<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD OF ________ TO ________.
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) Identification 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 the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest practicable date.
Common Stock $.01 par value - 4,136,506 shares as of April 30, 1997.
<PAGE>
Item 1. Financial Statements
Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
( in thousands, except share data )
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------- ---------
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $4,179 $1,533
Accounts receivable 6,051 1,331
Inventories 34,316 20,554
Prepaid expenses/other 170 263
Total current assets 44,716 23,681
Property and equipment:
Land 1,816 1,816
Buildings and improvements 5,696 4,909
Furniture, fixtures and equipment 2,529 1,847
10,041 8,572
Less accumulated depreciation (2,361) (2,025)
7,680 6,547
Intangibles and other assets :
Goodwill & noncompete agreements, net 2,524 1,063
Other assets 227 59
Total assets $55,147 $31,350
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $909 $240
Accrued liabilities 2,241 1,389
Federal & state income taxes payable 1,099 953
Unearned revenue 994 1,174
Current portion of notes payable and other 24,930 4,661
short-term obligations
Total current liabilities 30,173 8,417
Notes payable, less current portion 5,800 4,335
Stockholders' equity
Common Stock, $.01 par value, 50,000,000 authorized
4,136,506 issued and outstanding at
September 30,1996 and March 31, 1997 41 41
Paid-in capital 11,527 11,527
Retained earnings 7,606 7,030
Total stockholders' equity 19,174 18,598
Total liabilities and stockholders' equity $55,147 $31,350
</TABLE>
See notes to unaudited condensed consolidated financial statements
<PAGE>
Travis Boats & Motors, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share data and stores open)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
1997 1996 1997 1996
-------- ------- --------- ---------
<S> <C> <C> <C> <C>
Net sales.................................... $24,273 $18,453 $29,724 $22,017
Cost of goods sold........................... 17,869 13,830 21,979 16,446
Gross profit................................. 6,404 4,623 7,745 5,571
Selling, general and administrative.......... 3,638 2,751 5,778 4,302
Depreciation and amortization................ 237 136 421 262
3,875 2,887 6,199 4,564
Operating income............................. 2,529 1,736 1,546 1,007
Interest expense............................. (415) (393) (629) (669)
Other income................................. (6) 30 (9) 32
Income before income taxes................... 2,108 1,373 908 370
Provision for income taxes................... 788 488 332 127
Net Income................................... $1,320 $885 $576 $243
Net Income per common share.................. $0.32 $0.32 $0.14 $0.08
Weighted average common shares outstanding... 4,136,506 2,683,506 4,136,506 2,683,506
Stores open at end of period................. 16 12 16 12
</TABLE>
See notes to unaudited condensed consolidated financial statements
<PAGE>
Travis Boats & Motors, Inc.and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flow
(in thousands)
<TABLE>
<CAPTION>
Six months ended
March 31,
1997 1996
-------- --------
<S>
Operating activities: <C> <C>
Net Income $576 $243
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization......................... 421 262
Changes in operating assets and liabilities
(Increase) in accounts receivable.................. (4,720) (3,409)
(Increase) in prepaid expenses..................... (68) (83)
(Increase) in inventories.......................... (11,144) (14,332)
(Increase) in other assets......................... (7) (159)
Decrease in deferred tax asset..................... 0 60
Increase in accounts payable....................... 669 274
Increase in accrued liabilities.................... 852 49
Increase/(Decrease) in income taxes payable........ 146 (89)
Increase/(Decrease) in unearned revenue............ (180) 2,770
-------- --------
Net Cash used in by operating activities.............. (13,455) (14,414)
Investing Activities:
Purchase of businesses................................ (4,492) (263)
Purchase of property and equipment.................... (1,141) (883)
------- --------
Net cash used in investing activities (5,633) (1,146)
Financing activities:
Net increase in notes payable and other short term 21,734 15,229
obligations -------- --------
Net cash provided by financing activities............. 21,734 15,229
Increase/(Decrease) in cash and cash equivalents...... 2,646 (331)
Cash and cash equivalents, beginning of period........ 1,533 996
-------- --------
Cash and cash equivalents, end of period.............. $4,179 $665
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared from the records of Travis Boats & Motors, Inc. and subsidiaries
(collectively, the "Company") without audit. In the opinion of management, such
financial statements include all adjustments (consisting of only recurring
accruals) necessary to present fairly the financial position at March 31, 1997;
and the interim results of operations and cash flows for the six month periods
ended March 31, 1997 and 1996. The condensed consolidated balance sheet at
September 30, 1996, presented herein, has been prepared from the audited
consolidated financial statements of the Company for the fiscal year then ended.
Accounting policies followed by the Company are described in Note 1 to the
audited consolidated financial statements for the fiscal year ended
September 30, 1996. Certain information and footnote disclosures normally
included in financial statements have been condensed or omitted for purposes
of the condensed consolidated interim financial statements. The condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements, including the notes thereto, for the fiscal
year ended September 30, 1996.
The results of operations for the six month period ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of common
shares outstanding during the periods. The effect of the Common Stock
equivalents is not significant.
NOTE 3 - INITIAL PUBLIC OFFERING OF COMMON STOCK
On June 27, 1996, the Company consummated an initial public offering of
1,890,500 shares of Common Stock at the price of $9.00 per share. Of the
1,890,500 shares sold, 1,453,000 shares were sold by the Company (including
140,500 shares sold pursuant to an over-allotment option) and 437,500 shares
were sold by certain shareholders. Net proceeds to the Company were
approximately $11.5 million.
NOTE 4 - STOCKHOLDERS' EQUITY
In November 1995, the Board of Directors of the Company approved a 15 for 1
stock dividend for stockholders of record as of November 8, 1995.
Effective December 14, 1995, the Company changed the stated par value of each
share of common stock from $.10 to $.01. The condensed consolidated financial
statements have been restated to retroactively reflect the change in par value.
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 condensed consolidated financial statements have been
restated retroactively to reflect the above stock dividends and change in par
value.
NOTE 5 - ACQUISITIONS
Clay's Boats and Motors, Inc. ("Clay's")
Effective December 1, 1995, the Company acquired certain assets of Clay's Boats
<PAGE>
and Motors, Inc. in New Iberia, Louisiana. The assets acquired included
furniture, fixtures and equipment, parts and accessories inventory, 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) based on their respective fair values at the date of acquisition.
The resulting excess purchase price ($88,072) was allocated to non-compete
agreements and goodwill.
North Alabama Watersports, Inc. ("NAWS")
Effective October 3, 1996, the Company acquired certain assets of North Alabama
Watersports, Inc. in Florence, Alabama. This acquisition included boat, motor
and trailer inventory, parts and accessories inventory, and furniture, fixtures
and equipment. The purchase price was $892,255, of which $79,707 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 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 noncompete
agreements and goodwill.
Tri-Lakes Marine, Inc. ("Tri-Lakes")
Effective November 1, 1996, the Company acquired certain assets of Tri-Lakes
Marine, Inc. with retail store locations in Tennessee and Alabama. This
acquisition included boat, motor and trailer inventory, parts and accessories
inventory, and furniture, fixtures and equipment. The purchase price was
$1,242,924, of which $642,924 was paid in cash and $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 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 noncompete agreements and goodwill.
Bent's Marine, Inc. ("Bent's")
Effective February 19, 1997, the Company acquired certain assets of Bent's
Marine, Inc. in Metairie, Louisiana. This acquisition included boat, motor
and trailer inventory, parts and accessories inventory, and furniture, fixtures
and equipment. The purchase price was $1,518,550, of which $1,063,671 was paid
in cash and $454,879 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 Bent's have been included in the
consolidated financial statements from the date of acquisition. The purchase
price ($1,518,550) has been allocated to the tangible assets acquired ($839,627)
based on their respective fair values at the date of acquisition. The resulting
excess purchase price ($678,923) was allocated to noncompete agreements and
goodwill.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
` AND RESULTS OF OPERATIONS.
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 16 stores 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.
Since its founding in 1979 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 the Texas markets of
San Antonio, 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) eleven
additional store locations within the following states: Texas (3), Arkansas (2),
Louisiana (3), Alabama (2) and Tennessee (1).
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. 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 competitively priced and
conveniently packaged for immediate enjoyment.
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.
<PAGE>
Results of Operations
Quarter Ended, March 31, 1997 Compared to the Quarter Ended, March 31, 1996 and
Six Months Ended, March 31, 1997 Compared to the Six Months Ended March 31, 1996
Net sales. Net sales increased by 31.5% to $24.3 million in the second quarter
of fiscal 1997 from $18.5 million in the second quarter of fiscal 1996. For the
six months ended, March 31, 1997, net sales increased by 35.0% to $29.7 million
from $22.0 million during the same period of the prior year. Of the increases
in net sales, approximately $490,000 and $723,000 were attributable to a 3.4%
and 6.3% growth in comparable store sales for the quarter (nine stores in base,
three of which have not yet been converted to superstore standards) and six
months (six stores in base) ended March 31 1997, respectively. For the quarter
and six months ended March 31, 1997, respectively, approximately $5.5 million
and $6.4 million of the increases in net sales were related to the four store
locations acquired thus far in fiscal 1997. General growth in overall sales
volume was primarily the result of the increased number of stores in operation
during the periods, mild weather conditions (particularly in the first fiscal
quarter), the participation in additional season opening boat and recreation
shows and volume client sales derived from the newly acquired Winchester,
Tennessee store. The Winchester store location has two distinct types of
sales - local retail (similar to the traditional Travis Boating Center
superstore) and volume client sales. Volume client sales are typically
non-packaged products (ie not Travis Editions) sold below the Company's standard
profit margins. It is anticipated that this location will be the only of our
existing stores that will have a volume client sales component as a material
part of its operations.
Historically, the Company's first fiscal quarter represents its slowest quarter
in terms of sales demand. This is historically followed a broad seasonal
increase in sales by both the Company and the industry as a whole in the quarter
ending on March 31. In this quarter, the Company participates in boat and
recreation shows in and around its major markets and further stocks its
inventory lines to support its primary selling season.
Gross profit. Gross profit increased by 38.5% to $6.4 million in the second
quarter of fiscal 1997 from $4.6 million in the same quarter of fiscal 1996,
while gross profit as a percent of sales increased to 26.4% from 25.1% during
the same periods. For the six months ended, March 31, 1997, gross profit
increased 39.0% to $7.7 million from $5.6 million in the same period of the
prior year, while the gross profit as a percent of sales increased to 26.1% from
25.3%. These increases in gross profit as a percent of sales were primarily
related to enhanced revenues attributable to traditionally higher gross profit
sales categories such as: F&I income, over the counter sales of parts &
accessories and service labor, as well as an overall favorable mix of boats
sold. While the gross profit margin has reflected improvement as a percent of
sales, it has been offset somewhat by the sales to high volume clients through
the Winchester, Tennessee store location. During the recently completed second
quarter and six months ended March 31, 1997, approximately $1.5 and $1.8 million
in sales, respectively, from the Winchester store were volume client sales.
However, the Winchester store is expected to generate less than $5.0 million
in volume client transactions during fiscal 1997, a level not expected to have
a material impact on the Company's targeted gross profit margin.
<PAGE>
Net sales attributable to F&I Products, which have a significant impact on the
gross profit margin, contributed $1,242,000, or 19.4%, of total gross profit in
the second quarter of fiscal 1997, as compared to $799,000 or 17.3%, of total
gross profit for the second quarter of the prior fiscal year. For the six
months ended, March 31, 1997, net sales attributable to F&I Products accounted
for $1,416,000, or 18.3% of the total gross proifit, compared to $954,000, or
17.1%, for the same period of the prior year. Net sales attributable to F&I
Products are reported on a net basis, 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 32.2% to $3.6 million in second quarter of
fiscal 1997 from $2.8 million for the second quarter of fiscal 1996. Selling,
general and administrative expenses as a percent of net sales increased to
14.99% in the second quarter of fiscal 1997 from 14.91% for the second quarter
of fiscal 1996. This increase in selling, general and administrative expenses as
a percent of net sales was primarily attributable to costs of participating in
additional season opening boat and recreation shows, the start up costs
associated with the four stores acquired thus far in fiscal 1997 and the
expenses of operating a larger store base with an expanded regional market
presence. Selling, general and administrative expenses in dollars increased by
34.3% to $5.8 million for the six months ended March 31, 1997, versus $4.3
million in the same period of the prior fiscal year. However, as a percent of
net sales, selling, general and administrative expenses for the six months ended
March 31, 1997 declined marginally to 19.4% from 19.5% for the same period of
the prior year due primarily to the overall increase in net sales.
Depreciation and amortization expenses increased in the quarter and for the six
months ended, March 31, 1997, primarily as a result of the expenses attributable
to the acquisitions which occurred thus far in fiscal 1997, and through the
capitalization of costs associated with the conversion of certain existing
stores to superstore standards.
Interest expense. Interest expense, in actual dollars, increased by 5.6% to
$415,000 in second quarter of fiscal 1997 from $393,000 in the second quarter
of fiscal 1996. However, interest expense as a percent of net sales decreased
to 1.7% in the second quarter of fiscal 1997 from 2.1% in the same quarter of
fiscal 1996. The dollar increase was reflective of increased revolving line
of credit borrowings to fund the Bent's Marine, Inc. acquisition, the further
stocking of Travis Edition inventory in the other recent acquired stores and to
support working capital needs. Effective with the funding of the Company's
Initial Public Offering in late June of 1996, the Company reduced certain
revolving indebtedness and certain long term indebtedness. This reduction of
debt, and a reduction in the Company's revolving line of credit interest rate,
provided for the corresponding decrease in both interest expense dollars
(totalling $629,000) and as a percent of net sales (2.1%) for the six months
ended, March 31, 1997 versus the same period of the prior year (totalling
$669,000 and 3.0% of net sales, respectively). See ''Liquidity and Capital
Resources.''
Net Income. The Company experienced a net profit of $1.3 million for the
second quarter of fiscal 1997. This represents an increase of 49.2% from the
net profit of $885,000 in the second quarter of fiscal 1996. The net profit as a
percent of sales was 5.4% and 4.8% for the second quarter of fiscal 1997 and
1996, respectively. For the six months ended, March 31, 1997, net income
increased by 137.0% to $576,000 from $243,000 in the same period prior year.
The improved net income has been the result of the Company generating higher net
sales levels while attaining higher gross profit margins and containing interest
and selling, general and administrative expenses.
<PAGE>
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
March 31, 1997, the Company had working capital of $14.5 million, including
$6.1 million in accounts receivable (primarily contracts in transit from sales)
and $34.3 million in inventories, offset by approximately $3.2 million of
accounts payable and accrued liabilities, and $24.9 million in other short-term
liabilities including current maturities of long-term debt. As of
March 31, 1997, the aggregate maximum borrowing limits under floor plan and
working capital lines of credit were approximately $40.0 million.
Operating activities utilized cash flows of $13.5 million for the first six
months of fiscal 1997 due primarily to the net increases of $11.2 million in
inventories and $4.7 million in accounts receivable. In addition to inventory
from the four store locations acquired thus far in fiscal 1997, it is during
this first and second fiscal quarter that the Company builds inventory levels to
support the selling season which begins with the January and February boat
shows (see "Seasonality"). Large retail contracts in transit from sales were the
result of the increased accounts receivable levels reported at March 31, 1997.
Financing activities for the six months ended March 31, 1997 provided $21.7
million of cash flows primarily from the net proceeds of advances under the
Company's revolving and floorplan lines of credit. These advances were used to
fund the build-up in inventories and certain acquisition expenses. 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 National Bank and
NationsBank. The line provides for borrowing pursuant to a borrowing formula
based upon 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. Pricing is at the
prime rate minus .375%, with a fee of .125% on the unfunded 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 March 31, 1997, $13.0 million 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 providing approximately $25.0 million in credit limits. These floor
plan lines 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 of these floor plan lines of credit with
finance companies are governed by loan agreements containing various financial
covenants concerning, among others, ratios governing tangible net worth and
leverage. As of March 31, 1997, approximately $11.2 million was outstanding
under these floor plan lines and management believes the Company was in
compliance with the terms and conditions of these loan agreements.
Merchandise inventories were $34.3 million and $20.6 million as of
March 31, 1997 and September 30, 1996, respectively. Costs in excess of net
assets acquired increased by approximately $1.5 million to $2.5 million in the
first six months of fiscal 1997 due to the acquisitions of the additional four
store loactions thus far in fiscal 1997.
The Company had net capital expenditures of approximately $5.55 million in the
first six months of fiscal 1997. During the quarter the Company acquired
substantially all of the assets of North Alabama Watersports, Inc., Tri-Lakes
Marine, Inc. and Bent's Marine, Inc. which accounted for approximately $4.49
million of the capital expenditures. The Company also updated certain
<PAGE>
facilities with its standard superstore trade dress awnings and neon. The
acquisition related capital expenditures were substantially financed with
advances made under the Company's revolving credit lines. Additionally, certain
sellers in the recent acquisitions have provided long term debt at fixed
interest rates in connection with those acquisitions.
The Company's revolving credit facility, floor plan lines of credit and
internally generated working capital are expected by the Company's management
to be sufficient to meet the Company's cash requirements at least through fiscal
1997.
Seasonality
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 through July. During
the fiscal year and the 12 months ended September 30, 1996 and 1995,
respectively, net sales for the quarterly periods ended March 31 and June 30
represented in excess of 29% and 39%, 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 typically 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 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.
Reliance on Manufacturers and Other Key Vendors
The Company's success is dependent upon its relationship with, and favorable
pricing relationships from, a limited number of major manufacturers. In the
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 a cancellable, annually renewable, non-exclusive, dealer agreement
that does not contain any contractural 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 approximately 100% of its outboard motors in fiscal years
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.
On Friday, April 5, 1997 OMC released a press report concerning its operating
results for the first six months of its current fiscal year. OMC reported an
operating loss for both its first and second fiscal quarters. The Company
further announced that its Board had retained its investment banking firm,
Salomon Brothers, to seek alternative new sources of capital. Travis Boats
management does not believe that a new owner or financial partner for OMC will
prove detrimental to or result in the termination of its longstanding
<PAGE>
relationship with the company. Travis Boats believes that it is the largest
volume purchaser of products from OMC and believes that alternative product
suppliers exist, if necessary, for a high volume purchasing client such as
Travis Boats. Although the Company believes that adequate alternate sources
would be available that could replace OMC, there can be no assurance that such
alternate manufacturers will be available at the time of any future
interruption, or that alternative products will be available at comparable
quality and prices. While it is not known what impact OMC's financial condition
will have upon Travis, if any, as of the date of this report Travis Boats has
not had any material difficulties in obtaining necessary product from OMC and
further believes that existing stock in addition to planned upcoming deliveries
will be sufficient to meet demand throughout the current model year's selling
season.
On Friday, April 25, 1997, Mastercrafters Corporation, of Winnsboro, Louisiana,
announced that it was halting production in its only plant facility and that it
would seek to find a buyer for certain of its assets including its trade name,
Cajun Boats. Mastercrafters Corporation is a subsidiary of Genmar Holdings,
Inc. which also owns and manufacture's the Larson and Aquasport boat lines which
the Company sells as part of its Travis Edition line. Approximately 22% of the
Company's net inventory purchases in fiscal 1996 were from Genmar and was
comprised of boats from its Aquasport, Larson and Cajun subsidiaries. As a
result of the interruption in Mastercrafters Corporation's production the
Company may experience temporary product shortfalls, or disruptions or delays
with respect to any unfilled purchase orders as well as intended upcoming
purchase orders which would have been outstanding as of the date production was
halted. Although the Company believes that it has sufficient stock on hand to
substantially meet current model year's market demands and that adequate
alternative sources will be available to absorb the lack of Mastercrafters'
production, there can be no assurance that such alternate sources will be
available in a timely manner or that such products will be available at
comparable quality and prices.
Effect of Newly Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact of Statement 128 on the
calculation of primary and fully diluted earnings per share for these quarters
is not expected to be material.
Cautionary Statement for purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995.
Other than statements of historical fact, all statements contained in this
quarterly Report on Form 10-Q or in documents incorporated herein may contain
forward-looking statements. Forward-looking statements in this 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'' in the Report on Form 10-K filed by the Company
for the fiscal year ended September 30, 1996 and the Registration Statement
filed on Form S-1 filed in conjunction with the Company's initial public
offering in June of 1996. All forward-looking statements in this 10-Q Report
are expressly qualified in their entirety by the cautionary statements in this
paragraph and the referenced filings.
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8 - K
(a) Exhibits
10.32 Asset Purchase Agreement dated as of February 19, 1997, between
Travis Boating Center Louisiana, Inc. and Bent's Marine Inc.
(b) Reports on Form 8 - K
No reports on Form 8 - K have been filed during the quarter for which
this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereto duly authorized.
Date: May 15, 1997 Travis Boats & Motors, Inc.
By:______________________________
<PAGE>
[ARTICLE] 5
[MULTIPLIER] 1,000
<PERIOD TYPE> 6-MOS 12-MOS
<FISCAL YEAR-END> SEP-30-97 SEP-30-96
[PERIOD-START] JAN-01-97 OCT-01-95
[PERIOD-END] MAR-31-97 SEP-30-96
[CASH] 4,179 1,533
[SECURITIES] 0 0
[RECEIVABLES] 6,051 1,331
<ALLOWOWANCES> 0 0
[INVENTORY] 34,316 20,554
[CURRENT-ASSETS] 44,716 23,681
[PP&E] 10,041 8,572
[DEPRECIATION] 2,362 2,025
[TOTAL-ASSETS] 55,147 31,350
[TOTAL-LIABILITIES] 35,973 12,752
[BONDS] 5,800 4,335
[PREFERRED-MANDATORY] 0 0
[COMMON] 41 41
[OTHER-SE] 19,133 18,557
[TOTAL-LIABILITY-AND-EQUITY] 55,147 31,350
[SALES] 29,724 64,555
[TOTAL-REVENUES] 29,724 64,555
[CGS] <21,979> <48,072>
[TOTAL-COSTS] <21,979> <48,072>
[OTHER-EXPENSES] <6,199> <11,421>
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] <629> <1,289>
[INCOME-PRETAX] 908 3,833
[INCOME-TAX] <332> <1,450>
[INCOME-CONTINUING] 576 2,383
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 576 2,383
[EPS-PRIMARY] .14 .78
[EPS-DILUTED] .14 .78
<PAGE>
ASSET PURCHASE AGREEMENT
BY AND AMONG
TRAVIS BOATING CENTER LOUISIANA, INC.,
BENT'S MARINE, INC.,
AND
GEORGE AND CAROLYN BENT
DATED AS OF
FEBRUARY 19, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of
February 19, 1997, by and among Travis Boating Center Louisiana,
Inc., a Louisiana corporation ("Buyer"), Bent's Marine, Inc., a
Louisiana corporation ("Seller"), and George and Carolyn Bent,
husband and wife, individuals living in Louisiana ("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. 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 1.2, (iii) the Parts and Accessories, (iv) the
Miscellaneous Assets listed on Schedule 1.3, (v) the Intangibles, (vi) the
Deposits, (vii) the Boat Show Rights, and (viii) the 1995 Chevrolet
Suburban listed on Schedule 1.3.
<PAGE>
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: $561,861.90., plus
Louisiana sales tax, if applicable, payable in immediately available
funds at Closing.
2.1.2 Used Boats, Motors, and Trailers: $ -0- , payable in
immediately available funds at Closing.
2.1.3 Parts and Accessories: $127,217.55, plus Louisiana sales
tax, if applicable, payable in immediately available funds at Closing.
2.1.4 Miscellaneous Assets: $75,000.00, payable in immediately
available funds at Closing.
2.1.5 Boat Show Rights and Prepaid Boat Show Expenses: $25,272.80,
payable in immediately available funds at Closing.
2.1.6 1995 Chevrolet Suburban: $22,711.32, payable in immediately
available funds at Closing.
2.1.7 Intangibles, Deposits, and other Assets: $224,044.00 in
immediately available funds at Closing.
2.1.8 Non-Competition Agreement from Owner: $454,879.00, payable
pursuant to a promissory note (the "Promissory Note") in the form
attached as Exhibit A.
2.2 Returns and Post-Closing Liquidation; Ordered Boats.
2.2.1 (a) After the Closing, Seller will return to the
manufacturer or other vendor, as appropriate (the "Manufacturer"), in
accordance with Section 773.2, L.R.S., and other laws and regulations
regarding marine products repurchase, Seller's new boats, motors and
trailers not purchased by Buyer (the "Residual Boats") and Seller's new
parts not purchased by Buyer (the "Residual Parts"), and Seller will
retain all funds received for such returns. Seller may utilize Buyer's
employees to package the Residual Boats and Residual Parts for return
pursuant to this Section 2.2.1. Buyer may sell in the ordinary course
of business any Residual Boats not yet returned. For any sale of
Residual Boats, Buyer will pay Seller, within five days of the sale, the
Schedule 2.2 amount for the item sold, plus interest and insurance
incurred since Closing, less any Rebates. "Rebates" means rebates that
have been paid, as well as Mercury motor rebates that have been earned
but not paid.
(b) Schedule 2.2 sets forth the agreed aggregate cost for
Residual Parts, and Seller represents to Buyer that Schedule 2.2 sets
forth the actual invoice cost plus freight costs (either the amount paid
on invoice for freight, or the manufacturer's scheduled freight for
items picked up by Seller) for Residual Boats; to the extent that the
price on the invoice did not separate the boat and motor price, the
motor cost plus the boat cost on Schedule 2.2 represents the invoice
cost of such pre-rigged unit.
<PAGE>
(c) "Net Profits" on sales of Residual Boats by Buyer means
the gross sales price, less the amount paid Seller, sales commissions,
and any direct expenses (at internal rates) incurred for delivery and
make-ready. Seller will keep 50% of the Net Profits, and will hold the
other 50% in a pool (the "Pool"). On the 15th of each month, Buyer
will pay Seller from the Pool an amount equal to Seller's "Net Interest"
and insurance expenses on Residual Boats for the prior calendar month.
"Net Interest" means interest paid on the Residual Boats, less any
manufacturer reimbursements for interest accrued after Closing, less
interest reimbursed under the "Pro-Line manufacturer program" described
below. When Seller has been reimbursed for all Residual Boats (by Buyer
or Manufacturer, as described herein), the balance of the Pool will
become the property of Buyer.
2.2.2 If a Manufacturer does not accept any Residual Boats or
Residual Parts for return or does not pay Seller for accepted returns,
Buyer will purchase such Residual Boats or Residual Parts that are
delivered to Buyer free and clear of Encumbrances at the cost set
forth on Schedule 2.2, less Rebates. As of Closing, Buyer acknowledges
delivery of the Residual Parts pending settlement of returns between
Seller and Manufacturer, and agrees to bear the risk of loss with
respect to them. For the Residual Parts, Buyer will pay Seller the
Schedule 2.2 amount in aggregate at time of settlement. Before Buyer
will purchase Residual Boats or Residual Parts not accepted for return,
Seller must first have made reasonable efforts to enforce its rights
under Section 773.2, L.R.S., and other laws and regulations regarding
marine products repurchase, against the Manufacturer of such item,
except that if the aggregate amount Seller is trying to collect from a
Manufacturer is greater than $10,000, Seller must have first prosecuted
an action at the trial court level against such Manufacturer. If Seller
receives a judgment that the Manufacturer is not required to accept
return of any of the items that were the subject of the action, Buyer
will purchase such items from Seller as provided in this Section 2.2.2,
within 15 days of receipt from Seller of notice of such judgment.
Thereafter, at its sole cost and expense, Buyer may prosecute an appeal
of the judgment in Seller's name or take an assignment of Seller's claim
against the Manufacturer. To the extent that a Manufacturer remits to
Seller an amount less than the Schedule 2.2 price, less Rebates, for a
returned item, Buyer will pay Seller the difference between the amount
remitted and the Schedule 2.2 price, less Rebates, unless the reason for
the difference is that the returned item is damaged (unless the damage
was caused by Buyer).
2.2.3 With respect to Pro-Line boats not purchased by Buyer and
listed on Schedule 2.2 (the "Pro-Line Boats"), Buyer will reimburse
Seller for interest accrued on Pro-Line Boats between Closing and the
date Seller has been paid by Buyer or Pro-Line for the sale or return
of such boats, except to the extent Seller is reimbursed by Pro-Line
under the "Pro-Line manufacturer program". Interest accrued will be
calculated on the principal value set forth on Schedule 2.2.3, at the
New York prime rate (8.25% on the date hereof), floating as such rate
varies.
2.2.4 After the Closing, Buyer will serve as broker for any used
or "demo" boats, motors and trailers not purchased by it. Seller will
set a minimum price for such items, and Buyer will retain a ten percent
(10%) commission on the sales price of items sold. Buyer will have the
right to profit from any finance and insurance on such items.
2.2.5 Seller may store on the premises of the Business, and will
bear the risk of loss with respect to, all boats, motors, trailers, and
other assets (except Residual Parts) not purchased by Buyer, and may
complete the sale of any Residual Boats for which Seller has received a
deposit ("Ordered Boats") and will be entitled to the proceeds from such
sale of any Ordered Boats, provided that Seller will reimburse Buyer for
Buyer's expenses related to delivery, rigging or make-ready.
<PAGE>
2.2.6 Schedule 2.2.6 lists boats which Seller has special-ordered
and for which it has collected deposits from customers, but which have
not been delivered to Seller (the "Special Order Boats"). Buyer will pay
the vendor for Special Order Boats upon their delivery and will complete
the sale to the customer for Buyer's own account. Seller will remit the
deposit on a Special Order Boat to Buyer upon completion of Buyer's sale
to the customer.
2.2.7 After the Closing, Buyer will serve as broker for used
Mercury and Mercruiser parts not purchased by it and will retain a 45%
commission on sales made. Buyer will be responsible for paying the 20%
commission due the selling employee.
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 Louisiana Bulk Sales Act, if any. Assumed Liabilities
and Excluded Assets.
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 reasonable
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, earned but unpaid finance income, insurance policies, books
and records, all motor vehicles except those listed on Schedule 1.3, and
those boats, motors, trailers, parts and accessories not listed on
Schedules 1.1, 1.2 or 1.3.
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 Louisiana 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
<PAGE>
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, the Parts, and the Accessories
are in the condition in which they were delivered by the manufacturer.
The Used Boats, Motors, and Trailers are in the condition received from
the customer trading in such items. The Miscellaneous Assets are sold
"as is".
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
<PAGE>
are applied for or which are registered in the office of the Secretary
of State of the State of Louisiana 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. Seller has no knowledge that 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
September 30, 1995 and 1996, together with its unaudited statements of
income for the fiscal years or periods then ended, (collectively, the
"Financial Statements"). The Financial Statements have been prepared on
a tax basis, 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. tax return for the fiscal year ended
September 30, 1995. 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
<PAGE>
(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. To Seller's best knowledge, 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. To Seller's best knowledge,(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.
<PAGE>
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. Anything referred to on any Schedule hereto and any
representation made herein will, wherever appropriate, be deemed
incorporated in the other Schedules hereto and representations made
herein.
4.15 Invoices. All invoices provided by Seller to Buyer are authentic.
Section 5. Representations and Warranties of Buyer.
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller and Owner, 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.
5.4 SEC Statements. The financial statements included in the SEC
filings made by Travis Boats & Motors, Inc., a Texas corporation that is
Buyer's parent corporation, fairly present its financial condition in
accordance with GAAP as of the date of such statements.
<PAGE>
5.5 Buyer's Knowledge. Buyer has no knowledge that any representation
or warranty made herein by Seller or Owner is untrue in any material
respect.
Section 6. Closing.
6.1 Closing; Effective Date. The closing ("Closing")of the transactions
will be in Metairie, Louisiana, simultaneously with the execution of this
Agreement ("Closing Date"). The transactions will be effective as of
February 14, 1997 ("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 Owner has signed and delivered to Buyer a Non-Competition
Agreement in substantially the form attached as Exhibit E.
7.2.4 Seller has signed and delivered to Buyer a Non-Competition
Agreement in substantially the form attached as Exhibit F.
<PAGE>
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 Louisiana
state taxing authorities as of a date no earlier than 10 days prior to
the Closing.
7.2.6 Buyer has received the opinion of Greenberger & Forman in
substantially the form attached as Exhibit H.
7.2.7 Buyer and George Bent have entered into a lease agreement
substantially in the form attached as Exhibit I.
7.2.8 George Bent has signed and delivered a landlord's waiver
of lien on inventory owned by Buyer and located on the premises subject
to the lease described in the previous subsection.
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; and
7.3.3.2 the Promissory Note.
7.3.4 Buyer has delivered to George Bent and Greg Bent,
respectively, written offers of employment substantially in the form
attached as Exhibit J.
7.3.5 Owner has been released from its personal guarantee of any
loans with respect to the Assets.
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
<PAGE>
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, 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). Owner's indemnification of Buyer under this Section 8.2 is
limited to the original principal amount of the Promissory Note, and is
limited to the original term of the Promissory Note. To the extent that
Buyer or Seller recovers insurance proceeds in connection with any
occurrence for which indemnity is sought, such proceeds will be applied
to satisfy Buyer's claim for indemnity before Buyer seeks to collect from
Seller or Owner on the indemnity. Exclusive of such application of
insurance proceeds, Buyer shall not be entitled to any indemnity under
this Section 8.2 until the aggregate amount for which indemnity is claimed
reaches $5,000.00.
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,
(iii) the failure by Buyer to perform any of its obligations in respect
<PAGE>
of the Assumed Liabilities, or (iv) all claims relating to the operation
of the Business after the Effective Date; 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 Note
with respect to any matter for which Buyer is indemnified under Section
8.2. If Seller disputes Buyer's claim to offset, Buyer will make payments
<PAGE>
under the Promissory Note, with respect to which it claims the right of
offset, to Greenberger & Forman as escrow agent for the parties pending
resolution of the dispute regarding the right of offset. The escrowed
funds will be held in an interest-bearing account. Upon resolution of the
dispute, the prevailing party will receive the accrued interest, if any.
Section 9. Post-Closing Covenants.
9.1 Transfer Taxes. In the event that any Governmental Authority of the
State of Louisiana 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, Buyer will be responsible for the payment.
9.2 Proration. Buyer will be responsible for, and will pay to Seller,
the prorated portion of 1997 ad valorem inventory taxes on the Business,
and 1997 property taxes on Owner's building at 4625 Airline Highway,
relating to Buyer's ownership of the Business after the Effective Date, on
the date such taxes are due, as reflected by Seller's Jefferson Parish tax
bills. Seller will be responsible for the prorated portion of such taxes
relating to the period before the Effective Date. To this end, Buyer will
collect ad valorem taxes on its boat, motor and trailer sales during the
remainder of 1997.
9.3 Use of Seller's Name. Seller may continue use of its Marks after
the Effective Date only as long as necessary to, and in connection with,
winding up Business transactions undertaken before the Effective Date,
but in no event beyond January 31, 1998, after which time Seller will
cease all such usage. Neither Seller nor Owner will at any time adopt or
use any word, mark or trade name which is similar to or confusing with
"Bent's Marine, Inc.". On or before January 31, 1998, Seller will change
its corporate name to one that is not similar to or confusing with "Bent's
Marine, Inc." and will provide Buyer with a copy of the amendment to its
charter, certified by the Secretary of State of Louisiana. Seller will
have the right to sue and recover for any and all past infringements of
the Intangibles. Seller and Owner will notify Buyer of any infringement of
the Intangibles of which either becomes aware.
9.4 Confidentiality. Each party will, and will cause its employees,
consultants, advisors and agents to, hold in confidence 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). 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 at Buyer's internal shop rates for labor and parts.
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.
<PAGE>
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 Louisiana 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 Metairie, Louisiana 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.
<PAGE>
10.10 Intangibles. All intangible assets, including trademarks, service
marks, copyrights, trade names (collectively, "Marks"), customer lists,
claims, patents, rights of publicity and other intangibles, owned, used or
held for use in the Business, including the names "Bent's Marine, Inc."
and all derivative uses of such names, and the goodwill associated
therewith, 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 1.3.
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, or, if Seller has
picked up the items, the scheduled freight charges rather than freight
charges that have been paid.
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 1.2.
<PAGE>
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
Promissory Note 2.1.7
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.
<PAGE>
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 Louisiana, 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:
Bent's Marine, Inc.
c/o George Bent
3968 Haddon Street
Metairie, Louisiana 70002
With a copy (which will not constitute notice) transmitted by
telecopier to:
Greenberger & Forman
1370 Avenue of the Americas
New York, NY 10019-4602
Attention: Rob Forman, Esq.
Telecopy: 212/757-4054
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
rising 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. Buyer
acknowledges that money damages are an inadequate remedy for the breach by
Buyer of its obligations under this Agreement, and Buyer agrees that in
the event of such breach, Seller will upon proper action instituted by it,
be entitled to a decree of specific performance of this Agreement.
<PAGE>
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.
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.
<PAGE>
The parties have executed this Agreement as of the day and
year first above written.
BUYER:
TRAVIS BOATING CENTER LOUISIANA, INC.
By: /s/ Ron Spradling
-----------------------------------------------
Ron Spradling, Executive Vice President
SELLER:
BENT'S MARINE, INC.
By: /s/ George Bent, President
-----------------------------------------------
George Bent, President
OWNER:
/s/ George Bent
--------------------------------------------------
George Bent
/s/ Carolyn Bent
--------------------------------------------------
Carolyn Bent
GUARANTY
The undersigned hereby irrevocably and unconditionally guarantees the
performance of all of Buyer's obligations under this Agreement.
TRAVIS BOATS & MOTORS, INC.
By: /s/ Ron Spradling
----------------------------------------
Ron Spradling
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$454,879.00 February 19, 1997
FOR VALUE RECEIVED, the undersigned, Travis Boating Center Louisiana, Inc.,
a Louisiana corporation ("Maker"), promises to pay to the order of George and
Carolyn Bent ("Payee"), at Payee's address at _________________________________,
the principal sum of
________________________________ and ____________ /100 DOLLARS ($________,___),
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
Non-Competition Agreement dated as of February 14, 1997, between Maker and
Payee. Principal and interest are payable in monthly installments, as follows:
first installment of __________________ Dollars ($______,___), due and payable
on June 30, 1997; and fifty-six (56) equal installments of _____________ Dollars
($_______.__), each 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 Asset Purchase Agreement dated as of
February 19, 1997, among Maker, Payee and Bent's Marine, Inc. If Payee
disputes Maker's claim to offset, Maker will make payments hereunder, with
respect to which it claims the right of offset, to Greenberger & Forman as
escrow agent for the parties pending resolution of the dispute regarding the
right of offset. Interest on the escrowed amounts will be paid to the party to
whom the amounts are paid when the dispute is resolved. This Note shall not be
assigned by Payee without the written consent of Maker.
<PAGE>
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 LOUISIANA, INC.
By: /s/ Ron Spradling
---------------------------------------------
Ron Spradling, Executive Vice President
<PAGE>
GUARANTY
--------
The undersigned hereby irrevocably and unconditionally guarantees the prompt
payment when due, and at all times thereafter, of all of Maker's indebtedness
evidenced by this Note, including interest thereon, 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: /s/ Ron Spradling
---------------------------------------
Ron Spradling, Executive Vice President
Date: February 19, 1997
<PAGE>
EXHIBIT B
CERTIFICATE OF PRESIDENT
OF
BENT'S MARINE, INC.
This Certificate is delivered pursuant to Section 7.2.1 of the Asset Purchase
Agreement dated as of February 19, 1997, among Travis Boating Center Louisiana,
Inc., Bent's Marine, Inc. and George and Carolyn Bent (the "Agreement"). Terms
used herein and not defined herein have the meanings assigned to them in the
Agreement.
I, George Bent, President of Bent's Marine, Inc., a Louisiana corporation,
do hereby certify that, to the best of my knowledge in my corporate capacity,
Seller has performed and complied in all material respects with each obligation,
agreement, covenant and condition required by the Agreement to be performed or
complied with by Seller at or prior to the Closing.
IN WITNESS WHEREOF, I have signed this Certificate on February 19, 1997.
/s/ George Bent
-----------------------------
George Bent, President
<PAGE>
EXHIBIT C
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, BENT'S MARINE, INC.,
a Louisiana corporation ("Seller"), for and in consideration of the payment of
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and pursuant to the Asset Purchase Agreement (the "Purchase
Agreement") dated as of February 19, 1997, by and among Seller, TRAVIS BOATING
CENTER LOUISIANA, INC., a Louisiana corporation ("Purchaser"), and George and
Carolyn Bent, does hereby transfer, grant, bargain, sell, assign and deliver to
Purchaser, its successors and assigns, the assets of Seller that are listed on
Schedules 1.1, 1.2 and 1.3 attached hereto, the Parts and Accessories, 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, assigned 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, other than
Permitted Encumbrances. 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.
<PAGE>
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 February 19,1997.
Seller:
BENT'S MARINE, INC.
By: /s/ George Bent
-----------------------------
George Bent, President
THE STATE OF LOUISIANA
PARISH OF __________ _
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)
-------------------------------
<PAGE>
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of
February 19, 1997, by and between TRAVIS BOATING CENTER LOUISIANA, INC., a
Louisiana corporation ("Buyer"), and BENT'S MARINE, INC., a Louisiana
corporation ("Seller"). Capitalized terms used herein without definition will
have the meanings assigned to them in the Purchase Agreement (defined below).
WHEREAS, Buyer, Seller and George and Carolyn Bent have entered into that
certain Asset 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:
BENT'S MARINE, INC.
By: /s/ George Bent
---------------------------------------
George Bent, President
Buyer:
TRAVIS BOATING CENTER LOUISIANA, INC.
By: /s/ Ron Spradling
---------------------------------------
Ron Spradling, Executive Vice President
<PAGE>
THE STATE OF LOUISIANA
PARISH OF __________ _
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 Louisiana 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 LOUISIANA
PARISH OF __________ _
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 Louisiana, Inc., a Louisiana 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:
<PAGE>
EXHIBIT E
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (the "Agreement"), dated as of February 19,
1997, is among TRAVIS BOATS & MOTORS, INC., a Texas corporation ("Travis"),
TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana 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 George and Carolyn Bent,
individuals residing at 3968 Maddon, Metairie, Louisiana 77002 (collectively,
"Owner").
WHEREAS, Buyer has agreed to acquire certain of the assets of Bent's Marine,
Inc., a Louisiana corporation ("Seller"), pursuant to that certain asset
purchase agreement dated February 19, 1997 (the "Purchase Agreement") among
Buyer, Seller and Owner (the capitalized terms used herein have the meanings
assigned to them in the Purchase Agreement unless otherwise defined herein);
and
WHEREAS, Owner owns 100% 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
tradename "Bent's Marine, Inc.", and all derivative uses of such name 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 12.
----------
12.1 Non-Competition. Owner will not, for any reason:
---------------
12.1.1 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 in the State of Louisiana
within 150 miles of the location of the Business.
12.1.2 Participate, directly or indirectly, in any business that competes
with Buyer and the Business at any Boat Show.
12.1.3 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 in the State of
Louisiana within 150 miles of the location of any store operated by Travis or
any Affiliate of Travis.
<PAGE>
12.1.4 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, 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 in the
State of Louisiana within 150 miles of the location of any store operated by
Buyer, Travis or any Affiliate of Travis.
12.2 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.
12.3 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, lender, guarantor, or in any other capacity.
12.4 George Bent's employment by, or ventures with, Travis or Buyer will not
be deemed a breach of the provisions of this Agreement.
Section 13
---------
13.1 Term. The term of this Agreement will commence on the date hereof and
will terminate on the earliest of: (a) February 19, 2002; (b) twelve months
from the date on which George Bent's employment by Buyer is terminated without
cause; or (c) the default by Buyer on the Promissory Note executed pursuant to
Section 2.1 of the Purchase Agreement.
13.2 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.
13.3 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.
<PAGE>
13.4 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.
13.5 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.
13.6 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.
13.7 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.
13.8 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: /s/ Ron Spradling
---------------------------------
---------------------------------
---------------------------------
TRAVIS BOATING CENTER LOUISIANA, INC.
By: /s/ Ron Spradling
---------------------------------
---------------------------------
---------------------------------
/s/ George Bent
---------------------------------
George Bent
/s/ Carolyn Bent
---------------------------------
Carolyn Bent
<PAGE>
EXHIBIT F
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (the "Agreement"), dated as of February 19,
1997, 1996, is among TRAVIS BOATS & MOTORS, INC., a Texas corporation
("Travis"), TRAVIS BOATING CENTER LOUISIANA, INC., a Louisiana 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 Bent's
Marine, Inc., a Louisiana corporation ("Seller") with an office for the purpose
of notice at 3968 Haddon, Metairie, Louisiana 77002.
WHEREAS, Buyer has agreed to acquire certain of the assets of Seller pursuant
to that certain asset purchase agreement dated February 19, 1997 (the "Purchase
Agreement") among Buyer, Seller and George and Carolyn Bent (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 "Bent's 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 in the State of Louisiana
within 150 miles of the location of the Business, except that Seller may sell
the inventory of the Business that was not purchased by Buyer.
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 in the State of
Louisiana 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 in the State of Louisiana within 150 miles of the location of any store
operated by Buyer, Travis or any Affiliate of Travis.
<PAGE>
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 the earliest of: (a) February 19, 2002; (b) twelve months
from the date on which George Bent's employment by Buyer is terminated without
cause; or (c) the default by Buyer on the Promissory Note executed pursuant to
Section 2.1 of the Purchase Agreement.
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
<PAGE>
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.
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: /s/ Ron Spradling
-------------------------------------
-------------------------------------
-------------------------------------
TRAVIS BOATING CENTER LOUISIANA,INC.
By: /s/ Ron Spradling
--------------------------------------
BENT'S MARINE, INC.
By: /s/ George Bent
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George Bent, President
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EXHIBIT G
CERTIFICATE OF EXECUTIVE VICE PRESIDENT
OF
TRAVIS BOATING CENTER LOUISIANA, INC.
This Certificate is delivered pursuant to Section 7.3.2 of the Asset Purchase
Agreement dated as of February 19, 1997, among Travis Boating Center Louisiana,
Inc., Bent's Marine, Inc., and George and Carolyn Bent (the "Agreement"). Terms
used herein and not defined herein have the meanings assigned to them in the
Agreement.
I, Ron Spradling, Executive Vice President of Travis Boating Center Louisiana,
Inc., a Louisiana corporation, do hereby certify that, to the best of my
knowledge in my corporate capacity, Buyer has performed and complied in all
material respects with each obligation, agreement, covenant and condition
required by the Agreement to be performed or complied with by Buyer at or prior
to the Closing.
IN WITNESS WHEREOF, I have signed this Certificate on February 19, 1997.
/s/ Ron Spradling
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Ron Spradling, Executive Vice President
