Taxes............................................... 10 -------------- 9.2 Employment of Charles R. Bondurant........................... 10 ---------------------------------- 9.3 Use of Seller's Name......................................... 10 -------------------- 9.4 Confidentiality.............................................. 10 --------------- 9.5 Consignment and Repair....................................... 10 ---------------------- 9.6 Access to Records............................................ 10 ----------------- Section 10. Definitions.................................................. 10 10.1 Accessories.................................................. 10 ----------- 10.2 Affiliate................................................... 10 --------- 10.3 Assets...................................................... 11 ------ 10.4 Boat Show Rights............................................. 11 ---------------- 10.5 Boat Shows................................................... 11 ---------- 10.6 Business..................................................... 11 -------- 10.7 Deposits..................................................... 11 -------- 10.8 Encumbrance.................................................. 11 ----------- 10.9 Governmental Authority....................................... 11 ---------------------- 10.10 Intangibles.................................................. 11 ----------- 10.11 Legal Requirement............................................ 11 ----------------- 10.12 Miscellaneous Assets......................................... 11 -------------------- 10.13 Net Cost..................................................... 11 -------- 10.14 New Boats, Motors, and Trailers.............................. 11 ------------------------------- 10.15 Parts........................................................ 11 ----- 10.16 Permitted Encumbrances....................................... 11 ---------------------- 10.17 Person....................................................... 12 ------ 10.18 Used Boats, Motors, and Trailers............................. 12 -------------------------------- 10.19 Other Definitions............................................ 12 ----------------- Section 11. Miscellaneous................................................ 12 11.1 Parties Obligated and Benefited.............................. 12 ------------------------------- 11.2 Notices...................................................... 12 ------- 11.3 Attorneys' Fees.............................................. 13 --------------- 11.4 Right to Specific Performance................................ 13 ----------------------------- 11.5 Waiver....................................................... 13 ------ 11.6 Captions..................................................... 13 -------- 11.7 Choice of Law................................................ 14 ------------- 11.8 Terms........................................................ 14 ----- 11.9 Rights Cumulative............................................ 14 ----------------- 11.10 Further Actions.............................................. 14 --------------- 11.11 Time......................................................... 14 ---- 11.12 Counterparts................................................. 14 ------------ 11.13 Entire Agreement............................................. 14 ---------------- 11.14 Severability................................................. 14 ------------ 11.15 Construction................................................. 14 ------------ 11.16 Expenses..................................................... 14 -------- Exhibits and Schedules ---------------------- Exhibits A, A-1, A-2, A-3 Promissory Notes Exhibit B Certificate (Seller) Exhibit C Bill of Sale Exhibit D Assignment and Assumption Agreement Exhibits E-1, E-2, E-3 Non-Competition Agreement (Individuals) Exhibit F Non-Competition Agreement (Seller) Exhibit G Certificate (Buyer) Exhibit H Opinion of Seller's Counsel Schedule 1.1 Assets Schedule 3.1 Seller's Contracts Schedule 4.1 Capitalization Schedule 4.4.1 Encumbrances Schedule 4.4.2 Intangibles Schedule 4.7 Financial Statements Schedule 4.8 Legal Proceedings Schedule 4.10 Employment Matters EXHIBIT 10.30 ASSET PURCHASE AGREEMENT This Asset Purchase Agreement ("Agreement") is made as of November 1, 1996, by and among Travis Boating Center Tennessee, Inc., a Texas corporation ("Buyer"), Tri-Lakes Marine, Inc., a Tennessee corporation ("Seller"), and Charles R. Bondurant, Joe Bondurant and Tom Ed Bondurant, all individuals living in Tennessee (collectively, "Owner"). Recitals -------- WHEREAS, Seller is engaged in the business of retail marine products sales and service; and WHEREAS, Buyer desires to purchase, and Seller desires to sell, certain of Seller's assets used or held for use in the Business as conducted by Seller; NOW, THEREFORE, in consideration of the above recitals and of the mutual agreements, representations, warranties, provisions, and covenants herein contained, and other good and valuable consideration, the parties hereto agree as follows: Section 1. Sale of Assets. 1.1 Purchase and Sale of Assets. --------------------------- 1.1.1 Subject to the terms and conditions set forth in this Agreement, at the Closing, Seller will sell to Buyer, and Buyer will purchase from Seller, all of Seller's rights, title and interest in, to and under the following Assets: (i) the New Boats, Motors, and Trailers listed on Schedule 1.1, (ii) the Used Boats, Motors, and Trailers listed on Schedule 1.1, (iii) all Parts and Accessories, (iv) all Miscellaneous Assets listed on Schedule 1.1, (v) all Intangibles, (vi) all Deposits, and (vii) Boat Show Rights. 1.1.2 Attached hereto as Schedule 1.1 is a list of the Assets. Section 2. Consideration. 2.1 Purchase Price. Buyer will pay the purchase price for the -------------- Assets in the amounts and in the manner set forth in this Section 2 (the --------- "Purchase Price"): 2.1.1 New Boats, Motors, and Trailers valued at Net Cost: $1,419,838.63, payable to Seller in immediately available funds at Closing. 2.1.2 Used Boats, Motors, and Trailers: $0.00, payable to Seller in immediately available funds at Closing. 2.1.3 Accessories: The lesser of the manufacturer's 1996 wholesale published price or invoice amount, after rebates and credits, for each item identified in the physical inventory made jointly by Buyer and Seller. $359,135.19. 2.1.4 Miscellaneous Assets: $165,195.76. 2.1.5 Intangibles, Deposits, Boat Show Rights and other Assets: $1458,084. A portion of this amount will be allocated to the value of the Non-Competition Agreement to be executed by Seller and Owners. 2.1.6 The aggregate amount payable to Seller for the assets described in Sections 2.1.3, 2.1.4 and 2.1.5 is payable as follows: ------------------------------- $267,687.00 is payable in immediately available funds at Closing and the remainder is payable pursuant to a promissory note substantially in the form attached as Exhibit A. 2.1.7 As consideration for the Non-Competition Agreement to be executed by Charles R. Bondurant, $69,425.00 is payable in cash and $68,000.00 is payable to him pursuant to a promissory note substantially in the form attached as Exhibit A-1. As consideration for the Non-Competition Agreement to be executed by Joe Bondurant, $69,425.00 is payable in cash and $68,000.00 is payable to him pursuant to a promissory note substantially in the form attached as Exhibit A-2. As consideration for the Non-Competition Agreement to be executed by Tom Ed Bondurant, $34,712.60 is payable in cash and $34,000.00 is payable to him pursuant to a promissory note substantially in the form attached as Exhibit A-3 (these three notes and the note described in Section 2.1.6, collectively, the "Promissory ------------- Notes".) 2.2 Post-Closing Liquidation. ------------------------ 2.2.1 Seller may ask Buyer to serve as broker for any new or used boats, motors and trailers not purchased by Buyer. Seller will establish an acceptable selling price for each item, which price will be agreeable to Buyer, and upon the sale of such items Buyer will pay Seller the sale proceeds, retaining the greater of: (i) ten percent (10%) of the actual sales price, and (ii) the excess of the actual sales price over the acceptable selling price established by Seller. 2.2.2 Seller will bear the risk for, and will remain responsible for insuring all boats, motors, trailers, and other assets not purchased by Buyer and left on Buyer's premises. 2.3 Allocation of Consideration. The consideration payable by --------------------------- Buyer under this Agreement will be allocated among the Assets as set forth in Section 2.1. Buyer and Seller agree to be bound by such allocation, will not - ------------ take any position inconsistent with such allocation, and will file all returns and reports with respect to the transactions contemplated by this Agreement, including all federal, state, and local tax returns, on the basis of such allocation. 2.4 Bulk Sales Act. Buyer and Seller waive compliance with the -------------- provisions of the Tennessee Bulk Sales Act with respect to the transactions contemplated by this Agreement, subject to Section 8.2.1(v). ---------------- Section 3. Assumed Liabilities and Excluded Assets. 3.1 Assignment and Assumption. Seller will assign to Buyer, and ------------------------- Buyer will assume and perform, the "Assumed Liabilities", which are defined as: (a) obligations accruing and relating to periods after the Effective Date under the contracts, oral and written, listed on Schedule 3.1 hereof, including the Boat Show Rights (the "Seller's Contracts"), and (b) warranty repair service on boats, motors, and trailers sold by Seller prior to or on the Effective Date, provided that (i) Buyer is recognized as an authorized warranty repair facility by the manufacturer or extended service contract provider, as the case may be, (ii) the requested warranty repair is covered under the applicable manufacturer's warranty program or extended service contract, and (iii) Seller and Owner use their best efforts to assist Buyer in collecting reimbursement from such manufacturers or extended service contract providers for repairs. Buyer will not assume or have any responsibility for any liabilities or obligations of Seller other than the Assumed Liabilities. In no event will Buyer assume or have any responsibility for any liabilities or obligations associated with the Excluded Assets. 3.2 Excluded Assets. The excluded assets (the "Excluded --------------- Assets"), which will be retained by Seller, will consist of the following: cash, accounts receivable, insurance policies, books and records, and other assets not listed on Schedules 1.1, 3.1 or 4.4.2. Section 4. Representations and Warranties of Seller. To induce Buyer to enter into this Agreement, Seller and Owner represent and warrant to Buyer, as of the Effective Date, as follows: 4.1 Organization and Qualification. Seller is a corporation duly ------------------------------ organized, validly existing and in good standing under the laws of the State of Tennessee and has all requisite corporate power and authority to own, lease and use the Assets as they are currently owned, leased and used and to conduct the Business as it is currently conducted. Seller is duly qualified or licensed to do business and is in good standing under the laws of each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on Seller or on the validity, binding effect or enforceability of this Agreement. Set forth on Schedule 4.1 is the name and identity of each Person who owns of record or beneficially any common stock, capital stock, or other securities of Seller, has any right to vote with the owners of Seller, or has the right to acquire any such securities or rights. Schedule 4.1 also sets forth the amounts of all such securities or rights and the percentage that each Person's securities or rights bears to the whole. 4.2 Authority and Validity. Seller has all requisite power and ---------------------- authority to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement. The execution and delivery by Seller of, the performance by Seller of its obligations under, and the consummation by Seller of the transactions contemplated by this Agreement have been duly authorized by all requisite action of Seller. This Agreement has been duly executed and delivered by Seller and is the valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except insofar as enforceability may be affected by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors' rights generally or by principles governing the availability of equitable remedies. 4.3 No Breach or Violation. The execution, delivery and ---------------------- performance of this Agreement by Seller will not: (a) violate any provision of the charter or bylaws of Seller; (b) violate any Legal Requirement; (c) require any consent, approval or authorization of, or any filing with or notice to, any Person; or (d) (i) violate, conflict with or constitute a breach of or default under, (ii) permit or result in the termination, suspension or modification of, (iii) result in the acceleration of (or give any Person the right to accelerate) the performance of Seller under, or (iv) result in the creation or imposition of any Encumbrance under, any Seller contract or agreement or any other instrument evidencing any of the Assets or any instrument or other agreement to which Seller is a party or by which Seller or any of its assets is bound or affected, except, for purposes of this clause (d), such violations, conflicts, breaches, defaults, terminations, suspensions, modifications, and accelerations as would not, individually or in the aggregate, have a material adverse effect on the Business or Seller. 4.4 Assets. ------ 4.4.1 Seller has exclusive, good and marketable title to the Assets claimed by Seller. The Assets are free and clear of all Encumbrances of any kind or nature, except (a) Permitted Encumbrances and (b) Encumbrances disclosed on Schedule 4.4.1, which will be removed or otherwise released of record effective at or prior to the Closing, or for which executed releases in form appropriate for filing by Buyer will be delivered to Buyer at Closing. Except as set forth on Schedules 3.1 and 4.4.1, none of the Assets is leased by Seller from any other Person. All the New Boats, Motors, and Trailers, Used Boats, Motors, and Trailers, Accessories, Leasehold Improvements, Parts and Miscellaneous Assets are in good and operable condition and repair, ordinary wear and tear excepted, and have been maintained in accordance with all applicable safety codes. 4.4.2 Seller has adopted, used, is using, and is the owner of the Intangibles, including trade names, brand names, trademarks, service marks, or any other word, name, symbol, or device, or combination thereof which is used by Seller to identify and distinguish Seller's goods and services from those manufactured, sold, or offered by others, as set forth on Schedule 4.4.2, whether existing at common law or which are applied for or which are registered in the office of the Secretary of State of the State of Tennessee or in the United States Patent and Trademark Office. Except as set forth on Schedule 4.4.2, Seller has full title and ownership of the Intangibles. Neither Owner nor Seller has any knowledge of any infringement of Seller's rights with respect to the Intangibles. The Intangibles do not conflict with or infringe the rights of others. No third party has any ownership right, title, interest, claim in or lien on any of the Intangibles. 4.5 Contracts and Commitments. Seller has disclosed to Buyer all ------------------------- contracts and other contractual rights, oral and written, relating to the Business. Except as may be disclosed on Schedule 3.1, each of the written agreements, contracts, commitments, leases, plans and other instruments, documents and undertakings listed on Schedule 3.1, including the Boat Show Rights, is valid and enforceable in accordance with its terms; Seller is, and to the knowledge of Seller and Owner, all other parties thereto are, in compliance in all material respects with the provisions thereof; Seller is not, and to the knowledge of Seller and Owner, no other party thereto, is in default in the performance, observance or fulfillment of any material obligation, covenant or condition contained therein; and no event has occurred which with or without the giving of notice or lapse of time, or both, would constitute a default thereunder; furthermore, except as may be disclosed on Schedule 3.1, no such material agreement, contract, commitment, lease, plan or other instrument, document or undertaking, in the reasonable opinion of Seller and Owner, contains any contractual requirement with which there is a reasonable likelihood the Seller, the Buyer, or any other party thereto will be unable to comply. 4.6 Compliance with Law. The ownership, leasing and use of the ------------------- Assets as they are currently owned, leased and used and the conduct of the Business as it is currently conducted do not violate any Legal Requirement, which violations, individually or in the aggregate, would have a material adverse effect on the Business. Seller has not received notice claiming a violation by Seller or the Business of any Legal Requirement applicable to Seller or the Business as it is currently conducted and to Seller's best knowledge, there is no basis for any claim that such a violation exists. 4.7 Financial Statements. Schedule 4.7 presents correct and -------------------- complete copies of Seller's unaudited balance sheets for the fiscal years ended December 31, 1993, 1994 and 1995, together with its unaudited statements of income and cash flows for the fiscal years or periods then ended, and its unaudited balance sheet as of May 31, 1996, together with its unaudited statement of income for the 5 months then ended (collectively, the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles, consistently applied, and fairly present Seller's financial condition and results of operations as of the dates and for the periods indicated. Since the opening date of the most recent operating statement included in the Financial Statements, the Business has been operated only in the ordinary course, and there has been no material adverse change in, and no events have occurred which are likely, individually or in the aggregate, to result in any material adverse change in, the Business, operations, Assets, prospects or condition (financial or otherwise) of the Business. 4.8 Legal Proceedings. Except as set forth on Schedule 4.8, ----------------- there is no judgment or order outstanding, or any action, suit, complaint, proceeding or investigation by or before any Governmental Authority or any arbitrator pending, or to Seller's best knowledge, threatened, involving or affecting all or any part of the Business, the Assets or Seller. 4.9 Tax Returns; Other Reports. Seller has delivered to Buyer -------------------------- true and correct copies of its U.S. and Tennessee tax returns for the fiscal years ended December 31, 1993 and 1994. Seller has duly and timely filed in proper form with the appropriate Governmental Authority all income, franchise, sales, use, property, excise, payroll and other tax returns, and all other reports (whether or not relating to taxes) required to be filed with respect to the Business. All taxes, fees and assessment of whatever nature due and payable by Seller with respect to the Business and the Assets have been paid, except such amounts as are being contested diligently and in good faith and are not in the aggregate material. 4.10 Employment Matters. Schedule 4.10 includes a complete and ------------------ correct list of names and positions of all employees of Seller engaged in the Business, and their current hourly wages or monthly salaries and other compensation. Seller has complied in all respects with all Legal Requirements relating to the employment of labor, including the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), continuation coverage requirements with respect to group health plans, and those relating to wages, hours, collective bargaining, unemployment compensation, worker's compensation, equal employment opportunity, age and disability discrimination, immigration control and the payment and withholding of taxes. No reportable event, within the meaning of Title IV of ERISA, has occurred and is continuing with respect to any "employee benefit plan" or "multiemployer plan" (as those terms are defined in ERISA) maintained by Seller or any Affiliate of Seller. No prohibited transaction, within the meaning of Title I of ERISA, has occurred with respect to any such employee benefit plan or multiemployer plan, and no material accumulated funding deficiency (as defined in Title I of ERISA) or withdrawal liability (as defined in Title IV of ERISA) exists with respect to any such employee benefit plan or multiemployer plan. 4.11 Environmental Matters. (i) Real property used by Seller has, --------------------- during Seller's use thereof, been maintained, and all activities of Seller, its employees, agents, contractors, lessees and invites thereon have been conducted, in compliance with all applicable environmental laws; (ii) Seller has not received written notification from any governmental authority with respect to any actual or alleged violations of, or remedial obligations arising under, any applicable environmental laws with respect to such property which have not been responded to and cured; (iii) Seller has not received written notification from any Person or entity that it is (A) potentially responsible or liable under any applicable environmental laws for removal or remedial action or costs associated with the generation, treatment, storage, transportation or disposal of hazardous materials at such property, or (B) potentially liable for any costs or liability as a result of Seller's operation of the Business or Seller's generation, transfer, storage, use, release, transportation or disposal of hazardous materials in connection with the Business; (iv) Seller has not removed any underground storage tanks located on such property, (v) such property has not been used by Seller for the generation, disposal storage, treatment, processing or handling of hazardous materials in a manner that violates, or creates any remedial obligation under, any applicable environmental law, and such property is free of any on-site condition of environmental concern and is not in violation of any applicable environmental law; (vi) such property has not been listed on the National Priorities List maintained by the U.S. Environmental Protection Agency pursuant to CERCLA or on any other "Superfund" or "Superlien" list maintained by any governmental authority pursuant to any applicable law; and (vii) Seller has made available to Buyer true and correct copies of all environmental reports or inspections delivered to Seller or prepared at the request of Seller relating to such property. 4.12 Finders and Brokers. Any liability for any financial ------------------- advisory, brokerage, finder's or similar fee or commission in connection with the transactions contemplated by this Agreement will be the liability of the party incurring the liability. 4.13 Access and Notice. Seller and Owner will permit Buyer and ----------------- its authorized representatives access to, and make available for inspection, all of the assets and Business of Seller, including employees, customers and suppliers, and permit Buyer and its authorized representatives to inspect and make copies of all documents, records and information with respect to the Business or the Assets as Buyer or its representatives may request. Seller and Owner will promptly notify Buyer in writing of (a) any notice or communication relating to a default or event that, with notice or lapse of time or both, could become a default, under any contract, commitment or obligation to which Seller is a party, or relating to the Business or the Assets, and (b) any adverse change in the Seller's or the Business' financial condition or the condition of the Assets. 4.14 Disclosure. No representation or warranty by Seller in this ---------- Agreement or in any Schedule or Exhibit to this Agreement, or any statement, list or certificate furnished or to be furnished by Seller pursuant to this Agreement, contains or will contain any untrue statement of material fact, or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which made. Section 5. Representations and Warranties of Buyer To induce Seller to enter into this Agreement, Buyer represents and warrants to Seller, as of the Effective Date, as follows: 5.1 Organization and Qualification. Buyer is a corporation duly ------------------------------ organized, validly existing and in good standing under the laws of the State of Texas and has all requisite corporate power and authority to carry on its business as currently conducted and to own, lease, use and operate its assets. 5.2 Authority and Validity. Buyer has all requisite corporate ---------------------- power and authority to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by this Agreement. The execution and delivery by Buyer of, the performance by Buyer of its obligations under, and the consummation by Buyer of the transactions contemplated by this Agreement have been duly authorized by all requisite corporate action of Buyer and this Agreement constitutes the valid and binding obligation of Buyer, enforceable in accordance with its terms, except insofar as enforceability may be limited or affected by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors' rights generally or by principles governing the availability of equitable remedies. 5.3 No Breach or Violation. The execution, delivery and ---------------------- performance of this Agreement by Buyer will not: (a) violate any provision of the charter or bylaws of Buyer; (b) violate any Legal Requirement; (c) require any consent, approval or authorization of, or any filing with or notice to, any Person; or (d) (i) violate, conflict with or constitute a breach of or default under (without regard to requirements of notice, passage of time or elections of any Person), (ii) permit or result in the termination, suspension or modification of, (iii) result in the acceleration of (or give any Person the right to accelerate) the performance of Buyer under, or (iv) result in the creation or imposition of any Encumbrance under, any instrument or other agreement to which Buyer is a party or by which Buyer or any of its assets is bound or affected, except for purposes of this clause (d) such violations, conflicts, breaches, defaults, terminations, suspensions, modifications, and accelerations as would not, individually or in the aggregate, have a material adverse effect on Buyer or on the validity, binding effect or enforceability of this Agreement. Section 6. Closing. 6.1 Closing; Effective Date. The closing ("Closing") of the ----------------------- transactions will be in Winchester, Tennessee, at 10:00 a.m. local time on November 1, 1996 ("Closing Date"). The transactions will be effective as of November 1, 1996 ("Effective Date"). Section 7. Conditions to Closing. 7.1 Conditions to the Obligations of Buyer and Seller. The ------------------------------------------------- obligations of each party to consummate the transactions contemplated by this Agreement to take place at the Closing are subject to the satisfaction or waiver, to the extent permitted by applicable Legal Requirements, at or prior to the Closing Date, of each of the following conditions: 7.1.1 No action, suit or proceeding is pending or threatened by or before any Governmental Authority and no Legal Requirement has been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement by any Governmental Authority, which would (a) prohibit Buyer's ownership or operation of all or a material portion of the Business or the Assets, (b) compel Buyer to dispose of or hold separate all or a material portion of the Business or the Assets as a result of any of the transactions contemplated by this Agreement, or (c) prevent or make illegal the consummation of any transactions contemplated by this Agreement. 7.2 Conditions to Obligations of Buyer. The obligations of Buyer ---------------------------------- to consummate the transactions contemplated by this Agreement to take place at the Closing are subject to the satisfaction or waiver, to the extent permitted by applicable Legal Requirements, at or prior to the Closing Date, of each of the following conditions: 7.2.1 Seller has performed and complied in all material respects with each obligation, agreement, covenant and condition required by this Agreement to be performed or complied with by Seller at or prior to the Closing and has delivered to Buyer a certificate, dated the Closing Date, signed by Seller's President, to such effect, in substantially the form attached as Exhibit B. 7.2.2 Seller has executed (or caused to be executed) and delivered to Buyer each of the following items: 7.2.2.1 a Bill of Sale in substantially the form attached as Exhibit C; 7.2.2.2 an Assignment and Assumption Agreement in substantially the form attached as Exhibit D; and 7.2.2.3 motor vehicle title certificates, applications for title, assignments of Manufacturer's Statements of Origin, and such other transfer instruments as Buyer may reasonably deem necessary or advisable to transfer the Assets to Buyer and to perfect Buyer's rights in the Assets. 7.2.3 By the Closing Date, Buyer will have completed a due diligence review of the Business, operations and financial statements of Seller, the results of which are satisfactory to Buyer in its sole discretion. 7.2.4 Charles R. Bondurant, Joe Bondurant and Tom Ed Bondurant have each signed and delivered to Buyer a Non-Competition Agreement in substantially the form attached as Exhibits E-1, E-2 and E-3, respectively, and Seller has signed and delivered to Buyer a Non- Competition Agreement in substantially the form attached as Exhibit F (collectively, the "Non-Competition Agreements"). 7.2.5 Seller has delivered releases, in form reasonably satisfactory to Buyer, of all Encumbrances affecting any of the Assets (other than Permitted Encumbrances) and a certificate of no taxes due with respect to Seller and the Assets issued by appropriate Tennessee state taxing authorities as of a date no earlier than 10 days prior to the Closing. 7.2.6 Seller has provided Buyer with a copy of amendments to its charter, certified by the Secretary of State of the State of Tennessee, that it has changed its name from "Tri-Lakes Marine, Inc." 7.2.7 Seller has provided Buyer with the original invoices evidencing the cost of the New Boats, Motors, and Trailers, Parts and Accessories, and an inventory sheet detailing these items. 7.2.8 Buyer has received the opinion of Copeland, Conley & Hazard in substantially the form attached as Exhibit H. 7.2.9 Seller has executed a lease for the site of the Business with Tim's Ford Marina, Inc. ("Landlord"), on terms acceptable to Buyer in its sole discretion, including waiver by Landlord of any rights it may have in the inventory of the Business, to the extent such inventory does not constitute a part of the real property subject to the lease. 7.3 Conditions to Obligations of Seller. The obligations of ----------------------------------- Seller to consummate the transactions contemplated by this Agreement to take place at the Closing are subject to the satisfaction or waiver by Seller, to the extent permitted by applicable law, at or prior to the Closing Date, of each of the following conditions: 7.3.1 Buyer has paid the Purchase Price required to be paid at the Closing. 7.3.2 Buyer has performed and complied in all material respects with each obligation, agreement, covenant and condition required by this Agreement to be performed or complied with by Buyer at or prior to the Closing and has delivered to Seller a certificate, dated the Closing Date, signed by Buyer's President, to such effect, in substantially the form attached as Exhibit G. 7.3.3 Buyer has executed and delivered to Seller each of the following: 7.3.3.1 an Assignment and Assumption Agreement in substantially the form attached as Exhibit D. 7.3.3.2 the Promissory Notes, guaranteed by Travis Boats & Motors, Inc.; 7.4 Waiver of Conditions. Any party may waive in writing any or -------------------- all of the conditions to its obligations under this Agreement. Section 8. Survival of Representations and Warranties; Indemnification. 8.1 Survival of Representations and Warranties. The ------------------------------------------ representations and warranties of Seller in this Agreement and in the documents and instruments to be delivered by Seller pursuant to this Agreement will survive the Closing without limitation until the third anniversary of the Effective Date. The representations and warranties of Buyer in this Agreement and in the documents and instruments to be delivered by Buyer pursuant to this Agreement will survive the Closing without limitation until the third anniversary of the Effective Date. The periods of survival of the representations and warranties prescribed by this Section 8.1 are referred to as ----------- the "Survival Period." The liabilities of the parties under their respective representations and warranties will expire as of the expiration of the applicable Survival Period; provided, however, that such expiration will not include, extend or apply to any representation or warranty, the breach of which has been asserted by Buyer in written notice to Seller before such expiration or about which Seller has given Buyer written notice before such expiration indicating the facts or conditions existing that, with the passage of time or otherwise, can reasonably be expected to result in a breach (and describing such potential breach in reasonable detail). The covenants and agreements of the parties in this Agreement and in the other documents and instruments to be delivered by Seller or Buyer pursuant to this Agreement will survive the Closing and will continue in full force and effect without limitation. 8.2 Indemnification by Seller. Seller and Owner will indemnify, ------------------------- defend and hold harmless Buyer and its shareholders and its and their respective Affiliates, and the shareholders, directors, officers, employees, agents, successors and assigns of any of such Persons, from and against: 8.2.1 all losses, damages, liabilities, deficiencies or obligations of or to Buyer resulting from or arising out of (i) any breach of any then surviving representation or warranty made by Seller in this Agreement, (ii) any breach of any then surviving covenant, agreement or obligation of Seller contained in this Agreement, (iii) any third party claim with respect to any occurrence prior to or on the Effective Date, without regard to whether such third party claim with respect to such occurrence is asserted before or after the Effective Date, including any matter described on Schedule 4.8, (iv) any liability or obligation of Seller not included in the Assumed Liabilities, including contingent liability for products sold prior to the Effective Date, (v) any claim that the transactions contemplated by this Agreement violate the Worker Adjustment and Retraining Notification Act, as amended, or any similar state or local law, or any bulk transfer or fraudulent conveyance laws of any jurisdiction, and (vi) any liability or obligation of Seller arising after the Effective Date; and 8.2.2 all claims, actions, suits, proceedings, demands, judgments, assessments, fines, interest, penalties, costs and expenses (including settlement costs and reasonable legal, accounting, experts' and other fees, costs and expenses) incident or relating to or resulting from any of the foregoing. In the event that an indemnified item arises under both clause 8.2.1(i) and -------- under one or more of clauses 8.2.1(ii) through 8.2.1(vi) of this Section 8.2, --------- --------- ----------- Buyer's rights to pursue its claim under clauses 8.2.1(ii) through 8.2.1(vi), as --------- --------- applicable, will exist notwithstanding the expiration of the Survival Period applicable to such claim under clause 8.2.1(i). -------- 8.3 Indemnification by Buyer. Buyer will indemnify, defend and ------------------------ hold harmless Seller and Seller's officers, employees, agents, successors and assigns, from and against: 8.3.1 all losses, damages, liabilities, deficiencies or obligations of or to Seller or any such other indemnified Person resulting from or arising out of (i) any breach of any representation or warranty made by Buyer in this Agreement, (ii) the breach of any covenant, agreement or obligation of Buyer contained in this Agreement or (iii) the failure by Buyer to perform any of its obligations in respect of the Assumed Liabilities; and 8.3.2 all claims, actions, suits, proceedings, demands, judgments, assessments, fines, interest, penalties, costs and expenses (including, without limitation, settlement costs and reasonable legal, accounting, experts' and other fees, costs and expenses) incident or relating to or resulting from any of the foregoing. In the event that an indemnified item arises under both clause 8.3.1(i) and -------- under one or more of clauses 8.3.1(ii) or 8.3.1(iii) of this Section 8.3, --------- ---------- ----------- Seller's rights to pursue its claim under clauses 8.3.1(ii) or 8.3.1(iii), as --------- ---------- applicable, will exist notwithstanding the expiration of the Survival Period applicable to such claim under clause 8.3.1(i). -------- 8.4 Third Party Claims. Promptly (and in any event within 30 ------------------ days) after the receipt by any party of notice of any claim, action, suit or proceeding by any Person who is not a party to this Agreement (collectively, an "Action"), which Action is subject to indemnification under this Agreement, such party (the "Indemnified Party") will give reasonable written notice to the party from whom indemnification is claimed (the "Indemnifying Party"). The Indemnified Party will be entitled, at the sole expense and liability of the Indemnifying Party, to exercise full control of the defense, compromise or settlement of any such Action unless the Indemnifying Party, within a reasonable time (and in any event within 15 days) after the giving of such notice by the Indemnified Party, (a) admits in writing to the Indemnified Party the Indemnifying Party's liability to the Indemnified Party for such Action under the terms of this Section 8, (b) notifies the Indemnified Party in writing of the Indemnifying - --------- Party's intention to assume such defense, and (c) retains legal counsel reasonably satisfactory to the Indemnified Party to conduct the defense of such Action. The other party will cooperate with the party assuming the defense, compromise or settlement of any such Action in accordance with this Agreement in any reasonable manner that such party reasonably may request. If the Indemnifying Party so assumes the defense of any such Action, the Indemnified Party will have the right to employ separate counsel and to participate in (but not control) the defense, compromise or settlement of the Action, but the fees and expenses of such counsel will be at the expense of the Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) any relief other than the payment of money damages is sought against the Indemnified Party or (iii) the Indemnified Party will have been advised by its counsel that there may be one or more defenses available to it which are different from or additional to those available to the Indemnifying Party, and in any such case that portion of the fees and expenses of such separate counsel that are reasonably related to matters covered by the indemnity provided in this Section 8 will be paid by the Indemnifying Party. No Indemnified Party will - --------- settle or compromise any such Action for which it is entitled to indemnification under this Agreement without prior written consent of the Indemnifying Party, unless the Indemnifying Party has failed, after reasonable notice, to undertake control of such Action in the manner provided in this Section 8.4. No ----------- Indemnifying Party will settle or compromise any such Action (A) in which any relief other than the payment of money damages is sought against any Indemnified Party or (B) in the case of any Action relating to the Indemnified Party's liability for any tax, if the effect of such settlement would be an increase in the liability of the Indemnified Party for the payment of any tax for any period beginning after the Effective Date, unless the Indemnified Party consents in writing to such compromise or settlement. 8.5 Offset. Buyer will have a right of offset in the Promissory ------ Notes with respect to any matter for which Buyer is indemnified under Section 8.2. - ----------- Section 9. Post-Closing Covenants. 9.1 Transfer Taxes. In the event that any Governmental Authority -------------- of the State of Tennessee or of any municipality, parish or other subdivision thereof shall at any time impose or otherwise require or demand payment by or from either Seller or Buyer of any state or local sales, use, transfer, excise, documentary or license taxes or fees or any other charge (including filing fees) with respect to Seller's sale or transfer to Buyer of the Assets, Seller will be responsible for the payment. 9.2 Employment of Charles R. Bondurant. Buyer will offer the ---------------------------------- position of General Manager of the Winchester, Tennessee store to Charles R. Bondurant. As General Manager, he will have the use of a company-owned vehicle (selected by him, subject to Buyer's approval) for all business related purposes. 9.3 Use of Seller's Name. Seller may continue use of its -------------------- tradenames and Marks after the Effective Date only as long as necessary to, and in connection with, winding up Business transactions undertaken before the Effective Date, after which time Seller will cease all such usage. Seller will assign unto Buyer all right, title, and interest in and to the Intangibles, together with the goodwill of the Business symbolized by and connected with the use of the Intangibles, the applications and registrations identified in Schedule 4.4.2, and the right to sue and recover for any and all past infringements thereof. 9.4 Confidentiality. No party will issue any press release or --------------- make any other public announcement regarding this Agreement or the transactions contemplated hereby without the consent of the other parties. Each party will hold, and will cause its employees, consultants, advisors and agents to hold, in confidence, the terms of this Agreement and any non-public information concerning another party obtained pursuant to this Agreement. Notwithstanding the preceding, a party may disclose such information to the extent required by any Legal Requirement (including disclosure requirements under federal and state securities laws), but the party proposing to disclose such information will first notify and consult with the other parties concerning the proposed disclosure, to the extent reasonably feasible. Each party also may disclose such information to employees, consultants, advisors, agents and actual or potential lenders whose knowledge is necessary to facilitate the consummation of the transactions contemplated by this Agreement. Each party's obligation to hold information in confidence will be satisfied if it exercises the same care with respect to such information as it would exercise to preserve the confidentiality of its own similar information. 9.5 Consignment and Repair. In the event Seller or Owner is ---------------------- required to retake possession of any products sold prior to the Effective Date, Buyer will accept the products on consignment from Seller or Owner. Any repairs will be pre-approved by Seller and will be paid for by Seller or Owner. 9.6 Access to Records. Seller will allow Buyer reasonable access ----------------- to its records for a period of two years after the Effective Date, for any reasonable business purpose related to the Business. Section 10. Definitions. In addition to terms defined elsewhere in this Agreement, the following capitalized terms, when used in this Agreement, will have the meanings set forth below: 10.1 Accessories. All accessories inventoried on the Effective ----------- Date. 10.2 Affiliate. With respect to any Person, any other Person --------- controlling, controlled by or under common control with such Person, with "control" for such purpose meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract, or otherwise. 10.3 Assets. All properties, privileges, rights, interests and ------ claims, real and personal, tangible and intangible, of every type and description (including, without limitation, New Boats, Motors, and Trailers; Used Boats, Motors, and Trailers; Parts; Accessories; Miscellaneous Assets; Intangibles; Deposits; Boat Show Rights; and Seller's Contracts, more particularly described in Section 1.1 and on Schedules 1.1, 3.1 and 4.4.2), that ----------- are used, or held for use, by Seller or Owner in the Business and in which Seller or Owner has any right, title or interest (or in which Seller or Owner hereafter acquires any right, title or interest on or before the Closing Date), but excluding all Excluded Assets. 10.4 Boat Show Rights. All agreements for space at Boat Shows, ---------------- including common stock and other ownership rights in corporations, partnerships, and other types of entities holding Boat Shows. 10.5 Boat Shows. All boat shows in Tennessee and all boat shows ---------- at which Seller has had a booth or made a presentation in any of the last five (5) years. 10.6 Business. The retail sales and service of boats, motors, -------- trailers, marine accessories and water sporting goods at the store located in Winchester, Tennessee and at Boat Shows attended by the Seller. 10.7 Deposits. All customer deposits relating to customer special -------- orders as of the Effective Date. 10.8 Encumbrance. Any mortgage, lien, security interest, security ----------- agreement, conditional sale or other title retention agreement, limitation, pledge, option, assessment or other such charge, restrictive agreement, restriction, encumbrance, adverse interest, restriction on transfer, or exception to or defect in title or other ownership interest (including reservations, rights of way, possibilities of reverter, encroachments, easements, rights of entry, restrictive covenants, leases and licenses). 10.9 Governmental Authority. (i) The United States of America, ---------------------- (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like), (iii) any foreign (as to the United States of America) sovereign entity and any political subdivision thereof, or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board. 10.10 Intangibles. All intangible assets, including trademarks, ----------- service marks, copyrights (collectively, "Marks"), customer lists, claims, patents, and goodwill assigned in gross, rights of publicity and other intangibles, owned, used or held for use in the Business, including the names "Tri-Lakes Marine, Inc." and all derivative uses of such names, and all rights granted to Buyer pursuant to the Non-Competition Agreements. 10.11 Legal Requirement. Any statute, ordinance, code, law, rule, ----------------- regulation, order or other requirement, standard or procedure enacted, adopted or applied by any Governmental Authority, including judicial decisions applying common law or interpreting any other Legal Requirement. 10.12 Miscellaneous Assets. All furniture, fixtures, vehicles, -------------------- equipment and other assets set forth on Schedule 1.1. 10.13 Net Cost. The actual net cost to Seller of an item, after -------- all rebates and credits have been issued, including freight charges (if any) that have been paid by Seller to the manufacturer. 10.14 New Boats, Motors, and Trailers. All new boats, motors, and ------------------------------- trailers described on Schedule 1.1. 10.15 Parts. All parts inventoried on the Effective Date. ----- 10.16 Permitted Encumbrances. The following Encumbrances: (a) ---------------------- liens for taxes, assessments and governmental charges not yet due and payable; (b) zoning laws and ordinances and similar Legal Requirements; (c) rights reserved to any Governmental Authority to regulate the affected property; and (d) as to real property interests, any easements, rights-of-way, servitudes, permits, restrictions and minor imperfections or irregularities in title which are reflected in public records and which do not individually or in the aggregate interfere with the right or ability to own, lease, use or operate (whichever may be the case) the real property for the Business or to convey good, marketable and indefeasible title to the real property; provided that (i) Permitted Encumbrances will not include any item which could materially adversely affect the conduct of the Business and (ii) the classification of any item as a Permitted Encumbrance will not affect any liability Seller may have for such item, including pursuant to any indemnity obligation under this Agreement. 10.17 Person. Any natural person, corporation, partnership, trust, ------ unincorporated organization, association, limited liability company, Governmental Authority or other entity. 10.18 Used Boats, Motors, and Trailers. All used boats, motors, -------------------------------- and trailers described on Schedule 1.1. 10.19 Other Definitions. The following terms are defined in the ----------------- Sections indicated: Term Section ---- ------- Action 8.4 Assumed Liabilities 3.1 Closing 6.1 Closing Date 6.1 Effective Date 6.1 ERISA 4.10 Excluded Assets 3.2 Financial Statements 4.7 Indemnifying Party; Indemnified Party 8.4 Marks 10.10 Non-Competition Agreements 7.2.4 Promissory Notes 2.1 Purchase Price 2.1 Seller's Contracts 3.1 Survival Period 8.1 Section 11. Miscellaneous. 11.1 Parties Obligated and Benefited. Subject to the ------------------------------- limitations set forth below, this Agreement will be binding on the parties and their respective assigns and successors in interest and will inure solely to the benefit of the parties and their respective assigns and successors in interest, and no other Person will be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other parties, no party will assign any of its rights under this Agreement or delegate any of its duties under this Agreement, provided that Buyer may, without the consent of any other party, (i) assign or delegate its rights or obligations under this Agreement to a commonly controlled entity of Buyer, and such assignee will be substituted for Buyer under this Agreement as though it were the original party to this Agreement and Buyer will be released from all obligations under this Agreement, and (ii) make a collateral assignment of its rights hereunder to Buyer's or its assignee's secured lenders. 11.2 Notices. Any notice, request, demand, waiver or other ------- communication required or permitted to be given under this Agreement will be in writing and will be deemed to have been duly given only if delivered in person or sent by first class, prepaid, registered or certified mail (return receipt requested), or delivered by commercial courier (e.g., United Parcel Service or Federal Express) or, if receipt is confirmed, by telecopier: To Buyer at: Travis Boating Center Tennessee, Inc. 13045 Research Blvd. Austin, Texas 78750 Attention: Mike Perrine, Chief Financial Officer Telecopy: 512/250-1207 With a copy (which will not constitute notice) transmitted by telecopier to: Winstead Sechrest & Minick P.C. 100 Congress Avenue, Suite 800 Austin, Texas 78701 Attention: Walter Earl Bissex, Esq. Telecopy: 512/370-2850 To Seller and Owner at Tri-Lakes Marine, Inc. 38 Marina Lane Winchester, Tennessee 37398 With a copy (which will not constitute notice) transmitted by telecopier to: Copeland, Conley & Hazard 111 West Grundy Street P.O. Box 176 Tullahoma, Tennessee 37388 Attention: Tom Copeland Telecopy: 615/455-1753 Any party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section 11.2. All ------------ notices will be deemed to have been received on the date of delivery or on the third business day after mailing in accordance with this Section, except that any notice of a change of address will be effective only upon actual receipt. 11.3 Attorneys' Fees. In the event of any action or suit based --------------- upon or arising out of any alleged breach by any party of any representation, warranty, covenant or agreement contained in this Agreement, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs of such action or suit from the other party. 11.4 Right to Specific Performance. Seller acknowledges that the ----------------------------- unique nature of the Assets to be purchased by Buyer pursuant to this Agreement renders money damages an inadequate remedy for the breach by Seller of its obligations under this Agreement, and Seller agrees that in the event of such breach, Buyer will upon proper action instituted by it, be entitled to a decree of specific performance of this Agreement. 11.5 Waiver. Neither this Agreement nor any of its provisions may ------ be waived except in writing. The failure of any party to enforce any right arising under this Agreement on one or more occasions will not operate as a waiver of that or any other right on that or any other occasion. 11.6 Captions. The section captions of this Agreement are for -------- convenience only and do not constitute a part of this Agreement. 11.7 Choice of Law. This agreement and the rights of the parties ------------- under it will be governed by and construed in all respects in accordance with the laws of the State of Texas, without regard to the conflicts of laws rules of Texas. Any litigation resulting from any dispute among the parties must be filed in Travis County, Texas. 11.8 Terms. Terms used with initial capital letters will have the ----- meanings specified, applicable to both singular and plural forms, for all purposes of this Agreement. The word "include" and derivatives of that word are used in this Agreement in an illustrative sense rather than a limiting sense. 11.9 Rights Cumulative. All rights and remedies of each of the ----------------- parties under this Agreement will be cumulative, and the exercise of one or more rights or remedies will not preclude the exercise of any other right or remedy available under this Agreement or applicable law. 11.10 Further Actions. Seller and Buyer will execute and deliver --------------- to the other, from time to time at or after the Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded to and acquired by it under this Agreement. 11.11 Time. Time is of the essence under this Agreement. If the ---- last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a business day, the time for the giving of such notice or the performance of such act will be extended to the next succeeding business day. 11.12 Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which will be deemed an original. 11.13 Entire Agreement. This Agreement (including the Schedules ---------------- and Exhibits referred to in this Agreement, which are incorporated into and constitute a part of this Agreement) contains the entire agreement of the parties and supersedes all prior oral or written agreements and understandings with respect to the subject matter of this Agreement. This Agreement may not be amended or modified except by a writing signed by the parties. 11.14 Severability. Any term or provision of this Agreement which ------------ is invalid or unenforceable will be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining rights of the Person intended to be benefited by such provision or any other provisions of this Agreement. 11.15 Construction. This Agreement has been negotiated by Buyer ------------ and Seller and their respective legal counsel, and legal or equitable principles that might require the construction of this Agreement or any provision of this Agreement against the party drafting this Agreement will not apply in any construction or interpretation of this Agreement. 11.16 Expenses. Except as otherwise expressly provided in this -------- Agreement, each party will pay all of its own expenses, including attorneys' and accountants' fees, in connection with the negotiation of this Agreement, the performance of its obligations and the consummation of the transactions contemplated by this Agreement. The parties have executed this Agreement as of the day and year first above written. BUYER: ----- TRAVIS BOATING CENTER TENNESSEE, INC. By: /s/ Mark Walton ------------------------ Mark Walton ------------------------ President ------------------------ SELLER: ------ TRI-LAKES MARINE, INC. By: /s/ Charles R. Bondurant ------------------------- Charles R. Bondurant President OWNER: ----- /s/ Charles R. Bondurant ----------------------------- CHARLES R. BONDURANT /s/ Joe Bondurant ----------------------------- JOE BONDURANT /s/ Tom Ed Bondurant ----------------------------- TOM ED BONDURANT EXHIBIT A PROMISSORY NOTE $270,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Tennessee, Inc., a Texas corporation ("Maker"), promises to pay to the order of Tri-Lakes Marine, Inc. ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. Travis Boating Center Tennessee, INC. By: ------------------------------ ------------------------------ President ------------------------------ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ------------------------------ ------------------------------ ------------------------------ Date: ------------------------- EXHIBIT A-1 PROMISSORY NOTE $68,000.00 November 1, 1996 --------- FOR VALUE RECEIVED, the undersigned, Travis Boating Center Tennessee, Inc., a Texas corporation ("Maker"), promises to pay to the order of Charles R. Bondurant ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER TENNESSEE, INC. By: ------------------------------ ------------------------------ ------------------------------ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ------------------------------ ------------------------------ ------------------------------ Date: ------------------------- EXHIBIT A-2 PROMISSORY NOTE $68,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Tennessee, Inc., a Texas corporation ("Maker"), promises to pay to the order of Joe Bondurant ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER TENNESSEE, INC. By: _________________________________ ___________________________ ___________________________ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ______________________________ ___________________________ ___________________________ Date: EXHIBIT A-3 PROMISSORY NOTE $34,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Tennessee, Inc., a Texas corporation ("Maker"), promises to pay to the order of Tom Ed Bondurant ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER TENNESSEE, INC. By: ______________________________ ___________________________ ___________________________ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ______________________________ ___________________________ ___________________________ Date: EXHIBIT C BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Tri-Lakes Marine, Inc., an Alabama corporation ("Seller"), for and in consideration of the payment of such good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and pursuant to the Asset Purchase Agreement (the "Purchase Agreement"), made as of November 1, 1996 by and among Seller, TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation ("Purchaser"), Charles R. Bondurant, Joe Bondurant, and Tom Ed Bondurant, does hereby transfer, grant, bargain, sell and deliver to Purchaser, its successors and assigns, the assets of Seller that are listed on Schedule 1.1 attached hereto, the Intangibles, the ------------ Deposits and the Boat Show Rights, all as the same shall exist as of the date hereof (collectively, the "Assets"). Capitalized terms used herein without definition will have the meanings assigned to them in the Purchase Agreement. TO HAVE AND TO HOLD, all and singular, the said Assets hereby conveyed, transferred, granted, bargained, sold and delivered to Purchaser, its successors and assigns, to and for their own use and benefit forever. Seller represents and warrants that it is the sole and lawful owner in every respect of all of the Assets and that all of the Assets are being transferred free and clear of any and all liabilities, obligations, liens, claims and encumbrances of every kind and character whatsoever. Seller does hereby bind itself, its successors and assigns, to warrant and defend such title to the Assets unto Purchaser, its successors and assigns, against every person whosoever claims or might claim such Assets, any part thereof or any interest therein. Seller, for itself, its successors and assigns, further covenants and agrees that Seller and its successors and assigns will do or cause to be done all such further acts and will execute, acknowledge and deliver, or will cause to be executed, acknowledged and delivered, any and all such further deeds, assignments, transfers and conveyances, powers of attorney and assurances as Purchaser, its successors and assigns, may reasonably require (i) for the better assuring, assigning, transferring and conveying the Assets, all and singular, unto Purchaser, its successors and assigns; (ii) to protect the right, title and interest of Purchaser, its successors and assigns, in and to, and their enjoyment of, all and singular, the Assets; and (iii) as may be appropriate otherwise to carry out the transactions contemplated by the Purchase Agreement. Seller, for itself, its successors and assigns, irrevocably constitutes and appoints Purchaser, its successors and assigns, and each of them, the true and lawful attorney of Seller, its successors and assigns, with full power of substitution and gives and grants unto Purchaser, its successors and assigns, and each of them, full power and authority in the name of Seller, its successors and assigns, at any time and from time to time, to demand, sue for, recover and receive any and all rights, demands, claims and choses in action of every kind and description whatsoever incident or relating to the Assets, for the purpose of fully vesting in Purchaser, its successors and assigns, all the right, title and interest in and to the Assets, all and singular. This instrument will be binding upon Seller, its successors and assigns, and will inure to the benefit of Purchaser, its successors and assigns. This Bill of Sale will be governed by, and construed and interpreted in accordance with, the laws of the State of Texas. IN WITNESS WHEREOF, this Bill of Sale is executed on November 1, 1996 Seller: TRI-LAKES MARINE, INC. By: Charles R. Bondurant, President THE STATE OF ________ (S) (S) COUNTY OF ___________ (S) The foregoing instrument was ACKNOWLEDGED before me this _____ day of _____________, by _________________________, the ____________________________ of _______________________, a ________ corporation, on behalf of said corporation. [ S E A L ] Notary Public, State of __________ My Commission Expires: (Printed Name of Notary Public) ------------------------------- EXHIBIT D ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of November 1, 1996 by and between TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation ("Buyer"), and TRI-LAKES MARINE, INC. a Tennessee corporation ("Seller"). Capitalized terms used herein without definition will have the meanings assigned to them in the Purchase Agreement. WHEREAS, Buyer and Seller have entered into that certain Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to the terms of which Buyer agrees to buy, and Seller agrees to sell, certain assets of Seller; WHEREAS, pursuant to Section 3.1 of the Purchase Agreement, Buyer has agreed to assume certain debts and obligations of Seller; NOW, THEREFORE, for and in consideration of the sale of the Assets pursuant to the Purchase Agreement, Seller hereby assigns to Buyer, and Buyer hereby assumes and undertakes to pay, perform and discharge the liabilities and obligations set forth in Section 3.1 and on Schedule 3.1 of, the Purchase Agreement, that accrue from and after the Effective Date. Buyer does not agree to pay, assume, perform or discharge any obligations of whatever kind (whether direct or indirect, absolute or contingent, known or unknown, matured or unmatured, or otherwise) in connection with the Excluded Assets or any obligation that it does not expressly assume hereunder or under the Purchase Agreement. This Agreement will be binding upon, and inure to the benefit of, the parties hereto and their respective successors in interest and permitted assigns. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. Seller: TRI-LAKES MARINE, INC. By: _____________________________________ Charles R. Bondurant, President Buyer: TRAVIS BOATING CENTER TENNESSEE, INC. By: _____________________________________ ___________________________ ___________________________ THE STATE OF ________ (S) (S) COUNTY OF ___________ (S) On this day, before me, a Notary Public, duly commissioned and qualified and acting within and for the state and county aforesaid, appeared in person, ____________________, who stated that he was the ______________ of ________________________, a ___________ corporation, and was duly authorized in his capacity to execute the foregoing instrument for and in the name and on behalf of said corporation; and further stated that he had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on this ______ day of ____________. [S E A L] Notary Public, State of _________ Notary's Printed Name: Notary's Commission Expires: THE STATE OF ________ (S) (S) COUNTY OF ___________ (S) On this day, before me, a Notary Public, duly commissioned and qualified and acting within and for the state and county aforesaid, appeared in person, ____________________, who stated that he was the ______________ of Travis Boating Center ______, Inc., a Texas corporation, and was duly authorized in his capacity to execute the foregoing instrument for and in the name and on behalf of said corporation; and further stated that he had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on this ______ day of ____________. [S E A L] Notary Public, State of __________ Notary's Printed Name: Notary's Commission Expires: EXHIBIT F NON-COMPETITION AGREEMENT (SELLER) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996, is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller") with an office for the purpose of notice at ____________________________, ____________________________. WHEREAS, Buyer has agreed to acquire certain of the assets of Seller pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain Shareholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "_________________________", "__________________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Seller shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Seller agree as follows: Section 1. ---------- 1.1 Non-Competition. Seller will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, or marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Seller agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Seller further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Seller will be deemed to be engaging or participating in a business or businesses if it is engaged in such business or businesses, directly or indirectly, whether for its own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof and ---- will terminate on November 1, 2001. 2.2 Remedies. Seller acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices Notices and demands provided for under this Agreement will be ------- in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of this ------------------------- Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement between ------------ the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Seller have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER TENNESSEE, INC. By: --------------------------- --------------------------- --------------------------- TRI-LAKES MARINE, INC. By: --------------------------- --------------------------- --------------------------- EXHIBIT E-1 NON-COMPETITION AGREEMENT (INDIVIDUAL) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996 is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and Charles R. Bondurant, an individual residing at ________________________________ ("Owner"). WHEREAS, Buyer has agreed to acquire certain of the assets TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller"), pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain stockholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, Owner owns 40% of the outstanding shares of capital stock of Seller; and WHEREAS, Owner has established a valuable, far-reaching personal reputation in the boat, boat accessory and water sports sales business; and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "___________________", "___________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, Owner's personal reputation and identification with the Business is a significant portion of the value of the Business; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Owner shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Owner agree as follows: Section 1. ---------- 1.1 Non-Competition. Owner will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Owner agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Owner further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Owner will be deemed to be engaging or participating in a business or businesses if he is engaged in such business or businesses, directly or indirectly, whether for his own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof and ---- will terminate on November 1, 2001. 2.2 Remedies. Owner acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices. Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of this ------------------------- Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement between ------------ the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Owner have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER TENNESSEE, INC. By: --------------------------- --------------------------- --------------------------- Charles R. Bondurant --------------------------- EXHIBIT E-2 NON-COMPETITION AGREEMENT (INDIVIDUAL) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996 is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and Joe Bondurant, an individual residing at ________________________________ ("Owner"). WHEREAS, Buyer has agreed to acquire certain of the assets TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller"), pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain stockholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, Owner owns 40% of the outstanding shares of capital stock of Seller; and WHEREAS, Owner has established a valuable, far-reaching personal reputation in the boat, boat accessory and water sports sales business; and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "___________________", "___________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, Owner's personal reputation and identification with the Business is a significant portion of the value of the Business; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Owner shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Owner agree as follows: Section 1. ---------- 1.1 Non-Competition. Owner will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Owner agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Owner further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Owner will be deemed to be engaging or participating in a business or businesses if he is engaged in such business or businesses, directly or indirectly, whether for his own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof and ---- will terminate on November 1, 2001. 2.2 Remedies. Owner acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices. Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of this ------------------------- Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement between ------------ the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Owner have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER TENNESSEE, INC. By: --------------------------- --------------------------- --------------------------- Joe Bondurant --------------------------- EXHIBIT E-3 NON-COMPETITION AGREEMENT (INDIVIDUAL) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996 is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER TENNESSEE, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and Tom Ed Bondurant, an individual residing at ________________________________ ("Owner"). WHEREAS, Buyer has agreed to acquire certain of the assets TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller"), pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain stockholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, Owner owns 20% of the outstanding shares of capital stock of Seller; and WHEREAS, Owner has established a valuable, far-reaching personal reputation in the boat, boat accessory and water sports sales business; and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "___________________", "___________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, Owner's personal reputation and identification with the Business is a significant portion of the value of the Business; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Owner shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Owner agree as follows: Section 1. ---------- 1.1 Non-Competition. Owner will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Owner agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Owner further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Owner will be deemed to be engaging or participating in a business or businesses if he is engaged in such business or businesses, directly or indirectly, whether for his own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof and ---- will terminate on November 1, 2001. 2.2 Remedies. Owner acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices. Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of this ------------------------- Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement between ------------ the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Owner have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER TENNESSEE, INC. By: --------------------------- --------------------------- --------------------------- Tom Ed Bondurant --------------------------- EX-10.31 6 ASSET PURCHASE AGMT. ================================================================================ EXHIBIT 10.31 ASSET PURCHASE AGREEMENT BY AND AMONG TRAVIS BOATING CENTER ALABAMA, INC., TRI-LAKES MARINE, INC., CHARLES R. BONDURANT, JOE BONDURANT AND TOM ED BONDURANT DATED AS OF NOVEMBER 1, 1996 ================================================================================ TABLE OF CONTENTS
Page ----- Section 1. Sale of Assets................................................ 1 1.1 Purchase and Sale of Assets................................... 1 --------------------------- Section 2. Consideration................................................. 1 2.1 Purchase Price................................................ 1 -------------- 2.2 Post-Closing Liquidation...................................... 2 ------------------------ 2.3 Allocation of Consideration................................... 2 --------------------------- 2.4 Bulk Sales Act................................................ 2 -------------- Section 3. Assumed Liabilities and Excluded Assets....................... 2 3.1 Assignment and Assumption..................................... 2 ------------------------- 3.2 Excluded Assets............................................... 2 --------------- Section 4. Representations and Warranties of Seller...................... 3 4.1 Organization and Qualification................................ 3 ------------------------------ 4.2 Authority and Validity........................................ 3 ---------------------- 4.3 No Breach or Violation........................................ 3 ---------------------- 4.4 Assets........................................................ 3 ------ 4.5 Contracts and Commitments..................................... 4 ------------------------- 4.6 Compliance with Law........................................... 4 ------------------- 4.7 Financial Statements.......................................... 4 -------------------- 4.8 Legal Proceedings............................................. 4 ----------------- 4.9 Tax Returns; Other Reports.................................... 4 -------------------------- 4.10 Employment Matters............................................ 4 ------------------ 4.11 Environmental Matters......................................... 5 --------------------- 4.12 Finders and Brokers........................................... 5 ------------------- 4.13 Access and Notice............................................. 5 ----------------- 4.14 Disclosure.................................................... 5 ---------- Section 5. Representations and Warranties of Buyer....................... 6 5.1 Organization and Qualification................................ 6 ------------------------------ 5.2 Authority and Validity........................................ 6 ---------------------- 5.3 No Breach or Violation........................................ 6 ---------------------- Section 6. Closing....................................................... 6 6.1 Closing; Effective Date....................................... 6 ----------------------- Section 7. Conditions to Closing......................................... 6 7.1 Conditions to the Obligations of Buyer and Seller............. 6 ------------------------------------------------- 7.2 Conditions to Obligations of Buyer............................ 7 ---------------------------------- 7.3 Conditions to Obligations of Seller........................... 7 ----------------------------------- 7.4 Waiver of Conditions.......................................... 8 -------------------- Section 8. Survival of Representations and Warranties; Indemnification... 8 8.1 Survival of Representations and Warranties.................... 8 ------------------------------------------ 8.2 Indemnification by Seller..................................... 8 ------------------------- 8.3 Indemnification by Buyer...................................... 9 ------------------------ 8.4 Third Party Claims............................................ 9 ------------------ 8.5 Offset........................................................ 9 ------
i TABLE OF CONTENTS ----------------- (Continued) Section 9. Post-Closing Covenants......................................... 10 9.1 Transfer Taxes................................................. 10 -------------- 9.2 Use of Seller's Name........................................... 10 -------------------- 9.3 Confidentiality................................................ 10 --------------- 9.4 Consignment and Repair......................................... 10 ---------------------- 9.5 Access to Records.............................................. 10 ----------------- Section 10. Definitions................................................... 10 10.1 Accessories................................................... 10 ----------- 10.2 Affiliate..................................................... 10 --------- 10.3 Assets........................................................ 10 ------ 10.4 Boat Show Rights.............................................. 11 ---------------- 10.5 Boat Shows.................................................... 11 ---------- 10.6 Business...................................................... 11 -------- 10.7 Deposits...................................................... 11 -------- 10.8 Encumbrance................................................... 11 ----------- 10.9 Governmental Authority........................................ 11 ---------------------- 10.10 Intangibles................................................... 11 ----------- 10.11 Legal Requirement............................................. 11 ----------------- 10.12 Miscellaneous Assets.......................................... 11 -------------------- 10.13 Net Cost...................................................... 11 -------- 10.14 New Boats, Motors, and Trailers............................... 11 ------------------------------- 10.15 Parts......................................................... 11 ----- 10.16 Permitted Encumbrances........................................ 11 ---------------------- 10.17 Person........................................................ 12 ------ 10.18 Used Boats, Motors, and Trailers.............................. 12 -------------------------------- 10.19 Other Definitions............................................. 12 ----------------- Section 11. Miscellaneous................................................. 12 11.1 Parties Obligated and Benefited............................... 12 ------------------------------- 11.2 Notices....................................................... 12 ------- 11.3 Attorneys' Fees............................................... 13 --------------- 11.4 Right to Specific Performance................................. 13 ----------------------------- 11.5 Waiver........................................................ 13 ------ 11.6 Captions...................................................... 13 -------- 11.7 Choice of Law................................................. 14 ------------- 11.8 Terms......................................................... 14 ----- 11.9 Rights Cumulative............................................. 14 ----------------- 11.10 Further Actions............................................... 14 --------------- 11.11 Time.......................................................... 14 ---- 11.12 Counterparts.................................................. 14 ------------ 11.13 Entire Agreement.............................................. 14 ---------------- 11.14 Severability.................................................. 14 ------------ 11.15 Construction.................................................. 14 ------------ 11.16 Expenses...................................................... 14 --------
ii Exhibits and Schedules ---------------------- Exhibits A, A-1, A-2, A-3 Promissory Notes Exhibit B Certificate (Seller) Exhibit C Bill of Sale Exhibit D Assignment and Assumption Agreement Exhibits E-1, E-2, E-3 Non-Competition Agreement (Individuals) Exhibit F Non-Competition Agreement (Seller) Exhibit G Certificate (Buyer) Exhibit H Opinion of Seller's Counsel Schedule 1.1 Assets Schedule 3.1 Seller's Contracts Schedule 4.1 Capitalization Schedule 4.4.1 Encumbrances Schedule 4.4.2 Intangibles Schedule 4.7 Financial Statements Schedule 4.8 Legal Proceedings Schedule 4.10 Employment Matters iii ASSET PURCHASE AGREEMENT This Asset Purchase Agreement ("Agreement") is made as of November 1, 1996, by and among Travis Boating Center Alabama, Inc., a Texas corporation ("Buyer"), Tri-Lakes Marine, Inc., a Tennessee corporation ("Seller"), and Charles R. Bondurant, Joe Bondurant and Tom Ed Bondurant, all individuals living in Tennessee (collectively, "Owner"). Recitals -------- WHEREAS, Seller is engaged in the business of retail marine products sales and service; and WHEREAS, Buyer desires to purchase, and Seller desires to sell, certain of Seller's assets used or held for use in the Business as conducted by Seller; NOW, THEREFORE, in consideration of the above recitals and of the mutual agreements, representations, warranties, provisions, and covenants herein contained, and other good and valuable consideration, the parties hereto agree as follows: Section 1. Sale of Assets. 1.1 Purchase and Sale of Assets. --------------------------- 1.1.1 Subject to the terms and conditions set forth in this Agreement, at the Closing, Seller will sell to Buyer, and Buyer will purchase from Seller, all of Seller's rights, title and interest in, to and under the following Assets: (i) the New Boats, Motors, and Trailers listed on Schedule 1.1, (ii) the Used Boats, Motors, and Trailers listed on Schedule 1.1, (iii) all Parts and Accessories, (iv) all Miscellaneous Assets listed on Schedule 1.1, (v) all Intangibles, (vi) all Deposits, and (vii) Boat Show Rights. 1.1.2 Attached hereto as Schedule 1.1 is a list of the Assets. Section 2. Consideration. 2.1 Purchase Price. Buyer will pay the purchase price for the -------------- Assets in the amounts and in the manner set forth in this Section 2 (the "Purchase Price"): 2.1.1 New Boats, Motors, and Trailers valued at Net Cost: $405,862.10, payable to Seller in immediately available funds at Closing. 2.1.2 Used Boats, Motors, and Trailers: $4,500.00, payable to Seller in immediately available funds at Closing. 2.1.3 Accessories: The lesser of the manufacturer's 1996 wholesale published price or invoice amount, after rebates and credits, for each item identified in the physical inventory made jointly by Buyer and Seller. $158,197.56. 2.1.4 Miscellaneous Assets: $73,359.87. 2.1.5 Intangibles, Deposits, Boat Show Rights and other Assets: $186,028. A portion of this amount will be allocated to the value of the Non-Competition Agreement to be executed by Seller and Owners. 2.1.6 The aggregate amount payable to Seller for the assets described in Sections 2.1.3, 2.1.4 and 2.1.5 is payable as follows: ------------------------------- $89,229.00 is payable in immediately available funds at Closing and the remainder is payable pursuant to a promissory note substantially in the form attached as Exhibit A. 2.1.7 As consideration for the Non-Competition Agreement to be executed by Charles R. Bondurant, $27,808.40 is payable in cash and $28,000.00 is payable to him pursuant to a promissory note substantially in the form attached as Exhibit A-1. As consideration for the Non-Competition Agreement to be executed by Joe Bondurant, $27,808.40 is payable in cash and $28,000.00 is payable to him pursuant to a promissory note substantially in the form attached as Exhibit A-2. As consideration for the Non-Competition Agreement to be executed by Tom Ed Bondurant, $13,904.20 is payable in cash and $14,000.00 is payable to him pursuant to a promissory note substantially in the form attached as Exhibit A-3 (these three notes and the note described in Section 2.1.6, collectively, the "Promissory ----- Notes".) 2.2 Post-Closing Liquidation. ------------------------ 2.2.1 Seller may ask Buyer to serve as broker for any new or used boats, motors and trailers not purchased by Buyer. Seller will establish an acceptable selling price for each item, which price will be agreeable to Buyer, and upon the sale of such items Buyer will pay Seller the sale proceeds, retaining the greater of: (i) ten percent (10%) of the actual sales price, and (ii) the excess of the actual sales price over the acceptable selling price established by Seller. 2.2.2 Seller will bear the risk for, and will remain responsible for insuring all boats, motors, trailers, and other assets not purchased by Buyer and left on Buyer's premises. 2.3 Allocation of Consideration. The consideration payable by --------------------------- Buyer under this Agreement will be allocated among the Assets as set forth in Section 2.1. Buyer and Seller agree to be bound by such allocation, will not take any position inconsistent with such allocation, and will file all returns and reports with respect to the transactions contemplated by this Agreement, including all federal, state, and local tax returns, on the basis of such allocation. 2.4 Bulk Sales Act. Buyer and Seller waive compliance with the -------------- provisions of the Alabama Bulk Sales Act with respect to the transactions contemplated by this Agreement, subject to Section 8.2.1(v). ---------------- Section 3 Assumed Liabilities and Excluded Assets. 3.1 Assignment and Assumption. Seller will assign to Buyer, and ------------------------- Buyer will assume and perform, the "Assumed Liabilities", which are defined as: (a) obligations accruing and relating to periods after the Effective Date under the contracts, oral and written, listed on Schedule 3.1 hereof, including the Boat Show Rights (the "Seller's Contracts"), and (b) warranty repair service on boats, motors, and trailers sold by Seller prior to or on the Effective Date, provided that (i) Buyer is recognized as an authorized warranty repair facility by the manufacturer or extended service contract provider, as the case may be, (ii) the requested warranty repair is covered under the applicable manufacturer's warranty program or extended service contract, and (iii) Seller and Owner use their best efforts to assist Buyer in collecting reimbursement from such manufacturers or extended service contract providers for repairs. Buyer will not assume or have any responsibility for any liabilities or obligations of Seller other than the Assumed Liabilities. In no event will Buyer assume or have any responsibility for any liabilities or obligations associated with the Excluded Assets. 3.2 Excluded Assets. The excluded assets (the "Excluded Assets"), --------------- which will be retained by Seller, will consist of the following: cash, accounts receivable, insurance policies, books and records, and other assets not listed on Schedules 1.1, 3.1 or 4.4.2. 2 Section 4. Representations and Warranties of Seller. To induce Buyer to enter into this Agreement, Seller and Owner represent and warrant to Buyer, as of the Effective Date, as follows: 4.1 Organization and Qualification. Seller is a corporation duly ------------------------------ organized, validly existing and in good standing under the laws of the State of Tennessee and has all requisite corporate power and authority to own, lease and use the Assets as they are currently owned, leased and used and to conduct the Business as it is currently conducted. Seller is duly qualified or licensed to do business and is in good standing under the laws of each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on Seller or on the validity, binding effect or enforceability of this Agreement. Set forth on Schedule 4.1 is the name and identity of each Person who owns of record or beneficially any common stock, capital stock, or other securities of Seller, has any right to vote with the owners of Seller, or has the right to acquire any such securities or rights. Schedule 4.1 also sets forth the amounts of all such securities or rights and the percentage that each Person's securities or rights bears to the whole. 4.2 Authority and Validity. Seller has all requisite power and ---------------------- authority to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement. The execution and delivery by Seller of, the performance by Seller of its obligations under, and the consummation by Seller of the transactions contemplated by this Agreement have been duly authorized by all requisite action of Seller. This Agreement has been duly executed and delivered by Seller and is the valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except insofar as enforceability may be affected by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors' rights generally or by principles governing the availability of equitable remedies. 4.3 No Breach or Violation. The execution, delivery and ---------------------- performance of this Agreement by Seller will not: (a) violate any provision of the charter or bylaws of Seller; (b) violate any Legal Requirement; (c) require any consent, approval or authorization of, or any filing with or notice to, any Person; or (d) (i) violate, conflict with or constitute a breach of or default under, (ii) permit or result in the termination, suspension or modification of, (iii) result in the acceleration of (or give any Person the right to accelerate) the performance of Seller under, or (iv) result in the creation or imposition of any Encumbrance under, any Seller contract or agreement or any other instrument evidencing any of the Assets or any instrument or other agreement to which Seller is a party or by which Seller or any of its assets is bound or affected, except, for purposes of this clause (d), such violations, conflicts, breaches, defaults, terminations, suspensions, modifications, and accelerations as would not, individually or in the aggregate, have a material adverse effect on the Business or Seller. 4.4 Assets. ------ 4.4.1 Seller has exclusive, good and marketable title to the Assets claimed by Seller. The Assets are free and clear of all Encumbrances of any kind or nature, except (a) Permitted Encumbrances and (b) Encumbrances disclosed on Schedule 4.4.1, which will be removed or otherwise released of record effective at or prior to the Closing, or for which executed releases in form appropriate for filing by Buyer will be delivered to Buyer at Closing. Except as set forth on Schedules 3.1 and 4.4.1, none of the Assets is leased by Seller from any other Person. All the New Boats, Motors, and Trailers, Used Boats, Motors, and Trailers, Accessories, Leasehold Improvements, Parts and Miscellaneous Assets are in good and operable condition and repair, ordinary wear and tear excepted, and have been maintained in accordance with all applicable safety codes. 4.4.2 Seller has adopted, used, is using, and is the owner of the Intangibles, including trade names, brand names, trademarks, service marks, or any other word, name, symbol, or device, or combination thereof which is used by Seller to identify and distinguish Seller's goods and services from those manufactured, sold, or offered by others, as set forth on Schedule 4.4.2, whether existing at common law or which are applied for or which are registered in the office of the Secretary of State of the State of 3 Alabama or in the United States Patent and Trademark Office. Except as set forth on Schedule 4.4.2, Seller has full title and ownership of the Intangibles. Neither Owner nor Seller has any knowledge of any infringement of Seller's rights with respect to the Intangibles. The Intangibles do not conflict with or infringe the rights of others. No third party has any ownership right, title, interest, claim in or lien on any of the Intangibles. 4.5 Contracts and Commitments. Seller has disclosed to Buyer all ------------------------- contracts and other contractual rights, oral and written, relating to the Business. Except as may be disclosed on Schedule 3.1, each of the written agreements, contracts, commitments, leases, plans and other instruments, documents and undertakings listed on Schedule 3.1, including the Boat Show Rights, is valid and enforceable in accordance with its terms; Seller is, and to the knowledge of Seller and Owner, all other parties thereto are, in compliance in all material respects with the provisions thereof; Seller is not, and to the knowledge of Seller and Owner, no other party thereto, is in default in the performance, observance or fulfillment of any material obligation, covenant or condition contained therein; and no event has occurred which with or without the giving of notice or lapse of time, or both, would constitute a default thereunder; furthermore, except as may be disclosed on Schedule 3.1, no such material agreement, contract, commitment, lease, plan or other instrument, document or undertaking, in the reasonable opinion of Seller and Owner, contains any contractual requirement with which there is a reasonable likelihood the Seller, the Buyer, or any other party thereto will be unable to comply. 4.6 Compliance with Law. The ownership, leasing and use of the ------------------- Assets as they are currently owned, leased and used and the conduct of the Business as it is currently conducted do not violate any Legal Requirement, which violations, individually or in the aggregate, would have a material adverse effect on the Business. Seller has not received notice claiming a violation by Seller or the Business of any Legal Requirement applicable to Seller or the Business as it is currently conducted and to Seller's best knowledge, there is no basis for any claim that such a violation exists. 4.7 Financial Statements. Schedule 4.7 presents correct and -------------------- complete copies of Seller's unaudited balance sheets for the fiscal years ended December 31, 1993, 1994, and 1995, together with its unaudited statements of income and cash flows for the fiscal years or periods then ended, and its unaudited balance sheet as of May 31, 1996, together with its unaudited statement of income for the five (5) months then ended (collectively, the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles, consistently applied, and fairly present Seller's financial condition and results of operations as of the dates and for the periods indicated. Since the opening date of the most recent operating statement included in the Financial Statements, the Business has been operated only in the ordinary course, and there has been no material adverse change in, and no events have occurred which are likely, individually or in the aggregate, to result in any material adverse change in, the Business, operations, Assets, prospects or condition (financial or otherwise) of the Business. 4.8 Legal Proceedings. Except as set forth on Schedule 4.8, ----------------- there is no judgment or order outstanding, or any action, suit, complaint, proceeding or investigation by or before any Governmental Authority or any arbitrator pending, or to Seller's best knowledge, threatened, involving or affecting all or any part of the Business, the Assets or Seller. 4.9 Tax Returns; Other Reports. Seller has delivered to Buyer -------------------------- true and correct copies of its U.S. and Alabama tax returns for the fiscal years ended December 31, 1993 and 1994. Seller has duly and timely filed in proper form with the appropriate Governmental Authority all income, franchise, sales, use, property, excise, payroll and other tax returns, and all other reports (whether or not relating to taxes) required to be filed with respect to the Business. All taxes, fees and assessment of whatever nature due and payable by Seller with respect to the Business and the Assets have been paid, except such amounts as are being contested diligently and in good faith and are not in the aggregate material. 4.10 Employment Matters. Schedule 4.10 includes a complete and ------------------ correct list of names and positions of all employees of Seller engaged in the Business, and their current hourly wages or monthly salaries and other compensation. Seller has complied in all respects with all Legal Requirements relating to the employment of 4 labor, including the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), continuation coverage requirements with respect to group health plans, and those relating to wages, hours, collective bargaining, unemployment compensation, worker's compensation, equal employment opportunity, age and disability discrimination, immigration control and the payment and withholding of taxes. No reportable event, within the meaning of Title IV of ERISA, has occurred and is continuing with respect to any "employee benefit plan" or "multiemployer plan" (as those terms are defined in ERISA) maintained by Seller or any Affiliate of Seller. No prohibited transaction, within the meaning of Title I of ERISA, has occurred with respect to any such employee benefit plan or multiemployer plan, and no material accumulated funding deficiency (as defined in Title I of ERISA) or withdrawal liability (as defined in Title IV of ERISA) exists with respect to any such employee benefit plan or multiemployer plan. 4.11 Environmental Matters. (i) Real property used by Seller has, --------------------- during Seller's use thereof, been maintained, and all activities of Seller, its employees, agents, contractors, lessees and invites thereon have been conducted, in compliance with all applicable environmental laws; (ii) Seller has not received written notification from any governmental authority with respect to any actual or alleged violations of, or remedial obligations arising under, any applicable environmental laws with respect to such property which have not been responded to and cured; (iii) Seller has not received written notification from any Person or entity that it is (A) potentially responsible or liable under any applicable environmental laws for removal or remedial action or costs associated with the generation, treatment, storage, transportation or disposal of hazardous materials at such property, or (B) potentially liable for any costs or liability as a result of Seller's operation of the Business or Seller's generation, transfer, storage, use, release, transportation or disposal of hazardous materials in connection with the Business; (iv) Seller has not removed any underground storage tanks located on such property, (v) such property has not been used by Seller for the generation, disposal storage, treatment, processing or handling of hazardous materials in a manner that violates, or creates any remedial obligation under, any applicable environmental law, and such property is free of any on-site condition of environmental concern and is not in violation of any applicable environmental law; (vi) such property has not been listed on the National Priorities List maintained by the U.S. Environmental Protection Agency pursuant to CERCLA or on any other "Superfund" or "Superlien" list maintained by any governmental authority pursuant to any applicable law; and (vii) Seller has made available to Buyer true and correct copies of all environmental reports or inspections delivered to Seller or prepared at the request of Seller relating to such property. 4.12 Finders and Brokers. Any liability for any financial ------------------- advisory, brokerage, finder's or similar fee or commission in connection with the transactions contemplated by this Agreement will be the liability of the party incurring the liability. 4.13 Access and Notice. Seller and Owner will permit Buyer and ----------------- its authorized representatives access to, and make available for inspection, all of the assets and Business of Seller, including employees, customers and suppliers, and permit Buyer and its authorized representatives to inspect and make copies of all documents, records and information with respect to the Business or the Assets as Buyer or its representatives may request. Seller and Owner will promptly notify Buyer in writing of (a) any notice or communication relating to a default or event that, with notice or lapse of time or both, could become a default, under any contract, commitment or obligation to which Seller is a party, or relating to the Business or the Assets, and (b) any adverse change in the Seller's or the Business' financial condition or the condition of the Assets. 4.14 Disclosure. No representation or warranty by Seller in this ---------- Agreement or in any Schedule or Exhibit to this Agreement, or any statement, list or certificate furnished or to be furnished by Seller pursuant to this Agreement, contains or will contain any untrue statement of material fact, or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which made. 5 Section 5. Representations and Warranties of Buyer To induce Seller to enter into this Agreement, Buyer represents and warrants to Seller, as of the Effective Date, as follows: 5.1 Organization and Qualification. Buyer is a corporation duly ------------------------------ organized, validly existing and in good standing under the laws of the State of Texas and has all requisite corporate power and authority to carry on its business as currently conducted and to own, lease, use and operate its assets. 5.2 Authority and Validity. Buyer has all requisite corporate ---------------------- power and authority to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by this Agreement. The execution and delivery by Buyer of, the performance by Buyer of its obligations under, and the consummation by Buyer of the transactions contemplated by this Agreement have been duly authorized by all requisite corporate action of Buyer and this Agreement constitutes the valid and binding obligation of Buyer, enforceable in accordance with its terms, except insofar as enforceability may be limited or affected by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors' rights generally or by principles governing the availability of equitable remedies. 5.3 No Breach or Violation. The execution, delivery and ---------------------- performance of this Agreement by Buyer will not: (a) violate any provision of the charter or bylaws of Buyer; (b) violate any Legal Requirement; (c) require any consent, approval or authorization of, or any filing with or notice to, any Person; or (d) (i) violate, conflict with or constitute a breach of or default under (without regard to requirements of notice, passage of time or elections of any Person), (ii) permit or result in the termination, suspension or modification of, (iii) result in the acceleration of (or give any Person the right to accelerate) the performance of Buyer under, or (iv) result in the creation or imposition of any Encumbrance under, any instrument or other agreement to which Buyer is a party or by which Buyer or any of its assets is bound or affected, except for purposes of this clause (d) such violations, conflicts, breaches, defaults, terminations, suspensions, modifications, and accelerations as would not, individually or in the aggregate, have a material adverse effect on Buyer or on the validity, binding effect or enforceability of this Agreement. Section 6. Closing. 6.1 Closing; Effective Date. The closing ("Closing") of the ----------------------- transactions will be in Winchester, Tennessee, at 10:00 a.m. local time on November 1, 1996 ("Closing Date"). The transactions will be effective as of November 1, 1996 ("Effective Date"). Section 7. Conditions to Closing. 7.1 Conditions to the Obligations of Buyer and Seller. The ------------------------------------------------- obligations of each party to consummate the transactions contemplated by this Agreement to take place at the Closing are subject to the satisfaction or waiver, to the extent permitted by applicable Legal Requirements, at or prior to the Closing Date, of each of the following conditions: 7.1.1 No action, suit or proceeding is pending or threatened by or before any Governmental Authority and no Legal Requirement has been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement by any Governmental Authority, which would (a) prohibit Buyer's ownership or operation of all or a material portion of the Business or the Assets, (b) compel Buyer to dispose of or hold separate all or a material portion of the Business or the Assets as a result of any of the transactions contemplated by this Agreement, or (c) prevent or make illegal the consummation of any transactions contemplated by this Agreement. 6 7.2 Conditions to Obligations of Buyer. The obligations of ---------------------------------- Buyer to consummate the transactions contemplated by this Agreement to take place at the Closing are subject to the satisfaction or waiver, to the extent permitted by applicable Legal Requirements, at or prior to the Closing Date, of each of the following conditions: 7.2.1 Seller has performed and complied in all material respects with each obligation, agreement, covenant and condition required by this Agreement to be performed or complied with by Seller at or prior to the Closing and has delivered to Buyer a certificate, dated the Closing Date, signed by Seller's President, to such effect, in substantially the form attached as Exhibit B. 7.2.2 Seller has executed (or caused to be executed) and delivered to Buyer each of the following items: 7.2.2.1 a Bill of Sale in substantially the form attached as Exhibit C; 7.2.2.2 an Assignment and Assumption Agreement in substantially the form attached as Exhibit D; and 7.2.2.3 motor vehicle title certificates, applications for title, assignments of Manufacturer's Statements of Origin, and such other transfer instruments as Buyer may reasonably deem necessary or advisable to transfer the Assets to Buyer and to perfect Buyer's rights in the Assets. 7.2.3 By the Closing Date, Buyer will have completed a due diligence review of the Business, operations and financial statements of Seller, the results of which are satisfactory to Buyer in its sole discretion. 7.2.4 Charles R. Bondurant, Joe Bondurant and Tom Ed Bondurant have each signed and delivered to Buyer a Non-Competition Agreement in substantially the form attached as Exhibits E-1, E-2 and E-3, respectively, and Seller has signed and delivered to Buyer a Non- Competition Agreement in substantially the form attached as Exhibit F (collectively, the "Non-Competition Agreements). 7.2.5 Seller has delivered releases, in form reasonably satisfactory to Buyer, of all Encumbrances affecting any of the Assets (other than Permitted Encumbrances) and a certificate of no taxes due with respect to Seller and the Assets issued by appropriate Alabama state taxing authorities as of a date no earlier than 10 days prior to the Closing. 7.2.6 Seller has provided Buyer with a copy of amendments to its charter, certified by the Secretary of State of the State of Tennessee, that it has changed its name from "Tri-Lakes Marine, Inc." 7.2.7 Seller has provided Buyer with the original invoices evidencing the cost of the New Boats, Motors, and Trailers, Parts and Accessories, and an inventory sheet detailing these items. 7.2.8 Buyer has received the opinion of Copeland, Conley & Hazard in substantially the form attached as Exhibit H. 7.2.9 The lessor of the Huntsville, Alabama, facility has consented to Buyer's sublease of said facility from Seller at Seller's current rental rate, through September 1999, and has released Seller and Owner from liability in connection with the lease. 7.3 Conditions to Obligations of Seller. The obligations of ----------------------------------- Seller to consummate the transactions contemplated by this Agreement to take place at the Closing are subject to the satisfaction or waiver by Seller, to the extent permitted by applicable law, at or prior to the Closing Date, of each of the following conditions: 7 7.3.1 Buyer has paid the Purchase Price required to be paid at the Closing. 7.3.2 Buyer has performed and complied in all material respects with each obligation, agreement, covenant and condition required by this Agreement to be performed or complied with by Buyer at or prior to the Closing and has delivered to Seller a certificate, dated the Closing Date, signed by Buyer's President, to such effect, in substantially the form attached as Exhibit G. 7.3.3 Buyer has executed and delivered to Seller each of the following: 7.3.3.1 an Assignment and Assumption Agreement in substantially the form attached as Exhibit D. 7.3.3.2 the Promissory Notes, guaranteed by Travis Boats & Motors, Inc.; 7.4 Waiver of Conditions. Any party may waive in writing any -------------------- or all of the conditions to its obligations under this Agreement. Section 8. Survival of Representations and Warranties; Indemnification. 8.1 Survival of Representations and Warranties. The ------------------------------------------ representations and warranties of Seller in this Agreement and in the documents and instruments to be delivered by Seller pursuant to this Agreement will survive the Closing without limitation until the third anniversary of the Effective Date. The representations and warranties of Buyer in this Agreement and in the documents and instruments to be delivered by Buyer pursuant to this Agreement will survive the Closing without limitation until the third anniversary of the Effective Date. The periods of survival of the representations and warranties prescribed by this Section 8.1 are referred to as ----------- the "Survival Period." The liabilities of the parties under their respective representations and warranties will expire as of the expiration of the applicable Survival Period; provided, however, that such expiration will not include, extend or apply to any representation or warranty, the breach of which has been asserted by Buyer in written notice to Seller before such expiration or about which Seller has given Buyer written notice before such expiration indicating the facts or conditions existing that, with the passage of time or otherwise, can reasonably be expected to result in a breach (and describing such potential breach in reasonable detail). The covenants and agreements of the parties in this Agreement and in the other documents and instruments to be delivered by Seller or Buyer pursuant to this Agreement will survive the Closing and will continue in full force and effect without limitation. 8.2 Indemnification by Seller. Seller and Owner will indemnify, ------------------------- defend and hold harmless Buyer and its shareholders and its and their respective Affiliates, and the shareholders, directors, officers, employees, agents, successors and assigns of any of such Persons, from and against: 8.2.1 all losses, damages, liabilities, deficiencies or obligations of or to Buyer resulting from or arising out of (i) any breach of any then surviving representation or warranty made by Seller in this Agreement, (ii) any breach of any then surviving covenant, agreement or obligation of Seller contained in this Agreement, (iii) any third party claim with respect to any occurrence prior to or on the Effective Date, without regard to whether such third party claim with respect to such occurrence is asserted before or after the Effective Date, including any matter described on Schedule 4.8, (iv) any liability or obligation of Seller not included in the Assumed Liabilities, including contingent liability for products sold prior to the Effective Date, (v) any claim that the transactions contemplated by this Agreement violate the Worker Adjustment and Retraining Notification Act, as amended, or any similar state or local law, or any bulk transfer or fraudulent conveyance laws of any jurisdiction, and (vi) any liability or obligation of Seller arising after the Effective Date; and 8.2.2 all claims, actions, suits, proceedings, demands, judgments, assessments, fines, interest, penalties, costs and expenses (including settlement costs and reasonable legal, accounting, experts' and other fees, costs and expenses) incident or relating to or resulting from any of the foregoing. 8 In the event that an indemnified item arises under both clause 8.2.1(i) and -------- under one or more of clauses 8.2.1(ii) through 8.2.1(vi) of this Section 8.2, --------- --------- ----------- Buyer's rights to pursue its claim under clauses 8.2.1(ii) through 8.2.1(vi), as --------- --------- applicable, will exist notwithstanding the expiration of the Survival Period applicable to such claim under clause 8.2.1(i). -------- 8.3 Indemnification by Buyer. Buyer will indemnify, defend and ------------------------ hold harmless Seller and Seller's officers, employees, agents, successors and assigns, from and against: 8.3.1 all losses, damages, liabilities, deficiencies or obligations of or to Seller or any such other indemnified Person resulting from or arising out of (i) any breach of any representation or warranty made by Buyer in this Agreement, (ii) the breach of any covenant, agreement or obligation of Buyer contained in this Agreement or (iii) the failure by Buyer to perform any of its obligations in respect of the Assumed Liabilities; and 8.3.2 all claims, actions, suits, proceedings, demands, judgments, assessments, fines, interest, penalties, costs and expenses (including, without limitation, settlement costs and reasonable legal, accounting, experts' and other fees, costs and expenses) incident or relating to or resulting from any of the foregoing. In the event that an indemnified item arises under both clause 8.3.1(i) and -------- under one or more of clauses 8.3.1(ii) or 8.3.1(iii) of this Section 8.3, --------- ---------- ----------- Seller's rights to pursue its claim under clauses 8.3.1(ii) or 8.3.1(iii), as --------- ---------- applicable, will exist notwithstanding the expiration of the Survival Period applicable to such claim under clause 8.3.1(i). -------- 8.4 Third Party Claims. Promptly (and in any event within 30 ------------------ days) after the receipt by any party of notice of any claim, action, suit or proceeding by any Person who is not a party to this Agreement (collectively, an "Action"), which Action is subject to indemnification under this Agreement, such party (the "Indemnified Party") will give reasonable written notice to the party from whom indemnification is claimed (the "Indemnifying Party"). The Indemnified Party will be entitled, at the sole expense and liability of the Indemnifying Party, to exercise full control of the defense, compromise or settlement of any such Action unless the Indemnifying Party, within a reasonable time (and in any event within 15 days) after the giving of such notice by the Indemnified Party, (a) admits in writing to the Indemnified Party the Indemnifying Party's liability to the Indemnified Party for such Action under the terms of this Section 8, (b) notifies the Indemnified Party in writing of --------- the Indemnifying Party's intention to assume such defense, and (c) retains legal counsel reasonably satisfactory to the Indemnified Party to conduct the defense of such Action. The other party will cooperate with the party assuming the defense, compromise or settlement of any such Action in accordance with this Agreement in any reasonable manner that such party reasonably may request. If the Indemnifying Party so assumes the defense of any such Action, the Indemnified Party will have the right to employ separate counsel and to participate in (but not control) the defense, compromise or settlement of the Action, but the fees and expenses of such counsel will be at the expense of the Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) any relief other than the payment of money damages is sought against the Indemnified Party or (iii) the Indemnified Party will have been advised by its counsel that there may be one or more defenses available to it which are different from or additional to those available to the Indemnifying Party, and in any such case that portion of the fees and expenses of such separate counsel that are reasonably related to matters covered by the indemnity provided in this Section 8 will be paid by the Indemnifying Party. No --------- Indemnified Party will settle or compromise any such Action for which it is entitled to indemnification under this Agreement without prior written consent of the Indemnifying Party, unless the Indemnifying Party has failed, after reasonable notice, to undertake control of such Action in the manner provided in this Section 8.4. No Indemnifying Party will settle or compromise any such ----------- Action (A) in which any relief other than the payment of money damages is sought against any Indemnified Party or (B) in the case of any Action relating to the Indemnified Party's liability for any tax, if the effect of such settlement would be an increase in the liability of the Indemnified Party for the payment of any tax for any period beginning after the Effective Date, unless the Indemnified Party consents in writing to such compromise or settlement. 8.5 Offset. Buyer will have a right of offset in the Promissory ------ Notes with respect to any matter for which Buyer is indemnified under Section 8.2. - ----------- 9 Section 9. Post-Closing Covenants. 9.1 Transfer Taxes. In the event that any Governmental Authority -------------- of the State of Alabama or of any municipality, parish or other subdivision thereof shall at any time impose or otherwise require or demand payment by or from either Seller or Buyer of any state or local sales, use, transfer, excise, documentary or license taxes or fees or any other charge (including filing fees) with respect to Seller's sale or transfer to Buyer of the Assets, Seller will be responsible for the payment. 9.2 Use of Seller's Name. Seller may continue use of its -------------------- tradenames and Marks after the Effective Date only as long as necessary to, and in connection with, winding up Business transactions undertaken before the Effective Date, after which time Seller will cease all such usage. Seller will assign unto Buyer all right, title, and interest in and to the Intangibles, together with the goodwill of the Business symbolized by and connected with the use of the Intangibles, the applications and registrations identified in Schedule 4.4.2, and the right to sue and recover for any and all past infringements thereof. 9.3 Confidentiality. No party will issue any press release or --------------- make any other public announcement regarding this Agreement or the transactions contemplated hereby without the consent of the other parties. Each party will hold, and will cause its employees, consultants, advisors and agents to hold, in confidence, the terms of this Agreement and any non-public information concerning another party obtained pursuant to this Agreement. Notwithstanding the preceding, a party may disclose such information to the extent required by any Legal Requirement (including disclosure requirements under federal and state securities laws), but the party proposing to disclose such information will first notify and consult with the other parties concerning the proposed disclosure, to the extent reasonably feasible. Each party also may disclose such information to employees, consultants, advisors, agents and actual or potential lenders whose knowledge is necessary to facilitate the consummation of the transactions contemplated by this Agreement. Each party's obligation to hold information in confidence will be satisfied if it exercises the same care with respect to such information as it would exercise to preserve the confidentiality of its own similar information. 9.4 Consignment and Repair. In the event Seller or Owner is ---------------------- required to retake possession of any products sold prior to the Effective Date, Buyer will accept the products on consignment from Seller or Owner. Any repairs will be pre-approved by Seller and will be paid for by Seller or Owner. 9.5 Access to Records. Seller will allow Buyer reasonable access ----------------- to its records for a period of two years after the Effective Date, for any reasonable business purpose related to the Business. Section 10. Definitions. In addition to terms defined elsewhere in this Agreement, the following capitalized terms, when used in this Agreement, will have the meanings set forth below: 10.1 Accessories. All accessories inventoried on the Effective ----------- Date. 10.2 Affiliate. With respect to any Person, any other Person --------- controlling, controlled by or under common control with such Person, with "control" for such purpose meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract, or otherwise. 10.3 Assets. All properties, privileges, rights, interests and ------ claims, real and personal, tangible and intangible, of every type and description (including, without limitation, New Boats, Motors, and Trailers; Used Boats, Motors, and Trailers; Parts; Accessories; Miscellaneous Assets; Intangibles; Deposits; Boat Show Rights; and Seller's Contracts, more particularly described in Section 1.1 and on Schedules 1.1, 3.1 and 4.4.2), that are used, or held for use, by Seller or Owner in the Business and in which Seller or Owner has any right, title or interest (or in which 10 Seller or Owner hereafter acquires any right, title or interest on or before the Closing Date), but excluding all Excluded Assets. 10.4 Boat Show Rights. All agreements for space at Boat Shows, ---------------- including common stock and other ownership rights in corporations, partnerships, and other types of entities holding Boat Shows. 10.5 Boat Shows. All boat shows in Alabama and all boat shows at ---------- which Seller has had a booth or made a presentation in any of the last five (5) years. 10.6 Business. The retail sales and service of boats, motors, -------- trailers, marine accessories and water sporting goods at the store located in Huntsville, Alabama and at Boat Shows attended by the Seller. 10.7 Deposits. All customer deposits relating to customer special -------- orders as of the Effective Date. 10.8 Encumbrance. Any mortgage, lien, security interest, security ----------- agreement, conditional sale or other title retention agreement, limitation, pledge, option, assessment or other such charge, restrictive agreement, restriction, encumbrance, adverse interest, restriction on transfer, or exception to or defect in title or other ownership interest (including reservations, rights of way, possibilities of reverter, encroachments, easements, rights of entry, restrictive covenants, leases and licenses). 10.9 Governmental Authority. (i) The United States of America, ---------------------- (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like), (iii) any foreign (as to the United States of America) sovereign entity and any political subdivision thereof, or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board. 10.10 Intangibles. All intangible assets, including trademarks, ----------- service marks, copyrights (collectively, "Marks"), customer lists, claims, patents, and goodwill assigned in gross, rights of publicity and other intangibles, owned, used or held for use in the Business, including the names "Tri-Lakes Marine, Inc." and all derivative uses of such names, and all rights granted to Buyer pursuant to the Non-Competition Agreements. 10.11 Legal Requirement. Any statute, ordinance, code, law, rule, ----------------- regulation, order or other requirement, standard or procedure enacted, adopted or applied by any Governmental Authority, including judicial decisions applying common law or interpreting any other Legal Requirement. 10.12 Miscellaneous Assets. All furniture, fixtures, vehicles, -------------------- equipment and other assets set forth on Schedule 1.1. 10.13 Net Cost. The actual net cost to Seller of an item, after all -------- rebates and credits have been issued, including freight charges (if any) that have been paid by Seller to the manufacturer. 10.14 New Boats, Motors, and Trailers. All new boats, motors, and ------------------------------- trailers described on Schedule 1.1. 10.15 Parts. All parts inventoried on the Effective Date. ----- 10.16 Permitted Encumbrances. The following Encumbrances: (a) liens ---------------------- for taxes, assessments and governmental charges not yet due and payable; (b) zoning laws and ordinances and similar Legal Requirements; (c) rights reserved to any Governmental Authority to regulate the affected property; and (d) as to real property interests, any easements, rights-of-way, servitudes, permits, restrictions and minor imperfections or irregularities in title which are reflected in public records and which do not individually or in the aggregate interfere with the right or ability to own, lease, use or operate (whichever may be the case) the real property for the Business or to convey good, marketable and indefeasible title to the real property; provided that (i) Permitted Encumbrances will not include any item which could materially adversely affect the conduct of the Business and (ii) the classification of any item 11 as a Permitted Encumbrance will not affect any liability Seller may have for such item, including pursuant to any indemnity obligation under this Agreement. 10.17 Person. Any natural person, corporation, partnership, trust, ------ unincorporated organization, association, limited liability company, Governmental Authority or other entity. 10.18 Used Boats, Motors, and Trailers. All used boats, motors, and -------------------------------- trailers described on Schedule 1.1. 10.19 Other Definitions. The following terms are defined in the ----------------- Sections indicated:
Term Section ---- ------- Action 8.4 Assumed Liabilities 3.1 Closing 6.1 Closing Date 6.1 Effective Date 6.1 ERISA 4.10 Excluded Assets 3.2 Financial Statements 4.7 Indemnifying Party; Indemnified Party 8.4 Marks 10.10 Non-Competition Agreements 7.2.4 Promissory Notes 2.1 Purchase Price 2.1 Seller's Contracts 3.1 Survival Period 8.1
Section 11. Miscellaneous. 11.1 Parties Obligated and Benefited. Subject to the limitations ------------------------------- set forth below, this Agreement will be binding on the parties and their respective assigns and successors in interest and will inure solely to the benefit of the parties and their respective assigns and successors in interest, and no other Person will be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other parties, no party will assign any of its rights under this Agreement or delegate any of its duties under this Agreement, provided that Buyer may, without the consent of any other party, (i) assign or delegate its rights or obligations under this Agreement to a commonly controlled entity of Buyer, and such assignee will be substituted for Buyer under this Agreement as though it were the original party to this Agreement and Buyer will be released from all obligations under this Agreement, and (ii) make a collateral assignment of its rights hereunder to Buyer's or its assignee's secured lenders. 11.2 Notices. Any notice, request, demand, waiver or other ------- communication required or permitted to be given under this Agreement will be in writing and will be deemed to have been duly given only if delivered in person or sent by first class, prepaid, registered or certified mail (return receipt requested), or delivered by commercial courier (e.g., United Parcel Service or Federal Express) or, if receipt is confirmed, by telecopier: To Buyer at: Travis Boating Center Alabama, Inc. 13045 Research Blvd. Austin, Texas 78750 Attention: Mike Perrine, Chief Financial Officer Telecopy: 512/250-1207 12 With a copy (which will not constitute notice) transmitted by telecopier to: Winstead Sechrest & Minick P.C. 100 Congress Avenue, Suite 800 Austin, Texas 78701 Attention: Walter Earl Bissex, Esq. Telecopy: 512/370-2850 To Seller and Owner at: Tri-Lakes Marine, Inc. 38 Marina Lane Winchester, TN 37398 With a copy (which will not constitute notice) transmitted by telecopier to: Copeland, Conley & Hazard 111 West Grundy Street P.O. Box 176 Tullahoma, Tennessee 37388 Attention: Tom Copeland Telecopy: 615/455-1753 Any party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section 11.2. All ------------ notices will be deemed to have been received on the date of delivery or on the third business day after mailing in accordance with this Section, except that any notice of a change of address will be effective only upon actual receipt. 11.3 Attorneys' Fees. In the event of any action or suit based --------------- upon or arising out of any alleged breach by any party of any representation, warranty, covenant or agreement contained in this Agreement, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs of such action or suit from the other party. 11.4 Right to Specific Performance. Seller acknowledges that the ----------------------------- unique nature of the Assets to be purchased by Buyer pursuant to this Agreement renders money damages an inadequate remedy for the breach by Seller of its obligations under this Agreement, and Seller agrees that in the event of such breach, Buyer will upon proper action instituted by it, be entitled to a decree of specific performance of this Agreement. 11.5 Waiver. Neither this Agreement nor any of its provisions may ------ be waived except in writing. The failure of any party to enforce any right arising under this Agreement on one or more occasions will not operate as a waiver of that or any other right on that or any other occasion. 11.6 Captions. The section captions of this Agreement are for -------- convenience only and do not constitute a part of this Agreement. 11.7 Choice of Law. This agreement and the rights of the parties ------------- under it will be governed by and construed in all respects in accordance with the laws of the State of Texas, without regard to the conflicts of laws rules of Texas. Any litigation resulting from any dispute among the parties must be filed in Travis County, Texas. 11.8 Terms. Terms used with initial capital letters will have the ----- meanings specified, applicable to both singular and plural forms, for all purposes of this Agreement. The word "include" and derivatives of that word are used in this Agreement in an illustrative sense rather than a limiting sense. 13 11.9 Rights Cumulative. All rights and remedies of each of the ----------------- parties under this Agreement will be cumulative, and the exercise of one or more rights or remedies will not preclude the exercise of any other right or remedy available under this Agreement or applicable law. 11.10 Further Actions. Seller and Buyer will execute and deliver to --------------- the other, from time to time at or after the Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded to and acquired by it under this Agreement. 11.11 Time. Time is of the essence under this Agreement. If the ---- last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a business day, the time for the giving of such notice or the performance of such act will be extended to the next succeeding business day. 11.12 Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which will be deemed an original. 11.13 Entire Agreement. This Agreement (including the Schedules and ---------------- Exhibits referred to in this Agreement, which are incorporated into and constitute a part of this Agreement) contains the entire agreement of the parties and supersedes all prior oral or written agreements and understandings with respect to the subject matter of this Agreement. This Agreement may not be amended or modified except by a writing signed by the parties. 11.14 Severability. Any term or provision of this Agreement which ------------ is invalid or unenforceable will be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining rights of the Person intended to be benefited by such provision or any other provisions of this Agreement. 11.15 Construction. This Agreement has been negotiated by Buyer and ------------ Seller and their respective legal counsel, and legal or equitable principles that might require the construction of this Agreement or any provision of this Agreement against the party drafting this Agreement will not apply in any construction or interpretation of this Agreement. 11.16 Expenses. Except as otherwise expressly provided in this -------- Agreement, each party will pay all of its own expenses, including attorneys' and accountants' fees, in connection with the negotiation of this Agreement, the performance of its obligations and the consummation of the transactions contemplated by this Agreement. 14 The parties have executed this Agreement as of the day and year first above written. BUYER: ----- TRAVIS BOATING CENTER ALABAMA, INC. By: /s/ Mark Walton ---------------------------- President ---------------------------- ---------------------------- SELLER: ------ TRI-LAKES MARINE, INC. By: /s/ Charles R. Bondurant ---------------------------- Charles R. Bondurant President OWNER: ----- /s/ Charles R. Bondurant -------------------------------- CHARLES R. BONDURANT /s/ Joe Bondurant -------------------------------- JOE BONDURANT /s/ Tom Ed Bondurant -------------------------------- TOM ED BONDURANT 15 EXHIBIT A PROMISSORY NOTE $90,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Alabama, Inc., a Texas corporation ("Maker"), promises to pay to the order of Tri-Lakes Marine, Inc. ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER ALABAMA, INC. By: ------------------------ ------------------------ ------------------------ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ------------------------ ------------------------ ------------------------ Date: ------------------------ EXHIBIT A-1 PROMISSORY NOTE $28,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Alabama, Inc., a Texas corporation ("Maker"), promises to pay to the order of Charles R. Bondurant ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER ALABAMA, INC. By: ------------------------ ------------------------ ------------------------ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ------------------------ ------------------------ ------------------------ Date: -------------------------- EXHIBIT A-2 PROMISSORY NOTE $28,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Alabama, Inc., a Texas corporation ("Maker"), promises to pay to the order of Joe Bondurant ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER ALABAMA, INC. By: ------------------------ ------------------------ ------------------------ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ------------------------ ------------------------ ------------------------ Date: --------------------------- EXHIBIT A-3 PROMISSORY NOTE $14,000.00 November 1, 1996 FOR VALUE RECEIVED, the undersigned, Travis Boating Center Alabama, Inc., a Texas corporation ("Maker"), promises to pay to the order of Tom Ed Bondurant ("Payee"), at Payee's address at _______________________________________, ______________, the principal sum of ________________________________________________ and ____/100 DOLLARS ($___________.____), together with simple interest thereon from the date hereof until maturity, at the rate of Eight and One-Quarter percent (8.25%) per annum. After maturity until paid, interest will accrue on the principal outstanding at the rate of ____________ percent (____%) per annum. This Note is delivered pursuant to the Asset Purchase Agreement dated as of November 1, 1996 among Maker, Payee and others (the "Purchase Agreement"). Principal and interest are payable in sixty (60) equal monthly installments of ____________________________________ Dollars ($ _________.____) and a final installment of ___________________________________ Dollars ($ _________.____), the first of which is due and payable on March 30, 1997, and the remainder of which are due and payable on the last day of each successive month. Maker reserves the right to prepay this Note in whole or in part at any time prior to maturity without penalty. Any prepayment will be applied first toward the payment of accrued interest and next to the payment of principal. Maker and all endorsers, guarantors and sureties of this Note severally (i) waive presentment for payment, demand, notice of intent to accelerate, notice of acceleration, protest and notice of protest, notice of dishonor and diligence in collecting and the bringing of suit against any other party, and (ii) agree to all renewals, extensions, partial payments, releases and substitutions of security, in whole or in part, with or without notice, before or after maturity. If default is made in the payment of any of said installments of principal or interest as the same become due, or in the performance or observance of any of the covenants or agreements contained in the instrument securing this Note, the entire debt, at the election of the legal holder of this Note, notice of election being expressly waived, will become due and payable. No delay in the exercise of the option of acceleration will be construed a waiver of such right, but it may be exercised at any subsequent time during default. In the event of default and if this Note is sued upon or placed in the hands of any attorney for collection, Maker agrees to pay all costs of collection and reasonable attorneys' fees. Maker will have the right to offset, against any amounts due and payable under this Note, any sums with respect to any matter for which Maker is indemnified under Section 8.2 of the Purchase Agreement. This Note shall not be assigned by Payee without the written consent of Maker. It is further agreed and declared that this Note is made and executed under, and in all respects is to be construed and enforced in accordance with, the laws of the State of Texas and the United States of America. TRAVIS BOATING CENTER ALABAMA, INC. By: ------------------------ ------------------------ ------------------------ GUARANTY -------- The undersigned hereby guarantees the prompt payment when due, and at all times thereafter, of all of Maker's indebtedness evidenced by this Note, including interest thereon and costs of collection and reasonable attorneys' fees incurred by the holder of this Note by reason of default on this Guaranty. This Guaranty will not terminate until this Note has been paid in full. TRAVIS BOATS & MOTORS, INC., a Texas corporation By: ------------------------ ------------------------ ------------------------ Date: -------------------------- EXHIBIT C BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Tri-Lakes Marine, Inc., an Alabama corporation ("Seller"), for and in consideration of the payment of such good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and pursuant to the Asset Purchase Agreement (the "Purchase Agreement"), made as of November 1, 1996 by and among Seller, TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation ("Purchaser"), Charles R. Bondurant, Joe Bondurant, and Tom Ed Bondurant, does hereby transfer, grant, bargain, sell and deliver to Purchaser, its successors and assigns, the assets of Seller that are listed on Schedule 1.1 attached hereto, the Intangibles, the Deposits and ------------ the Boat Show Rights, all as the same shall exist as of the date hereof (collectively, the "Assets"). Capitalized terms used herein without definition will have the meanings assigned to them in the Purchase Agreement. TO HAVE AND TO HOLD, all and singular, the said Assets hereby conveyed, transferred, granted, bargained, sold and delivered to Purchaser, its successors and assigns, to and for their own use and benefit forever. Seller represents and warrants that it is the sole and lawful owner in every respect of all of the Assets and that all of the Assets are being transferred free and clear of any and all liabilities, obligations, liens, claims and encumbrances of every kind and character whatsoever. Seller does hereby bind itself, its successors and assigns, to warrant and defend such title to the Assets unto Purchaser, its successors and assigns, against every person whosoever claims or might claim such Assets, any part thereof or any interest therein. Seller, for itself, its successors and assigns, further covenants and agrees that Seller and its successors and assigns will do or cause to be done all such further acts and will execute, acknowledge and deliver, or will cause to be executed, acknowledged and delivered, any and all such further deeds, assignments, transfers and conveyances, powers of attorney and assurances as Purchaser, its successors and assigns, may reasonably require (i) for the better assuring, assigning, transferring and conveying the Assets, all and singular, unto Purchaser, its successors and assigns; (ii) to protect the right, title and interest of Purchaser, its successors and assigns, in and to, and their enjoyment of, all and singular, the Assets; and (iii) as may be appropriate otherwise to carry out the transactions contemplated by the Purchase Agreement. Seller, for itself, its successors and assigns, irrevocably constitutes and appoints Purchaser, its successors and assigns, and each of them, the true and lawful attorney of Seller, its successors and assigns, with full power of substitution and gives and grants unto Purchaser, its successors and assigns, and each of them, full power and authority in the name of Seller, its successors and assigns, at any time and from time to time, to demand, sue for, recover and receive any and all rights, demands, claims and choses in action of every kind and description whatsoever incident or relating to the Assets, for the purpose of fully vesting in Purchaser, its successors and assigns, all the right, title and interest in and to the Assets, all and singular. This instrument will be binding upon Seller, its successors and assigns, and will inure to the benefit of Purchaser, its successors and assigns. This Bill of Sale will be governed by, and construed and interpreted in accordance with, the laws of the State of Texas. IN WITNESS WHEREOF, this Bill of Sale is executed on November 1, 1996 Seller: TRI-LAKES MARINE, INC. By: ------------------------------------ Charles R. Bondurant, President THE STATE OF ________ (S) (S) COUNTY OF ___________ (S) The foregoing instrument was ACKNOWLEDGED before me this _____ day of _____________, by _________________________, the ____________________________ of _______________________, a ________ corporation, on behalf of said corporation. [ S E A L ] Notary Public, State of __________ My Commission Expires: (Printed Name of Notary Public) ------------------------------- EXHIBIT D ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of November 1, 1996 by and between TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation ("Buyer"), and TRI-LAKES MARINE, INC. a Tennessee corporation ("Seller"). Capitalized terms used herein without definition will have the meanings assigned to them in the Purchase Agreement. WHEREAS, Buyer and Seller have entered into that certain Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to the terms of which Buyer agrees to buy, and Seller agrees to sell, certain assets of Seller; WHEREAS, pursuant to Section 3.1 of the Purchase Agreement, Buyer has agreed to assume certain debts and obligations of Seller; NOW, THEREFORE, for and in consideration of the sale of the Assets pursuant to the Purchase Agreement, Seller hereby assigns to Buyer, and Buyer hereby assumes and undertakes to pay, perform and discharge the liabilities and obligations set forth in Section 3.1 and on Schedule 3.1 of, the Purchase Agreement, that accrue from and after the Effective Date. Buyer does not agree to pay, assume, perform or discharge any obligations of whatever kind (whether direct or indirect, absolute or contingent, known or unknown, matured or unmatured, or otherwise) in connection with the Excluded Assets or any obligation that it does not expressly assume hereunder or under the Purchase Agreement. This Agreement will be binding upon, and inure to the benefit of, the parties hereto and their respective successors in interest and permitted assigns. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. Seller: TRI-LAKES MARINE, INC. By: ------------------------------------- Charles R. Bondurant, President Buyer: TRAVIS BOATING CENTER ALABAMA, INC. By: --------------------------------- --------------------------------- --------------------------------- THE STATE OF ________ (S) (S) COUNTY OF ___________ (S) On this day, before me, a Notary Public, duly commissioned and qualified and acting within and for the state and county aforesaid, appeared in person, ____________________, who stated that he was the ______________ of ________________________, a ___________ corporation, and was duly authorized in his capacity to execute the foregoing instrument for and in the name and on behalf of said corporation; and further stated that he had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on this ______ day of ____________. [S E A L] Notary Public, State of _________ Notary's Printed Name: Notary's Commission Expires: THE STATE OF ________ (S) (S) COUNTY OF ___________ (S) On this day, before me, a Notary Public, duly commissioned and qualified and acting within and for the state and county aforesaid, appeared in person, ____________________, who stated that he was the ______________ of Travis Boating Center ______, Inc., a Texas corporation, and was duly authorized in his capacity to execute the foregoing instrument for and in the name and on behalf of said corporation; and further stated that he had so signed, executed and delivered said instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on this ______ day of ____________. [S E A L] Notary Public, State of __________ Notary's Printed Name: Notary's Commission Expires: EXHIBIT E-1 NON-COMPETITION AGREEMENT (INDIVIDUAL) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996 is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and Charles R. Bondurant, an individual residing at ________________________________ ("Owner"). WHEREAS, Buyer has agreed to acquire certain of the assets TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller"), pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain stockholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, Owner owns 40% of the outstanding shares of capital stock of Seller; and WHEREAS, Owner has established a valuable, far-reaching personal reputation in the boat, boat accessory and water sports sales business; and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "___________________", "___________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, Owner's personal reputation and identification with the Business is a significant portion of the value of the Business; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Owner shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Owner agree as follows: Section 1. ---------- 1.1 Non-Competition. Owner will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Owner agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Owner further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Owner will be deemed to be engaging or participating in a business or businesses if he is engaged in such business or businesses, directly or indirectly, whether for his own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof ---- and will terminate on November 1, 2001. 2.2 Remedies. Owner acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices. Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of ------------------------- this Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement ------------ between the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Owner have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER ALABAMA, INC. By: --------------------------- --------------------------- --------------------------- Charles R. Bondurant --------------------------- EXHIBIT E-2 NON-COMPETITION AGREEMENT (INDIVIDUAL) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996 is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and Joe Bondurant, an individual residing at ________________________________ ("Owner"). WHEREAS, Buyer has agreed to acquire certain of the assets TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller"), pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain stockholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, Owner owns 40% of the outstanding shares of capital stock of Seller; and WHEREAS, Owner has established a valuable, far-reaching personal reputation in the boat, boat accessory and water sports sales business; and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "___________________", "___________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, Owner's personal reputation and identification with the Business is a significant portion of the value of the Business; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Owner shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Owner agree as follows: Section 1. ---------- 1.1 Non-Competition. Owner will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Owner agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Owner further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Owner will be deemed to be engaging or participating in a business or businesses if he is engaged in such business or businesses, directly or indirectly, whether for his own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof ---- and will terminate on November 1, 2001. 2.2 Remedies. Owner acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices. Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of ------------------------- this Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement ------------ between the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Owner have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER ALABAMA, INC. By: --------------------------- --------------------------- --------------------------- Joe Bondurant --------------------------- EXHIBIT E-3 NON-COMPETITION AGREEMENT (INDIVIDUAL) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996 is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and Tom Ed Bondurant, an individual residing at ________________________________ ("Owner"). WHEREAS, Buyer has agreed to acquire certain of the assets TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller"), pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain stockholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, Owner owns 20% of the outstanding shares of capital stock of Seller; and WHEREAS, Owner has established a valuable, far-reaching personal reputation in the boat, boat accessory and water sports sales business; and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "___________________", "___________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, Owner's personal reputation and identification with the Business is a significant portion of the value of the Business; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Owner shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Owner agree as follows: Section 1. ---------- 1.1 Non-Competition. Owner will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Owner agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non-competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Owner further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non-competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Owner will be deemed to be engaging or participating in a business or businesses if he is engaged in such business or businesses, directly or indirectly, whether for his own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof ---- and ill terminate on November 1, 2001. 2.2 Remedies. Owner acknowledges that a breach of any of the provisions -------- of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices. Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of ------------------------- this Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement ------------ between the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Owner have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER ALABAMA, INC. By: --------------------------- --------------------------- --------------------------- Tom Ed Bondurant --------------------------- EXHIBIT F NON-COMPETITION AGREEMENT (SELLER) This Non-Competition Agreement (the "Agreement"), dated as of November 1, 1996, is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"), TRAVIS BOATING CENTER ALABAMA, INC., a Texas corporation and wholly owned subsidiary of Travis ("Buyer"), both having an office for the purpose of notice at 13045 Research Blvd., Austin, Texas 78750, and TRI-LAKES MARINE, INC., a Tennessee corporation ("Seller") with an office for the purpose of notice at ____________________________, ____________________________. WHEREAS, Buyer has agreed to acquire certain of the assets of Seller pursuant to that certain asset purchase agreement dated November 1, 1996 (the "Purchase Agreement"), among Buyer, Seller and certain Shareholders of Seller (the capitalized terms used herein have the meanings assigned to them in the Purchase Agreement unless otherwise defined herein); and WHEREAS, pursuant to the Purchase Agreement, Buyer will acquire Seller's tradenames "Tri-Lakes Marine, Inc.", "_________________________", "__________________________", and all derivative uses of such names and the goodwill associated therewith; and WHEREAS, the parties hereto agree that the reasonable market area of a business such as the Business is approximately a 150-mile radius; and WHEREAS, it is a condition precedent to the closing of the purchase under the Purchase Agreement that Seller shall have entered into this Agreement; NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants, terms and conditions hereinafter expressed, Travis, Buyer and Seller agree as follows: Section 1. ---------- 1.1 Non-Competition. Seller will not, for any reason: --------------- 1.1.1 Engage in a business or businesses, directly or indirectly, that competes with Buyer in its conduct of the Business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of the Business. 1.1.2 Participate, directly or indirectly, in any business that competes with Buyer and the Business at any Boat Show. 1.1.3 Engage in a business or businesses, directly or indirectly, that competes with Travis or any Affiliate of Travis in their conduct of the boat, boat accessory or water sport sales business, or otherwise receive compensation for any services rendered regarding any aspect of the boat, motor, trailer, or marine accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Travis or any Affiliate of Travis. 1.1.4 Engage or participate, directly or indirectly, in any business which is substantially similar to that of Travis or any Affiliate of Travis, including, without limitation, serving as a consultant, administrator, officer, director, employee, manager, landlord, lender, guarantor, or in any similar or related capacity or otherwise receive compensation for services rendered regarding any aspect of the boat, boat accessory or water sport sales business anywhere within 150 miles of the location of any store operated by Buyer, Travis or any Affiliate of Travis. 1.2 Seller agrees that Travis and Buyer will not be able to recognize the value of Seller's assets and the Business unless Buyer is able to engage in the successful operation of the Business, that the non-competition provisions set forth in Section 1.1 are ancillary to the Purchase Agreement, that the Purchase Agreement is an otherwise enforceable agreement, and that the non- competition provisions in this Agreement are therefore ancillary to an otherwise enforceable agreement. Seller further agrees that the non-competition provisions set forth above are supported by independent valuable consideration and contain reasonable limitations as to the time, geographical area, and scope of activity for which he is to be restrained; and that the limitations of the non- competition provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Travis and Buyer. It is agreed by the parties that the restrictions contained in Section 1.1 impose, on the date of the execution of this Agreement, a reasonable restraint on Seller in light of the activities and businesses of Travis and Buyer and their future plans. 1.3 For the purposes of this Agreement, Seller will be deemed to be engaging or participating in a business or businesses if it is engaged in such business or businesses, directly or indirectly, whether for its own account or for that of any other person, firm or corporation, and whether as a stockholder (except solely as a stockholder in a publicly held corporation with more than 500 holders of common stock and as to which he owns, in the aggregate, less than 5% of any class of stock), director, officer, employee, consultant, partner, joint venturer, principal, agent, proprietor, consultant, manager, independent contractor, sales representative, landlord, lessor, lender, guarantor, or in any other capacity. Section 2. ---------- 2.1 Term. The term of this Agreement will commence on the date hereof ---- and will terminate on November 1, 2001. 2.2 Remedies. Seller acknowledges that a breach of any of the -------- provisions of Section 1 will cause irreparable harm to Travis and Buyer, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Travis and Buyer will be entitled to specific performance of Section 1 hereof, in addition to, and without having to prove the inadequacy of, other remedies at law, as well as injunctive relief (without being required to post bond or other security), and, if such legal action becomes necessary, Travis and Buyer will be entitled to recover reasonable attorney's fees and costs of court incurred in connection with such action. Nothing contained herein will be construed as prohibiting Travis and Buyer from pursuing any other remedies available to it for such breach, including the recovery of money damages. 2.3 Notices Notices and demands provided for under this Agreement will ------- be in writing and will be deemed to be fully given and received if sent by registered mail, postage prepaid, to the respective party at the address listed at the beginning of this Agreement. 2.4 Assignment. Buyer or Travis may assign its rights or obligations ---------- hereunder to any Affiliate of Buyer or Travis or any successor to the business of Buyer or Travis, by merger, consolidation, sale of assets, or otherwise. 2.5 Reformation; Severability. Whenever possible, each provision of ------------------------- this Agreement will be interpreted so as to be legal, valid and enforceable under applicable law, but in the event any provision of this Agreement is held to be prohibited, unenforceable or invalid under applicable law, the parties agree that such provision will automatically be deemed modified for purposes of performance of this Agreement to the extent necessary to render it lawful, valid and enforceable, or if such modification is not possible without materially altering the intent of the parties, that such provision will automatically be deemed severed from this Agreement to the extent of such prohibition, unenforceability, or invalidity. The validity of the remaining provisions of this Agreement will not be altered by any such modification or severance. 2.6 Amendment of Agreement. Except as set forth in Section 2.5, this ---------------------- Agreement may not be amended, modified, or supplemented except by a writing signed by all parties. 2.7 Governing Law; Venue. THIS AGREEMENT WILL BE CONSTRUED AND -------------------- INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAWS RULES OF TEXAS. Each of the undersigned irrevocably agrees that any legal action or proceeding brought against said Person with respect to this Agreement will be brought in the appropriate court in Travis County, Texas and hereby waives any right to be sued in any other place. 2.8 Construction. This Agreement constitutes the entire Agreement ------------ between the parties and will be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. No terms or understandings not herein contained will apply unless in writing and signed by all parties subsequent to execution of this Agreement. This Agreement is intended to benefit only the parties hereto and no third party will have any right to enforce this Agreement or receive any benefits hereof. IN WITNESS WHEREOF, Travis, Buyer and Seller have executed this Agreement, in the manner appropriate to each, as of the day and year first above written. TRAVIS BOATS & MOTORS, INC. By: --------------------------- --------------------------- --------------------------- TRAVIS BOATING CENTER ALABAMA, INC. By: --------------------------- --------------------------- --------------------------- TRI-LAKES MARINE, INC. By: --------------------------- --------------------------- --------------------------- EX-21.1 7 SUBSIDIARIES EXHIBIT 21.1 SUBSIDIARIES
CHIEF EXECUTIVE OFFICE AND LOCATION OF BUSINESS STORAGE AND MATERIAL RECORDS AND COMPANY DISTRIBUTION LOCATIONS BOOKS OF ACCOUNT Travis Boats & Motors, Inc. 13045 Research Blvd. 13045 Research Blvd. Austin, Texas 78750 Austin, Texas 78750 Travis Boats & Motors, Inc. 12300 IH 10 West 13045 Research Blvd. San Antonio, Texas 78230 Austin, Texas 78750 Travis Boats & Motors, Inc. 7530 North Freeway 13045 Research Blvd. Houston, Texas 77037 Austin, Texas 78750 Travis Snowden Marine, Inc. 1320 S. Stemmons 13045 Research Blvd. Lewisville, Texas 75067 Austin, Texas 78750 Travis Boating Center Arlington, Inc. 1725 W. Division 13045 Research Blvd. Arlington, Texas 76012 Austin, Texas 78750 Falcon Marine, Inc. 1920 North Loop 250 W. 13045 Research Blvd. Midland, Texas 79707 Austin, Texas 78750 Falcon Marine Abilene, Inc. 1021 E. Highway 80 13045 Research Blvd. Abilene, Texas 79601 Austin, Texas 78750 Travis Boating Center Beaumont, Inc. 7660 College Street 13045 Research Blvd. Beaumont, Texas 77707 Austin, Texas 78750 Travis Boats & Motors Baton Rouge, Inc. 14369 Florida Blvd. 13045 Research Blvd. Baton Rouge, Louisiana Austin, Texas 78750 70819 TBC Arkansas, Inc. 2001 Hwy. 25 North 13045 Research Blvd. Heber Springs, Arkansas Austin, Texas 78750 72543 TBC Arkansas, Inc. 3034 Albert Pike 13045 Research Blvd. Hot Springs, Arkansas Austin, Texas 78750 71913 TBC Management, Ltd., 13045 Research Blvd. 13045 Research Blvd. Austin, Texas 78750 Austin, Texas 78750 TBC Management, Inc. 1209 Orange Street 1209 Orange Street Wilmington, Delaware Wilmington, Delaware 19801-1134 19801-1134 Travis Boating Center Louisiana, Inc. 1700 East Main Street 13045 Research Blvd. New Iberia, Louisiana Austin, Texas 78750 70560 Travis Boating Center Tennessee, Inc. 38 Marina Lane 13045 Research Blvd. Winchester, Tennessee Austin, Texas 78750 37398
EXHIBIT 21.1 ------------ SUBSIDIARIES (cont.) Travis Boating Center Alabama, Inc. 2006 Fisher Street 13045 Research Blvd. Huntsville, Alabama 35803 Austin, Texas 78750 Travis Boating Center Alabama, Inc. Route 7, Box 1 13045 Research Blvd. Florence, Alabama 35630 Austin, Texas 78750 Red River Marine Arkansas, Inc. 13045 Research Blvd. Austin, Texas 78750 Travis Boating Center Little Rock, Inc. 13045 Research Blvd. Austin, Texas 78750 Travis Boating Center Georgia, Inc. 13045 Research Blvd. Austin, Texas 78750 Travis Boating Center Florida, Inc. 13045 Research Blvd. Austin, Texas 78750
SCHEDULE 7.4 ------------ INTERCREDITOR AGREEMENT LENDERS Transamerica Commercial Finance Corporation 225 North Michigan Avenue Chicago, Illinois 60601 Bombardier Capital, Inc. P.O. Box 991 Colchester, Vermont 05446 Deutsche Financial Services Corporation P.O. Box 1349 Troy, Michigan 48099 -----END PRIVACY-ENHANCED MESSAGE-----