<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1998
REGISTRATION NO. 333-47873
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MARINEMAX, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 5551 59-3496957
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
WILLIAM H. MCGILL JR.,
CHAIRMAN OF THE BOARD
18167 U.S. 19 NORTH, SUITE 499
CLEARWATER, FLORIDA 33764
(813) 531-1700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
Copies to:
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ROBERT S. KANT, ESQ. CHRISTOPHER T. JENSEN, ESQ.
MICHELLE S. MONSEREZ, ESQ. MORGAN, LEWIS & BOCKIUS LLP
O'CONNOR, CAVANAGH, ANDERSON, 101 PARK AVENUE
KILLINGSWORTH & BESHEARS, P.A. NEW YORK, NEW YORK 10178
ONE EAST CAMELBACK (212) 309-6000
PHOENIX, ARIZONA 85012-1656
(602) 263-2400
</TABLE>
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S AGENT FOR SERVICE)
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 22, 1998
PROSPECTUS
4,780,569 SHARES
[MARINEMAX LOGO]
COMMON STOCK
------------------
Of the 4,780,569 shares of common stock, par value $.001 per share (the
"Common Stock"), offered hereby, 3,515,824 shares are being sold by MarineMax,
Inc. (the "Company") and 1,264,745 shares are being sold by certain stockholders
(the "Selling Stockholders"). See "Principal and Selling Stockholders." The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. Prior to the offering, there has not been a public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price per share will be between $14.00 and $16.00. See
"Underwriting" for information relating to the factors to be considered in
determining the initial public offering price. Application has been made to list
the Common Stock on the New York Stock Exchange under the symbol "HZO."
Of the 3,515,824 shares of Common Stock being offered by the Company,
1,861,200 shares are being offered to Brunswick Corporation ("Brunswick") at a
price per share equal to the Per Share Proceeds to Company set forth in the
table below. Brunswick has informed the Company that it intends to purchase all
of such shares. See "Sale of Shares to Brunswick."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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====================================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3) SELLING STOCKHOLDERS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share $ $ $ $
- --------------------------------------------------------------------------------------------------------------------
Total(4) $ $ $ $
====================================================================================================================
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(1) The shares to be sold to Brunswick will be at a price per share equal to
the Per Share Proceeds to Company.
(2) No underwriting discounts or commissions will be paid or received by the
Underwriters on the sale of the shares of Common Stock to Brunswick. See
"Sale of Shares to Brunswick." For information regarding indemnification
of the several Underwriters, see "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $2,500,000.
(4) The Selling Stockholders have granted the Underwriters a 30-day option to
purchase up to 437,905 additional shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised
in full, the total Price to the Public, Underwriting Discounts and
Commissions, and Proceeds to Selling Stockholders will be $ ,
$ , and $ , respectively, and the total Proceeds to Company
will not change.
------------------
The shares of Common Stock being offered by the Underwriters as described
herein are being offered by the several Underwriters named herein, subject to
prior sale, when, as and if accepted by them and subject to certain conditions.
It is expected that certificates for the shares of Common Stock offered hereby
will be available for delivery on or about , 1998 at the office of
Smith Barney Inc., 333 West 34th Street, New York, New York 10001.
------------------
SALOMON SMITH BARNEY WILLIAM BLAIR & COMPANY
May , 1998
<PAGE> 3
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
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PAGE
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Prospectus Summary.................. 3
Risk Factors........................ 8
Formation of the Company............ 20
Use of Proceeds..................... 23
Dividend Policy..................... 23
Capitalization...................... 24
Dilution............................ 25
Selected Financial Data............. 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 27
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PAGE
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Business............................ 32
Management.......................... 49
Principal and Selling
Stockholders...................... 54
Certain Transactions................ 56
Description of Capital Stock........ 57
Shares Eligible for Future Sale..... 60
Underwriting........................ 61
Sale of Shares to Brunswick......... 62
Legal Opinions...................... 62
Experts............................. 62
Additional Information.............. 63
Index to Financial Statements....... F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS, AND THE IMPOSITION
OF PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."
THIS PROSPECTUS INCLUDES TRADEMARKS OF COMPANIES OTHER THAN THE COMPANY.
THESE TRADEMARKS ARE THE PROPERTY OF THEIR HOLDERS.
All industry statistics referenced in this Prospectus (including those set
forth under "Business -- U.S. Recreational Boating Industry") are based on the
belief of the Company, which takes into account the experience (averaging more
than 21 years) of the Company's senior executives in the recreational boat
industry and available industry data.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless the
context otherwise requires, all references to "MarineMax" mean MarineMax, Inc.
prior to the effectiveness of the Mergers and Property Acquisitions
(collectively, the "Combination Transactions"), and all references to the
"Company" mean, as a combined company, MarineMax, Inc., the six recreational
boat dealers (the "Merged Companies") acquired by MarineMax in separate merger
transactions (the "Mergers"), and the property companies (the "Property
Companies") acquired by MarineMax in separate contribution transactions (the
"Property Acquisitions") and which own real properties used in the operations of
the Merged Companies. Unless otherwise indicated, the information set forth
herein assumes no exercise of the Underwriters' over-allotment option.
THE COMPANY
The Company is the largest recreational boat dealer in the United States.
Through 28 retail locations in Florida, Texas, California, Georgia, and Arizona,
the Company sells new and used recreational boats, including pleasure boats
(such as sport boats, sport cruisers, sport yachts, and yachts), fishing boats,
bass boats, pontoon boats, and high-performance boats, with a focus on premium
brands in each segment. The Company also sells related marine products,
including engines, trailers, parts, and accessories. In addition, the Company
arranges related boat financing, insurance, and extended service contracts;
provides repair and maintenance services; and offers boat brokerage services.
See "Business." The Company is the nation's largest retailer of Sea Ray, Boston
Whaler, and other boats manufactured by Brunswick Corporation ("Brunswick"),
which is the world's largest manufacturer of recreational boats. Sales of new
Brunswick boats accounted for 84% of the Company's new boat sales in calendar
1997, which the Company believes represented approximately 20% of all new Sea
Ray boat sales and approximately 5% of all Brunswick marine product sales during
that period. The Company acquired five of the Merged Companies and the Property
Companies on March 1, 1998 and acquired the sixth Merged Company on April 30,
1998. See "Formation of the Company." Each Merged Company is a party to a
10-year dealer agreement with Brunswick covering Sea Ray products. For the 12
months ended December 31, 1997, the Company had pro forma revenue of
approximately $233,779,000, pro forma operating income of approximately
$22,353,000, and pro forma net income of approximately $13,377,000 (assuming the
adjustments described herein had occurred as of January 1, 1997). MarineMax
itself, however, had no operations and generated no operating revenue prior to
its March 1, 1998 acquisition of five of the Merged Companies. The Company's
same-store sales increased by approximately 19% in calendar 1997, following 16%
and 15% increases in calendar 1996 and 1995, respectively.
The combination of the six Merged Companies permits the Company to
capitalize on the experience and success of each of the Merged Companies in
order to establish a new national standard of customer service and
responsiveness in the highly fragmented retail boating industry. The Merged
Companies were organized between 1946 and 1983, and each is the exclusive dealer
of Sea Ray boats in its geographic market and ranks in the top 15 Sea Ray
dealers in the United States. See "Formation of the Company." While the average
new boat retailer generated less than $3 million in annual sales in 1997, the
retail locations of the Merged Companies averaged $10 million in annual sales in
1997. As a result of the Company's emphasis on premium brand boats, the
Company's average selling price for a new boat in 1997 was approximately $39,000
compared to the industry average selling price of approximately $14,000. The
senior executives of the Merged Companies have an average of more than 21 years
of experience in the recreational boat industry and have maintained long-term
business and personal relationships with each other. The Company is adopting the
best practices of the Merged Companies as appropriate to enhance its ability to
attract more customers, foster an overall enjoyable boating experience, and
offer boat manufacturers stable and professional retail distribution. The
Company believes that its prime retail locations, extensive facilities, full
range of services, MarineMax Value-Price sales approach, and emphasis on
customer service and satisfaction before and after a boat sale are competitive
advantages and enable it to be more responsive to the needs of existing and
prospective customers. See "Business -- General."
3
<PAGE> 5
The recreational boating industry generated approximately $19.3 billion in
retail sales in 1997, including sales of new and used boats; marine products,
such as engines, trailers, equipment, and accessories; and related expenditures,
such as fuel, insurance, docking, storage, and repairs. Retail sales of new
boats, engines, and trailers accounted for approximately $10.0 billion of such
sales in 1997. The Company estimates that the boat retailing industry includes
more than 4,000 boat retailers, most of which are small retailers that operate
in a single market and provide varying degrees of merchandising, professional
management, and customer service. Based on the knowledge, experience, and
relationships of its senior executives as operators of privately owned dealers,
the Company believes that many dealers are finding it increasingly difficult to
make the managerial and capital commitments necessary to achieve higher customer
service levels and upgrade systems and facilities as required by boat
manufacturers, particularly during a period of stagnant industry growth. The
Company also believes that many dealers lack an exit strategy for their owners.
See "Business -- U.S. Recreational Boating Industry."
The Company's executive offices are located at 18167 U.S. 19 North, Suite
499, Clearwater, Florida 33764, and its telephone number is (813) 531-1700. The
Company was incorporated in the state of Delaware in January 1998.
STRATEGY
The Company's goal is to enhance its position as the leading operator of
recreational boat dealerships. Key elements of the Company's operating and
growth strategies include the following:
Operating Strategies
Implementing Best Practices. The Company is implementing the "best
practices" of each of the Merged Companies as appropriate throughout its
dealerships. In particular, the Company is phasing in throughout its dealerships
the MarineMax Value-Price sales approach, recently implemented at certain of its
dealerships. Under the MarineMax Value-Price approach, the Company sells its
boats at posted prices, generally representing a discount from the
manufacturer's suggested retail price, without further price negotiation,
thereby eliminating the anxieties of price negotiations that occur in most boat
purchases. In addition, the Company will adopt, where beneficial, the best
practices of each Merged Company in terms of location design and layout, product
purchases, maintenance and repair services (including extended service hours and
mobile or dockside services), product mix, employee training, and customer
education and services.
Achieving Operating Efficiencies and Synergies. The Company plans to
increase the operating efficiencies of and achieve certain synergies among its
dealerships in order to enhance internal growth and profitability. The Company
is centralizing certain administrative functions at the corporate level, such as
accounting, finance, insurance coverage, employee benefits, marketing, strategic
planning, legal support, purchasing and distribution, and management information
systems. Centralization of these functions should reduce duplicative expenses
and permit the dealerships to benefit from a level of scale and expertise that
would otherwise be unavailable to each dealership individually. The Company
expects to realize cost savings from reduced inventory carrying costs as a
result of purchasing boat inventories on a national level and directing boats to
dealership locations that can more readily sell such boats; lower financing
costs through new credit facilities; and volume purchase discounts and rebates
for certain marine products, supplies, and advertising.
Emphasizing Customer Satisfaction and Loyalty. The Company seeks to
achieve a high level of customer satisfaction and establish long-term customer
loyalty by creating an overall enjoyable boating experience beginning with the
negotiation-free purchase process. The Company further enhances and simplifies
the purchase process by offering financing and insurance at its retail locations
with competitive terms and streamlined turnaround. The Company provides the
customer with a thorough in-water orientation of boat operation as well as
ongoing boat safety, maintenance, and use seminars and demonstrations for the
customer's entire family. The Company continues its customer service after the
sale by leading and sponsoring Getaways! group boating trips to various
destinations, rendezvous gatherings, and on-the-water organized events to
provide its customers with pre-arranged opportunities to enjoy the pleasures of
the boating lifestyle.
4
<PAGE> 6
The Company also endeavors to provide superior maintenance and repair services,
often at the customer's wet slip and with extended service department hours, to
minimize the hassles of boat maintenance.
Operating with Decentralized Management. The Company has adopted a
decentralized approach to the operational management of its dealerships. The
decentralized management approach takes advantage of the extensive experience of
local managers, enabling them to implement policies and make decisions,
including the appropriate product mix, based on the needs of the local market.
Local management authority also fosters responsive customer service and promotes
long-term community and customer relationships. In addition, the centralization
of certain administrative functions at the corporate level enhances the ability
of local managers to focus their efforts on day-to-day dealership operations.
Utilizing Technology Throughout Operations. The Company believes that its
management information system, which was being utilized by each Merged Company
prior to the Mergers and was developed over the past six years through
cooperative efforts with a common vendor, enhances the Company's ability to
integrate successfully the operations of the Merged Companies and future
acquired dealers. The system facilitates the interchange of information and
enhances cross-selling opportunities throughout the Company. The system
integrates each level of operations on a Company-wide basis, including
purchasing, inventory, receivables, financial reporting and budgeting, and sales
management. The system also enables management to monitor each retail location's
operations on a daily basis in order to identify quickly areas requiring
additional focus.
Growth Strategies
Pursuing Strategic Acquisitions. The Company intends to capitalize upon
the significant consolidation opportunities available in the highly fragmented
recreational boat dealer industry by acquiring additional dealers and improving
their performance and profitability through the implementation of the Company's
operating strategies. The primary acquisition focus will be on well-established,
high-end recreational boat dealers in geographic markets not currently served by
the Company, particularly geographic markets with strong boating demographics,
such as the coastal states and the Great Lakes region. The Company also may seek
to acquire boat dealers that, while located in attractive geographic markets,
have not been able to realize favorable market share or profitability and that
can benefit substantially from the Company's systems and operating strategies.
The Company may expand its range of product lines and its market penetration by
acquiring dealers that distribute recreational boat product lines different from
those currently offered by the Company. The Company believes it will be regarded
as an attractive acquiror by boat dealers because of (i) the Company's
historical performance and the experience and reputation of its management team
within the industry; (ii) the Company's decentralized operating strategy, which
enables the managers of an acquired dealer to continue their involvement in
dealership operations; (iii) the ability of management and employees of an
acquired dealer to participate in the Company's growth and expansion through
potential stock ownership and career advancement opportunities; and (iv) the
ability to offer liquidity to the owners of acquired dealers through the receipt
of Common Stock or cash. The Company's acquisition strategy depends on the
consent of Brunswick and possibly other manufacturers to the acquisitions of
their dealers. See "Risk Factors -- Necessity for Manufacturers' Consent to
Dealer Acquisitions and Market Expansion." Brunswick has agreed to cooperate in
good faith with the Company and not to unreasonably withhold its consent to the
acquisition by the Company each year of Sea Ray boat dealers with aggregate
total revenue not exceeding 20% of the Company's revenue in its prior fiscal
year to the extent such dealers desire to be acquired by the Company. Brunswick
consented to the acquisition of Stovall Marine, Inc. ("Stovall") by the Company
(the "Stovall Acquisition") on April 30, 1998 and agreed that the Stovall
Acquisition would not count against the 20% benchmark. See
"Business -- Brunswick Agreement Relating to Acquisitions." The Company has no
binding agreements, understandings, arrangements, or negotiations to effect any
additional acquisitions.
Opening New Facilities. The Company intends to establish additional retail
facilities in its existing and new territories. The Company believes that the
demographics of its existing geographic territories support the opening of
additional facilities and has opened two new retail locations since the Mergers
that occurred in March 1998. The Company also plans to reach new customers by
expanding various innovative retail formats developed by the Merged Companies,
such as mall stores and floating retail facilities. The Company currently
operates one mall store and four floating retail facilities, and plans to open a
new mall store in 1998. Costs to open a new retail facility depend on many
factors, including whether the facility is leased or purchased and the
5
<PAGE> 7
location of the facility. The Company is not currently engaged in any
negotiations with respect to opening any new facilities. The Company's Dealer
Agreements with Brunswick require Brunswick's consent to open, close, or change
retail locations that sell Sea Ray products, which consent cannot be
unreasonably withheld, and other dealer agreements generally contain similar
provisions. See "Risk Factors -- Risks Related to Internal Growth and Operating
Strategies; Management of Growth" and "Business -- Dealer Agreements With
Brunswick."
Offering Additional Product Lines and Services. The Company plans to offer
throughout its existing and acquired dealerships product lines that have been
offered only at certain of its locations. The Company also may obtain additional
product lines through the acquisition of distribution rights directly from
manufacturers and the acquisition of dealerships with distribution rights. In
addition, the Company plans to increase its used boat sales and boat brokerage
services through an increased emphasis on these activities and cooperative
efforts among its dealerships. The Company also plans to offer enhanced
financing and insurance packages designed to better serve customers and thereby
increase sales and improve profitability.
FORMATION AND STRUCTURE OF THE COMPANY
MarineMax was founded in January 1998 to acquire five businesses that
operated in the recreational boat industry under their principal owners for an
average of more than 21 years. MarineMax itself, however, conducted no
operations until the acquisition of five of the Merged Companies on March 1,
1998. The Company acquired the sixth Merged Company on April 30, 1998. See
"Formation of the Company."
The Merged Companies consist of Bassett Boat Company of Florida (which
operates four retail locations in Florida); Louis DelHomme Marine (which
operates seven retail locations in Texas); Gulfwind USA, Inc. (which operates
three retail locations in Florida); Gulfwind South, Inc. (which operates two
retail locations in Florida); Harrison's Boat Center, Inc. and Harrison's Marine
Centers of Arizona, Inc. (which operate eight retail locations in California and
Arizona); and Stovall Marine, Inc. (which operates four retail locations in
Georgia). The Merged Companies are continuing their operations as wholly owned
subsidiaries of the Company. See "Formation of the Company -- The Merged
Companies and the Property Companies."
The senior executives of the Merged Companies have entered into five-year,
full-time employment agreements with the Company, and senior executives
constitute a majority of the Company's Board of Directors and executive
officers. The senior executive of each Merged Company will continue to be
responsible for the day-to-day operations of such Merged Company. See "Formation
of the Company," "Management," "Principal and Selling Stockholders," and
"Certain Transactions."
THE OFFERING
Common Stock offered by the
Company........................... 3,515,824 shares(1)
Common Stock offered by the
Selling Stockholders.............. 1,264,745 shares(2)
Common Stock to be outstanding
after the Offering................ 13,200,000 shares(3)
Use of proceeds................... To repay indebtedness, to enhance the
Company's management information system,
and to provide working capital and funds
for future acquisitions. See "Use of
Proceeds."
Proposed New York Stock
Exchange symbol................. HZO
- ---------------
(1) Includes 1,861,200 shares being offered to Brunswick. See "Sale of Shares to
Brunswick."
(2) Assumes the Underwriters' over-allotment option is not exercised. See
"Underwriting."
(3) Does not include (a) 1,980,000 shares of Common Stock reserved for issuance
under the Company's 1998 Incentive Stock Plan, or (b) 500,000 shares of
Common Stock reserved for issuance under the Company's 1998 Employee Stock
Purchase Plan. See "Management -- 1998 Incentive Stock Plan" and
"Management -- Employee Stock Purchase Plan."
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
6
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SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
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NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------- -----------------------------------
PRO FORMA
AS ADJUSTED
1993 1994 1995 1996 1996 1997 1997(1)
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STATEMENT OF OPERATIONS DATA:
Revenue................................. $111,543 $127,729 $152,889 $175,060 $136,325 $ 169,675 $ 188,419
Cost of sales........................... 86,799 98,295 116,896 132,641 101,993 127,418 141,287
-------- -------- -------- -------- -------- --------- ----------
Gross profit............................ 24,745 29,434 35,992 42,419 34,332 42,257 47,131
Selling, general, and
administrative expenses............... 19,637 22,925 28,374 34,449 22,035 25,723 25,032
-------- -------- -------- -------- -------- --------- ----------
Income (loss) from operations........... 5,108 6,510 7,619 7,970 12,297 16,535 22,099
Interest expense, net................... 1,140 392 949 1,268 1,006 1,381 353
-------- -------- -------- -------- -------- --------- ----------
Income (loss) before tax provision and
unusual item.......................... 3,968 6,118 6,670 6,702 11,290 15,154 21,746
Unusual item --
settlement obligation................. -- -- -- -- -- -- --
-------- -------- -------- -------- -------- --------- ----------
Income (loss) before
tax provision......................... 3,968 6,118 6,670 6,702 11,290 15,154 21,746
Income tax provision (benefit).......... 1 1 (49) 21 527 411 8,430
-------- -------- -------- -------- -------- --------- ----------
Net income (loss)....................... $ 3,967 $ 6,117 $ 6,719 $ 6,681 $ 10,763 $ 14,743 $ 13,316
======== ======== ======== ======== ======== ========= ==========
Net income (loss) per share: Basic............................................................ $ 1.89 $ 1.01
========= ==========
Weighted average number of shares: Basic...................................................... 7,799,844 13,200,000
========= ==========
OTHER DATA:
Number of stores(3)..................... 15 17 20 19 19 20
Sales per store(4)...................... $ 8,004 $ 8,353 $ 8,706 $ 9,438 $ 7,113 $8,952
Same-store sales growth(5).............. 12% 12% 15% 16% 8% 22%
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
----------------------------------
PRO FORMA
AS ADJUSTED
1997 1998 1998(2)
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STATEMENT OF OPERATIONS DATA:
Revenue................................. $87,779 $ 103,510 $ 111,154
Cost of sales........................... 68,531 80,438 86,662
------- --------- ----------
Gross profit............................ 19,247 23,072 24,493
Selling, general, and
administrative expenses............... 20,075 24,032 20,796
------- --------- ----------
Income (loss) from operations........... (828) (960) 3,697
Interest expense, net................... 525 1,000 165
------- --------- ----------
Income (loss) before tax provision and
unusual item.......................... (1,353) (1,961) 3,532
Unusual item --
settlement obligation................. -- 15,000 15,000
------- --------- ----------
Income (loss) before
tax provision......................... (1,353) (16,961) (11,468)
Income tax provision (benefit).......... (485) (4,581) (4,506)
------- --------- ----------
Net income (loss)....................... $ (868) $ (12,380) $ (6,962)
======= ========= ==========
Net income (loss) per share: Basic...... $ (1.35) $ (0.53)
========= ==========
Weighted average number of shares: Basic 9,191,870 13,200,000
========= ==========
OTHER DATA:
Number of stores(3)..................... 21 24
Sales per store(4)...................... $ 4,592 $ 5,149
Same-store sales growth(5).............. 24% 19%
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(6) AS ADJUSTED(7)
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BALANCE SHEET DATA:
Working capital............................................. $ 1,191 $ 1,215 $ 39,171
Total assets................................................ 108,275 124,171 130,348
Long-term debt (including current portion).................. 10,657 10,657 1,899
Total stockholders' equity.................................. 4,863 11,066 57,612
</TABLE>
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(1) Pro forma as adjusted 1997 gives effect to (a) the Stovall Acquisition, (b)
certain pro forma adjustments to the historical financial statements, and
(c) the consummation of the Offering. See the Pro Forma Consolidated
Financial Statements and notes thereto for a description of the pro forma
adjustments.
(2) Pro forma as adjusted 1998 gives effect to (a) the Stovall Acquisition, (b)
certain pro forma adjustments to the historical financial statements, and
(c) the consummation of the Offering. See the Pro Forma Consolidated
Financial Statements and notes thereto for a description of the pro forma
adjustments.
(3) Includes only those stores open at period end.
(4) Includes only those stores open for the entire preceding 12-month period.
(5) New stores are included in the comparable base at the beginning of the
store's thirteenth month of operations.
(6) The pro forma balance sheet has been adjusted to give effect to (a) the
Stovall Acquisition, and (b) certain pro forma adjustments to the historical
financial statements. See the Pro Forma Consolidated Financial Statements
and notes thereto for a description of the pro forma adjustments.
(7) Adjusted to reflect the consummation of the Offering and the application of
the estimated net proceeds to the Company therefrom. See "Use of Proceeds"
and the Pro Forma Consolidated Financial Statements and notes thereto for a
further description of the application of the net proceeds.
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RISK FACTORS
An investment in shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should consider carefully the following
risk factors, in addition to the other information contained in this Prospectus,
in evaluating an investment in shares of Common Stock offered hereby. This
Prospectus contains forward-looking statements that involve risks and
uncertainties and address, among other things, the Company's acquisition and
expansion strategy, use of proceeds, capital expenditures, liquidity,
third-party contractual arrangements, cost-reduction strategy, integration of
acquired companies, and product demand. Actual results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including those set forth below.
RECENTLY COMBINED OPERATIONS; RISKS OF INTEGRATION
MarineMax was founded in January 1998 to acquire five businesses that
operated in the recreational boat industry under their principal owners for an
average of more than 21 years, but MarineMax itself conducted no operations and
generated no sales or revenue until the acquisitions of five of the Merged
Companies on March 1, 1998. The Merged Companies operated independently prior to
the Mergers, and the Company may not be able to integrate these businesses
successfully on an economic basis. The pro forma consolidated financial results
of MarineMax cover periods when MarineMax and the Merged Companies were not
under common management or control and are not necessarily indicative of the
results that would have been achieved if MarineMax and the Merged Companies had
been operated on an integrated basis or the results that may be realized on a
consolidated basis in the future. The Company had revenue of approximately $22.2
million for the month of March 1998.
The success of the Company will depend, in part, on the Company's ability
to integrate the operations of the Merged Companies and other dealerships it
acquires, including centralizing certain functions to achieve cost savings and
pursuing programs and processes that promote cooperation and the sharing of
opportunities and resources among its dealerships. The Company's senior
executives have operated independently in the recreational boat industry and
have been assembled only recently as a management team. Management may not be
able to oversee the combined entity efficiently or to implement effectively the
Company's growth and operating strategies. To the extent that the Company is
able to implement successfully its acquisition strategy, the resulting growth of
the Company will place significant additional demands on the Company's
management and infrastructure. The Company's failure to implement successfully
its strategies or operate effectively the combined entity could have a material
adverse effect on the Company's business, financial condition, and results of
operations. These effects could include lower revenue, higher cost of sales,
increased selling, general, and administrative expenses, and reduced margins on
a consolidated basis. See "Formation of the Company," "Business -- Strategy,"
and "Management."
RELIANCE ON BRUNSWICK AND OTHER KEY MANUFACTURERS
Approximately 84% of the Company's revenue in calendar 1997 was derived
from sales of products manufactured by Brunswick, including 83% from Brunswick's
Sea Ray division. The remainder of the Company's revenue from new boat sales in
calendar 1997 was derived from sales of products from a limited number of other
manufacturers, none of which accounted for more than 10% of the Company's
revenue. The Company's success depends to a significant extent on the continued
popularity and reputation for quality of the boating products of its
manufacturers, particularly Brunswick's Sea Ray boat lines. In addition, the
financial condition, production efficiency, product development, and management
and marketing capabilities of the Company's manufacturers, particularly
Brunswick's Sea Ray division given the Company's reliance on Sea Ray, could have
a substantial impact on the Company's business. To ensure adequate inventory
levels to support the Company's expansion, it may be necessary for Brunswick and
other manufacturers to increase production levels or allocate a greater
percentage of their production to the Company. In the event that the operations
of Brunswick or the Company's other manufacturers were interrupted or
discontinued, the Company could experience inventory shortfalls, disruptions, or
delays with respect to unfilled purchase orders then outstanding. Although the
Company believes that adequate alternate sources would be available that could
replace any manufacturer other than Brunswick as a product source, there can be
no assurance that such
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alternate sources will be available at the time of any such interruption or that
alternative products will be available at comparable quality and prices.
Through the Merged Companies, the Company maintains Dealer Agreements with
Brunswick covering Sea Ray products. The Dealer Agreement with each of the
Merged Companies has a 10-year term and provides for the lowest product prices
charged by the Sea Ray division of Brunswick from time to time to other domestic
Sea Ray dealers, subject to the dealer meeting all the requirements and
conditions of Sea Ray's applicable programs and the right of Brunswick in good
faith to charge lesser prices to other dealers to meet existing competitive
circumstances, for unusual and non-ordinary business circumstances, or for
limited duration promotional programs. The agreements do not give the Company
the exclusive right to sell Sea Ray product lines within any particular
territory or restrict the Company from selling competing products. See
"Business -- Dealer Agreements With Brunswick."
As is typical in the industry, the Company deals with each of its
manufacturers, other than the Sea Ray division of Brunswick, pursuant to
renewable dealer agreements. These agreements do not contain any contractual
provisions concerning product pricing or required purchasing levels. Pricing is
generally established on a model year basis, but is subject to change at the
manufacturer's sole discretion. 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. In addition, the timing, structure, and
amount of manufacturer sales incentives and rebates could impact the timing and
profitability of the Company's sales. See "Risk Factors -- Boat Manufacturers'
Control Over Dealers" and "Business -- Operations -- Suppliers and Inventory
Management."
IMPACT OF GENERAL ECONOMIC CONDITIONS; DISCRETIONARY CONSUMER SPENDING; AND
CHANGES IN TAX LAWS
The Company's operations depend upon a number of factors relating to or
affecting consumer spending for luxury goods, such as recreational boats. The
Company's operations may be adversely affected by unfavorable local, regional,
or national economic developments or by uncertainties regarding future economic
prospects that reduce consumer spending in the markets served by the Company.
Consumer spending on luxury goods can also be adversely affected as a result of
declines in consumer confidence levels, even if prevailing economic conditions
are favorable. In an economic downturn, consumer discretionary spending levels
generally decline, often resulting in disproportionately large reductions in the
sale of luxury goods. Similarly, rising interest rates could have a negative
impact on consumers' ability or willingness to finance boat purchases, which
could also adversely affect the ability of the Company to sell its products.
Local influences, such as corporate downsizing and military base closings, also
could adversely affect the Company's operations in certain markets. There can be
no assurance that the Company could maintain its profitability during any such
period of adverse economic conditions or low consumer confidence. Changes in
federal and state tax laws, such as an imposition of luxury taxes on certain new
boat purchases, also could influence consumers' decisions to purchase products
offered by the Company and could have a negative effect on the Company's sales.
For example, during 1991 and 1992 the federal government imposed a luxury tax on
new recreational boats with sales prices in excess of $100,000, which coincided
with a sharp decline in boating industry sales from a high of more than $17.9
billion in the late 1980s to a low of $10.3 billion in 1992. See "Business --
U.S. Recreational Boating Industry."
INDUSTRY FACTORS
The recreational boating industry is cyclical and has been stagnant in
terms of overall revenue growth over the last 10-year period. General economic
conditions, consumer spending patterns, federal tax policies, and the cost and
availability of fuel can impact overall boat purchases. See "Risk
Factors -- Impact of General Economic Conditions; Discretionary Consumer
Spending; and Changes in Tax Laws" and "Risk Factors -- Fuel Prices and Supply."
Industry sources attribute the lack of increase in overall boat purchases to
increased competition from other recreational activities, perceived hassles of
boat ownership, and relatively poor customer service and education throughout
the retail boat industry. Although the Company's strategy addresses many of
these industry factors and the Company has achieved significant growth during
the period of stagnant industry growth, there can be no assurance that the
cyclical nature of the recreational boating
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industry or the lack of industry growth will not adversely affect the Company's
business, financial condition, or results of operations in the future. See
"Business -- U.S. Recreational Boating Industry."
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
The Company intends to grow significantly through the acquisition of
additional recreational boat dealers. This strategy will entail reviewing and
potentially reorganizing acquired business operations, corporate infrastructure
and systems, and financial controls. Unforeseen expenses, difficulties, and
delays frequently encountered in connection with rapid expansion through
acquisitions could inhibit the Company's growth and negatively impact
profitability. There can be no assurance that suitable acquisition candidates
will be identified, that acquisitions of such candidates will be consummated, or
that the operations of any acquired businesses will be successfully integrated
into the Company's operations and managed profitably without substantial costs,
delays, or other operational or financial difficulties. In addition, increased
competition for acquisition candidates may increase purchase prices for
acquisitions to levels beyond the Company's financial capability or to levels
that would not result in the returns required by the Company's acquisition
criteria. As of the date of this Prospectus, the Company has no binding
agreements, understandings, arrangements, or negotiations to effect any
additional acquisitions. The Company may issue Common Stock or incur substantial
indebtedness in making future acquisitions. See "Risk Factors -- Future Capital
Needs; Debt Service Requirements; Possible Dilution Through Issuance of Stock,"
"Formation of the Company -- The Mergers and Property Acquisitions," and
"Certain Transactions -- The Mergers and Property Acquisitions." The size,
timing, and integration of any future acquisitions may cause substantial
fluctuations in operating results from quarter to quarter. Consequently,
operating results for any quarter may not be indicative of the results that may
be achieved for any subsequent quarter or for a full fiscal year. These
fluctuations could adversely affect the market price of the Common Stock. See
"Risk Factors -- No Prior Market and Possible Volatility of Stock Price."
The Company's ability to continue to grow through the acquisition of
additional dealers will depend upon (i) the availability of suitable acquisition
candidates at attractive purchase prices, (ii) the Company's ability to compete
effectively for available acquisition opportunities, and (iii) the availability
of funds or Common Stock with a sufficient market price to complete the
acquisitions. See "Business -- Strategy." The Company's future growth through
acquisitions also will depend upon its ability to obtain the requisite
manufacturer approvals. Alternatively, one or more manufacturers may attempt to
impose further restrictions on the Company in connection with their approval of
acquisitions. See "Risk Factors -- Necessity for Manufacturers' Consent to
Dealer Acquisitions and Market Expansion."
NECESSITY FOR MANUFACTURERS' CONSENT TO DEALER ACQUISITIONS AND MARKET EXPANSION
Brunswick's dealer agreement with each Merged Company by its terms required
the dealer to obtain Brunswick's consent to any change in the ownership of the
dealer. Brunswick and the Company disputed the applicability of the change in
control provisions to the March 1998 Mergers. In order to avoid a long, costly,
and disruptive dispute, the Company and Brunswick entered into a Settlement
Agreement on March 12, 1998 under which Brunswick consented to the changes in
the ownership of five of the Merged Companies resulting from the Mergers and the
Company agreed to pay Brunswick $15.0 million, together with accrued interest,
no later than December 31, 1998. In April 1998, Brunswick consented to the
Stovall Acquisition. See "Formation of the Company -- The Mergers and Property
Acquisitions."
The Company may be required to obtain the consent of Brunswick and various
other manufacturers prior to the acquisition of other dealers. In determining
whether to approve acquisitions, manufacturers may consider many factors,
including the financial condition and ownership structure of the Company.
Further, manufacturers may impose conditions on granting their approvals for
acquisitions, including a limitation on the number of such manufacturers'
dealers that may be acquired by the Company. The Company's ability to meet
manufacturers' requirements for approving future acquisitions will have a direct
bearing on the Company's ability to complete acquisitions and effect its growth
strategy. There can be no assurance that a manufacturer will not terminate its
dealer agreement, refuse to renew its dealer agreement, refuse to approve
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future acquisitions, or take other action that could have a material adverse
effect on the Company's acquisition program.
The Company's growth strategy also entails expanding its product lines and
geographic scope by obtaining additional distribution rights from its existing
and new manufacturers. While the Company believes it will be successful in
obtaining such distribution rights, there can be no assurance that such
distribution rights will be granted to the Company or that it can obtain
suitable alternative sources of supply if the Company is unable to obtain such
distribution rights. The inability of the Company to expand its product lines
and geographic scope by obtaining additional distribution rights could have a
material adverse effect on the Company's business, financial condition, and
results of operations.
On April 28, 1998, the Company and Brunswick entered into an agreement
providing for Brunswick to cooperate in good faith and not to unreasonably
withhold its consent to the acquisitions each year by the Company of Sea Ray
boat dealers with aggregate total revenue not exceeding 20% of the Company's
revenue in its prior fiscal year. The Stovall Acquisition will not count against
the 20% benchmark. Any acquisitions in excess of the 20% benchmark will be at
Brunswick's discretion. In the event that the Company's sales of Sea Ray boats
exceed 49% of the sales of Sea Ray boats by all Sea Ray boat dealers (including
the Company) in any fiscal year of Brunswick, the agreement provides that
Company and Brunswick will negotiate in good faith the standards for
acquisitions of Sea Ray boat dealers by the Company during Brunswick's next
succeeding fiscal year, but that Brunswick may grant or withhold its consent to
any such acquisition in its sole discretion for as long as the Company's Sea Ray
boat sales exceed the 49% benchmark.
BOAT MANUFACTURERS' CONTROL OVER DEALERS
Historically, boat manufacturers, including Brunswick, have exercised
significant control over their dealers, restricted them to specified locations,
and retained approval rights over changes in management and ownership. The
continuation of the Company's dealer agreements with most manufacturers,
including Brunswick, is contingent upon, among other things, the Company's
achieving stated goals for customer satisfaction ratings and market share
penetration in the market served by the applicable dealership. Failure to meet
the customer satisfaction and market share goals set forth in any dealer
agreement could result in the imposition of additional conditions in subsequent
dealer agreements, termination of such dealer agreement by the manufacturer,
limitations on boat inventory allocations, reductions in reimbursement rates for
warranty work performed by the dealer, or denial of approval of future
acquisitions. See "Business -- Dealer Agreements With Brunswick."
The Company's dealer agreements with manufacturers, including Brunswick,
generally do not give the Company the exclusive right to sell those
manufacturers' products within a given geographical area. Accordingly, a
manufacturer, including Brunswick, could authorize another dealer to start a new
dealership in proximity to one or more of the Company's locations, or an
existing dealer could move a dealership to a location that would be directly
competitive with the Company. Such an event could have a material adverse effect
on the Company and its operations. See "Business -- Dealer Agreements With
Brunswick."
The Company's dealer agreements, including those with Brunswick, provide
for termination for a variety of causes. The Company believes that it has been
and is in material compliance with all of its dealer agreements. The Company
currently believes that it will be able to renew all of the dealer agreements
upon expiration, but no such assurance can be given. See
"Business -- Operations -- Suppliers and Inventory Management" and
"Business -- Dealer Agreements With Brunswick."
FUTURE CAPITAL NEEDS; DEBT SERVICE REQUIREMENTS; POSSIBLE DILUTION THROUGH
ISSUANCE OF STOCK
The Company's future capital requirements will depend upon the size,
timing, and structure of future acquisitions and its working capital and general
corporate needs. A substantial portion of the proceeds of the Offering will be
applied to discharge certain liabilities of the Merged Companies and the
Property Companies outstanding at the effectiveness of the Mergers and the
Property Acquisitions, including $8.8 million of long-term indebtedness. To the
extent that the Company finances future acquisitions in whole or in part through
the issuance of Common Stock or securities convertible into or exercisable for
Common Stock, existing stockholders will experience a dilution in the voting
power of their Common Stock and earnings per share
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could be negatively impacted. The extent to which the Company will be able or
willing to use the Common Stock for acquisitions will depend on the market value
of its Common Stock from time to time and the willingness of potential sellers
to accept Common Stock as full or partial consideration. The inability of the
Company to use its Common Stock as consideration, to generate cash from
operations, or to obtain additional funding through debt or equity financings in
order to pursue its acquisition program could materially limit the Company's
growth.
Any borrowings made to finance future acquisitions or for operations could
make the Company more vulnerable to a downturn in its operating results, a
downturn in economic conditions, or increases in interest rates on borrowings
that are subject to interest rate fluctuations. If the Company's cash flow from
operations is insufficient to meet its debt service requirements, the Company
could be required to sell additional equity securities, refinance its
obligations, or dispose of assets in order to meet its debt service
requirements. In addition, it is likely that any credit arrangements will
contain financial and operational covenants and other restrictions with which
the Company must comply, including limitations on capital expenditures and the
incurrence of additional indebtedness. There can be no assurance that such
financing will be available if and when needed by the Company or will be
available on terms acceptable to the Company. The failure to obtain sufficient
financing on favorable terms and conditions could have a material adverse effect
on the Company's growth prospects and its business, financial condition, and
results of operations.
The Company has a three-year, $105 million revolving line of credit, which
the Company believes is sufficient for its anticipated needs and reflects
competitive terms and conditions. Certain of the Company's assets, principally
boat inventories, are pledged to secure the line of credit and other debt. While
the Company believes it will continue to obtain adequate financing from lenders,
there can be no assurance that such financing will be available to the Company.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Strategy."
The Company does not itself incur credit risk in connection with its
participation in financing the boat purchases of its customers. Instead, the
Company originates these contracts for sale to independent financial
institutions that provide credit for the Company's boat purchasers in a timely
and efficient manner and at competitive rates in accordance with existing
pre-sale agreements between the Company and such financial institutions.
RISKS RELATED TO INTERNAL GROWTH AND OPERATING STRATEGIES; MANAGEMENT OF GROWTH
In addition to pursuing growth by acquiring boat dealers, the Company
intends to continue to pursue a strategy of growth through opening new retail
locations and offering new products in its existing and new territories.
Accomplishing these goals for expansion will depend upon a number of factors,
including the identification of new markets in which the Company can obtain
distribution rights to sell its existing or additional product lines, the
Company's financial capabilities, the hiring, training, and retention of
qualified personnel, and the timely integration of new retail locations into
existing operations. The strategy of growth through opening new retail locations
will further depend upon the Company's ability (i) to obtain the reliable data
necessary to determine the size and product preferences of such potential
markets in which the Company believes it can obtain adequate market penetration
at favorable operating margins without the acquisition of an existing dealer,
and (ii) to locate or construct suitable facilities at a reasonable cost in
those new markets. Costs to open a new retail facility depend on many factors,
including whether the facility is leased or purchased and the location of the
facility. The Company is not currently engaged in any negotiations with respect
to opening any new facilities. The Company's Dealer Agreements with Brunswick
require Brunswick's consent to open, close, or change retail locations to sell
Sea Ray products, which consent cannot be unreasonably withheld, and other
dealer agreements generally contain similar provisions. See "Business -- Dealer
Agreements With Brunswick." There can be no assurance that the Company will be
able to open and operate new retail locations or introduce new product lines on
a timely or profitable basis. Moreover, the costs associated with opening new
retail locations or introducing new product lines may adversely affect the
Company's profitability.
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As a result of these growth strategies, the Company expects that management
will expend significant time and effort in opening and acquiring new retail
locations and introducing new products. There can be no assurance that the
Company's systems, procedures, controls, or financial resources will be adequate
to support the Company's expanding operations. The inability of the Company to
manage its growth effectively could have a material adverse effect on the
Company's business, financial condition, and results of operations.
The Company's planned growth also will impose significant added
responsibilities on members of senior management and require it to identify,
recruit, and integrate additional senior level managers. There can be no
assurance that suitable additions to management can be identified, hired, or
retained. See "Risk Factors -- Necessity for Manufacturers' Consent to Dealer
Acquisitions and Market Expansion" and "Business -- Strategy."
IMPACT OF SEASONALITY AND WEATHER ON OPERATIONS
The Company's business, as well as the entire recreational boating
industry, is highly seasonal, with seasonality varying in different geographic
markets. During the two-year period ended December 31, 1997, the average net
sales for the quarterly periods ended March 31, June 30, September 30, and
December 31 represented 23%, 31%, 25%, and 21%, respectively, of the Company's
average annual net sales. With the exception of Florida, the Company generally
realizes significantly lower sales in the quarterly period ending December 31
with boat sales generally improving in January with the onset of the public boat
and recreation shows. The Company's current operations are concentrated in the
more temperate regions of the United States, and its business could become
substantially more seasonal if it acquires dealers that operate in colder
regions of the United States.
The Company's business is also significantly affected by weather patterns,
which may adversely impact the Company's operating results. For example, drought
conditions or reduced rainfall levels, as well as excessive rain, may force
boating areas to close or render boating dangerous or inconvenient, thereby
curtailing customer demand for the Company's products. Although the Company's
geographic diversity and its future geographic expansion will reduce the overall
impact on the Company of adverse weather conditions in any one market area, such
conditions will continue to represent potential material adverse risks to the
Company and its future operating performance. Many of the Company's dealerships
sell boats to customers for use on reservoirs, thereby subjecting the Company's
business to the continued viability of these reservoirs for boating use. As a
result of the foregoing and other factors, the Company's operating results in
some future quarters could be below the expectations of stock market analysts
and investors. In such event, there could be an immediate and significant
adverse effect on the trading price of the Common Stock. See "Risk Factors -- No
Prior Market and Possible Volatility of Stock Price," "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Quarterly Data
and Seasonality," and "Business -- Seasonality."
COMPETITION
The Company operates in a highly competitive environment. In addition to
facing competition generally from non-boating recreation businesses seeking to
attract discretionary spending dollars, the recreational boat industry itself is
highly fragmented, resulting in intense competition for customers, product
distribution rights, and suitable retail locations, particularly on or near
waterways. Such competition is intensified during periods of stagnant industry
growth, such as currently exists.
The Company competes primarily with single-location boat dealers and, with
respect to sales of marine parts, accessories, and equipment, with national
specialty marine parts and accessories stores, catalog retailers, sporting goods
stores, and mass merchants. Competition among boat dealers is based on the
quality of available products, the price and value of the products, and
attention to customer service. There is significant competition both within
markets currently being served by the Company and in new markets that the
Company may enter. The Company competes in each of its markets with retailers of
brands of boats and engines not sold by the Company in that market. In addition,
several of the Company's competitors, especially those selling marine equipment
and accessories, are large national or regional chains that have substantial
financial, marketing, and other resources. Private sales of used boats represent
an additional source of competition. See "Business -- Competition."
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INCOME FROM FINANCING, INSURANCE, AND EXTENDED SERVICE CONTRACTS
A portion of the Company's income results from referral fees derived from
the placement of customer financing, insurance products, and extended service
contracts (collectively, "F&I products"), the most significant component of
which is the participation and other fees resulting from the Company's sale of
customer financing contracts. The Company does not act as an insurance broker or
agent nor does it issue insurance policies on behalf of insurers. During 1997,
F&I products accounted for approximately 2.3% of revenue. The availability of
financing for the Company's boat purchasers and the level of participation and
other fees received by the Company in connection with such financing depend on
the particular agreement between the Company and the lender. These lenders may
impose terms in their boat financing arrangements with the Company that may be
unfavorable to the Company or its customers, resulting in reduced demand for its
customer financing programs and lower referral fees. The reduction of profit
margins on sales of F&I products or the lack of demand for or the unavailability
of these products could have a material adverse effect on the Company's
business, financial condition, and results of operations. Furthermore, under
optional extended service contracts with customers, the Company may experience
significant warranty claims that, in the aggregate, may be material to the
Company's business. See "Business -- Products and Services -- F&I Products."
DEPENDENCE ON KEY PERSONNEL
The Company believes its success depends, in large part, upon the
continuing efforts and abilities of its key management personnel, including
William H. McGill Jr., Richard R. Bassett, Louis R. DelHomme Jr., Richard C.
LaManna Jr., and Paul Graham Stovall, each of whom is a director and officer of
the Company and the senior executive of one of the Merged Companies. Although
the Company has a five-year employment agreement with each of these members of
key management, the Company cannot assure that such individuals will remain with
the Company throughout the term of the agreements, or thereafter. As a result of
the Company's decentralized operating strategy, the Company also relies on these
individuals and their management teams to continue the operations of the Merged
Companies. In addition, the Company likely will depend on the senior management
of any significant dealers it acquires in the future. The loss of the services
of one or more of these key employees before the Company is able to attract and
retain qualified replacement personnel could adversely affect the Company's
business. The Company maintains a key-man life insurance policy on Mr. McGill in
the amount of $6.0 million. See "Management."
PRODUCT AND SERVICE LIABILITY RISKS
Products sold or serviced by the Company may expose it to potential
liability for personal injury or property damage claims relating to the use of
those products. Historically, the resolution of product liability claims has not
materially affected the Company. Manufacturers of the products sold by the
Company generally maintain product liability insurance. The Company also
maintains third-party product liability insurance that it believes to be
adequate. There can be no assurance, however, that the Company will not
experience claims that are not covered by or that are in excess of its insurance
coverage. The institution of any significant claims against the Company could
adversely affect the Company's business, financial condition, and results of
operations as well as its business reputation with potential customers. See
"Business -- Product Liability."
IMPACT OF ENVIRONMENTAL AND OTHER REGULATORY ISSUES
The Company's operations are subject to extensive regulation, supervision,
and licensing under various federal, state, and local statutes, ordinances, and
regulations. While the Company believes that it maintains all requisite licenses
and permits and is in compliance with all applicable federal, state, and local
regulations, there can be no assurance that the Company will be able to maintain
all requisite licenses and permits. The failure to satisfy those and other
regulatory requirements could have a material adverse effect on the Company's
business, financial condition, and results of operations. The adoption of
additional laws, rules, and regulations could also have a material adverse
effect on the Company's business. Various federal, state, and local regulatory
agencies, including the Occupational Safety and Health Administration ("OSHA"),
the United States Environmental Protection Agency (the "EPA"), and similar
federal and local agencies, have jurisdiction over the operation of the
Company's dealerships, repair facilities, and other operations, with
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respect to matters such as consumer protection, workers' safety, and laws
regarding protection of the environment, including air, water, and soil.
The EPA recently promulgated emissions regulations for outboard marine
engines that impose stricter emissions standards for two-cycle, gasoline
outboard marine engines. Emissions from such engines must be reduced by
approximately 75% over a nine-year period beginning with the 1998 model year.
Costs of comparable new engines, if materially more expensive than previous
engines, or the inability of the Company's manufacturers to comply with EPA
requirements, could have a material adverse effect on the Company's business,
financial condition, and results of operations. See "Business -- Products and
Services -- Marine Engines and Related Marine Equipment."
Certain of the Company's facilities own and operate underground storage
tanks ("USTs") for the storage of various petroleum products. The USTs are
generally subject to federal, state, and local laws and regulations that require
testing and upgrading of USTs and remediation of contaminated soils and
groundwater resulting from leaking USTs. In addition, if leakage from
Company-owned or operated USTs migrates onto the property of others, the Company
may be subject to civil liability to third parties for remediation costs or
other damages. Based on historical experience, the Company believes that its
liabilities associated with UST testing, upgrades and remediation are unlikely
to have a material adverse effect on its financial condition or operating
results.
As with boat dealerships generally, and parts and service operations in
particular, the Company's business involves the use, handling, storage, and
contracting for recycling or disposal of hazardous or toxic substances or
wastes, including environmentally sensitive materials, such as motor oil, waste
motor oil and filters, transmission fluid, antifreeze, freon, waste paint and
lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline,
and diesel fuels. Accordingly, the Company is subject to regulation by federal,
state, and local authorities establishing investigation and health and
environmental quality standards, and liability related thereto, and providing
penalties for violations of those standards. The Company also is subject to
laws, ordinances, and regulations governing investigation and remediation of
contamination at facilities it operates or to which it sends hazardous or toxic
substances or wastes for treatment, recycling, or disposal. In particular, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"
or "Superfund") imposes joint, strict, and several liability on (i) owners or
operators of facilities at, from, or to which a release of hazardous substances
has occurred; (ii) parties who generated hazardous substances that were released
at such facilities; and (iii) parties who transported or arranged for the
transportation of hazardous substances to such facilities. A majority of states
have adopted Superfund statutes comparable to and, in some cases, more stringent
than CERCLA. If the Company were to be found to be a responsible party under
CERCLA or a similar state statute, the Company could be held liable for all
investigative and remedial costs associated with addressing such contamination.
In addition, claims alleging personal injury or property damage may be brought
against the Company as a result of alleged exposure to hazardous substances
resulting from the Company's operations. In addition, certain of the Company's
retail locations are located on waterways that are subject to federal or state
laws regulating navigable waters (including oil pollution prevention), fish and
wildlife, and other matters.
The Company believes that it does not have any material environmental
liabilities and that compliance with environmental laws, ordinances, and
regulations will not, individually or in the aggregate, have a material adverse
effect on the Company's business, financial condition, or results of operations.
However, soil and groundwater contamination has been known to exist at certain
properties owned and leased by the Company. The Company has also been required
and may in the future be required to remove aboveground and underground storage
tanks containing hazardous substances or wastes. As to certain of the Company's
properties, specific releases of petroleum have been or are in the process of
being remediated in accordance with state and federal guidelines. The Company
believes it has completed or is in the process of completing remedial actions
required by law regarding known contamination. In addition, the shareholders of
the Merged Companies and Property Companies have indemnified the Company for
specific environmental issues identified on certain environmental site
assessments performed by the Company as part of the Combination Transactions.
The Company maintains insurance for pollutant cleanup and removal. The coverage
pays for the expenses to extract pollutants from land or water at the insured
property if the discharge, dispersal, seepage,
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<PAGE> 17
migration, release or escape of the pollutants is caused by or results from a
covered cause of loss. The Company also may have additional storage tank
liability insurance and "Superfund" coverage where applicable. Environmental
laws and regulations are complex and subject to frequent change. There can be no
assurance that compliance with amended, new or more stringent laws or
regulations, stricter interpretations of existing laws or the future discovery
of environmental conditions will not require additional expenditures by the
Company, or that such expenditures would not be material.
Certain of the properties owned or leased by the Company are located in
commercial areas that have historically been used for gasoline service stations.
As a consequence, it is possible that historical site activities or current
neighboring activities have affected these properties owned or leased by the
Company and that, as a result, additional environmental issues may arise in the
future, the precise nature of which the Company cannot now predict. Also, one of
the Company's properties is within the boundaries of a Superfund site, although
the Company's property has not been and is not expected to be identified as a
contributor to the contamination in the area. The Company, however, does not
believe that these environmental issues will result in any material liabilities
to the Company.
Additionally, certain states have required or are considering requiring a
license in order to operate a recreational boat. While such licensing
requirements are not expected to be unduly restrictive, regulations may
discourage potential first-time buyers, thereby limiting future sales and
adversely affecting the Company's business, financial condition, and results of
operations. See "Business -- Environmental and Other Regulatory Issues."
FUEL PRICES AND SUPPLY
All of the recreational boats sold by the Company are powered by diesel or
gasoline engines. Consequently, an interruption in the supply, or a significant
increase in the price or tax on the sale, of such fuel on a regional or national
basis could have a material adverse effect on the Company's sales and operating
results. At various times in the past, diesel or gasoline fuel has been
difficult to obtain, and there can be no assurance that the supply of such fuels
will not be interrupted, that rationing will not be imposed, or that the price
of or tax on such fuels will not significantly increase in the future. See
"Business -- U.S. Recreational Boating Industry."
AMORTIZATION OF INTANGIBLE ASSETS
The Stovall Acquisition resulted in goodwill of approximately $5.6 million,
which will be amortized over a period of 40 years. Goodwill is an intangible
asset that represents the difference between the aggregate purchase price for
the net assets acquired and the amount of such purchase price allocated to such
net assets for purposes of the Company's pro forma balance sheet. The Company is
required to amortize the goodwill from acquisitions accounted for as purchases
over a period of time, with the amount amortized in a particular period
constituting an expense that reduces the Company's net income for that period. A
reduction in net income resulting from the amortization of goodwill may have an
adverse impact upon the market price of the Company's Common Stock.
CONFLICTS RELATING TO TRANSACTIONS WITH AFFILIATES
Certain of the Merged Companies and Property Companies incurred
indebtedness (including $10.7 million of long-term indebtedness) prior to the
Combination Transactions, substantially all of which was subject to personal
guarantees of their stockholders or owners and remained outstanding at the
effectiveness of the Combination Transactions. The guarantors (and the amount
guaranteed) include William H. McGill Jr., Chairman, President, and a principal
stockholder of the Company ($6,248,000); Jerry L. Marshall, a principal
stockholder of the Company ($1,071,000); and Richard C. LaManna Jr., a director,
officer, and principal stockholder of the Company, Richard C. LaManna III, an
executive officer and principal stockholder of the Company, and Darrell C.
LaManna, an executive officer and principal stockholder of the Company
($2,138,000). The Company intends to use a portion of the net proceeds from the
Offering to repay or refinance a substantial portion of this indebtedness,
including the indebtedness guaranteed by its stockholders,
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<PAGE> 18
directors, and officers. The Company leases two retail locations from an
irrevocable trust of which relatives of Louis R. DelHomme Jr., a director,
officer, and principal stockholder of the Company, are the beneficiaries; a
warehouse facility from a corporation of which Mr. DelHomme is a 51% owner; and
four retail locations from partnerships in which Paul Graham Stovall, a
director, officer, and principal stockholder, is an owner. The foregoing
arrangements were not negotiated on an arms'-length basis. While the Company
intends to enter into any future related party transactions on terms no less
favorable than those the Company could obtain from unrelated third parties, the
interests of directors or officers of the Company or holders of more than 5% of
its Common Stock, in their individual capacities or capacities with related
third-party entities, may conflict with the interests of such persons in their
capacities with the Company. The Company's senior executives will be released
from personal guarantees under the Company's line of credit upon the completion
of the Offering. See "Business -- Operations -- Inventory Financing" and
"Certain Transactions."
CONTROL BY OFFICERS, DIRECTORS, AND CERTAIN STOCKHOLDERS
Upon completion of the Offering, the Company's directors, executive
officers, and persons associated with them will own beneficially an aggregate of
approximately 52.8% of the issued and outstanding shares of Common Stock
(approximately 50.2% if the Underwriters' over-allotment option is exercised in
full). As a result of such ownership, such persons will have the power
effectively to control the Company, including the election of directors, the
determination of matters requiring stockholder approval, and other matters
pertaining to corporate governance. This concentration of ownership also may
have the effect of delaying or preventing a change in control of the Company.
See "Principal and Selling Stockholders."
The Company, Brunswick, and the senior executive officers of the Company
are parties to a Stockholders' Agreement, and the Company and Brunswick are
parties to a Governance Agreement, each dated April 28, 1998. Subject to certain
limitations, the Stockholders' Agreement provides various rights of first
refusal on the sale of shares of Common Stock by the parties to the agreement,
particularly in the event that Brunswick does not own its Targeted Investment
Percentage of 19% of the Company's Common Stock at the time of the proposed sale
or in the event the proposed sale is to a competitor of Brunswick. The
Governance Agreement provides for various terms and conditions concerning
Brunswick's participation in the corporate governance of the Company. Among
other provisions and subject to certain conditions, the Governance Agreement
requires Brunswick and the senior executives to vote their Common Stock for
nominees of the Board of Directors in the election of directors and to vote
their Common Stock in favor of all proposals and recommendations approved by the
Company's Board of Directors and submitted to a vote of the Company's
stockholders. As a result, the Stockholders' Agreement and the Governance
Agreement will have the effect of increasing the control of the Company's
directors, executive officers, and persons associated with them and may have the
effect of delaying or preventing a change in control of the Company. See
"Description of Capital Stock -- Stockholders' and Governance Agreements."
NO PRIOR MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE
There has been no public trading market for the Company's Common Stock
prior to the Offering. The initial public offering price of the Common Stock
will be determined through negotiations between the Company and the
Representatives of the Underwriters based on factors described under
"Underwriting" and may not be indicative of the price at which the Common Stock
will trade after the Offering. The Company has applied to list the Common Stock
on the New York Stock Exchange. However, there can be no assurance that the
listing application will be approved or, if approved, that an active trading
market will develop and continue after completion of the Offering or that the
market price of the Common Stock will not decline below the initial public
offering price. It is anticipated that there will be limited float in the market
as a result of the relatively low number of shares to be offered to the public,
and fluctuations in the market price for the Common Stock could be significant.
Recent market conditions for newly public companies are likely to result in
significant fluctuations in the market price for the Common Stock. In addition,
the Company's quarterly operating results in some future quarters could be below
the expectations of stock market analysts and investors as a result of
variations in operating results due to seasonality and other factors. See "Risk
Factors -- Impact of Seasonality and Weather on Operations." Future
announcements concerning the Company, including announcements regarding
acquisitions, litigation, and changes in earnings estimates published by
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<PAGE> 19
analysts, as well as announcements concerning governmental regulations, the
recreational boat industry, or the Company's suppliers or competitors may cause
the market price of the Common Stock to fluctuate significantly. Moreover, the
stock market in the past has experienced significant price and volume
fluctuations, which have not necessarily been related to corporate operating
performance. The volatility of the market could adversely affect the market
price of the Common Stock and the ability of the Company to raise equity in the
public markets. These fluctuations, as well as general economic, political, and
market conditions, such as recessions, may adversely affect the market price of
the Common Stock. See "Underwriting."
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of Common Stock in the Offering will experience immediate and
substantial dilution in the pro forma as adjusted net tangible book value of
their shares in the amount of $10.01 per share for Brunswick and $11.06 per
share for all other investors. If the Company issues additional Common Stock in
the future, including shares which may be issued pursuant to option grants and
future acquisitions, purchasers of Common Stock in the Offering may experience
further dilution in the net tangible book value per share of the Common Stock.
The Board of Directors of the Company has the legal power and authority to
determine the terms of an offering of shares of the Company's capital stock (or
securities convertible into or exchangeable for such shares) to the extent of
the Company's shares of authorized and unissued capital stock. See "Dilution"
and "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, there will be 13,200,000 shares of Common
Stock outstanding. The 4,780,569 shares sold in the Offering will be freely
tradable without restriction or further registration under the Securities Act,
unless acquired by an "affiliate" of the Company, as that term is defined in
Rule 144 promulgated under the Securities Act ("Rule 144"); shares held by
affiliates of the Company will be subject to the resale limitations of Rule 144
described below. All of the 8,419,431 remaining outstanding shares of Common
Stock will be available for resale beginning one year after the respective dates
of the Combination Transactions, which occurred on March 1, 1998 and April 30,
1998, and subject to compliance with the provisions of Rule 144 under the
Securities Act. See "Shares Eligible for Future Sale." Further, the 1998
Incentive Stock Plan provides for the grant of stock options for up to 1,980,000
shares of Common Stock and the 1998 Employee Stock Purchase Plan provides for
the purchase of 500,000 shares of Common Stock by the Company's employees. The
Company intends to file registration statements with respect to the shares of
Common Stock issuable upon the exercise of all such options granted under the
1998 Incentive Stock Plan or offered under the 1998 Employee Stock Purchase
Plan. See "Management -- 1998 Incentive Stock Plan" and "Management -- Employee
Stock Purchase Plan."
In addition, the Company may issue additional shares of Common Stock as
part of any acquisition it may complete in the future. In connection with its
intention to consummate acquisitions, the Company intends to register 5,000,000
shares of Common Stock under the Securities Act during 1998 for use in
connection with future acquisitions. Pursuant to Rule 145 under the Securities
Act, these shares generally will be freely tradable after their issuance by
persons not affiliated with the Company or the acquired companies; however,
sales of these shares during the Lockup Period (as defined below) would require
the prior written consent of Smith Barney Inc. See "Business -- Strategy."
Sales of substantial amounts of Common Stock, or the perception that such
sales could occur, could adversely affect prevailing market prices of the Common
Stock. The Company, its officers, and directors, the holders of substantially
all of the Common Stock, and Brunswick have agreed that, until 180 days
following the date of this Prospectus ("Lockup Period"), they will not, without
the prior written consent of Smith Barney Inc., sell, offer to sell, solicit any
offer to buy, contract to sell, grant any option to purchase, or otherwise
transfer or dispose of any shares of Common Stock, or any securities convertible
into, or exercisable or exchangeable for, Common Stock, except that the Company
may grant options under the 1998 Incentive Stock Plan and may issue shares of
Common Stock (i) in connection with acquisitions, (ii) pursuant to the 1998
Employee Stock Purchase Plan, and (iii) pursuant to the exercise of options
granted under the 1998 Incentive Stock Plan. See "Underwriting."
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<PAGE> 20
HOLDING COMPANY STRUCTURE
The Company is a holding company, the principal assets of which are the
shares of the capital stock of its subsidiaries, including the Merged Companies.
As a holding company without independent means of generating operating revenue,
the Company depends on dividends and other payments from its subsidiaries to
fund its obligations and meet its cash needs. Expenses of the Company include
salaries of its executive officers, insurance, professional fees, and service of
indebtedness that may be outstanding from time to time. Financial covenants
under future loan agreements of the Company's subsidiaries may limit such
subsidiaries' ability to make sufficient dividend or other payments to permit
the Company to fund its obligations or meet its cash needs, in whole or in part.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future.
Moreover, the Company's financing covenants under certain of the Company's loan
agreements restrict its ability to pay dividends. See "Dividend Policy."
ANTI-TAKEOVER EFFECT OF CERTIFICATE AND BYLAW PROVISIONS, DELAWARE LAW, AND
CONTRACT PROVISIONS
Certain provisions of the Company's Restated Certificate of Incorporation
and Bylaws and Delaware law may make a change in the control of the Company more
difficult to effect, even if a change in control were in the stockholders'
interest or might result in a premium over the market price for the shares held
by the stockholders. The Company's Restated Certificate of Incorporation and
Bylaws divide the Board of Directors into three classes of directors elected for
staggered three-year terms. The Restated Certificate of Incorporation also
provides that the Board of Directors may authorize the issuance of one or more
series of preferred stock from time to time and may determine the rights,
preferences, privileges, and restrictions and fix the number of shares of any
such series of preferred stock, without any vote or action by the Company's
stockholders. The Board of Directors may authorize the issuance of preferred
stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of Common Stock. The Restated Certificate
of Incorporation also allows the Board of Directors to fix the number of
directors in the Bylaws with no minimum or maximum number of directors required
and to fill vacancies on the Board of Directors. The Company also is subject to
the anti-takeover provisions of Section 203 of the Delaware General Corporation
Law, which prohibit the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an "interested stockholder," unless the
business combination is approved in a prescribed manner. The senior executives
of the Merged Companies are exempted from the application of Section 203. See
"Management" and "Description of Capital Stock -- Delaware General Corporation
Law and Certain Charter Provisions." Certain of the Company's dealer agreements
could also make it difficult for a third party to attempt to acquire a
significant ownership position in the Company. See "Risk Factors -- Boat
Manufacturers' Control Over Dealers" and "Business -- Operations -- Suppliers
and Inventory Management." In addition, the Stockholders' Agreement and
Governance Agreement will have the effect of increasing the control of the
Company's directors, executive officers, and persons associated with them and
may have the effect of delaying or preventing a change in control of the
Company. See "Description of Capital Stock -- Stockholders' and Governance
Agreements."
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two-digit entries to represent years in the date code field.
Computer systems and products that do not accept four-digit year entries will
need to be upgraded or replaced to accept four-digit entries to distinguish
years beginning with 2000 from prior years. The Company believes that its
management information system complies with the Year 2000 requirements, and the
Company currently does not anticipate that it will experience any material
disruption to its operations as a result of the failure of its management
information system to be Year 2000 compliant. There can be no assurance,
however, that computer systems operated by third parties, including customers,
vendors, credit card transaction processors, and financial institutions, with
which the Company's
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management information system interface will continue to properly interface with
the Company's system and will otherwise be compliant on a timely basis with Year
2000 requirements. The Company currently is developing a plan to evaluate the
Year 2000 compliance status of third parties with which its system interfaces.
Any failure of the Company's management information system or the systems of
third parties to timely achieve Year 2000 compliance could have a material
adverse effect on the Company's business, financial condition, and operating
results.
FORMATION OF THE COMPANY
MARINEMAX
MarineMax was incorporated in Delaware in January 1998. On March 1, 1998
and April 30, 1998, MarineMax acquired in the Combination Transactions the
Merged Companies, each of which operates recreational boat dealerships, and the
affiliated Property Companies that own real properties used in the operations of
the Merged Companies. See "Certain Transactions -- The Mergers and Property
Acquisitions." As a result, the Company became the largest recreational boat
dealer in the United States. Upon the consummation of the March 1998 Combination
Transactions, the Company commenced the integration of the Merged Companies by
centralizing certain administrative functions at the corporate level, such as
accounting, finance (including inventory financing), insurance coverage,
employee benefits, marketing, strategic planning, legal support, purchasing and
distribution, and management information systems. The Company believes that this
integration also provides career advancement opportunities to incentivize and
retain key employees, mitigates the impact of local or regional economic
downturns or poor weather conditions by geographic diversity, creates marketing
and sales synergies among its dealerships, enables each dealership to offer its
customers enhanced product offerings and financing and insurance products, and
improves financial, managerial, and other resources.
THE MERGERS AND PROPERTY ACQUISITIONS
On March 1, 1998, MarineMax acquired in separate merger transactions all of
the issued and outstanding capital stock of five of the Merged Companies in
exchange for shares of Common Stock. Simultaneously with the Mergers, MarineMax
acquired in separate contribution transactions all of the beneficial interests
of each of the Property Companies in exchange for shares of Common Stock. In
connection with these Combination Transactions, MarineMax issued an aggregate of
9,191,870 shares of Common Stock to the stockholders of the Merged Companies and
the owners of the Property Companies. On April 30, 1998, the Company acquired in
a separate merger transaction all of the issued and outstanding stock of
Stovall, the sixth Merged Company, for 492,306 shares of the Company's Common
Stock, at which time Stovall became a wholly owned subsidiary of the Company,
and the Company and affiliates of Stovall entered into leases for the four
retail locations of Stovall. Immediately prior to the Mergers, each of the
Merged Companies that was an S corporation incurred a distribution payable to
its stockholders in an amount anticipated to approximate the related income tax
obligations of such stockholders for the period from January 1, 1998 through the
date of the Mergers. As a result of the consummation of the Mergers and Property
Acquisitions, the aggregate long-term indebtedness of the Company includes $10.7
million of indebtedness of the Merged Companies and Property Companies that was
outstanding at the time of the Combination Transactions. Except for the Stovall
Acquisition, the Combination Transactions have been accounted for under the
"pooling-of-interests" accounting method. The Stovall Acquisition is being
accounted for under the "purchase" accounting method.
The number of shares of Common Stock issued to the stockholders of each
Merged Company and Property Company was determined based on negotiations between
MarineMax and those companies. No third-party valuation or appraisal was
conducted regarding the Merged Companies. The factors considered by the parties
in determining the number of shares of Common Stock issued included, among other
factors, historical cash flows, operating results, and appraised values of
properties. With the exception of the number of shares of Common Stock issued in
connection with each Combination Transaction, the acquisition of each Merged
Company and each Property Company was subject to substantially the same terms
and conditions as those to which the acquisition of each other Merged Company
and each other Property Company, respectively, was subject. See "Certain
Transactions -- The Mergers and Property Acquisitions" for a
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<PAGE> 22
description of the terms and conditions of the merger agreements between
MarineMax and the Merged Companies (the "Merger Agreements") and of the
contribution agreements between MarineMax and the Property Companies (the
"Contribution Agreements").
Brunswick's dealer agreement with each Merged Company by its terms required
the Merged Company to obtain Brunswick's consent to any change in the ownership
of the Merged Company. Brunswick and the Company disputed the applicability of
the change in control provisions to the March 1998 Mergers. In order to avoid a
long, costly, and disruptive dispute, the Company and Brunswick entered into a
Settlement Agreement on March 12, 1998 under which Brunswick consented to the
changes in the ownership of five of the Merged Companies resulting from the
Mergers and the Company agreed to pay Brunswick $15.0 million, together with
accrued interest, no later than December 31, 1998. On April 28, 1998, Brunswick
consented to the acquisition of the sixth Merged Company.
The following table sets forth information concerning the Common Stock
issued in connection with the Combination Transactions and the approximate
long-term indebtedness of the Merged Companies and Property Companies
outstanding at the time of the Combination Transactions:
<TABLE>
<CAPTION>
SHARES OF
COMMON LONG-TERM
STOCK OUTSTANDING DEBT
--------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
MERGED COMPANIES:
Bassett..................................................... 2,686,295 $ 0
DelHomme (includes DelHomme Realty, Inc.)................... 1,329,266 0
Gulfwind USA................................................ 2,032,914 6,248
Gulfwind South.............................................. 808,172 171
Harrison's.................................................. 943,197 148
Stovall..................................................... 492,306
--------- -------
Total............................................. 8,292,150 $ 6,567
--------- -------
PROPERTY COMPANIES:
Bassett Boat Company........................................ 51,921 $ 0
Bassett Realty, L.L.C....................................... 1,074,870 0
Gulfwind South Realty, L.L.C................................ 19,242 2,100
Harrison's Realty, L.L.C.................................... 113,409 900
Harrison's Realty California, L.L.C......................... 132,584 1,090
--------- -------
Total............................................. 1,392,026 4,090
--------- -------
Total Consideration in Combination Transactions............. 9,684,176 $10,657
========= =======
</TABLE>
THE MERGED COMPANIES AND PROPERTY COMPANIES
Bassett Boat Company of Florida, Bassett Realty, L.L.C., and Bassett Boat
Company ("Bassett")
Founded in 1979, Bassett operates recreational boat dealerships at four
retail locations in Miami, Palm Beach, Pompano Beach, and Stuart, Florida, and
has approximately 95 employees. Bassett offers Sea Ray pleasure boats and Boston
Whaler fishing boats. Bassett's revenue for the 12 months ended December 31,
1997 was approximately $60.5 million.
In connection with the Bassett merger, the Company acquired the five
properties used in Bassett's operations by acquiring all of the stock of Bassett
Boat Company and all of the beneficial interest in Bassett Realty, L.L.C.,
affiliates of Bassett that own such properties. See "Business -- Properties" for
a description of such properties. Richard R. Bassett, the president and owner of
Bassett, also entered into a five-year covenant not to compete and a five-year
employment agreement with the Company and became a director and Senior Vice
President of the Company. See "Management -- Employment Agreements" and "Certain
Transactions -- The Mergers and Property Acquisitions -- Terms of the
Agreements."
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11502 Dumas, Inc. d/b/a Louis DelHomme Marine ("DelHomme")
Founded in 1971, DelHomme operates recreational boat dealerships at seven
retail locations in Fort Worth, Lewisville (Dallas), League City, Montgomery,
and Houston, Texas, and has approximately 75 employees. DelHomme offers Sea Ray
pleasure boats; Baja high-performance boats; Sea Hunt, Sea Pro, Century, and
Challenger fishing boats; and Smokercraft pontoon boats. DelHomme's revenue for
the 12 months ended December 31, 1997 was approximately $39.7 million.
As part of the DelHomme merger, the Company acquired a floating facility
used as a retail facility in DelHomme's League City operations. In addition, the
Company leases three properties used in DelHomme's Houston operations (including
two retail facilities and one warehouse facility) from affiliates of Mr.
DelHomme. See "Business -- Properties" for a description of such properties.
Louis R. DelHomme Jr., the president and principal owner of DelHomme, also
entered into a five-year covenant not to compete and a five-year employment
agreement with the Company and became a director and Senior Vice President of
the Company. See "Management -- Employment Agreements," "Certain
Transactions -- The Mergers and Property Acquisitions -- Terms of the
Agreements," and "Certain Transactions -- Leases of Real Properties from
Affiliates."
Gulfwind USA, Inc. ("Gulfwind USA")
Founded in 1973, Gulfwind USA operates recreational boat dealerships at
three retail locations in Tampa and Clearwater, Florida, and has approximately
82 employees. Gulfwind USA offers Sea Ray pleasure boats and Boston Whaler
fishing boats. Gulfwind USA's revenue for the 12 months ended December 31, 1997
was approximately $45.2 million.
As part of the Gulfwind USA merger, the Company acquired two of the
properties used in Gulfwind USA's operations that were owned by Gulfwind USA
prior to the Merger. See "Business -- Properties" for a description of such
properties. William H. McGill Jr., the president and principal owner of Gulfwind
USA and President and Chief Executive Officer of the Company, also entered into
a five-year covenant not to compete and a five-year employment agreement with
the Company and became Chairman of the Board of Directors of the Company. See
"Management -- Employment Agreements" and "Certain Transactions -- The Mergers
and Property Acquisitions -- Terms of the Agreements."
Gulfwind South, Inc. and Gulfwind South Realty, L.L.C. ("Gulfwind South")
Founded in 1983, Gulfwind South operates recreational boat dealerships at
two locations in Fort Myers and Naples, Florida and has approximately 43
employees. Gulfwind South offers Sea Ray pleasure boats. Gulfwind South's
revenue for the 12 months ended December 31, 1997 was approximately $28.5
million.
In connection with the Gulfwind South merger, the Company acquired one of
the properties used in Gulfwind South's operations by acquiring all of the
beneficial interest in Gulfwind South Realty, L.L.C., an affiliate of Gulfwind
South that owns such property. See "Business -- Properties" for a description of
such property. See "Certain Transactions -- The Mergers and Property
Acquisitions -- Terms of the Agreements."
Harrison's Boat Center, Inc. and Harrison's Marine Centers of Arizona, Inc.
("Harrison's") and Harrison's Realty, L.L.C. and Harrison's Realty California,
L.L.C.
Founded in 1978, Harrison's operates recreational boat dealerships at eight
retail locations in Oakland, Oakley, Redding, Santa Rosa, and Sacramento,
California, and Tempe, Arizona, and has approximately 158 employees. Harrison's
offers Sea Ray pleasure boats, Malibu ski boats, Starcraft and Boston Whaler
fishing boats, Starcraft pontoon boats, Baja high-performance boats, Bombardier
Sea Doo and Yamaha personal watercraft, and Gregor and Generation 3 aluminum
boats. Harrison's revenue for the 12 months ended December 31, 1997 was
approximately $46.2 million.
In connection with the Harrison's merger, the Company acquired three of the
properties used in Harrison's operations by acquiring all of the beneficial
interest in Harrison's Realty L.L.C. and Harrison's Realty California, L.L.C.,
affiliates of Harrison's that own such properties. See "Business -- Properties"
for a description of such properties. Richard C. LaManna Jr., the president and
principal owner of Harrison's, also entered into a five-year covenant not to
compete and a five-year employment agreement with the Company and became a
director and Senior Vice President of the Company. Each of the two other
stockholders of
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<PAGE> 24
Harrison's, Richard C. LaManna III, the secretary and treasurer of Harrison's,
and Darrell C. LaManna, the vice president of Harrison's, entered into a
five-year covenant not to compete and a five-year employment agreement with the
Company. In addition, each of Richard C. LaManna III and Darrell C. LaManna
became Vice President of the Company. See "Management -- Employment Agreements"
and "Certain Transactions -- The Mergers and Property Acquisitions -- Terms of
the Agreements."
Stovall Marine, Inc.
Founded in 1946, Stovall operates recreational boat dealerships at four
retail locations in Kennesaw (Atlanta), Augusta, Forest Park (Atlanta), and Lake
Lanier, Georgia, and has approximately 64 employees. Stovall offers Sea Ray
pleasure boats, Boston Whaler and SeaPro fishing boats, and Challenger bass
boats. Stovall's revenue for the 12 months ended December 31, 1997 was
approximately $19.7 million. See the Pro Forma Consolidated Financial Statements
and the notes thereto.
In connection with the Stovall Acquisition, Paul Graham Stovall, president
of Stovall, entered into a five-year covenant not to compete and a five-year
employment agreement with the Company. Upon consummation of the Stovall
Acquisition, the Company entered into leases for the four properties used in
Stovall's operations from affiliates of Stovall, at fair market rental values.
See "Business -- Properties" for a description of such properties and "Certain
Transactions -- Leases of Real Properties From Affiliates."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,515,824 shares of
Common Stock offered by the Company hereby, after deducting estimated
underwriting discounts and expenses, are estimated to be approximately $46.5
million, assuming an initial public offering price of $15.00 per share. The
Company expects to use $19.2 million to repay term indebtedness and amounts owed
to related parties of the Merged Companies and Property Companies existing at
the effectiveness of the Mergers and Property Acquisitions, $1.5 million to
enhance its management information system, and the remainder for working capital
and general corporate purposes, including acquisitions and opening new retail
facilities. See "Formation of the Company -- The Mergers and Property
Acquisitions," "Certain Transactions -- The Mergers and Property Acquisitions,"
"Underwriting," and "Sale of Shares to Brunswick."
The Company intends to grow through the acquisition of additional
recreational boat dealers and the opening of new retail facilities and, as
stated above, plans to use a significant portion of the net proceeds of the
Offering for these purposes. As of the date of this Prospectus, however, the
Company has no binding agreements to effect any acquisitions or open any new
facilities. Accordingly, management will have substantial discretion in the use
of a large portion of the net proceeds of the Offering to be received by the
Company. The acquisitions of dealers and the opening of new retail facilities
also generally require the consent of applicable manufacturers. See "Risk
Factors -- Necessity for Manufacturers' Consent to Dealer Acquisitions and
Market Expansion." As a result of these and other factors, there can be no
assurance that any dealer acquisitions or facility openings will be completed
or, if completed, will be completed on terms favorable to the Company. Pending
application of the net proceeds as described above, the Company intends to
invest the net proceeds in short-term, interest-bearing, investment grade
securities. See "Business -- Strategy."
The Company will not receive any of the net proceeds from the sale of
shares of Common Stock by the Selling Stockholders. See "Principal and Selling
Stockholders."
DIVIDEND POLICY
The Company currently intends to retain its earnings to support the growth
and development of its business and has no present intention of paying any
dividends on its Common Stock in the foreseeable future. Any future declaration
of dividends will be subject to the discretion of the Board of Directors of the
Company and will depend on the Company's financial condition, operating results,
capital requirements, contractual restrictions with respect to the payment of
dividends, and such other factors as the Board of Directors deems relevant.
23
<PAGE> 25
CAPITALIZATION
The following table sets forth the Company's capitalization at March 31,
1998 (i) on a historical basis; (ii) on a pro forma basis giving effect to the
Stovall Acquisition; and (iii) as adjusted to reflect the sale of the shares of
Common Stock offered by the Company hereby at an assumed initial offering price
of $15.00 per share and the application of the estimated net proceeds therefrom
as described in "Use of Proceeds." This table should be read in conjunction with
the financial statements, including the notes thereto, included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
------- ------------ --------------
<S> <C> <C> <C>
Short-term debt (including current portion of long-term
debt)................................................ $19,418 $19,418 $15,048
Long-term debt, excluding current portion.............. 10,440 10,440 1,851
------- ------- -------
Stockholders' equity:
Preferred Stock, $.001 par value, 5,000,000 shares
authorized; none outstanding...................... -- -- --
Common Stock, $.001 par value, 40,000,000 shares
authorized; 9,191,870 shares issued and
outstanding before the Offering; 9,684,176 shares
issued and outstanding pro forma; 13,200,000
shares issued and outstanding pro forma as
adjusted(3)....................................... 9 10 13
Additional paid-in capital........................... 7,117 13,319 59,862
Retained earnings.................................... (2,263) (2,263) (2,263)
------- ------- -------
Total stockholders' equity........................... 4,863 11,066 57,612
------- ------- -------
Total capitalization................................... $34,721 $40,924 $74,511
======= ======= =======
</TABLE>
- ---------------
(1) Reflects pro forma adjustments giving effect to the Stovall Acquisition and
certain other pro forma entries as described in the Pro Forma Consolidated
Financial Statements and the notes thereto.
(2) Reflects pro forma adjustments giving effect to the Offering and the
application of the estimated net proceeds therefrom as described in "Use of
Proceeds." Short-term debt includes the Brunswick settlement obligation
until its maturity on December 31, 1998.
(3) Does not include (a) 1,980,000 shares of Common Stock reserved for issuance
under the Company's 1998 Incentive Stock Plan, or (b) 500,000 shares of
Common Stock reserved for issuance under the Company's 1998 Employee Stock
Purchase Plan. See "Management -- 1998 Incentive Stock Plan" and
"Management -- Employee Stock Purchase Plan."
24
<PAGE> 26
DILUTION
The pro forma net tangible book value of the Company at March 31, 1998 was
$5.5 million, or $.57 per share of Common Stock. "Pro forma net tangible book
value per share" is the pro forma tangible net worth (total tangible assets less
total liabilities) of the Company divided by the number of shares of Common
Stock outstanding without giving effect to the sale of shares of Common Stock
sold in connection with the Offering. After giving effect to the sale of the
shares of Common Stock offered by the Company in the Offering at an assumed
initial public offering price of (a) $13.95 per share to Brunswick (see "Sale of
Shares to Brunswick"), and (b) $15.00 per share (before deducting underwriting
discounts) to all other new investors (the "Other Investors") and the
application of the net proceeds therefrom (after deducting underwriting
discounts and estimated offering expenses) as described under "Use of Proceeds,"
the combined net tangible book value of the Company at March 31, 1998 would have
been $52.0 million or $3.94 per share, representing an immediate increase in net
tangible book value of $3.37 per share to existing stockholders and an immediate
dilution of $10.01 and $11.06 per share to Brunswick and the Other Investors,
respectively. The following table illustrates this dilution on a per share
basis:
<TABLE>
<CAPTION>
OTHER
BRUNSWICK INVESTORS
--------- ---------
<S> <C> <C>
Assumed initial public offering price per share............. $13.95 $15.00
Pro forma net tangible book value per share as of March
31, 1998............................................... .57 .57
Increase in pro forma net tangible book value per share
attributable to shares sold in the Offering............ 3.37 3.37
------ ------
Pro forma as adjusted net tangible book value per share
after the Offering........................................ 3.94 3.94
------ ------
Pro forma as adjusted dilution in net tangible book value
per share................................................. $10.01 $11.06
====== ======
</TABLE>
The following table sets forth at March 31, 1998, after giving effect to
the sale of the Common Stock offered hereby, (i) the number of shares of Common
Stock purchased by existing stockholders from the Company and the total
consideration (including the fair value of the shares of Common Stock issued to
the owners of the Merged Companies and Property Companies) and the average price
per share paid to the Company for such shares; (ii) the number of shares of
Common Stock purchased from the Company by Brunswick and the Other Investors in
the Offering and the total consideration and the price per share paid by them
for shares purchased from the Company; and (iii) the percentage of shares
purchased from the Company by existing stockholders, Brunswick, and the Other
Investors and the percentages of consideration paid to the Company for such
shares by existing stockholders, Brunswick, and the Other Investors (dollars in
thousands, except per share amounts).
<TABLE>
<CAPTION>
TOTAL CONSIDERATION AVERAGE
SHARES PURCHASED TO COMPANY PRICE
--------------------- -------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)(2)(3)............ 9,684,176 73.4% $19,068 27.3% $ 1.97
Brunswick(3).............................. 1,861,200 14.1 25,964 37.2 13.95
Other Investors(3)........................ 1,654,624 12.5 24,819 35.5 15.00
---------- ---- ------- ----
Total........................... 13,200,000 100% $69,851 100%
========== ==== ======= ====
</TABLE>
- ---------------
(1) See "Certain Transactions -- The Mergers and Property Acquisitions." Does
not include (a) 1,980,000 shares of Common Stock reserved for issuance under
the Company's 1998 Incentive Stock Plan, or (b) 500,000 shares of Common
Stock reserved for issuance under the Company's 1998 Employee Stock Purchase
Plan. See "Management -- 1998 Incentive Stock Plan" and
"Management -- Employee Stock Purchase Plan."
(2) Includes shares of Common Stock issued and the total consideration received
by the Company in connection with the Stovall Acquisition.
(3) Sales by the Selling Stockholders in the Offering will reduce the number of
shares held by existing stockholders to 8,419,431 shares or 63.8% (7,981,526
shares or 60.5% if the Underwriters' over-allotment option is exercised in
full) of the total number of shares of Common Stock outstanding after the
Offering and will increase the number of shares to be purchased by the Other
Investors to 4,780,569 or 36.3% (5,218,474 or 39.5% if the Underwriters'
over-allotment option is exercised in full) of the total number of shares of
Common Stock outstanding after the Offering. See "Principal and Selling
Stockholders."
25
<PAGE> 27
SELECTED FINANCIAL DATA
(In thousands, except per share data)
The following table contains certain financial and operating data and is
qualified by the more detailed Consolidated Financial Statements and notes
thereto included elsewhere in this Prospectus. The Balance Sheet Data as of
December 31, 1995 and 1996 and September 30, 1997 and the Statements of
Operations Data for the years ended December 31, 1995 and 1996 and the nine
months ended September 30, 1997 were derived from the Consolidated Financial
Statements and notes thereto that have been audited by Arthur Andersen LLP,
independent certified public accountants, and are included elsewhere in this
Prospectus. The Balance Sheet Data as of December 31, 1993 and 1994 and the
Statements of Operations Data for the years ended December 31, 1993 and 1994 and
the nine months ended September 30, 1996 and the six-month period ended March
31, 1997 and 1998 have been derived from the unaudited financial statements of
the Company which, in the opinion of management, have been prepared on the same
basis as the audited financial statements and include all adjustments,
consisting of normal recurring adjustments, which management considers necessary
for a fair presentation of the selected financial data shown. The financial data
shown for the six months ended March 31, 1998 are not necessarily indicative of
the results to be expected for the entire fiscal year ending September 30, 1998.
The financial data shown below should be read in conjunction with the
Consolidated Financial Statements and the related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------
YEAR ENDED DECEMBER 31, PRO FORMA
----------------------------------------- AS ADJUSTED
1993 1994 1995 1996 1996 1997 1997(1)
-------- -------- -------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................ $111,543 $127,729 $152,889 $175,060 $136,325 $ 169,675 $ 188,419
Cost of sales...................... 86,799 98,295 116,896 132,641 101,993 127,418 141,287
-------- -------- -------- -------- -------- ---------- ----------
Gross profit....................... 24,745 29,434 35,992 42,419 34,332 42,257 47,131
Selling, general, and
administrative expenses........... 19,637 22,925 28,374 34,449 22,035 25,723 25,032
-------- -------- -------- -------- -------- ---------- ----------
Income (loss) from operations...... 5,108 6,510 7,619 7,970 12,297 16,535 22,099
Interest expense, net.............. 1,140 392 949 1,268 1,006 1,381 353
-------- -------- -------- -------- -------- ---------- ----------
Income (loss) before tax provision
and unusual item.................. 3,968 6,118 6,670 6,702 11,290 15,154 21,746
Unusual item -- settlement
obligation........................ -- -- -- -- -- -- --
-------- -------- -------- -------- -------- ---------- ----------
Income (loss) before tax
provision......................... 3,968 6,118 6,670 6,702 11,290 15,154 21,746
Income tax provision (benefit)..... 1 1 (49) 21 527 411 8,430
-------- -------- -------- -------- -------- ---------- ----------
Net income......................... $ 3,967 $ 6,117 $ 6,719 $ 6,681 $ 10,763 $ 14,743 $ 13,316
======== ======== ======== ======== ======== ========== ==========
Net income (loss) per common share: Basic................................................ $ 1.89 $ 1.01
==== =====
Weighted average number of shares: Basic................................................. 7,799,844 13,200,000
======= =========
OTHER DATA:
Number of stores(3)................ 15 17 20 19 19 20
Sales per store(4)................. $ 8,004 $ 8,353 $ 8,706 $ 9,438 $ 7,113 $ 8,952
Same-store sales growth(5)......... 12% 12% 15% 16% 8% 22%
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
----------------------------------
PRO FORMA
AS ADJUSTED
1997 1998 1998(2)
------- ---------- -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................ $87,779 $ 103,510 $ 111,154
Cost of sales...................... 68,531 80,438 86,662
------- ---------- -----------
Gross profit....................... 19,247 23,072 24,493
Selling, general, and
administrative expenses........... 20,075 24,032 20,796
------- ---------- -----------
Income (loss) from operations...... (828) (960) 3,697
Interest expense, net.............. 525 1,000 165
------- ---------- -----------
Income (loss) before tax provision
and unusual item.................. (1,353) (1,961) 3,532
Unusual item -- settlement
obligation........................ -- 15,000 15,000
------- ---------- -----------
Income (loss) before tax
provision......................... (1,353) (16,961) (11,468)
Income tax provision (benefit)..... (485) (4,581) (4,506)
------- ---------- -----------
Net income......................... $ (868) $ (12,380) $ (6,962)
======= ========== ===========
Net income (loss) per common share: $ (1.35) $ (0.53)
==== =====
Weighted average number of shares: 9,191,870 13,200,000
======= ========
OTHER DATA:
Number of stores(3)................ 21 24
Sales per store(4)................. $ 4,592 $ 5,149
Same-store sales growth(5)......... 24% 19%
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
DECEMBER 31, SEPTEMBER 30, ------------------------------------
------------------------------------- ------------- PRO PRO FORMA
1993 1994 1995 1996 1997 ACTUAL FORMA(6) AS ADJUSTED(7)
------- ------- ------- ------- ------------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................... $10,121 $ 7,349 $ 7,381 $ 8,222 $20,779 $ 1,191 $ 1,215 $ 39,171
Total assets....................... 37,200 43,151 51,776 67,856 75,373 108,275 124,171 130,348
Long-term debt (including current
portion).......................... 1,624 1,162 1,076 1,095 6,955 10,657 10,657 1,899
Total stockholders' equity......... 11,890 10,263 11,125 12,317 20,328 4,863 11,066 57,612
</TABLE>
- ---------------
(1) Pro forma as adjusted 1997 gives effect to (a) the Stovall Acquisition, (b)
certain pro forma adjustments to the historical financial statements, and
(c) the consummation of the Offering. See the Pro Forma Consolidated
Financial Statements and notes thereto for a description of the pro forma
adjustments.
(2) Pro forma as adjusted 1998 gives effect to (a) the Stovall Acquisition, (b)
certain pro forma adjustments to the historical financial statements, and
(c) the consummation of the Offering. See the Pro Forma Consolidated
Financial Statements and notes thereto for a description of the pro forma
adjustments.
(3) Includes only those stores open at period end.
(4) Includes only those stores open for the entire preceding 12-month period.
(5) New stores are included in the comparable base at the beginning of the
store's thirteenth month of operations.
(6) The pro forma balance sheet has been adjusted to give effect to (a) the
Stovall Acquisition, and (b) certain pro forma adjustments to the historical
financial statements. See the Pro Forma Consolidated Financial Statements
and notes thereto for a description of the pro forma adjustments.
(7) Adjusted to reflect the consummation of the Offering and the application of
the estimated net proceeds to the Company therefrom. See "Use of Proceeds"
and the Pro Forma Consolidated Financial Statements and notes thereto for a
further description of the application of the net proceeds.
26
<PAGE> 28
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is the largest recreational boat dealer in the United States.
Through 28 retail locations in five states, the Company sells new and used
recreational boats and related marine products, including engines, boats,
trailers, parts, and accessories. The Company also arranges related boat
financing, insurance and extended warranty contracts, provides boat repair and
maintenance services, and offers boat brokerage services.
The Company was formed in January 1998 and merged with five recreational
boat dealers on March 1, 1998 and an additional recreational boat dealer on
April 30, 1998 (the "Merged Companies"). The Merged Companies had an average
operating history of 21 years under the ownership existing at the time of the
Mergers. The discussion below does not include the sixth Merged Company as a
result of its acquisition date. Each of the Merged Companies historically
operated with a calendar year end, but adopted the September 30 year end of
MarineMax upon completion of the Mergers. The September 30 year end more closely
conforms to the natural business cycle of the Company. The following discussion
compares the six months ended March 31, 1998 to the six months ended March 31,
1997, the nine months ended September 30, 1997 to the nine months ended
September 30, 1996, and calendar 1996 to calendar 1995, and should be read in
conjunction with the Consolidated Financial Statements of the Company, including
the related notes thereto, appearing elsewhere in this Prospectus.
The Company derives its revenue from (i) selling new and used recreational
boats and related marine products; (ii) arranging financing, insurance, and
extended warranty products; (iii) providing boat repair and maintenance
services; and (iv) offering boat brokerage services. Revenue from boat or
related marine product sales, boat repair and maintenance services, and boat
brokerage services is recognized at the time the product is delivered to the
customer or the service is completed. Revenue earned by the Company for
arranging financing, insurance, and extended warranty products is recognized
when the related boat sale is recognized.
Cost of sales generally includes the cost of the recreational boat or other
marine product, plus any additional parts or consumables used in providing
maintenance, repair, and rigging services.
The Merged Companies operated historically as independent, privately owned
entities, and their results of operations reflect varying tax structures,
including both S and C corporations, which have influenced the historical level
of employee-stockholder compensation. The selling, general, and administrative
expenses of the Merged Companies include compensation to employee-stockholders
totaling $5.4 million and $5.9 million for the six months ended March 31, 1998
and 1997, respectively, $4.1 million and $3.8 million for the nine months ended
September 30, 1997 and 1996, respectively, and $9.2 million and $6.9 million for
the years ended December 31, 1996 and 1995, respectively. As a result of the
varying practices regarding compensation to employee-stockholders among the
Merged Companies, the comparison of operating margins from period to period is
not meaningful. Certain employee-stockholders have entered into employment
agreements with the Company, reflecting reduced compensation when compared to
historical levels. See "Management -- Employment Agreements." This compensation
differential has been reflected in the Pro Forma Consolidated Statement of
Operations.
27
<PAGE> 29
RESULTS OF OPERATIONS
The following table sets forth certain selected financial data as a
percentage of revenue for the periods indicated:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------------------- -----------------------------------
1995 1996 1996 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $152,889 100.0% $175,060 100.0% $136,325 100.0% $169,675 100.0%
Cost of sales........... 116,896 76.5% 132,641 75.8% 101,993 74.8% 127,418 75.1%
-------- -------- -------- --------
Gross profit............ 35,992 23.5% 42,419 24.2% 34,332 25.2% 42,257 24.9%
Selling, general, and
administrative
expenses.............. 28,374 18.6% 34,449 19.7% 22,035 16.2% 25,723 15.2%
-------- -------- -------- --------
Income (loss) from
operations............ 7,619 5.0% 7,970 4.6% 12,297 9.0% 16,535 9.7%
Interest expense, net... 949 0.6% 1,268 0.7% 1,006 0.7% 1,381 0.8%
-------- -------- -------- --------
Income (loss) before tax
provision and unusual
item.................. 6,670 4.4% 6,702 3.8% 11,290 8.3% 15,154 8.9%
Unusual
item -- settlement
obligation............ -- 0.0% -- 0.0% -- 0.0% -- 0.0%
-------- -------- -------- --------
Income (loss) before tax
provision............. $ 6,670 4.4% $ 6,702 3.8% $ 11,290 8.3% $ 15,154 8.9%
<CAPTION>
SIX MONTHS ENDED MARCH 31,
----------------------------------
1997 1998
--------------- ----------------
<S> <C> <C> <C> <C>
Revenue................. $87,779 100.0% $103,510 100.0%
Cost of sales........... 68,531 78.1% 80,438 77.7%
------- --------
Gross profit............ 19,247 21.9% 23,072 22.3%
Selling, general, and
administrative
expenses.............. 20,075 22.9% 24,032 23.2%
------- --------
Income (loss) from
operations............ (828) (0.9%) (960) (0.9%)
Interest expense, net... 525 0.6% 1,000 1.0%
------- --------
Income (loss) before tax
provision and unusual
item.................. (1,353) (1.5%) (1,961) (1.9%)
Unusual
item -- settlement
obligation............ -- 0.0% 15,000 14.5%
------- --------
Income (loss) before tax
provision............. $(1,353) (1.5%) $(16,961) (16.4%)
</TABLE>
Six Months Ended March 31, 1998 Compared to Six Months Ended March 31, 1997
Revenue. Revenue increased $15.7 million or 17.9% to $103.5 million for
the six-month period ended March 31, 1998 from $87.8 million for the six-month
period ended March 31, 1997. Of this increase, $16.3 million was attributable to
19.2% growth in comparable stores sales in 1998. The offsetting difference
primarily relates to a store that was relocated during the comparable period.
The increase in comparable store sales for the six-month period ended March 31,
1998 resulted primarily from implementation of the MarineMax Value-Price sales
approach which management believes has resulted in an increased closing rate on
sales, increased access to all MarineMax store inventory since the Mergers,
which assists the Company's retail locations in offering the products customers
desire, and including the recognition that the Company carries lines such as
Boston Whaler.
Gross Profit. Gross profit increased $3.9 million or 19.9% to $23.1
million for the six-month period ended March 31, 1998 from $19.2 million for the
six-month period ended March 31, 1997. Gross profit as a percentage of revenue
increased to 22.3% in 1998 from 21.9% in 1997. The increase in gross profit
margin is attributable to sales of products or services that historically result
in higher gross profits, such as finance and insurance contracts, parts and
repair services as well as the implementation of the MarineMax Value-Price,
which generally results in improved overall gross profit margins.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased by approximately $4.0 million or 19.7% to
$24.0 million for the six-month period ended March 31, 1998 from $20.1 million
for the six-month period ended March 31, 1997. Selling, general, and
administrative expenses as a percentage of revenue increased to 23.2% in 1998
from 22.9% in 1997. Substantially all of the increase is attributable to
additional advertising and promotional costs associated with the opening of
three new stores.
Interest Expense, net. Interest expense, net increased approximately
$475,000 or 90.5% to $1.0 million in 1998 from approximately $525,000 in 1997.
Interest expense, net as a percentage of revenue increased to 1.0% in 1998 from
0.6% in 1997. This increase resulted primarily from increased debt associated
with the redemption of common stock and higher levels of outstanding borrowings
related to the increased level of inventories required to support the increased
level of revenue.
28
<PAGE> 30
Unusual Item -- Settlement Obligation. Unusual item -- settlement
obligation for the six-month period ended March 31, 1998 is attributable to the
$15.0 million obligation under the Settlement Agreement the Company entered into
with Brunswick.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
Revenue. Revenue increased $33.4 million, or 24.5%, to $169.7 million for
the nine-month period ended September 30, 1997 from $136.3 million for the
nine-month period ended September 30, 1996. Of this increase, $31.0 million was
attributable to 22.1% growth in comparable stores sales in 1997 and $2.4 million
was attributable to stores not eligible for inclusion in the comparable store
base. The increase in comparable store sales in 1997 resulted primarily from
more effective utilization of the prospective customer tracking feature of the
integrated computer system, a greater emphasis on used boat sales, the addition
of the Boston Whaler product line at 12 locations, the introduction of the
Value-Price sales approach at seven retail locations, which management believes
has resulted in increased closing rate on sales, and participation in additional
boat shows.
Gross Profit. Gross profit increased $8.0 million, or 23.1%, to $42.3
million for the nine-month period ended September 30, 1997 from $34.3 million
for the nine-month period ended September 30, 1996. Gross profit margin as a
percentage of revenue decreased to 24.9% in 1997 from 25.2% in 1996. The Company
experienced a decrease in gross profits recognized on boat sales primarily due
to management's decision to decrease prices in an effort to gain market share in
certain of the Company's regions.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $3.7 million, or 16.7%, to $25.7
million for the nine-month period ended September 30, 1997 from $22.0 million
for the nine-month period ended September 30, 1996. Selling, general, and
administrative expenses as a percentage of revenue decreased to 15.2% in 1997
from 16.2% in 1996. Compensation to stockholder-employees increased by
approximately $300,000, which was approximately $700,000 less than the
proportional increase in revenue.
Interest Expense, Net. Interest expense, net increased approximately
$375,000, or 37.2%, to $1.4 million in 1997 from $1.0 million in 1996. Interest
expense, net as a percentage of revenue increased to 0.8% in 1997 from 0.7% in
1996. This increase resulted primarily from increased debt associated with the
redemption of common stock and higher levels of outstanding borrowings related
to the increased level of inventories required to support the increase in
revenue.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Revenue. Revenue increased $22.2 million, or 14.5%, to $175.1 million in
1996 from $152.9 million in 1995. Of this increase, $23.7 million was
attributable to 16.2% growth in comparable stores sales. This increase was
partially offset by a decrease of $1.5 million as the result of one store
closing in 1996. The increase in comparable store sales in 1996 was due
primarily to increased use of the prospective customer tracking feature of the
integrated computer system, a stronger emphasis on used boat sales and parts and
service sales, the addition of product lines in selected locations (such as
Baja, Challenger Bass Boats, Sea Hunt, and Sea Pro), and participation in
additional boat shows.
Gross Profit. Gross profit increased $6.4 million, or 17.9%, to $42.4
million in 1996 from $36.0 million in 1995. Gross profit as a percentage of
revenue increased to 24.2% in 1996 from 23.5% in 1995. The gross profit margin
increase was primarily due to more effective utilization of the integrated
computer system, which allowed for more timely monitoring and emphasis on daily
and monthly gross profit margins, and increased sales of products that
historically result in higher gross profits such as finance and insurance
contracts.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $6.1 million, or 21.4%, to $34.4
million in 1996 from $28.4 million in 1995. Selling, general, and administrative
expenses as a percentage of revenue increased to 19.7% in 1996 from 18.6% in
1995. The increase in selling, general, and administrative expenses as a
percentage of revenue was primarily due to an additional $1.3 million of
stockholder-employee compensation and $800,000 in additional advertising expense
29
<PAGE> 31
in excess of their proportion to the increase in revenue. The increase in
advertising expense was primarily associated with the addition of new product
lines as noted above.
Interest Expense, Net. Interest expense, net increased approximately
$319,000, or 33.6%, to $1.3 million in 1996 from $900,000 in 1995. Interest
expense, net as a percentage of revenue increased to 0.7% in 1996 from 0.6% in
1995. This increase was primarily the result of increased borrowings related to
the higher level of inventories required to support the growth in revenue.
QUARTERLY DATA AND SEASONALITY
The following table sets forth certain unaudited quarterly financial data
for each of the Company's last nine quarters. The information has been derived
from unaudited financial statements that, in the opinion of management, reflect
all adjustments (consisting only of normal recurring adjustments) necessary for
the fair presentation of such quarterly financial information. The operating
results for any quarter are not necessarily indicative of the results to be
expected for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1996 1996 1996 1997 1997 1997
--------- -------- ------------- ------------ --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue............... $40,353 $58,710 $37,262 $38,735 $49,043 $62,083 $58,549
Cost of sales......... 30,712 44,611 26,670 30,648 37,883 46,402 43,133
------- ------- ------- ------- ------- ------- -------
Gross profit.......... $ 9,641 $14,099 $10,592 $ 8,087 $11,160 $15,681 $15,416
======= ======= ======= ======= ======= ======= =======
<CAPTION>
QUARTER ENDED
------------------------
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
(IN THOUSANDS)
<S> <C> <C>
Revenue............... $44,341 $59,169
Cost of sales......... 34,689 45,749
------- -------
Gross profit.......... $ 9,652 $13,420
======= =======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support
operations, including new and used boat and related parts inventories,
off-season liquidity, and growth through new store openings. These cash needs
have historically been financed with cash from operations and borrowings under
credit facilities. Historically, the Merged Companies utilized a combination of
floor plan financing, working capital lines of credit, and loans from
stockholders to finance inventory levels. These historic facilities had varying
interest rates, terms, and payment requirements. The Company depends upon
dividends and other payments from its operating subsidiaries to fund its
obligations and meet its cash needs. No agreements exist that restrict this flow
of funds.
For the six-month period ended March 31, 1997, cash flows used by operating
activities approximated $1.1 million. For the six-month period ended March 31,
1998, the cash flows generated by operating activities approximated $2.5
million. For the nine-month periods ended September 30, 1996 and 1997 and the
calendar years ended December 31, 1995 and 1996, the Company generated cash
flows from operating activities of approximately $4.0 million, $8.0 million,
$5.8 million, and $6.6 million, respectively. In addition to net income, cash
provided by operating activities was due primarily to inventory management,
including floor plan management. Stockholder-employee compensation significantly
impacts net income and therefore cash flows from operations, which causes
variations in operating cash flows.
For the six-month periods ended March 31, 1997 and 1998, the cash flows
used by investing activities approximated $941,000 and $831,000, respectively.
For the nine-month periods ended September 30, 1996 and 1997, the cash flows
used by investing activities approximated $900,000 and $1.0 million,
respectively. For the calendar years ended December 31, 1995 and 1996, cash
flows used by investing activities were $1.1 million and $1.3 million,
respectively. Cash used in investing activities was primarily attributable to
purchases of property and equipment associated with opening new or improving
existing stores.
For the six-month period ended March 31, 1997, the cash flows provided by
financing activities approximated $882,000. For the six-month period ended March
31, 1998, the cash flows used by financing activities approximated $7.4 million.
For the nine-month periods ended September 30, 1996 and 1997, the cash flows
provided by financing activities approximated $100,000 and $1.4 million,
respectively. For the calendar years ended December 31, 1995 and 1996, cash
flows used by financing activities were $4.1 million
30
<PAGE> 32
and $5.0 million, respectively. Cash flows used by financing activities during
the calendar years and six-month periods ended March 31 reflect distributions
made to stockholder-employees for tax and other purposes, which have
historically been made in the quarter ended December 31.
At March 31, 1998, the Company's long-term indebtedness totaled
approximately $10.7 million, of which approximately $5.5 million is due to a
former stockholder of one of the Merged Companies relating to the reacquisition
of that shareholder's interest, while the remaining long-term indebtedness is
primarily associated with the Company's real estate holdings. Upon completion of
the Offering, the Company intends to repay approximately $8.8 million of
long-term indebtedness.
At March 31, 1998, the Company had approximately $44.0 million of floor
plan financing outstanding under its existing agreements with lenders. The
Company replaced the floor plan lines of credit of the Merged Companies with a
Loan and Security Agreement, dated April 7, 1998, with Nations Credit
Distribution Finance, Inc. ("NDF"), providing for a revolving line of credit
loan to the Company in the maximum amount of $105 million (the "Loan"). Advances
accrue interest at the 90-day London Interbank Offered Rate plus 125 basis
points. The Loan terminates on April 1, 2001. The availability of loan advances
from time to time will be based upon the value of new and used inventory, parts
and accounts receivable of the Company and each of its direct and indirect
subsidiaries. Advances may be used for inventory, working capital, and other
purposes satisfactory to NDF. No more than $10 million in advances may be
outstanding for working capital purposes, unless the Company and its
subsidiaries pledge their real property assets. The Loan is guaranteed by each
of the Company's direct and indirect subsidiaries. The Loan and the guaranties
of the subsidiaries are secured by all of the accounts, inventory, other goods,
equipment, fixtures and furniture of the Company and all of the subsidiaries.
The Loan is also individually guaranteed by Richard R. Bassett, Louis R.
DelHomme Jr., William H. McGill Jr., Jerry L. Marshall, and Richard C. LaManna
Jr., and, since the consummation of the Stovall Acquisition, by Paul Graham
Stovall, Robert S. Stovall, and Jon M. Stovall. NDF will release these
individual guaranties upon the consummation of the Offering.
The Company opened two stores since the March 1, 1998 Mergers. The stores
are located in Palm Beach, Florida, and Sacramento, California. The Palm Beach
store was opened in a facility already owned by the Company and the Sacramento
store is leased from a third party. The costs to open these stores and the
related lease commitment are not material.
Except as specified above or in the Financial Statements, the Company has
no material commitments. The Company believes that its existing capital
resources, including the net proceedings from the Offering, will be sufficient
to finance the Company's operations, including the Brunswick settlement
obligation, for at least the next 12 months. Additionally, it is the intention
of the Company to register 5,000,000 shares of Common Stock for use in
connection with potential future acquisitions. See "Risk Factors -- Shares
Eligible for Future Sale."
31
<PAGE> 33
BUSINESS
GENERAL
The Company is the largest recreational boat dealer in the United States.
Through 28 retail locations in Florida, Texas, California, Georgia, and Arizona,
the Company sells new and used recreational boats, including pleasure boats
(such as sport boats, sport cruisers, sport yachts, and yachts), fishing boats,
bass boats, pontoon boats, and high-performance boats, with a focus on the
premium brands in each segment. The Company also sells related marine products,
including engines, trailers, parts, and accessories. In addition, the Company
arranges related boat financing, insurance, and extended service contracts,
provides repair and maintenance services, and offers boat brokerage services.
The Company is the nation's largest retailer of Sea Ray, Boston Whaler, and
other boats manufactured by Brunswick, which is the world's largest manufacturer
of recreational boats. Sales of new Brunswick boats accounted for 84% of the
Company's new boat sales in 1997, which the Company believes represented
approximately 20% of all new Sea Ray boat sales and approximately 5% of all
Brunswick marine product sales during that period. For the 12 months ended
December 31, 1997, the Company had pro forma revenue of $233,779,000, pro forma
operating income of $22,353,000, and pro forma net income of $13,377,000
(assuming the adjustments described herein had occurred as of January 1, 1997).
The Company's same-store sales increased by approximately 19% in calendar 1997,
following 16% and 15% increases in calendar 1996 and 1995, respectively.
The combination of the Merged Companies permits the Company to capitalize
on the experience and success of each of the Merged Companies in order to
establish a new national standard of customer service and responsiveness in the
highly fragmented retail boating industry. The Merged Companies were organized
between 1946 and 1983, and each is the exclusive dealer of Sea Ray boats in its
geographic market and ranks in the top 15 Sea Ray dealers in the United States.
While the average new boat retailer generates less than $3 million in annual
sales, the Merged Companies' retail locations averaged $10 million in annual
sales in 1997. Given the Company's emphasis on premium brand boats, the
Company's average selling price for a new boat in 1997 was approximately $39,000
compared to the industry average selling price in 1997 of approximately $14,000.
The senior executives of the Merged Companies have an average of more than 21
years of experience in the recreational boat industry and have maintained
long-term business and personal relationships with each other. The Company is
adopting the best practices of the Merged Companies as appropriate to enhance
its ability to attract more customers, foster an overall enjoyable boating
experience, and offer boat manufacturers stable and professional retail
distribution. The Company believes that its prime retail locations, extensive
facilities, full range of services, MarineMax Value-Price sales approach, and
emphasis on customer service and satisfaction before and after a boat sale are
competitive advantages and enable it to be more responsive to the needs of
existing and prospective customers.
The Company plans to expand its operations through internal growth and
acquisitions. See "Risk Factors -- Risks Associated With Acquisition Strategy"
and "Business -- Strategy." Brunswick has agreed to cooperate in good faith with
the Company and not to unreasonably withhold its consent to the acquisition by
the Company each year of Sea Ray boat dealers with aggregate total revenue not
exceeding 20% of the Company's revenue in its prior fiscal year. Brunswick
consented to the Stovall Acquisition in April 1998 and agreed that the Stovall
Acquisition would not count against the 20% benchmark.
U.S. RECREATIONAL BOATING INDUSTRY
In 1997, total U.S. recreational boating sales generated $19.3 billion in
revenue, including retail sales of new and used recreational boats; marine
products, such as engines, trailers, parts, and accessories; and related boating
expenditures, such as fuel, insurance, docking, storage, and repairs. Retail
sales of new boats, engines, trailers, and accessories accounted for
approximately $10.0 billion of such sales in 1997. Retail recreational boating
sales were $17.9 billion in the late 1980s, but declined to a low of $10.3
billion in 1992. The Company believes this decline can be attributed to a
recession and the imposition throughout 1991 and 1992 of a luxury tax on boats
sold at prices in excess of $100,000. The luxury tax was repealed in 1993, and
retail recreational boating sales have increased each year thereafter.
32
<PAGE> 34
Sales in the recreational boat industry are impacted significantly by other
recreational opportunities; economic factors, including general economic
conditions, consumer income levels, tax law changes, and fuel prices; and
demographics. The share of recreational dollars that U.S. consumers spend on
boating declined from 3.1% in 1988, the boating industry's peak year, to 2.0% in
1996. It is the Company's belief that the decline in boating is attributable to
poor customer service throughout the industry, lack of boater education, and the
perception that boating is time consuming, costly, and difficult.
Most boat purchasers are in the 35 to 54 age group. Although these
individuals account for 36% of the U.S. population over age 16, they account for
over 50% of discretionary income and represent the fastest growing segment of
the U.S. population, growing at a 2.5% annual rate.
The recreational boat retail market remains highly fragmented with little
consolidation having occurred to date. The Company estimates that the boat
retailing industry includes more than 4,000 boat retailers, most of which are
small companies owned by individuals that operate in a single market, have
annual sales of less than $3 million, and provide varying degrees of
merchandising, professional management, and customer service. Many such
retailers are encountering increased pressure from boat manufacturers to improve
their levels of service and systems, increased competition from larger national
retailers in certain product lines, and, in certain cases, business succession
issues.
STRATEGY
The Company's goal is to enhance its position as the leading operator of
recreational boat dealerships. Key elements of the Company's operating and
growth strategies include the following:
Operating Strategies
Implementing Best Practices. The Company is implementing the "best
practices" of each of the Merged Companies as appropriate throughout its
dealerships. In particular, the Company is phasing in throughout its dealerships
the MarineMax Value-Price sales approach, recently implemented at certain of its
dealerships. Under the MarineMax Value-Price approach, the Company sells its
boats at posted prices, generally representing a discount from the
manufacturer's suggested retail price, without further price negotiation,
thereby eliminating the anxieties of price negotiations that occur in most boat
purchases. In addition, the Company will adopt, where beneficial, the best
practices of each Merged Company in terms of location design and layout, product
purchases, maintenance and repair services (including extended service hours and
mobile or dockside services), product mix, employee training, and customer
education and services.
Achieving Operating Efficiencies and Synergies. The Company plans to
increase the operating efficiencies of and achieve certain synergies among its
dealerships in order to enhance internal growth and profitability. The Company
is centralizing certain administrative functions at the corporate level, such as
accounting, finance, insurance coverage, employee benefits, marketing, strategic
planning, legal support, purchasing and distribution, and management information
systems. Centralization of these functions should reduce duplicative expenses
and permit the dealerships to benefit from a level of scale and expertise that
would otherwise be unavailable to each dealership individually. The Company also
expects to realize cost savings from reduced inventory carrying costs as a
result of purchasing boat inventories on a national level and directing boats to
dealership locations that can more readily sell such boats; lower financing
costs through new credit facilities; and volume purchase discounts and rebates
for certain marine products, supplies, and advertising. The ability of each of
the Company's retail locations to offer complementary services of the Company's
other retail locations, such as offering customer excursion opportunities,
providing maintenance and repair services at the customer's boat location, and
giving access to a larger inventory, increases the competitiveness of each
retail location.
Emphasizing Customer Satisfaction and Loyalty. The Company seeks to
achieve a high level of customer satisfaction and establish long-term customer
loyalty by creating an overall enjoyable boating experience beginning with the
negotiation-free purchase process. The Company further enhances and simplifies
the purchase process by offering financing and insurance at its retail locations
with competitive terms and streamlined turnaround. The Company provides the
customer with a thorough in-water orientation
33
<PAGE> 35
of boat operation as well as ongoing boat safety, maintenance, and use seminars
and demonstrations for the customer's entire family. The Company also continues
its customer service after the sale by leading and sponsoring Getaways! group
boating trips to various destinations, rendezvous gatherings, and on-the-water
organized events to provide its customers with pre-arranged opportunities to
enjoy the pleasures of the boating lifestyle. The Company also endeavors to
provide superior maintenance and repair services, often at the customer's wet
slip and with extended service department hours, that minimize the hassles of
boat maintenance.
Operating with Decentralized Management. The Company has adopted a
decentralized approach to the operational management of its dealerships. The
decentralized management approach takes advantage of the extensive experience of
local managers, enabling them to implement policies and make decisions,
including the appropriate product mix, based on the needs of the local market.
Local management authority also fosters responsive customer service and promotes
long-term community and customer relationships. In addition, the centralization
of certain administrative functions at the corporate level enhances the ability
of local managers to focus their efforts on day-to-day dealership operations.
Utilizing Technology Throughout Operations. The Company believes that its
management information system, which currently is being utilized by each Merged
Company and was developed over the past six years through cooperative efforts
with a common vendor, enhances the Company's ability to integrate successfully
the operations of the Merged Companies and future acquired dealers. The system
facilitates the interchange of information and enhances cross-selling
opportunities throughout the Company. The system integrates each level of
operations on a Company-wide basis, including purchasing, inventory,
receivables, financial reporting and budgeting, and sales management. The system
enables management to monitor each dealership's operations on a daily basis in
order to identify quickly areas requiring additional focus. The system also
provides sales representatives with prospect and customer information that aids
them in tracking the status of their contacts with prospects, automatically
generates follow-up correspondence to such prospects, posts Company-wide the
availability of a particular boat, locates boats needed to satisfy a particular
customer request, and monitors the maintenance and service needs of customers'
boats. Company representatives also utilize the computer system to assist in
arranging customer financing and insurance packages.
Growth Strategies
Pursuing Strategic Acquisitions. The Company intends to capitalize upon
the significant consolidation opportunities available in the highly fragmented
recreational boat dealer industry by acquiring additional dealers and improving
their performance and profitability through the implementation of the Company's
operating strategies. The primary acquisition focus will be on well-established,
high-end recreational boat dealers in geographic markets not currently served by
the Merged Companies, particularly geographic markets with strong boating
demographics, such as the coastal states and the Great Lakes region. The Company
also may seek to acquire boat dealers that, while located in attractive
geographic markets, have not been able to realize favorable market share or
profitability and that can benefit substantially from the Company's systems and
operating strategies. The Company may expand its range of product lines and its
market penetration by acquiring dealers that distribute recreational boat
product lines different from those currently offered by the Company. As a result
of the considerable industry experience and relationships of the Company's
management team, the Company believes it is well positioned to identify and
evaluate acquisition candidates and assess their growth prospects, the quality
of their management teams, their local reputation with customers, and the
suitability of their locations. The Company believes it will be regarded as an
attractive acquiror by boat dealers because of (i) the Company's historical
performance and the experience and reputation of its management team within the
industry; (ii) the Company's decentralized operating strategy, which enables the
managers of an acquired dealer to continue their involvement in dealership
operations; (iii) the ability of management and employees of an acquired dealer
to participate in the Company's growth and expansion through potential stock
ownership and career advancement opportunities; and (iv) the ability to offer
liquidity to the owners of acquired dealers through the receipt of Common Stock
or cash. Brunswick has agreed to cooperate in good faith with the Company and
not to unreasonably withhold its consent to the acquisition by the Company each
year of Sea Ray boat dealers with aggregate total revenue not exceeding 20% of
the
34
<PAGE> 36
Company's revenue in its prior fiscal year to the extent such Sea Ray dealers
desire to be acquired by the Company. Brunswick consented to the Stovall
Acquisition in April 1998 and agreed that the Stovall Acquisition would not
count against the 20% benchmark. See "Business -- Brunswick Agreement Relating
to Acquisitions."
Opening New Facilities. The Company intends to establish additional retail
facilities in its existing and new territories. The Company believes that the
demographics of its existing geographic territories support the opening of
additional facilities and has opened two new retail locations (Palm Beach,
Florida and Sacramento, California) since the March 1998 Combination
Transactions. The Company also plans to reach new customers by expanding various
innovative retail formats developed by the Merged Companies, such as mall stores
and floating retail facilities. The mall store concept is unique to the boating
industry and is designed to draw mall traffic and provide exposure to boating
and to the Company's boats to the non-boating public and its new product
offerings to boating enthusiasts. Floating retail facilities place the sales
facility, with a customer reception area and sales offices, on or anchored to a
dock in a marina and use adjacent boat slips to display its new and used boats
in areas of high boating activity. The Company currently operates one mall store
(Clearwater, Florida) and four floating retail facilities (Sacramento,
California and Dallas, League City, and Montgomery, Texas), and plans to open a
new mall store in 1998. These retail formats generated approximately 8% of the
Company's revenue for the 1997 calendar year. See "Business -- Dealer Agreements
With Brunswick."
Offering Additional Product Lines and Services. The Company plans to offer
throughout its existing and acquired dealerships product lines that have been
offered only at certain of its locations. For example, one of the Merged
Companies historically has offered bass boats at its retail locations that the
Company intends to offer at other appropriate retail locations throughout the
Company. The Company also may obtain additional product lines through the
acquisition of distribution rights directly from manufacturers and the
acquisition of dealerships with distribution rights. In addition, the Company
plans to increase its used boat sales and boat brokerage services through an
increased emphasis on these activities, cooperative efforts among its
dealerships, and advertising on the Company's Internet home page. The Company
also plans to offer enhanced financing and insurance packages designed to better
serve customers and thereby increase sales and improve profitability.
PRODUCTS AND SERVICES
The Company offers new and used recreational boats and related marine
products, including engines, trailers, parts, and accessories. While the Company
sells a broad range of new and used boats, its dealerships tend to focus on
premium brand products. In addition, the Company arranges related boat
financing, insurance, and extended service contracts; provides boat maintenance
and repair services; and offers boat brokerage services.
New Boat Sales
The Company sells recreational boats, including pleasure boats (such as
sport boats, sport cruisers, sport yachts, and yachts), fishing boats, bass
boats, pontoon boats, and high-performance boats. The principal products offered
by the Company are manufactured by Brunswick, the leading worldwide manufacturer
of recreational boats, including Sea Ray pleasure boats, Baja Marine
high-performance boats, Boston Whaler offshore fishing boats, and Sea Rayder and
Rage jet boats. In calendar 1997, approximately 84% of new boats sold by the
Company were manufactured by Brunswick. The Company believes that it accounted
for approximately 20% of Sea Ray's U.S. marine product sales, and 5% of all of
Brunswick's marine product sales in calendar 1997. Certain of the Company's
dealerships also sell bass boats manufactured by Challenger, fishing boats and
pontoon boats manufactured by Starcraft Marine, pontoon boats manufactured by
Smokercraft, ski boats manufactured by Malibu Boats, and personal watercraft
manufactured by Bombardier (Sea Doo) and Yamaha. During 1997, new boat sales
accounted for approximately 74% of revenue.
The Company offers recreational boats in most market segments, but has a
particular focus on larger boats as reflected by the Company's average new boat
sales price in 1997 of approximately $39,000 compared
35
<PAGE> 37
to an industry average of approximately $14,000. Given the Company's locations
in some of the more affluent, offshore boating areas in the U.S. and emphasis on
high levels of customer service, the Company sells a relatively higher
percentage of large recreational boats such as yachts and sport cruisers. The
Company believes that the product lines offered by it are among the highest
quality within their respective market segments, with well-established
trade-name recognition and reputations for quality, performance, and styling.
The following table illustrates the range of the Company's new boat product
lines.
<TABLE>
<CAPTION>
PRODUCT LINE NUMBER OVERALL MANUFACTURER SUGGESTED
AND TRADE NAME OF MODELS LENGTH RETAIL PRICE RANGE
-------------- --------- ------------ --------------------------
<S> <C> <C> <C> <C> <C>
PLEASURE BOATS
Sea Ray Yachts............................ 6 50' to 63' $809,000 to $2,138,000
Sea Ray Sport Yachts...................... 10 37' to 289,000 to 810,000
48 1/2'
Sea Ray Sport Cruisers.................... 9 24 1/2' to 71,000 to 219,000
33 1/2'
Sea Ray Sport Boats....................... 17 18' to 18,000 to 59,000
25 1/2'
FISHING BOATS
Boston Whaler............................. 11 17' to 25' 6,000 to 93,000
Sea Pro................................... 19 17' to 10,000 to 30,000
26 1/2'
Starcraft Marine.......................... 8 14' to 21' 5,000 to 22,000
Sea Hunt.................................. 3 17' to 21' 12,000 to 15,000
BASS BOATS
Challenger................................ 14 17' to 20' 9,000 to 21,000
HIGH-PERFORMANCE BOATS
Baja Marine............................... 23 18' to 22,000 to 229,000
42 1/2'
JET BOATS
Sea Rayder................................ 1 15 1/2' 16,000
Boston Whaler Rage........................ 1 15' 16,000 to 18,000
SKI BOATS
Malibu Boats.............................. 7 20' to 21' 19,000 to 55,000
PONTOON BOATS
Starcraft Marine.......................... 8 18' to 26' 13,000 to 20,000
Smokercraft............................... 4 18' to 24' 8,000 to 14,000
PERSONAL WATERCRAFT
Bombardier Sea Doo........................ 13 8 1/2' to 4,000 to 8,000
10'
Yamaha.................................... 7 8 1/2' to 4,000 to 8,000
10'
</TABLE>
Pleasure Boats. Sea Ray pleasure boats target both the luxury and the
family recreational boating markets. Sea Ray sport yachts and yachts serve the
luxury segment of the recreational boating market and include top-of-the-line
living accommodations with a salon, a fully equipped galley, and up to three
staterooms. The sport yachts and yachts come in a variety of configurations,
including aft cabin, bridge cockpit, and express cruiser models, to suit each
customer's particular recreational boating style. Sea Ray sport boat and sport
cruiser models are designed for performance and dependability to meet family
recreational needs and include many of the features and accommodations of Sea
Ray's sport yacht and yacht models. All Sea Ray pleasure boats feature custom
instrumentation that may include an electronics package; Mercury and MerCruiser
engines; various hull, deck, and cockpit designs that can include a swim
platform, bow pulpit, and raised bridge; and various amenities, such as swivel
bucket helm seats, lounge seats, sun pads, wet bars, built-in ice chests,
insulated in-floor fish boxes, fight chairs, rod holders, and bait prep and
refreshment centers.
Fishing Boats. The fishing boats offered by the Company include a
10-horsepower fishing skiff model; aluminum and fiberglass models designed for
fishing and water sports in lakes and bays; and a 27-foot, 300-horsepower
fiberglass offshore fishing boat with cabins with limited live-aboard
capability. The fishing
36
<PAGE> 38
boats typically feature livewells, in-deck fishboxes, splash-well gates with
rodholders, rigging stations, cockpit coaming pads, and fresh and saltwater
washdowns.
High-Performance Boats. The high-performance boats that the Company sells
are manufactured by Baja Marine. Powered by MerCruiser sterndrive engines, Baja
high-performance boats are designed to deliver superior handling and durability
at high speeds. The larger offshore models have cabins featuring a V-berth and a
fully equipped galley.
Ski Boats. The Company sells Malibu ski boats designed to achieve a smooth
ride and the flattest wakes possible for increased skier performance and safety.
Most of Malibu's ski boat models are powered by a 310-horsepower engine.
Malibu's ski boats have been named Ski Boat of the Year each of the last seven
years by Powerboat Magazine and Hot Boat Magazine.
Pontoon Boats. The Company offers multi-purpose pontoon boats manufactured
by Starcraft Marine and Smokercraft. Pontoon boats are used primarily for day
use for both fishing and cruising.
Personal Watercraft. The Company sells one- to three-passenger personal
watercraft manufactured by Bombardier (Sea Doo) and Yamaha. Personal watercraft
are powered by 85 to 130 horsepower engines and are designed for water sport.
Used Boat Sales
The Company offers used versions of the new makes and models it offers and,
to a lesser extent, used boats of other makes and models generally taken as
trade-ins. Approximately 75% of the used boats sold by the Company in calendar
1997 were Brunswick models.
The Company's used boat sales depend on its ability to source a supply of
high-quality used boats at attractive prices. The Company acquires substantially
all of its used boats through customer trade-ins. The Company intends to
increase its used boat business as a result of the increased availability of
quality used boats generated from its acquisition of used boats in its expanding
sales efforts, the increasing number of used boats that are well-maintained
through its boat maintenance plans, and its ability to market used boats
throughout its combined dealership network to match used boat demand. The
Company recently introduced at its retail locations the Sea Ray Legacy(TM)
two-year warranty plan available for used Sea Ray boats less than six years old.
The Legacy plan guarantees that each qualifying used Sea Ray boat has passed a
48-point inspection and provides protection against failure of most mechanical
parts. The Company believes that the Sea Ray Legacy warranty plan, which is only
available for used Sea Ray boats purchased from a Sea Ray dealer, will enhance
its sales of used Sea Ray boats by motivating purchasers of used Sea Ray boats
to purchase only from a Sea Ray dealer and motivating sellers of Sea Ray boats
to sell through a Sea Ray dealer.
Marine Engines and Related Marine Equipment
The Company offers marine engines and propellers, all of which are
manufactured by Mercury Marine, a division of Brunswick. The Company sells
marine engines and propellers primarily to retail customers as replacements for
their existing engines or propellers. The engines range in price from $560 to
$33,900, and propellers range in price from $35 to $4,300. In 1997, Mercury
Marine introduced various new engine models that reduce engine emissions to
comply with current Environmental Protection Agency requirements, including its
OPTIMAX(R) 200-horsepower outboard engine, featuring a new direct fuel injection
technology that also increases fuel efficiency. See "Business -- Environmental
and Other Regulatory Issues." An industry leader for almost six decades, Mercury
Marine specializes in state-of-the-art marine propulsion systems and
accessories. Each of the Merged Companies has been recognized by Mercury Marine
as a "Platinum Dealer," which is generally awarded to the top 5% of Mercury
Marine dealers, for an average of 10 consecutive years.
The Company also sells related marine parts and accessories, including
oils, lubricants, steering and control systems, corrosion control products,
engine care and service products, primarily Mercury Marine's Quicksilver line;
Kiekhaefer high-performance accessories (such as propellers), instruments, and a
complete line of boating accessories, including life jackets, inflatables, and
wakeboards. The Company also offers novelty items, such as shirts, caps, and
floormats bearing the Sea Ray or dealer logo.
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Maintenance and Repair Services
Providing customers with professional, prompt maintenance and repair
services is critical to the Company's sales efforts and contributes to the
direct profitability of the Company. The Company provides maintenance and repair
services at most of its retail locations, with extended service hours at certain
of its locations. In addition, in many of its markets, the Company provides
mobile maintenance and repair services at the location of the customer's boat.
The Company believes that this service commitment is a competitive advantage in
the markets in which the Company competes and is critical to its efforts to
provide a trouble-free boating experience. The Company also believes that its
maintenance and repair services contribute to strong customer relationships and
that its emphasis on preventative maintenance and quality service increases the
potential supply of well-maintained boats for its used boat sales.
The Company generally offers a two-year maintenance plan that provides
protection for its customers' boats. Certain of the Company's dealerships
include the maintenance plan as part of the MarineMax Value-Price of the boat.
Company technicians provide maintenance on a regularly scheduled basis at either
the Company's retail locations or dockside. The Company notifies its customers
when their boats are due for periodic service, thereby encouraging preventative
maintenance.
The Company performs both warranty and non-warranty repair services, with
the cost of warranty work reimbursed by the manufacturer in accordance with the
manufacturer's warranty reimbursement program. For warranty work, Brunswick
reimburses a percentage of the dealer's posted service labor rates, with the
percentage varying depending on the dealer's customer satisfaction index rating
and attendance at service training courses. The Company derives the majority of
its warranty revenue from Brunswick products, as Brunswick products comprise the
majority of products sold. Certain other manufacturers reimburse warranty work
at a fixed amount per repair. Because boat manufacturers permit warranty work to
be performed only at authorized dealerships, the Company receives substantially
all of the warranted maintenance and repair work required for the new boats it
sells. The Company's extended warranty contracts also result in an ongoing
demand for the Company's maintenance and repair services for the duration of the
term of the extended warranty contract.
The Company's maintenance and repair services are performed by
manufacturer-trained and certified service technicians. In charging for its
mechanics' labor, many of the Company's dealerships use a variable rate
structure designed to reflect the difficulty and sophistication of different
types of repairs. The percentage markups on parts are similarly based on market
conditions for different parts.
F&I Products
At each of its retail locations, the Company offers its customers the
ability to finance new or used boat purchases and to purchase extended service
contracts and insurance coverage, including credit-life, accident/ disability
coverage, and boat property and casualty coverage (collectively "F&I products").
During 1997, F&I products accounted for approximately 2.3% of revenue. The
Company believes that its customers' ability to obtain competitive financing
quickly and easily at the Company's dealerships complements its ability to sell
new and used boats. The Company also believes its ability to provide
customer-tailored financing on a "same-day" basis gives it an advantage over
many of its competitors, particularly smaller competitors that lack the
resources to arrange boat financing at their dealerships or that do not generate
sufficient volume to attract the diversity of financing sources that are
available to the Company.
The Company has relationships with various national marine product lenders
under which the lenders purchase retail installment contracts evidencing retail
sales of boats and other marine products that are originated by the Company in
accordance with existing pre-sale agreements between the Company and such
lenders. These arrangements permit the Company to participate in the financing
by receiving a portion of the expected yield on the retail installment contract
based on a variety of factors, including the credit standing of the buyer, the
annual percentage rate of the retail installment contract, and the then current
"buy rate" of the lender. This participation is subject to a charge-back if the
buyer prepays the contract or defaults within a designated time period, usually
90 to 180 days. To the extent required by applicable state law, the Company's
dealerships are licensed to originate and sell retail installment contracts
financing the sale of boats and other marine products.
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The Company is in the process of establishing new retail financing
arrangements in order to secure lower buy rates and other favorable terms. Lower
buy rates would benefit the customers by making more affordable financing
available to them. Lower buy rates would benefit the Company by making its
financing programs more competitive and by increasing the amount of
participation the Company receives.
The Company also is able to offer its customers the opportunity to purchase
credit life insurance, credit accident and disability insurance, as well as
property and casualty insurance coverage. Credit life insurance policies provide
for repayment of the boat financing contract if the purchaser dies while the
contract is outstanding. Accident and disability insurance policies provide for
payment of the monthly contract obligation during any period in which the buyer
is disabled. Property and casualty insurance covers loss or damage to the boat.
Some buyers chose to include their insurance premiums in their financing
contract. The Company does not act as an insurance broker or agent nor does it
issue insurance policies on behalf of insurers. The Company, however, provides
marketing activities and other related services to insurance companies and
brokers for which it receives marketing fees. One of the Company's strategies is
to generate increased marketing fees by offering more competitive insurance
products.
The Company also offers extended service contracts under which, for a
predetermined price, the Company provides all designated services recommended in
the manufacturer's maintenance guidelines during the contract term at no
additional charge above a deductible. While the Company sells all new boats with
the boat manufacturer's standard warranty of generally five years, extended
service contracts provide additional coverage beyond the time frame or scope of
the manufacturer's warranty. Purchasers of used boats generally are able to
purchase an extended service contract, even if the selected boat is no longer
covered by the manufacturer's warranty. Generally, the Company receives a fee,
often up to 50% of the premium, for arranging an extended service contract. The
Company manages the service obligations that it sells and provides the parts and
service (or pays the cost of others that may provide such parts and services)
for claims made under the contracts. Most required services under the contracts
are provided by the Company. Claims and cancellations have been insignificant
during the past five years.
Boat Brokerage Services
Through employees who are licensed boat brokers, the Company offers boat
brokerage services at most of its retail locations. For a commission of
typically between 10% and 14%, the Company offers for sale brokered boats,
listing them on the "BUC" system, and advising its other retail locations of
their availability through the Company's integrated computer system. The BUC
system, which is similar to a real estate multiple listing service, is a
national boat listing service of approximately 600 brokers maintained by BUC
International. Often sales are co-brokered, with the commission split between
the buying and selling brokers. The Company believes that its access to
potential used boat customers and methods of listing and advertising customers'
brokered boats is more extensive than is typical among boat brokers. In addition
to generating revenue from brokerage commissions, the Company's boat brokerage
services also enable the Company to offer a broad array of used boats without
increasing related inventory costs.
The Company's brokerage customers receive the same high level of customer
service as its new and used boat customers. The Company's waterfront retail
locations enable in-water demonstrations of an on-site brokered boat. The
Company's maintenance and service, including mobile service, also is available
to the Company's brokerage customers. The purchaser of a Sea Ray boat brokered
through the Company also can take advantage of the Company's Getaways! weekend
and day trips and other rendezvous gatherings and in-water events, as well as
boat operation and safety seminars. The Company believes that the array of
services it offers are unique in the boat brokerage business.
RETAIL LOCATIONS
The Company sells its recreational boats and other marine products and
offers its related boat services through 28 retail locations in Florida, Texas,
California, Georgia, and Arizona. Each retail location generally includes an
indoor showroom (including some of the industry's largest indoor boat showrooms)
and outside area for displaying boat inventories, a business office to assist
customers in arranging financing and insurance,
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and repair and maintenance facilities. Most of the Company's retail locations
are waterfront properties on some of the nation's most popular boating
locations, including the Intracoastal Waterway, Naples Bay (next to the Gulf of
Mexico), Tampa Bay, and the Caloosahatchee River in Florida; Clear Lake, Lake
Conroe, and Lake Lewisville in Texas; the Delta Basin in northern California;
and Lake Lanier in Georgia. The Company's waterfront retail locations, most of
which include marina facilities and docks at which the Company displays its
boats, are easily accessible to the boating populace, serve as in-water
showrooms, and enable the sales force to give the customer immediate in-water
demonstrations of various boat models.
The Company plans to reach new customers by expanding in new locations the
various innovative retail formats developed by the Merged Companies, such as
mall stores and floating retail facilities. Located in a shopping mall and
utilizing a wooden dock set in a seaside scene to "anchor" seven to 10 new boat
models offered by the Company, the mall store concept is unique to the boating
industry and is designed to draw mall traffic, thereby providing exposure to
boating and to the Company's boats to the non-boating public as well as
displaying its new product offerings to boating enthusiasts. Floating retail
facilities place the sales facility, with a customer reception area and sales
offices, on or anchored to a dock in a marina and use adjacent boat slips to
display its new and used boats in areas of high boating activity. The Company
currently has one mall store, which opened in November 1997, and four floating
retail facilities. The Company plans to open an additional mall store in 1998.
See "Business -- Properties."
OPERATIONS
Dealership Operations and Management
The Company has adopted a decentralized approach to the operational
management of its dealerships. While certain administrative functions are
centralized at the corporate level, local management is primarily responsible
for the day-to-day operations of the retail locations. Each retail location is
managed by a store manager, who oversees the day-to-day operations, personnel,
and financial performance of the individual store, subject to the direction of a
district manager, who generally has responsibility for the retail locations
within a specified geographic region. Typically, each retail location also has a
staff consisting of a sales manager, an F&I manager, a parts and service
manager, sales representatives, maintenance and repair technicians, and various
support personnel.
The Company attempts to attract and retain quality employees at its retail
locations by providing them with ongoing training to enhance sales
professionalism and product knowledge, career advancement opportunities within a
larger company, and favorable benefit packages. Sales representatives receive
compensation primarily on a commission basis. Store managers are salaried
employees with incentive bonuses based on the performance of the dealership they
manage. Maintenance and repair service managers receive compensation primarily
on a salary basis with commission incentives. The Company's management
information system provides each store manager and sales representative with
daily sales information, enabling them to monitor their performance on a daily,
weekly, and monthly basis. The Company has a uniform, fully integrated
management information system serving each of its dealerships. See
"Business -- Operations -- Management Information System."
Sales and Marketing
The Company's sales philosophy focuses on selling the pleasures of the
boating lifestyle. The Company believes that the critical elements of its sales
philosophy include its appealing retail locations, hassle-free MarineMax
Value-Price approach, highly trained sales representatives, high level of
customer service, emphasis on educating the customer and the customer's family
on boat use, and providing its customers with opportunities for boating. The
Company strives to provide superior customer service and support before, during,
and after the sale.
The Company's retail locations offer each customer the opportunity to
evaluate a large variety of new and used boats in a comfortable and convenient
setting. The Company's full-service retail locations facilitate a turn-key
purchasing process that includes attractive lender financing packages, extended
service agreements,
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and insurance. Most of the Company's retail locations are located on waterfronts
and marinas, which attract boating enthusiasts and enable customers to operate
various boats prior to making a purchase decision.
The Company sells its boats at posted value prices that represent a
discount from the manufacturer's suggested retail price, frequently including
two years of free maintenance. The MarineMax Value-Price sales approach
eliminates customer anxiety associated with price negotiation and the ongoing
hassles of maintaining the boat.
Highly trained, professional sales representatives are an important factor
to the Company's successful sales efforts. These sales representatives are
trained to recognize the importance of fostering an enjoyable sales process, to
educate customers on the operation and use of the boats, and to assist customers
in making technical and design decisions in boat purchases.
As a part of its sales and marketing efforts, the Company also participates
in boat shows and in-the-water sales events at area boating locations, typically
held in January and February, in each of its markets and in certain markets in
close proximity to its markets. These shows and events are normally held at
convention centers or marinas, with area dealers renting space. Boat shows and
other offsite promotions are an important venue for generating sales orders for
the Company's new boats. The boat shows also generate a significant amount of
interest in the Company's products resulting in boat sales after the show. The
Company plans to sponsor its own boat shows.
The Company emphasizes customer education through one-on-one education by
its sales representatives and, at some locations, its delivery captains, before
and after a sale, and through in-house seminars for the entire family on boat
safety, the use and operation of boats, and product demonstrations. One of the
Company's delivery captains or the sales representative delivers the customer's
boat to an area boating location and thoroughly instructs the customer about the
operation of the boat, including hands-on instructions for docking and
trailering the boat. To enhance its customer relationships after the sale, the
Company leads and sponsors Getaways! group boating trips to various
destinations, rendezvous gatherings, and on-the-water organized events that
promote the pleasures of the boating lifestyle. Each Company-sponsored event,
planned and led by a Company employee, also provides a favorable medium for
acclimating new customers to boating and enables the Company to actively promote
new product offerings to boating enthusiasts.
As a result of the Company's relative size, the Company believes it will
have a competitive advantage within the industry by being able to conduct an
organized and systematic advertising and marketing effort. Part of its marketing
effort includes an integrated prospect management system that tracks the status
of each sales representative's contacts with a prospect, automatically generates
follow-up correspondence, posts Company-wide availability of a particular boat
or other marine product desired by a customer, and tracks the maintenance and
service needs for the customer's boat.
Suppliers and Inventory Management
The Company purchases substantially all of its new boat inventory directly
from manufacturers, which allocate new boats to dealerships based on the amount
of boats sold by the dealership. The Company also exchanges new boats with other
dealers to accommodate customer demand and to balance inventory.
The Company purchases new boats and other marine products from Brunswick,
Starcraft Marine, Smokercraft, Challenger, SeaPro, Sea Hunt, Malibu Boats,
Bombardier, and Yamaha. The Company is the largest volume purchaser of
Brunswick's Sea Ray boats, accounting for approximately 20% of all new Sea Ray
boat sales during 1997. Approximately 84% of the Company's net purchases in 1997
were from Brunswick; no other manufacturer accounted for more than 10% of the
Company's net purchases in 1997. Brunswick has entered into a 10-year Dealer
Agreement with each of the Merged Companies covering Sea Ray products. See
"Business -- Dealer Agreements With Brunswick."
The Company typically deals with each of its manufacturers, other than the
Sea Ray division of Brunswick, under an annually renewable, non-exclusive dealer
agreement. Pricing by manufacturers is generally established on an annual basis,
but may be changed at the manufacturer's sole discretion.
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Manufacturers typically discount the cost of inventory and offer inventory
financing assistance during the manufacturers' slow season, generally September
through December. To obtain lower cost of inventory, the Company intends to
capitalize on these manufacturer incentives to take product delivery during the
manufacturers' slow seasons. This permits the Company to gain pricing advantages
and better product availability during the selling season.
The Dealer Agreements with the Sea Ray division of Brunswick do not
restrict the Company's right to sell any Sea Ray product lines or competing
products. See "Business -- Dealer Agreements With Brunswick." Arrangements with
certain other manufacturers may restrict the Company's right to offer some
product lines in certain markets. The Company does not believe that these
restrictions will materially affect the Company's growth plans. See "Risk
Factors -- Boat Manufacturers' Control Over Dealers."
The Company transfers individual boats among its retail locations to fill
customer orders that otherwise might take three to four weeks to receive from
the manufacturer. This reduces delays in delivery, helps the Company maximize
inventory turnover, and assists in minimizing potential overstock or
out-of-stock situations. The Company actively monitors its inventory levels to
maintain the appropriate inventory levels to meet current market demands. The
Company is not bound by contractual agreements governing the amount of inventory
that it must purchase in any year from any manufacturer. The Company
participates in numerous end-of-summer manufacturer boat shows, which
manufacturers sponsor to sell off their remaining inventory at reduced costs
before the introduction of new model year products, typically beginning in July.
Historically, the Company has not carried over a material level of inventory
from one selling season to the next.
Inventory Financing
Historically, the Merged Companies purchased a substantial portion of their
inventory under floor plan lines of credit (secured by such inventory)
maintained with third-party finance companies and commercial banks, depending
upon the type of product purchased. Marine manufacturers customarily provide
interest assistance programs to retailers. The interest assistance varies by
manufacturer and may include periods of free financing or reduced interest rate
programs. The interest assistance may be paid directly to the retailer or the
financial institution depending on the arrangements the manufacturer has
established. The Company believes that its financing arrangements with
manufacturers are standard within the industry. As of December 31, 1997, the
Merged Companies owed an aggregate of approximately $41.4 million under the
floor plan financing agreements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The Company replaced the floor plan lines of credit of the Merged
Companies with a Loan and Security Agreement, dated April 7, 1998, with Nations
Credit Distribution Finance, Inc. ("NDF"), providing for a revolving line of
credit loan to the Company in the maximum amount of $105 million (the "Loan").
Advances accrue interest at the 90-day London Interbank Offered Rate plus 125
basis points. The Loan terminates on April 1, 2001. The availability of loan
advances from time to time will be based upon the value of new and used
inventory, parts, and accounts receivable of the Company and each of its direct
and indirect subsidiaries. Advances may be used for acquisition of inventory,
working capital, and other purposes satisfactory to NDF. No more than $10
million in advances may be outstanding for working capital purposes, unless the
Company and its subsidiaries pledge their real property assets. The Loan is
guaranteed by each of the Company's direct and indirect subsidiaries. The Loan
and the guaranties of the subsidiaries are secured by all of the accounts,
inventory, other goods, equipment, fixtures and furniture of the Company and all
of the subsidiaries. The Loan is also individually guaranteed by Richard R.
Bassett, Louis R. DelHomme Jr., William H. McGill Jr., Jerry L. Marshall, and
Richard C. LaManna Jr., and, since the consummation of the Stovall Acquisition,
by Paul Graham Stovall, Robert S. Stovall, and Jon M. Stovall. NDF is obligated
to release these individual guaranties upon consummation of the Offering.
Management Information System
The Company believes that its management information system, which
currently is being utilized by each Merged Company and was developed over the
past six years through cooperative efforts with a common vendor, enhances the
Company's ability to integrate successfully the operations of the Merged
Companies and
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future acquisitions, facilitates the interchange of information, and enhances
cross-selling opportunities throughout the Company. The system integrates each
level of operations on a Company-wide basis, including purchasing, inventory,
receivables, financial reporting and budgeting, and sales management. The system
enables the Company to monitor each dealership's operations in order to identify
quickly areas requiring additional focus and to manage inventory. The system
also provides sales representatives with prospect and customer information that
aids them in tracking the status of their contacts with prospects, automatically
generates follow-up correspondence to such prospects, posts Company-wide the
availability of a particular boat, locates boats needed to satisfy a particular
customer request, and monitors the maintenance and service needs of customers'
boats. Company representatives also utilize the system to assist in arranging
financing and insurance packages. The Company has implemented changes to its
management information system that it believes addresses the Year 2000 issue.
BRUNSWICK AGREEMENT RELATING TO ACQUISITIONS
On April 28, 1998, the Company and Brunswick entered into an agreement
providing for Brunswick to cooperate in good faith and not to unreasonably
withhold its consent to the acquisitions each year by the Company of Sea Ray
boat dealers with aggregate total revenue not exceeding 20% of the Company's
revenue in its prior fiscal year. The Stovall Acquisition will not count against
the 20% benchmark. Any acquisitions in excess of the 20% benchmark will be at
Brunswick's discretion. In the event that the Company's sales of Sea Ray boats
exceed 49% of the sales of Sea Ray boats by all Sea Ray boat dealers (including
the Company) in any fiscal year of Brunswick, the agreement provides that
Company and Brunswick will negotiate in good faith the standards for
acquisitions of Sea Ray boat dealers by the Company during Brunswick's next
succeeding fiscal year but that Brunswick may grant or withhold its consent to
any such acquisition in its sole discretion for as long as the Company's Sea Ray
boat sales exceed the 49% benchmark.
DEALER AGREEMENTS WITH BRUNSWICK
Brunswick, through its Sea Ray division, and the Company, through each of
the Merged Companies, are parties to Sales and Service Agreements, dated April
28, 1998 (the "Dealer Agreements"), relating to Sea Ray products. Each Dealer
Agreement appoints one of the Merged Companies as a non-exclusive dealer for the
retail sale, display, and servicing of designated Sea Ray products and repair
parts currently or in the future sold by Sea Ray. Each Dealer Agreement
designates a non-exclusive area of primary responsibility for the dealer, which
is a geographical area in proximity to the dealer's retail locations based on
such areas that are customarily designated by Sea Ray and applicable to its
domestic dealers. Each Dealer Agreement also specifies retail locations, which
the dealer may not close, change, or add to without the prior written consent of
Sea Ray, which Sea Ray may not unreasonably withhold. Upon at least one year's
prior notice and the failure by the dealer to cure, Sea Ray may remove the
dealer's right to operate any particular retail location if the dealer fails to
meet its material obligations, performance standards, or terms, conditions,
representations, warranties, and covenants applicable to that location. Each
Dealer Agreement also restricts the dealer from selling, advertising, soliciting
for sale, or offering for resale any Sea Ray products outside its area of
primary responsibility without the prior written consent of Sea Ray as long as
similar restrictions also apply to all domestic Sea Ray dealers selling
comparable Sea Ray products. Each Dealer Agreement provides for the lowest
product prices charged by the Sea Ray division of Brunswick from time to time to
other domestic Sea Ray dealers, subject to the dealer meeting all the
requirements and conditions of Sea Ray's applicable programs and the right of
Brunswick in good faith to charge lesser prices to other dealers to meet
existing competitive circumstances, for unusual and non-ordinary business
circumstances, or for limited duration promotional programs.
Each Dealer Agreement requires the dealer to (i) promote, display,
advertise, and sell Seal Ray boats at each of its retail locations in accordance
with the agreement and applicable laws; (ii) purchase and maintain sufficient
inventory of current Sea Ray boats to meet the reasonable demand of customers at
each of its locations and to meet the minimum inventory requirements applicable
to all Sea Ray dealers; (iii) maintain at each retail location, or at another
acceptable location, a service department to service Sea Ray boats promptly and
professionally and to maintain parts and supplies to service Sea Ray boats
properly on a timely basis;
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(iv) perform all necessary installation and inspection services prior to
delivery to purchasers and perform post-sale services of all Sea Ray products
sold by the dealer or brought to the dealer for service; (v) furnish purchasers
with Sea Ray's limited warranty on new products and with information and
training as to the sale and proper operation and maintenance of Sea Ray boats;
(vi) assist Sea Ray in performing any product defect and recall campaigns; (vii)
maintain complete product sales and service records; (viii) achieve annual sales
performance in accordance with fair and reasonable sales levels established by
Sea Ray, after consultation with the dealer, based on factors such as
population, sales potential, local economic conditions, competition, past sales
history, number of retail locations, and other special circumstances that may
affect the sale of products or the dealer, in each case consistent with
standards established for all domestic Sea Ray dealers selling comparable
products; (ix) provide designated financial information; (x) conduct its
business in a manner that preserves and enhances the reputation of Sea Ray and
the dealer for providing quality products and services; (xi) maintain the
financial ability to purchase and maintain on hand required inventory levels;
(xii) indemnify Sea Ray against any claims or losses resulting from the dealer's
failure to meet its obligations to Sea Ray; (xiii) maintain customer service
ratings sufficient to maintain Sea Ray's image in the marketplace; and (xiv)
achieve within designated time periods and thereafter maintain master dealer
status (which is Sea Ray's highest performance status) for the locations
designated by Sea Ray and the dealer.
Each Dealer Agreement has an initial term until July 31, 2008. Each Dealer
Agreement, however, may be terminated (a) by Sea Ray if the dealer fails or
refuses to place a minimum stocking order of the next model year's products in
accordance with requirements applicable to all Sea Ray dealers generally or
fails to meet its financial obligations as they become due to Sea Ray or to the
dealer's lenders; (b) by Sea Ray or the dealer where good cause exists
(including the material breach, default, or noncompliance with any material
term, provision, warranty, or obligation under the agreement) and has not been
cured within 60 days of prior written notice of the claimed deficiency or at the
end of the 60-day period without the opportunity to cure where the cause
constitutes bad faith; (c) by Sea Ray or the dealer in the event of the
insolvency, bankruptcy, or receivership of the other; (d) by Sea Ray in the
event of the assignment of the agreement by the dealer without the prior written
consent of Sea Ray; (e) by Sea Ray upon at least 10 days' prior written notice
in the event of the failure to pay any sums due and owning to Sea Ray that are
not disputed in good faith; (f) by Sea Ray if a majority of the Board of
Directors of the Company does not consist of the senior executives and Other
Designated Members (as defined in the Stockholders' Agreement); or (g) upon the
mutual consent of the dealer and Sea Ray.
EMPLOYEES
As of May 1, 1998, the Company had 517 employees, 510 of whom were in
store-level management and seven of whom were in corporate administration and
management. The Company is not a party to any collective bargaining agreements
and is not aware of any efforts to unionize its employees. The Company considers
its relations with its employees to be excellent.
TRADEMARKS AND SERVICE MARKS
The Company does not hold any registered trade or service marks at this
time, but has trade name and trademark applications pending with the U.S. Patent
and Trademark Office for the name "MarineMax" and for its corporate logo. There
can be no assurance that any of these applications will be granted.
SEASONALITY
The Company's business, as well as the entire recreational boating
industry, is highly seasonal. Over the two-year period ended December 31, 1997,
the average net sales for the quarters ended March 31, June 30, September 30,
and December 31 represented 23%, 31%, 25%, and 21%, respectively, of the
Company's average annual net sales. With the exception of Florida, the Company's
geographic territories generally realize significantly lower sales in the
quarterly period ending December 31, with boat sales generally improving in
January with the onset of the public boat and recreation shows, and continue
through July.
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The Company's business is also subject to weather patterns, which may
adversely affect the Company's results of operations. For example, drought
conditions, or merely reduced rainfall levels or excessive rain, may close area
boating locations or render boating dangerous or inconvenient, thereby
curtailing customer demand for the Company's products. In addition, unseasonably
cool weather and prolonged winter conditions may lead to a shorter selling
season in certain locations. Although the Company's geographic diversity is
likely to reduce the overall impact to the Company of adverse weather conditions
in any one market area, such conditions will continue to represent potential,
material adverse risks to the Company and its future financial performance.
ENVIRONMENTAL AND OTHER REGULATORY ISSUES
The Company's operations are subject to extensive regulation, supervision,
and licensing under various federal, state, and local statutes, ordinances, and
regulations. While the Company believes that it maintains all requisite licenses
and permits and is in compliance with all applicable federal, state, and local
regulations, there can be no assurance that the Company will be able to maintain
all requisite licenses and permits. The failure to satisfy those and other
regulatory requirements could have a material adverse effect on the Company's
business, financial condition, and results of operations. The adoption of
additional laws, rules, and regulations could also have a material adverse
effect on the Company's business. Various federal, state, and local regulatory
agencies, including OSHA, the EPA, and similar federal and local agencies, have
jurisdiction over the operation of the Company's dealerships, repair facilities,
and other operations with respect to matters such as consumer protection,
workers' safety, and laws regarding protection of the environment, including
air, water, and soil.
The EPA recently promulgated air emissions regulations for outboard marine
engines that impose stricter emissions standards for two-cycle, gasoline
outboard marine engines. Emissions from such engines must be reduced by
approximately 75% over a nine-year period beginning with the 1998 model year.
Costs of comparable new engines, if materially more expensive than previous
engines, or the inability of the Company's manufacturers to comply with EPA
requirements, could have a material adverse effect on the Company's business,
financial condition, and results of operations.
Certain of the Company's facilities own and operate underground storage
tanks ("USTs") for the storage of various petroleum products. The USTs are
generally subject to federal, state, and local laws and regulations that require
testing and upgrading of USTs and remediation of contaminated soils and
groundwater resulting from leaking USTs. In addition, if leakage from
Company-owned or operated USTs migrates onto the property of others, the Company
may be subject to civil liability to third parties for remediation costs or
other damages. Based on historical experience, the Company believes that its
liabilities associated with UST testing, upgrades, and remediation are unlikely
to have a material adverse effect on its financial condition or operating
results.
As with boat dealerships generally, and parts and service operations in
particular, the Company's business involves the use, handling, storage, and
contracting for recycling or disposal of hazardous or toxic substances or
wastes, including environmentally sensitive materials, such as motor oil, waste
motor oil and filters, transmission fluid, antifreeze, freon, waste paint and
lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline,
and diesel fuels. Accordingly, the Company is subject to regulation by federal,
state, and local authorities establishing requirements for the use, management,
handling, and disposal of these materials and health and environmental quality
standards, and liability related thereto, and providing penalties for violations
of those standards. The Company is also subject to laws, ordinances, and
regulations governing investigation and remediation of contamination at
facilities it operates to which it sends hazardous or toxic substances or wastes
for treatment, recycling, or disposal.
The Company believes that it does not have any material environmental
liabilities and that compliance with environmental laws, ordinances, and
regulations will not, individually or in the aggregate, have a material adverse
effect on the Company's business, financial condition, or results of operations.
However, soil and groundwater contamination has been known to exist at certain
properties owned and leased by the Company. The Company has also been required
and may in the future be required to remove aboveground and underground storage
tanks containing hazardous substances or wastes. As to certain of the Company's
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<PAGE> 47
properties, specific releases of petroleum have been or are in the process of
being remedied in accordance with state and federal guidelines. The Company
believes it has completed or is in the process of completing remedial actions
required by law regarding known contamination. In addition, the shareholders of
the Merged Companies and Property Companies have indemnified the Company for
specific environmental issues identified on environmental site assessments
performed by the Company as part of the Combination Transactions. The Company
maintains insurance for pollutant cleanup and removal. The coverage pays for the
expenses to extract pollutants from land or water at the insured property, if
the discharge, dispersal, seepage, migration, release or escape of the
pollutants is caused by or results from a covered cause of loss. The Company may
also have additional storage tank liability insurance and "Superfund" coverage
where applicable. In addition, certain of the Company's retail locations are
located on waterways that are subject to federal or state laws regulating
navigable waters (including oil pollution prevention), fish and wildlife, and
other matters.
Certain of the properties owned or leased by the Company are located in
commercial areas that have historically been used for gasoline service stations.
As a consequence, it is possible that historical site activities or current
neighboring activities have affected these properties owned or leased by the
Company and that, as a result, additional environmental issues may arise in the
future, the precise nature of which the Company cannot now predict. Also, one of
the Company's properties is within the boundaries of a Superfund site, although
the Company's property has not been and is not expected to be identified as a
contributor to the contamination in the area. The Company, however, does not
believe that these environmental issues will result in any material liabilities
to the Company.
Additionally, certain states have required or are considering requiring a
license in order to operate a recreational boat. While such licensing
requirements are not expected to be unduly restrictive, regulations may
discourage potential first-time buyers, thereby limiting future sales, which
could adversely affect the Company's business, financial condition, and results
of operations.
PRODUCT LIABILITY
Products sold or serviced by the Company may expose it to potential
liabilities for personal injury or property damage claims relating to the use of
those products. Historically, the resolution of product liability claims has not
materially affected the Company's business. The Company's manufacturers
generally maintain product liability insurance, and the Company maintains
third-party product liability insurance, which it believes to be adequate.
However, there can be no assurance that the Company will not experience legal
claims in excess of its insurance coverage or that claims will be covered by
insurance. Furthermore, if any significant claims are made against the Company,
the Company's business, financial condition, and results of operations may be
adversely affected by related negative publicity.
COMPETITION
The Company operates in a highly competitive environment. In addition to
facing competition generally from recreation businesses seeking to attract
consumers' leisure time and discretionary spending dollars, the recreational
boat industry itself is highly fragmented, resulting in intense competition for
customers, quality products, boat show space, and suitable retail locations. The
Company believes that the principal factors influencing competition within the
recreational boat industry are product features and quality, dealer service,
price, location, selection, and the availability of customer financing. The
Company relies to a certain extent on boat shows to generate sales. The
inability of the Company to participate in boat shows in its existing or
targeted markets could have a material adverse effect on the Company's business,
financial condition, and results of operations.
The Company competes primarily with single-location boat dealers and, with
respect to sales of marine equipment, parts, and accessories, with national
specialty marine stores, catalog retailers, sporting goods stores, and mass
merchants. Dealer competition continues to increase based on the quality of
available
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<PAGE> 48
products, the price and value of the products, and attention to customer
service. There is significant competition both within markets currently being
served by the Company and in new markets that the Company may enter. The Company
competes in each of its markets with retailers of brands of boats and engines
not sold by the Company in that market. In addition, several of the Company's
competitors, especially those selling boating accessories, are large national or
regional chains that have substantial financial, marketing, and other resources.
However, the Company believes that its integrated corporate infrastructure and
marketing and sales capabilities, its cost structure, and its nationwide
presence enable it to compete effectively against these companies. Private sales
of used boats is an additional significant source of competition.
PROPERTIES
The Company leases its corporate offices in Clearwater, Florida and
additional administrative, warehouse, and service facilities in Texas. The
Company also leases 18 of its retail locations under leases that generally
contain multi-year renewal options. In all such cases, the Company pays a fixed
rent at market rates. In substantially all of the leased locations, the Company
is responsible for taxes, utilities, insurance, and routine repairs and
maintenance. The Company owns the property associated with its 10 other retail
locations. See "Formation of the Company" and "Certain Transactions."
The following table reflects the status, approximate size, and facilities
of the Company's various retail locations as of the date of this Prospectus.
<TABLE>
<CAPTION>
OWNED OR SQUARE FACILITIES OPERATED
LOCATION LEASED FOOTAGE(1) AT PROPERTY SINCE WATERFRONT
- -------------------------- ----------------- ---------- -------------------------------- -------- -------------------
<S> <C> <C> <C> <C> <C>
FLORIDA
Clearwater................ Company owned 42,000 Retail and service; 16 wet slips 1973 Tampa Bay
Clearwater (mall)......... Third-party lease 2,600 Retail only 1997 --
Fort Myers................ Third-party lease 8,000 Retail and service; 18 wet slips 1983 Caloosahatchee
River
Miami..................... Company owned 7,200 Retail and service; 15 wet slips 1980 Intracoastal
Waterway
Naples.................... Company owned 19,600 Retail and service; 13 wet slips 1997 Naples Bay
Palm Beach................ Company owned 22,800 Retail and service; 8 wet slips 1998 Intracoastal
Waterway
Pompano Beach............. Company owned 23,000 Retail and service; 16 wet slips 1990 Intracoastal
Waterway
Stuart(2)................. Company owned 6,700 Retail and service; 60 wet slips 1994 Intracoastal
Waterway
Tampa..................... Company owned 13,100 Retail and service 1995 --
CALIFORNIA
Oakland................... Third-party lease 17,700 Retail and service; 20 wet slips 1985 Alameda Estuary
(San Francisco Bay)
Oakley.................... Third-party lease 5,100 Retail and service 1996 --
Redding................... Company owned 11,700 Retail and service 1978 --
Redding................... Third-party lease 3,500 Retail and service 1998 --
Santa Rosa................ Third-party lease 8,100 Retail and service 1990 --
Sacramento................ Company owned 24,800 Retail and service 1995 --
Sacramento (River Bend)
(floating facility)..... Third-party lease 500 Retail and service; 20 wet slips 1998 Sacramento River
ARIZONA
Tempe..................... Company owned 34,000 Retail and service 1992 --
</TABLE>
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<PAGE> 49
<TABLE>
<CAPTION>
OWNED OR SQUARE FACILITIES OPERATED
LOCATION LEASED FOOTAGE(1) AT PROPERTY SINCE WATERFRONT
- -------------------------- ----------------- ---------- -------------------------------- -------- -------------------
<S> <C> <C> <C> <C> <C>
TEXAS
League City (floating
facility)(3)............ Third-party lease 800 Retail and service; 30 wet slips 1988 Clear Lake
Lewisville (Dallas)....... Third-party lease 10,000 Retail and service 1992 Lake Lewisville
Lewisville (Dallas)
(floating facility)..... Third-party lease 500 Retail only; 20 wet slips(4) 1994 Lake Lewisville
Fort Worth................ Third-party lease 1,600 Retail only(5) 1997 --
Houston................... Affiliate lease 10,000 Retail only(5) 1987 --
Houston................... Affiliate lease 10,000 Retail only 1981 --
Montgomery (floating
facility)............... Third-party lease 600 Retail only; 10 wet slips 1995 Lake Conroe
GEORGIA
Kennesaw (Atlanta)........ Affiliate lease 12,000(6) Retail and service 1996 --
Augusta................... Affiliate lease 8,000 Retail and service; 15 wet slips 1988 Clark Hill Lake
Forest Park (Atlanta)..... Affiliate lease 47,300 Retail and service 1973 --
Lake Lanier............... Affiliate lease 3,000 Retail and service; 50 wet slips 1981 Lake Lanier
</TABLE>
- ---------------
(1) Square footage does not include outside sales space or dock or marina
facilities.
(2) The Stuart retail property consists of two parcels, each of which is owned
by a separate, wholly owned subsidiary of the Company.
(3) The floating facility is owned by the Company; however, the related dock and
marina space is leased by the Company from an unaffiliated third-party.
(4) Shares service facility located at the other Lewisville retail location.
(5) Service performed at Houston service center leased by the Company from an
affiliate of one of the Merged Companies.
(6) Includes 4,000 square feet currently under construction for a new service
center.
LEGAL PROCEEDINGS
The Company is involved in various legal proceedings arising out of its
operations in the ordinary course of business. The Company believes that the
outcome of all such proceedings, even if determined adversely, would not have a
material adverse effect on its business, financial condition, or results of
operations.
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<PAGE> 50
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning each of the directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William H. McGill Jr...... 54 Chairman of the Board, President, Chief Executive Officer,
and Director
Michael H. McLamb......... 33 Vice President, Chief Financial Officer, Secretary, and
Treasurer
Richard R. Bassett........ 44 Senior Vice President and Director
Louis R. DelHomme Jr...... 62 Senior Vice President and Director
Richard C. LaManna Jr..... 60 Senior Vice President and Director
Paul Graham Stovall....... 59 Senior Vice President and Director
Richard C. LaManna III.... 38 Vice President
Darrell C. LaManna........ 33 Vice President
R. David Thomas........... 64 Director Nominee
Stewart Turley............ 63 Director Nominee
</TABLE>
William H. McGill Jr. has served as the President and Chief Executive
Officer of MarineMax since January 1998 and as the Chairman of the Board and as
a director of the Company since March 1998. Mr. McGill was the principal owner
and president of Gulfwind USA, Inc., one of the Merged Companies, from 1973
until its merger with the Company.
Michael H. McLamb has served as Vice President, Chief Financial Officer,
and Treasurer of MarineMax since January 1998 and as Secretary of the Company
since April 1998. Mr. McLamb, a certified public accountant, was employed by
Arthur Andersen LLP from December 1987 to December 1997, serving most recently
as a senior manager.
Richard R. Bassett has served as a Senior Vice President and director of
the Company since March 1998. Mr. Bassett was the owner and president of Bassett
Boat Company of Florida, one of the Merged Companies, from 1979 until its merger
with the Company.
Louis R. DelHomme Jr. has served as a Senior Vice President and director of
the Company since March 1998. Mr. DelHomme was the owner and president of 11502
Dumas, Inc. d/b/a Louis DelHomme Marine, one of the Merged Companies, from 1971
until its merger with the Company.
Richard C. LaManna Jr. has served as a Senior Vice President and director
of the Company since March 1998. Mr. LaManna was the president and a principal
owner of Harrison's Boat Center, Inc. and Harrison's Marine Centers of Arizona,
Inc., one of the Merged Companies, from 1978 until its merger with the Company.
Paul Graham Stovall has served as a Senior Vice President and director of
the Company since May 1, 1998. Mr. Stovall was a principal owner and president
of Stovall Marine, Inc., one of the Merged Companies, from 1960 until its merger
with the Company.
Richard C. LaManna III has served as a Vice President of the Company since
March 1998. Mr. LaManna was an owner and the secretary and treasurer of
Harrison's Marine Centers of Arizona, Inc. from 1991 until its merger with the
Company. Richard LaManna III is the son of Richard LaManna Jr. and the brother
of Darrell LaManna.
Darrell C. LaManna has served as a Vice President of the Company since
March 1998. Mr. LaManna was an owner and the Vice President of Harrison's Boat
Center, Inc. from 1988 until its merger with the Company. Darrell LaManna is the
son of Richard LaManna Jr. and the brother of Richard LaManna III.
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<PAGE> 51
R. David Thomas has been nominated and approved to serve as a director of
the Company upon the consummation of the Offering. Mr. Thomas, the founder of
Wendy's International, Inc., has served as Senior Chairman of that company since
1985. Mr. Thomas served as Chairman of the Board of Wendy's, International, Inc.
from 1972 until 1985 and as President and Chief Executive Officer from 1969
until 1972. Mr. Thomas served on the Board of Trustees of Duke University and
Nova Southwest University.
Stewart Turley has been nominated and approved to serve as a director of
the Company upon the consummation of the Offering. Mr. Turley retired in 1997 as
Chairman of Eckerd Corporation, which he originally joined in 1966. Mr. Turley
served as Chairman, President, and Chief Executive Officer of Eckerd Corporation
from 1975 until 1993. He served as Chairman and Chief Executive Officer from
1993 until 1996, and remained as Chairman of the Board until his retirement in
1997. He has been a director of Eckerd Corporation since 1971. Mr. Turley was a
Senior Vice President from 1971 to 1974 and was Vice President from 1968 to
1971. Mr. Turley also serves as a director of Springs Industries, Inc. and
Sprint Corporation.
The Company's Restated Certificate of Incorporation and Bylaws divide the
Board of Directors of the Company into three classes. At each annual meeting of
stockholders, directors in each class will be elected for three-year terms to
succeed the directors of that class whose terms are expiring. Messrs. Bassett
and Stovall are Class I directors whose terms will expire in 1999; Mr. McGill is
a Class II director whose term will expire in 2000; and Messrs. DelHomme and
LaManna are Class III directors whose terms will expire in 2001. Messrs. Thomas
and Turley will be Class I and Class II directors, respectively. Officers serve
at the pleasure of the Board of Directors. Other than as set forth above, there
are no family relationships among any of the directors or officers of the
Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors will establish an Audit Committee and a
Compensation Committee upon the completion of the Offering, each consisting
entirely of independent directors.
The responsibilities of the Audit Committee will include recommending to
the Board of Directors the independent public accountants to be selected to
conduct the annual audit of the books and records of the Company, reviewing the
proposed scope of such audit, reviewing accounting and financial controls of the
Company with the independent public accountants and the Company's financial
accounting staff, and reviewing and approving transactions between the Company
and its directors, officers, and their affiliates.
The Compensation Committee will provide a general review of the Company's
compensation plans and policies to ensure that they meet corporate objectives.
As described below, the Company's existing plans with respect to executive
compensation are largely based upon contractual commitments set forth in
employment agreements. See "Management -- Executive Compensation." The
responsibilities of the Compensation Committee will also include administering
the 1998 Incentive Stock Plan, including selecting the officers and salaried
employees to whom options and awards will be granted.
EXECUTIVE COMPENSATION
The Company was incorporated in January 1998. As a result, the Company paid
no compensation prior to that time. The Company anticipates that during 1998 its
most highly compensated executive officers (including its Chief Executive
Officer) will consist of Messrs. McGill, Bassett, DelHomme, Stovall, R. LaManna
Jr., R. LaManna III, D. LaManna, and McLamb, but is unable to determine their
respective annual compensation until the completion of its fiscal year ending
September 30, 1998. The Company anticipates that its Chief Executive Officer and
four other most highly compensated officers will receive annualized base
salaries during the year ending December 31, 1998, as set forth under
"Management -- Employment Agreements." Executive officers also are eligible to
receive grants of stock options under the 1998 Incentive Stock Plan. See
"Management -- 1998 Incentive Stock Plan."
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<PAGE> 52
\DIRECTOR COMPENSATION
Members of the Board of Directors who are not full-time employees of the
Company will receive a quarterly directors' fee of $10,000, $5,000 of which will
be paid by the issuance of shares of Common Stock with a market value of $5,000
and the remainder of which will be paid at the director's option in cash or
shares of Common Stock. All directors will be reimbursed for out-of-pocket
expenses incurred in attending meetings of the Board of Directors or committees.
In addition, independent directors will receive automatic stock option grants
and will be eligible to receive discretionary grants of stock options under the
Company's 1998 Incentive Stock Plan. See "Management -- 1998 Incentive Stock
Plan." Officers of the Company receive no additional compensation for serving on
the Board of Directors.
EMPLOYMENT AGREEMENTS
The Company entered into five-year employment agreements with each of
William H. McGill Jr., Richard R. Bassett, Louis R. DelHomme Jr., Paul Graham
Stovall, Richard C. LaManna Jr., Richard C. LaManna III, and Darrell C. LaManna,
on the effective dates of the Mergers. The employment agreements with each of
these officers provides for a base salary of $150,000 per year. The Company also
entered into a five-year employment agreement with Michael H. McLamb on April
10, 1998 providing for a base salary of $150,000 per year. Mr. McLamb's
employment agreement also provides for him to receive stock options to purchase
35,600 shares of Common Stock at $15.00 per share and stock options to purchase
70,000 shares of Common Stock at $12.00 per share, with the options for 35,600
shares vesting upon grant and the options for 70,000 shares vesting ratably over
the five-year period from the date of grant. Each employment agreement provides
for incentive compensation based upon the performance of the Company and the
employee as determined by the Company's Board of Directors. The Board of
Directors approved for 1998 a quarterly bonus equal to 1.25% of the quarterly
pre-tax profits of the Company for William H. McGill Jr., provided the Company
achieves its budgeted quarterly earnings. Additionally, Mr. McGill will receive
an annual bonus targeted at 50% of his base salary plus quarterly bonuses if the
Company achieves its annual budgeted earnings. Messrs. Bassett, DelHomme, R.
LaManna Jr., R. LaManna III, D. LaManna, and Stovall are each eligible to
receive a quarterly bonus equal to 1.25% of the quarterly pre-tax profits for
their respective regional territories, provided the Company achieves its
quarterly budgeted earnings. Additionally, Messrs. Bassett, DelHomme, R. LaManna
Jr., R. LaManna III, D. LaManna, and Stovall are each eligible to receive an
annual bonus targeted at 50% of base salary and a quarterly bonus based upon the
customer satisfaction index and the Company's financial performance, provided
the Company achieves its annual budgeted earnings. Under the plan, the quarterly
and annual bonuses for Messrs. McGill, Bassett, DelHomme, R. LaManna Jr., R.
LaManna III, D. LaManna, and Stovall will not be paid if the Company does not
achieve its budgeted earnings.
The Company may terminate each officer's employment for good cause, as
defined in the respective agreements. The Company also may terminate each
officer's employment without good cause if such termination is approved by a
majority of the members of the Board of Directors (excluding such officer), but
the officer so terminated will receive his base salary for the remaining term of
his employment agreement or one year, whichever is greater, and certain bonus
and other payments. Each agreement also will terminate automatically upon the
death of the respective officer. In the event of a termination of employment by
the Company or the employee following any "change in control" of the Company as
defined in the agreement, each employment agreement provides for the employee to
receive his fixed compensation in a lump sum and bonus payments that would have
been payable through the end of the Company's then-current fiscal year as if his
employment had not been terminated. Section 280G of the Internal Revenue Code
may limit the deductibility of such payments for federal income tax purposes. If
these payments are not deductible and if the Company has income at least equal
to such payments, an amount of income equal to the amount of such payments could
not be offset. As a result, the income that was not offset would be "phantom
income" (i.e. income without cash) to the Company. A "change in control" would
include a merger or consolidation of the Company, a sale of all or substantially
all of the assets of the Company, under certain circumstances changes in the
identity of a majority of the members of the Board of Directors of the Company,
or acquisitions of more than 20% of the Company's Common Stock, subject to
certain limitations.
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<PAGE> 53
Each employment agreement contains a covenant not to compete with the
Company for a period of two years immediately following termination of
employment or, in the case of a termination by the Company without cause in the
absence of a change in control, with certain exceptions, for a period of one
year following termination of employment.
1998 INCENTIVE STOCK PLAN
On April 5, 1998 and April 30, 1998, respectively, the Board of Directors
adopted and the stockholders approved the MarineMax, Inc. 1998 Incentive Stock
Plan (the "Plan"), which provides for the grant of incentive and nonqualified
stock options to acquire Common Stock of the Company, the direct grant of Common
Stock, the grant of stock appreciation rights ("SARs"), and the grant of other
cash awards to key personnel, directors, consultants, independent contractors,
and others providing valuable services to the Company and its subsidiaries. The
Company believes that the Plan represents an important factor in attracting and
retaining executive officers and other key employees, directors, and consultants
and constitutes a significant part of its compensation program. The Plan
provides such individuals with an opportunity to acquire a proprietary interest
in the Company and thereby align their interests with the interests of the
Company's other stockholders and give them an additional incentive to use their
best efforts for the long-term success of the Company.
The Plan provides that a maximum of the lesser of 4,000,000 shares or 15%
of the then-outstanding shares of Common Stock of the Company may be issued
under the Plan. The maximum number of shares of stock with respect to which
options or other awards may be granted to any employee (including officers)
during the term of the Plan may not exceed 50% of the shares of Common Stock
covered by the Plan. As of the date of this Prospectus, options to purchase
105,600 shares of Common Stock have been granted to Michael H. McLamb. See
"Management -- Employment Agreements." No other stock options have been granted.
The Company, however, plans to grant stock options to purchase up to an
additional 1,379,400 shares of Common Stock at an exercise price equal to the
initial per share public offering price. Of these grants, it currently is
anticipated that William H. McGill Jr., Richard R. Bassett, and Michael H.
McLamb will receive grants to purchase 120,000, 64,167, and 28,000 shares,
respectively.
The power to administer the Plan with respect to executive officers and
directors of the Company and all persons who own 10% or more of the Company's
issued and outstanding stock rests exclusively with the Board of Directors or a
committee consisting of two or more non-employee directors who are appointed by
the Board of Directors. The power to administer the Plan with respect to other
persons rests with the Board of Directors.
The Plan will terminate in April 2008, and options may be granted at any
time during the life of the Plan. Options become exercisable at such time as may
be determined by the Board of Directors or the Plan administrator. The exercise
prices of options will be determined by the Board of Directors or the Plan
administrator, but if an option is intended to be an incentive stock option, the
exercise price may not be less than 100% (110% if the option is granted to a
stockholder who at the time of the grant of the option owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company) of the fair market value of the Common Stock at the time of the grant.
The Plan also includes an Automatic Grant Program providing for the
automatic grant of options ("Automatic Options") to non-employee directors of
the Company. Under the Automatic Grant Program, each non-employee whose election
to the Board of Directors is proposed as of the effective date of the
Registration Statement of which this Prospectus forms a part will receive an
Automatic Option to acquire 10,000 shares of Common Stock on that date (an
"Initial Grant"). Each subsequent newly elected non-employee member of the Board
of Directors will receive as an Initial Grant an Automatic Option to acquire
5,000 shares of Common Stock on the date of his or her first appointment or
election to the Board of Directors. In addition, an Automatic Option to acquire
2,500 shares of Common Stock will be granted to each non-employee director at
the meeting of the Board of Directors held immediately after each annual meeting
of stockholders (an "Annual Grant"). A non-employee member of the Board of
Directors will not be eligible to receive an Annual Grant if the option grant
date of such Annual Grant would be within 90 days of such non-employee member
receiving his or her Initial Grant. Each Initial Grant will vest and become
exercisable in a series of three equal and successive installments with the
first installment vested on the date of grant (or the
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<PAGE> 54
date of election to the Board of Directors, if later) and the next two
installments 12 months and 24 months after the date of grant. Each Annual Grant
will vest and become exercisable 12 months after the date of grant. Each
Automatic Option will vest and become exercisable only if the optionholder has
not ceased serving as a director as of such vesting date.
The exercise price per share of Common Stock subject to an Initial Grant on
the effective date of the Registration Statement of which this Prospectus forms
a part will be equal to the initial public offering price per share and the
exercise price per share of Common Stock subject to other Automatic Options will
be equal to 100% of the fair market value (as defined in the Plan) of the
Company's Common Stock on the date such option is granted. Each Automatic Option
will expire on the tenth anniversary of the date on which such Automatic Option
was granted. In the event the non-employee director ceases to serve as a member
of the Board of Directors or dies while serving as a director, the optionholder
or the optionholder's estate or successor by bequest or inheritance may exercise
any Automatic Options that have vested by the time of cessation of service until
the earlier of (a) 90 days after the cessation of service, or (b) the expiration
of the term of the Automatic Option. The Board of Directors believes that the
grant of Automatic Options to non-employee directors is necessary to attract,
retain, and motivate independent directors.
The Plan is not intended to be the exclusive means by which the Company may
issue options or warrants to acquire its Common Stock, stock awards, or any
other type of award. To the extent permitted by applicable law and New York
Stock Exchange requirements, the Company may issue any other options, warrants,
or awards other than pursuant to the Plan without stockholder approval.
EMPLOYEE STOCK PURCHASE PLAN
On April 5, 1998 and April 30, 1998, respectively, the Board of Directors
adopted and the stockholders approved the MarineMax, Inc. 1998 Employee Stock
Purchase Plan (the "Stock Purchase Plan"), which is intended to qualify for
favorable income tax treatment under Section 423 of the Internal Revenue Code
and is intended to offer financial incentives for employees to purchase Common
Stock of the Company. The Stock Purchase Plan is administered by an appointed
committee of the Board of Directors.
The Stock Purchase Plan provides for the issuance of up to 500,000 shares
of Common Stock. The Stock Purchase Plan is available to all regular, full-time
employees of the Company who have completed at least one year of continuous
service.
The Stock Purchase Plan provides for implementation of up to 10 annual
offerings beginning on the first day of July in the years 1998 through 2007,
with each offering terminating on June 30 of the following year. Each annual
offering may be divided into two six-month offerings. For each offering, the
purchase price per share will be the lower of (i) 85% of the closing price of
the Common Stock on the first day of the offering period or (ii) 85% of the
closing price of the Common Stock on the last day of the offering. The purchase
price is paid through periodic payroll deductions not to exceed 10% of the
participant's earnings during each offering period. However, no participant may
purchase more than $25,000 worth of Common Stock annually.
LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION
The Company's Restated Certificate of Incorporation provides that no
director of the Company will be personally liable to the Company or its
stockholders for monetary damages for breach of a fiduciary duty as a director,
except to the extent such exemption or limitation of liability is not permitted
under the Delaware General Corporation Law (the "Delaware GCL"). The effect of
this provision in the Restated Certificate of Incorporation is to eliminate the
rights of the Company and its stockholders, either directly or through
stockholders' derivative suits brought on behalf of the Company, to recover
monetary damages from a director for breach of the fiduciary duty of care as a
director except in those instances described under the Delaware GCL. In
addition, the Company has adopted provisions in its Bylaws and entered into
indemnification agreements that require the Company to indemnify its directors,
officers, and certain other representatives of the Company against expenses and
certain other liabilities arising out of their conduct on behalf of the Company
to the maximum extent and under all circumstances permitted by law.
Indemnification may not apply in certain circumstances to actions arising under
the federal securities laws. The Company has not indemnified its directors and
officers for actions prior to the Mergers.
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<PAGE> 55
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the date of this Prospectus, and
as adjusted to reflect the sale of shares offered hereby, for (i) all directors,
the Chief Executive Officer, and the other executive officers (including the
four other most highly compensated executive officers), (ii) all directors and
executive officers as a group, (iii) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, and (iv)
each Selling Stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING SHARES TO BE OFFERING
----------------------- SOLD IN -----------------------
NAME OF BENEFICIAL OWNER(1) NUMBER(2) PERCENT(2) OFFERING NUMBER(2) PERCENT(2)
--------------------------- --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
DIRECTORS, EXECUTIVE OFFICERS,
AND 5% STOCKHOLDERS
William H. McGill Jr. .......... 1,516,458 15.66% 0 1,516,458 11.49%
Richard R. Bassett.............. 3,813,086 39.37% 665,600 3,147,486 23.84%
Louis R. DelHomme Jr............ 1,247,121(3) 12.88%(3) 191,693 1,055,428 7.99%
Richard C. LaManna Jr.(4)....... 524,140 5.41% 58,573 465,567 3.53%
Richard C. LaManna III.......... 140,909 1.45% 0 140,909 1.07%
Paul Graham Stovall............. 164,102 1.69% 26,624 137,478 1.04%
Darrell C. LaManna(5)........... 524,141 5.41% 53,248 470,893 3.57%
Michael H. McLamb............... 35,601(6) 0.36% 0 35,601(6) 0.27%
Jerry L. Marshall(7)............ 534,934 5.52% 159,744 375,190 2.84%
All directors and officers as a
group (eight persons)......... 7,965,558 82.25% 995,738 6,969,820 52.80%
OTHER SELLING STOCKHOLDERS
Thomas A. and Theresa C.
George........................ 167,581 1.73% 26,624 140,957 1.07%
Barry Marshall.................. 40,408 0.42% 2,662 37,746 0.29%
William Brett McGill............ 167,581 1.73% 2,662 164,918 1.25%
Dana Marshall King.............. 40,408 0.42% 2,662 37,746 0.29%
Gerald K. Pedigo................ 211,664 2.19% 19,807 191,867 1.45%
Edward A. Russell............... 167,581 1.73% 8,520 159,061 1.21%
Jon M. Stovall.................. 164,102 1.69% 26,624 137,478 1.04%
Robert S. Stovall............... 164,102 1.69% 19,702 144,400 1.09%
</TABLE>
- ---------------
(1) All persons listed have an address in care of the Company at 18167 U.S. 19
North, Suite 499, Clearwater, Florida 33764, and have sole voting and
investment power over their shares unless otherwise indicated.
(2) The numbers and percentages shown include shares of Common Stock issuable to
the identified person pursuant to stock options that may be exercised within
60 days after May 1, 1998. In calculating the percentage of ownership, such
shares are deemed to be outstanding for the purpose of computing the
percentage of shares of Common Stock owned by such person, but are not
deemed to be outstanding for the purpose of computing the percentage of
shares of Common Stock owned by any other stockholders.
(3) Owned of record by Spicer Partnership Ltd. Spicer Partnership Ltd. owned
substantially all of the capital stock of DelHomme prior to its merger with
the Company. Louis R. DelHomme Jr. is the majority owner of Spicer
Partnership Ltd. and controls the voting interest of the Company's Common
Stock held by Spicer Partnership Ltd.
(4) Includes 316,940 shares held by Richard C. LaManna Jr. and Judith L.
LaManna, as joint tenants, and 104,095 shares held by Richard C. LaManna Jr.
and Judith L. LaManna as co-trustees of the LaManna Family Trust.
(5) Includes 354,744 shares held by Darrell C. LaManna as trustee of the Darrell
Christopher LaManna Separate Property Trust, dated January 4, 1993.
54
<PAGE> 56
(6) Of such shares, 35,600 represents vested options to acquire such shares.
(7) Mr. Marshall was a stockholder of Gulfwind South and serves as an officer
and director of a wholly owned subsidiary of the Company.
Pursuant to this Prospectus, the Company is offering for sale to Brunswick
1,861,200 shares of Common Stock and Brunswick has informed the Company that it
intends to purchase all of such shares of Common Stock. See "Sale of Shares to
Brunswick." In such event, Brunswick will beneficially own 14.1% of the
outstanding shares of Common Stock after the Offering.
Certain of the Selling Stockholders have granted to the Underwriters an
option, exercisable for 30 days after the date of this Prospectus, to purchase
up to a total of 437,905 shares of Common Stock at the initial public offering
price, less the underwriting discounts and commissions, to cover
over-allotments, if any. See "Underwriting." The following table sets forth the
number of shares held by those Selling Stockholders that are subject to the
over-allotment option and the number and percentages of shares to be held by
such Selling Stockholders after the Offering, assuming the Underwriters exercise
the over-allotment option in full.
<TABLE>
<CAPTION>
NUMBER OF SHARES
SHARES IN BENEFICIALLY OWNED
OVER- AFTER EXERCISE
SELLING STOCKHOLDERS ALLOTMENT --------------------
SUBJECT TO OVER-ALLOTMENT OPTION OPTION NUMBER PERCENT
-------------------------------- ------------- --------- -------
<S> <C> <C> <C>
Richard R. Bassett.......................................... 230,458 2,917,029 22.10%
Louis R. DelHomme Jr. ...................................... 66,371 989,057 7.49%
Richard C. LaManna Jr. ..................................... 20,280 445,286 3.37%
Paul Graham Stovall......................................... 9,218 128,260 0.97%
Darrell C. LaManna.......................................... 18,437 452,454 3.43%
Jerry L. Marshall........................................... 55,309 319,881 2.42%
Thomas A. and Theresa C. George............................. 9,219 131,738 1.00%
Barry Marshall.............................................. 922 36,824 0.28%
William Brett McGill........................................ 922 163,996 1.24%
Dana Marshall King.......................................... 922 36,824 0.28%
Gerald K. Pedigo............................................ 6,858 185,000 1.40%
Edward A. Russell........................................... 2,950 156,111 1.18%
Jon M. Stovall.............................................. 9,218 128,260 0.97%
Robert S. Stovall........................................... 6,821 137,579 1.04%
</TABLE>
55
<PAGE> 57
CERTAIN TRANSACTIONS
The following summarizes certain material agreements between MarineMax, the
Merged Companies, and the Property Companies. This summary is not a complete
description of such agreements and therefore this discussion is qualified in its
entirety by reference to the agreements, copies of which are filed as exhibits
to the Registration Statement of which this Prospectus forms a part.
THE MERGERS AND PROPERTY ACQUISITIONS -- TERMS OF THE AGREEMENTS
In March 1998, MarineMax acquired all of the issued and outstanding stock
of five of the Merged Companies and all of the beneficial interest in the
Property Companies, at which time each such Merged Company and Property Company
became a wholly owned subsidiary of the Company. MarineMax issued an aggregate
of 9,191,870 shares of Common Stock in connection with these Combination
Transactions. In April 1998, the Company acquired all of the issued and
outstanding stock of the sixth Merged Company, Stovall, for 492,306 shares of
the Company's Common Stock, at which time Stovall became a wholly owned
subsidiary of the Company, and the Company and the owners of Stovall entered
into leases for the four retail locations of Stovall. The number of shares of
Common Stock issued to the stockholders of each Merged Company and Property
Company was determined based on negotiations between MarineMax and those
companies. The factors considered by the parties in determining the number of
shares of Common Stock issued to the stockholders included, among other factors,
historical cash flows, operating results, and appraised values of the properties
owned by each such Property Company or Merged Company. In connection with the
Combination Transactions, certain persons who became directors, executive
officers, and holders of more than 5% of the outstanding shares of the Company
upon the consummation of such transactions, together with their spouses, and
partnerships and trusts for which they act as general partners and trustees,
received shares of Common Stock of the Company. See "Formation of the
Company -- The Mergers and Property Acquisitions" and "Principal and Selling
Stockholders."
With the exception of the number of shares issued in connection with each
Combination Transaction, the acquisition of each Merged Company and each
Property Company was subject to substantially the same terms and conditions as
the other Merged Companies and Property Companies, respectively. The Merger
Agreements and Contribution Agreements provide that the stockholders of the
Merged Companies and owners of the Property Companies will indemnify MarineMax
from certain liabilities that may arise in connection with the respective
Combination Transaction. A portion of the Common Stock payable as consideration
in connection with each Combination Transaction is pledged for a period of up to
one year from the effectiveness of the Combination Transaction as security for
the stockholders' and owners' respective indemnification obligations. Pursuant
to the Merger Agreements, the stockholders of the Merged Companies agreed not to
compete with the Company for five years, commencing on the date of consummation
of the Mergers.
Certain of the Merged Companies and Property Companies incurred
indebtedness prior to the effectiveness of the Combination Transactions,
substantially all of which was personally guaranteed by their stockholders,
owners, or entities controlled by their stockholders or owners and remained
outstanding at the effectiveness of the Combination Transactions (including
approximately $10.7 million of long-term indebtedness). See "Formation of the
Company -- The Mergers and Property Acquisitions." The Company intends to use a
portion of the net proceeds from the Offering to repay a substantial portion of
such indebtedness. See "Use of Proceeds."
LEASES OF REAL PROPERTY FROM AFFILIATES
The Company leases two retail locations in Houston, Texas from the
Sherri-Lindsey Spicer Trust, an irrevocable trust of which relatives of Louis R.
DelHomme Jr. are the beneficiaries. The trustee of the trust is Robert B.
Arrington, an unrelated third party. In addition, the Company leases a portion
of a warehouse facility in Houston under a three-year lease with LRD
Corporation, of which Mr. DelHomme is a 51% owner. Mr. DelHomme is a director
and officer of the Company.
56
<PAGE> 58
The Company also leases four retail locations in Georgia from separate
partnerships, the majority of each of which is owned by the former owners of
Stovall. Paul Graham Stovall became a director and officer of the Company
following the Stovall Acquisition.
The Company believes that the rents for these properties do not exceed
their fair market rates, that the leases provide for standard market terms, and
that the terms of the leases are on terms as favorable as could have been
received from unrelated third parties.
FUTURE TRANSACTIONS
The Company has adopted a policy that it will not enter into any material
transaction in which a director or officer has a direct or indirect financial
interest unless the transaction is determined by the Company's Board of
Directors to be fair as to the Company or is approved by a majority of the
Company's disinterested directors or by the Company's stockholders, as provided
for under Delaware law.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, par value $0.001 per share, and 5,000,000 shares of serial
preferred stock ("Serial Preferred Stock"), par value $0.001 per share. As of
May 1, 1998, there were issued and outstanding 9,684,176 shares of Common Stock,
and no shares of Serial Preferred Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, the holders of a majority of the stock entitled to vote in
any election of directors may elect all of the directors standing for election.
Subject to the preferences that may be applicable to any then outstanding
preferred stock, the holders of Common Stock will be entitled to receive such
dividends, if any, as may be declared by the Board of Directors from time to
time out of legally available funds. Upon the liquidation, dissolution, or
winding up of the Company, the holders of Common Stock will be entitled to share
ratably in all assets of the Company that are legally available for
distribution, after payment of all debts and other liabilities and subject to
the prior rights of holders of any preferred stock then outstanding. The holders
of Common Stock have no preemptive, subscription, redemption, or conversion
rights.
PREFERRED STOCK
The Board of Directors is authorized, subject to any limitations prescribed
by the laws of the state of Delaware, but without further action by the
Company's stockholders, to provide for the issuance of Serial Preferred Stock in
one or more series, to establish from time to time the number of shares to be
included in such series, to fix the designations, powers, preferences, and
rights of the shares of each such series and any qualifications, limitations, or
restrictions thereof, and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then outstanding)
without any further vote or action by the stockholders. The Board of Directors
may authorize and issue serial preferred stock with voting or conversion rights
that could adversely affect the voting power or other rights of the holders of
Common Stock. In addition, the issuance of Serial Preferred Stock may have the
effect of delaying, deterring, or preventing a change in control of the Company.
The Company has no current plan to issue any shares of Serial Preferred Stock.
DELAWARE GENERAL CORPORATION LAW AND CERTAIN CHARTER PROVISIONS
The provisions of the Company's Restated Certificate of Incorporation and
Bylaws and the Delaware GCL summarized below may have the effect of
discouraging, delaying, or preventing hostile takeovers, including those that
might result in a premium over the market price, or discouraging, delaying, or
preventing changes in control or management of the Company.
Upon the completion of the Offering, the Company will be subject to the
provisions of Section 203 of the Delaware GCL. In general, this statute
prohibits a publicly held Delaware corporation from engaging, under
57
<PAGE> 59
certain circumstances, in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless (i) prior to the date
at which the stockholder became an interested stockholder, the Board of
Directors approved either the business combination or the transaction in which
the stockholder becomes an interested stockholder; (ii) upon consummation of the
transaction in which the stockholder becomes an interested stockholder, the
stockholder owned at least 85% of the outstanding voting stock of the
corporation (excluding shares held by directors who are officers or held in
certain employee stock plans); or (iii) the business combination is approved by
the Board of Directors and by two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder) at a meeting
of stockholders (and not by written consent) held on or subsequent to the date
of the business combination. An "interested stockholder" is a person who,
together with affiliates and associates, owns (or at any time within the prior
three years did own) 15% or more of the corporation's voting stock. Section 203
defines a "business combination" to include mergers, consolidations, stock
sales, asset based transactions, and other transactions resulting in a financial
benefit to the interested stockholder. The Company's Restated Certificate of
Incorporation exempts from the application of Section 203 each of the persons
receiving Common Stock in the Combination Transactions.
The Company's Restated Certificate of Incorporation and Bylaws divide the
Board of Directors of the Company into three classes, each class to be as nearly
equal in number of directors as possible. At each annual meeting of
stockholders, directors in each class will be elected for three-year terms to
succeed the directors of that class whose terms are expiring. Messrs. Bassett
and Stovall are Class I directors whose terms will expire in 1999; Mr. McGill is
a Class II director whose term will expire in 2000; and Messrs. DelHomme and
LaManna are Class III directors whose terms will expire in 2001. Messrs. Thomas
and Turley will be Class I and Class II directors, respectively. In accordance
with the Delaware GCL, directors serving on classified boards of directors may
only be removed from office for cause. These provisions could, under certain
circumstances, operate to delay, defer, or prevent a change in control of the
Company.
The Company's Restated Certificate of Incorporation and Bylaws contain a
number of other provisions relating to corporate governance and to the rights of
stockholders. These provisions include (a) the authority of the Board to fill
vacancies on the Board, and (b) the authority of the Board to issue preferred
stock in series with such voting rights and other powers as the Board may
determine.
STOCKHOLDERS' AND GOVERNANCE AGREEMENTS
The Company, Brunswick, and the senior executives of the Company
(consisting of William H. McGill Jr., Richard R. Bassett, Louis R. DelHomme Jr.,
Richard C. LaManna Jr., and Paul Graham Stovall) have entered into a
stockholders' agreement (the "Stockholders' Agreement"), and the Company and
Brunswick have entered into a governance agreement (the "Governance Agreement").
Subject to certain exceptions, the Stockholders' Agreement restricts the right
of the senior executives (which, for this purpose, includes transferees upon the
death, pledge, or deposit in trust of or by a senior executive) and Brunswick to
sell Common Stock without first complying with the provisions of the agreement.
Under the agreement, the senior executives may not sell any Common Stock without
first offering to sell the Common Stock to Brunswick if Brunswick has not
reached its Targeted Investment Percentage of 19% of the then-outstanding shares
of Common Stock and then to the Company, the other senior executives, and
Brunswick. Likewise, Brunswick may not sell any Common Stock without first
offering to sell the Common Stock to the Company and the senior executives. In
each case, the price per share will be the average closing price of the Common
Stock on the New York Stock Exchange during the period commencing on the trading
day the offer is made and ending on the day of the acceptance of the offer.
The Stockholders' Agreement does not restrict transfers of Common Stock
resulting from a transaction that involves a change in control of the Company or
a transaction approved by a majority of the Board of Directors. The
Stockholders' Agreement excepts each party from the resale restrictions for
sales of Common Stock in any calendar year of up to the lesser of 1% of the
issued and outstanding Common Stock or 10% of the shares owned by the party. In
addition, the senior executives will not be restricted from selling Common Stock
if, at the time of the proposed sale, Brunswick owns the Targeted Investment
Percentage and a majority of the members of the Board of Directors constitutes
the senior executives and Other Designated Members
58
<PAGE> 60
(as described below) or if the Dealer Agreements between Brunswick and the
Merged Companies are not then in full force and effect. As defined in the
Stockholders' Agreement, the term "Other Designated Member" means any individual
designated by the Company to serve as a member of its Board of Directors and
agreed to by Brunswick, which approval will not be unreasonably withheld by
Brunswick taking into account whether such individual has the requisite
knowledge and experience in business and financial matters as to be reasonably
capable of serving as a director of a public corporation with revenue, assets,
and operations comparable to the Company. All members of the Company's current
Board of Directors are senior executives, and the two proposed directors have
been approved by Brunswick.
The Stockholders' Agreement also gives Brunswick the right to achieve and
maintain its Targeted Investment Percentage through open market purchases and
through purchases in any future stock offerings by the Company. The
Stockholders' Agreement also grants Brunswick a right of first refusal on any
proposed sale of the Company's capital stock to any person that competes with
the principal lines of Brunswick's marine business.
Under the Stockholders' Agreement, Brunswick and the senior executives also
have agreed to vote their Common Stock in all elections for directors of the
Company for board nominees proposed by the Company's Board of Directors if such
nominees are either senior executives or Other Designated Members and if,
assuming the election of such persons, the majority of the Board of Directors
will consist of the senior executives and Other Designated Members. In addition,
Brunswick and the senior executives have agreed to vote their Common Stock in
favor of all proposals and recommendations made by the Company's Board of
Directors and submitted to a vote of the Company's stockholders at an annual or
special meeting as long as such proposals or recommendations were approved by a
majority of the Board of Directors of the Company and a majority of the
Company's Board of Directors consists of the senior executives and Other
Designated Members.
The Stockholders' Agreement has a term of 10 years. The rights of
Brunswick, however, under the Stockholders' Agreement are applicable only during
such time as the Dealer Agreements remain in full force and effect.
The Governance Agreement generally restricts Brunswick from owning more
than its Targeted Investment Percentage of 19% of the outstanding Common Stock.
The Governance Agreement prohibits Brunswick from (i) seeking to affect or
influence the control of the management or Board of Directors of the Company or
its business, operations, or policies; (ii) entering into a voting trust or
other agreement respecting the voting of Common Stock other than the
Stockholders' Agreement; (iii) making or participating in any solicitation of
proxies to vote Common Stock or seeking to influence any person to vote Common
Stock or being a participant in any solicitation in opposition to the
recommendation of the majority of the Company's Board of Directors with respect
to any matter; (iv) initiating, proposing, or otherwise soliciting any
stockholder proposals; (v) entering into any group or otherwise acting in
concert with any person for the purpose of acquiring, holding, voting, or
disposing of any Common Stock; or (vi) encouraging, supporting, or participating
in any tender or exchange offer unless at least 51% of the then-outstanding
Common Stock (excluding any Common Stock owned by Brunswick) has been tendered
in response to such offer or the Company announces that it supports such offer.
The Governance Agreement terminates upon the earlier of (a) 10 years from
the date of the agreement; (b) such time, if any, that a majority of the Board
of Directors has not consisted of the senior executives and Other Designated
Members for a period of 60 consecutive days, or (c) the date on which Brunswick
has owned less than 5% of the Common Stock for two consecutive years; provided
that Brunswick may take no actions inconsistent with the agreement for a period
of six months after the termination by it of the Dealer Agreements for cause.
The Governance Agreement also will be inoperative during any period that
Brunswick owns less than 5% of the Common Stock.
59
<PAGE> 61
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
13,200,000 shares of Common Stock. All of the 4,780,569 shares to be sold in the
Offering will be freely tradable without restriction or further registration
under the Securities Act unless held by "affiliates" of the Company as that term
is defined in Rule 144 under the Securities Act. The 8,419,431 shares issued in
connection with the consummation of the Combination Transactions are "restricted
securities" as that term is defined under Rule 144 (the "Restricted Shares").
The Restricted Shares are subject to the holding period, volume, and other
resale limitations described below.
The Company, its directors, executive officers, and substantially all
stockholders of the Company as well as Brunswick have agreed, at the request of
the Representatives of the Underwriters, subject to certain exceptions, not to
sell or otherwise dispose of any shares of Common Stock in the public market
during the Lockup Period without the prior written consent of Smith Barney Inc.
See "Underwriting." These persons will own substantially all of the Restricted
Shares upon completion of the Offering. Subject to compliance with the volume
and other limitations of Rule 144 described below, beginning March 1, 1999 and
April 30, 1999, one year after completion of the Combination Transactions,
respectively, 9,191,870 and 492,306 Restricted Shares will be eligible for sale
in the public market.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated for purposes of Rule 144) who beneficially owns
restricted securities with respect to which at least one year has elapsed since
the later of the date the shares were acquired from the Company or from an
affiliate of the Company, is entitled to sell, within any three-month period
commencing 90 days after the date of this Prospectus, a number of shares that
does not exceed the greater of (i) 1% of the then outstanding shares of Common
Stock of the Company or (ii) the average weekly trading volume in Common Stock
during the four calendar weeks preceding such sale. Sales under Rule 144 also
are subject to certain manner-of-sale provisions and notice requirements and to
the availability of current public information about the Company. A person who
is not an affiliate, who has not been an affiliate within three months prior to
sale, and who beneficially owns restricted securities with respect to which at
least two years have elapsed since the later of the date the shares were
acquired from the Company or from an affiliate of the Company, is entitled to
sell such shares under Rule 144(k) without regard to any of the volume
limitations or other requirements described above.
The Company has reserved 1,980,000 shares of Common Stock for issuance
under the 1998 Incentive Stock Plan and 500,000 shares of Common Stock for
issuance under the 1998 Employee Stock Purchase Plan. Following the Offering,
the Company intends to file a registration statement under the Securities Act to
register the Common Stock to be issued under these plans. After the effective
date of such registration statement, shares issued under these plans will be
freely tradable without restriction or further registration under the Securities
Act unless acquired by affiliates of the Company, who will be subject to the
volume and other limitations of Rule 144.
In addition, the Company may issue additional shares of Common Stock as
part of any acquisition it may complete in the future. In connection with its
intention to consummate acquisitions, the Company intends to register 5,000,000
shares of Common Stock under the Securities Act during 1998 for use in
connection with future acquisitions. These shares generally will be freely
tradable after their issuance by persons not affiliated with the Company or the
acquired companies; however, sales of these shares during the Lockup Period
would require the prior written consent of Smith Barney Inc. See
"Business -- Strategy."
Prior to the Offering, there has been no market for the Common Stock. No
prediction can be made regarding the effect, if any, that public sales of shares
of the Common Stock or the availability of shares for sale will have on the
market price of the Common Stock after the Offering. Sales of substantial
amounts of the Common Stock in the public market following the Offering, or the
perception that such sales may occur, could adversely affect the market price of
the Common Stock and could impair the ability of the Company to raise capital
through sales of its equity securities.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
LISTING
Application has been made to list the Common Stock on the New York Stock
Exchange under the symbol "HZO."
60
<PAGE> 62
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, each Underwriter named below has severally
agreed to purchase, and the Company and the Selling Stockholders have agreed to
sell to such Underwriter, the number of shares of Common Stock set forth
opposite the name of such Underwriter.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
Smith Barney Inc. ..........................................
William Blair & Company, L.L.C. ............................
---------
Total.............................................
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are taken.
The Underwriters, for whom Smith Barney Inc. and William Blair & Company,
L.L.C. are acting as the Representatives, propose to offer part of the shares
directly to the public at the public offering price set forth on the cover page
of this Prospectus and part of the shares to certain dealers at a price which
represents a concession not in excess of $ per share under the public offering
price. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to certain other dealers. After the initial
offering of the shares to the public, the public offering price and such
concessions may be changed by the Representatives. The Representatives of the
Underwriters have advised the Company that the Underwriters do not intend to
confirm sales of any shares to any accounts over which they exercise
discretionary authority.
The Selling Stockholders have granted to the Underwriters an option,
exercisable for 30 days from the date of this Prospectus, to purchase up to
437,905 additional shares of Common Stock at the price to public set forth on
the cover page of this Prospectus minus the underwriting discounts and
commissions. The Underwriters may exercise such option solely for the purpose of
covering over-allotments, if any, in connection with the offering of the shares
offered hereby. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
each Underwriter's name in the preceding table bears to the total number of
shares listed in such table.
The Company, its executive officers, and directors, the holders of
substantially all of the Common Stock, and Brunswick have agreed that, until 180
days following the date of this Prospectus, they will not, without the prior
written consent of Smith Barney Inc., sell, offer to sell, solicit any offer to
buy, contract to sell, grant any option to purchase, or otherwise transfer or
dispose of any shares of Common Stock, or any securities convertible into, or
exercisable or exchangeable for, Common Stock, except that the Company may grant
options under the Plan and may issue shares of Common Stock (i) in connection
with acquisitions, (ii) pursuant to the Stock Purchase Plan, and (iii) pursuant
to the exercise of options granted under the Plan.
Prior to the Offering, there has not been any public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
shares of Common Stock included in the Offering will be determined by
negotiations between the Company and the Representatives. Among the factors to
be considered in determining such price are the history of and prospects for the
Company's business and the industry in which it competes, an assessment of the
Company's management and the present state of the Company's development, the
past and present revenues and earnings of the Company, the prospects for growth
of the Company's revenues and earnings, the current state of the economy in the
United States and the
61
<PAGE> 63
current level of economic activity in the industry in which the Company competes
and in related or comparable industries, and currently prevailing conditions in
the securities markets, including current market valuations of publicly traded
companies which are comparable to the Company.
The Representatives have advised the Company that, pursuant to Regulation M
under the Exchange Act, certain persons participating in the Offering may engage
in transactions, including stabilizing bids, syndicate covering transactions or
the imposition of penalty bids, which may have the effect of stabilizing or
maintaining the market price of the Common Stock at a level above that which
might otherwise prevail in the open market. A "stabilizing bid" is a bid for or
the purchase of the Common Stock on behalf of the Underwriters for the purpose
of fixing or maintaining the price of the Common Stock. A "syndicate covering
transaction" is the bid for or the purchase of the Common Stock on behalf of the
Underwriters to reduce a short position incurred by the Underwriters in
connection with the Offering. A "penalty bid" is an arrangement permitting the
Representatives to reclaim the selling concession otherwise accruing to an
Underwriter or syndicate member in connection with the Offering if the Common
Stock originally sold by such Underwriter or syndicate member is purchased by
the Representatives in a syndicate covering transaction and has therefore not
been effectively placed by such Underwriter or syndicate member. The
Underwriters are not required to engage in any of these activities and any such
activities, if commenced, may be discontinued at any time. The Representatives
have advised the Company that such transactions may be effected on the New York
Stock Exchange or otherwise and, if commenced, may be discontinued at any time.
The Company, the Selling Stockholders, and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
SALE OF SHARES TO BRUNSWICK
Pursuant to this Prospectus, the Company is offering for sale to Brunswick
1,861,200 shares of Common Stock at a price per share equal to the Per Share
Proceeds to Company set forth on the cover page of this Prospectus. No
underwriting discounts or commissions will be paid to or received by the
Underwriters on the sale of shares of Common Stock by the Company directly to
Brunswick. Brunswick has informed the Company that it intends to purchase all of
the shares of Common Stock offered by the Company directly to Brunswick pursuant
to this Prospectus, subject to the early termination or expiration of the
applicable notification period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the effectiveness of the Registration Statement of
which this Prospectus forms a part. Brunswick, however, has no obligation to
purchase the shares. If Brunswick purchases the shares the Company will
indemnify Brunswick against certain liabilities, including liabilities under the
Securities Act, in connection with such purchase of shares of Common Stock by
Brunswick. Any shares of Common Stock purchased by Brunswick will be subject to
certain restrictions on transfer for 180 days following the date of this
Prospectus. See "Underwriting."
LEGAL OPINIONS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by O'Connor, Cavanagh, Anderson, Killingsworth & Beshears,
a professional association, Phoenix, Arizona. Certain legal matters will be
passed upon for the Underwriters by Morgan, Lewis & Bockius LLP, New York, New
York.
EXPERTS
The consolidated financial statements included in this Prospectus and
Registration Statement have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their report with respect thereto,
and are included herein in reliance upon the authority of said firm as experts
in giving said reports.
62
<PAGE> 64
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement under
the Securities Act with respect to the Common Stock offered by this Prospectus.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock offered by this Prospectus,
reference is made to the Registration Statement, including the exhibits thereto.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. The Registration Statement, together with
exhibits thereto, may be inspected at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at
the following Regional Offices of the Commission: New York Regional Office,
Seven World Trade Center, New York, New York 10048, and Chicago Regional Office,
500 West Madison Street, Chicago, Illinois 60661. Copies of the material
contained therein may be obtained at prescribed rates from the Commission's
public reference facilities in Washington, D.C. The Commission also maintains a
Web site that contains reports, proxy and information statements and other
materials that are filed through the Commission's Electronic Data Gathering,
Analysis, and Retrieval system. This Web site can be accessed at
http://www.sec.gov.
63
<PAGE> 65
MARINEMAX, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
Basis of Presentation..................................... F-2
Pro Forma Consolidated Balance Sheet...................... F-3
Pro Forma Consolidated Statements of Operations........... F-4
Notes to Pro Forma Consolidated Financial Statements...... F-7
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants........ F-10
Consolidated Balance Sheets............................... F-11
Consolidated Statements of Income......................... F-12
Consolidated Statements of Stockholders' Equity........... F-13
Consolidated Statements of Cash Flows..................... F-14
Notes to Consolidated Financial Statements................ F-16
</TABLE>
F-1
<PAGE> 66
MARINEMAX, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
(UNAUDITED)
MarineMax, Inc. (MarineMax) was formed in January 1998. On March 1, 1998,
MarineMax acquired all of the issued and outstanding common stock of Bassett
Boat Company of Florida, Gulfwind South, Inc., Gulfwind U.S.A., Inc., 11502
Dumas, Inc. d/b/a/ Louis DelHomme Marine, Harrison's Boat Center, Inc., and
Harrison's Marine Centers of Arizona, Inc. (the Merged Companies) in exchange
for shares of MarineMax's Common Stock (the Mergers). Simultaneously with the
Mergers, MarineMax acquired all of the beneficial interests in Bassett Boat
Company, Bassett Realty, L.L.C., Gulfwind South Realty, L.L.C., Harrison's
Realty, L.L.C., and Harrison's Realty California, L.L.C. in exchange for shares
of MarineMax's Common Stock (the Property Acquisitions). These acquisitions have
been accounted for under the pooling-of-interests method of accounting. The
historical financial statements of MarineMax, Inc. and subsidiaries (the
Company) have been restated to include the accounts and operating results of the
Merged Companies for all dates and periods prior to the combinations. The
Property Acquisitions were reflected in the historical financial statements as
of March 1, 1998.
On April 30, 1998, MarineMax acquired all of the issued and outstanding
common stock of Stovall Marine, Inc. (Stovall). The Stovall acquisition has been
accounted for under the purchase method of accounting. The accompanying pro
forma financial statements give effect to the acquisition of Stovall, an initial
public offering (the Offering), and certain other pro forma adjustments. See
notes to Pro Forma Consolidated Financial Statements.
The pro forma balance sheet gives effect to the Offering and the
acquisition of Stovall as if they had occurred on March 31, 1998. The pro forma
statements of operations give effect to the Offering and the acquisition of
Stovall Marine as if they had occurred on January 1, 1997. See Notes to Pro
Forma Consolidated Financial Statements.
The pro forma adjustments are based on estimates, available information and
certain assumptions that management deems appropriate. The pro forma financial
data do not purport to represent what the Company's financial position or
results of operations would actually have been if such transactions had occurred
on those dates and are not necessarily representative of the Company's financial
position or results of operations for any future period. The pro forma financial
statements should be read in conjunction with the other financial statements and
notes thereto included elsewhere in this Prospectus. See "Risk Factors" included
elsewhere herein.
F-2
<PAGE> 67
MARINEMAX, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET -- MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------- PRO FORMA OFFERING PRO FORMA
MARINEMAX STOVALL ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........... $ 5,308,153 $ 410,271 $ -- $ 5,718,424 $ 6,177,439 $ 11,895,863
Accounts receivable, net............ 8,813,767 848,118 -- 9,661,885 -- 9,661,885
Inventories......................... 70,185,101 8,162,477 -- 78,347,578 -- 78,347,578
Prepaid and other current assets.... 2,744,758 295,245 -- 3,040,003 -- 3,040,003
Deferred income tax asset........... 5,838,175 -- -- 5,838,175 -- 5,838,175
------------- ------------ ----------- ------------- ------------ -------------
Total current assets.......... 92,889,954 9,716,111 -- 102,606,065 6,177,439 108,783,504
PROPERTY AND EQUIPMENT, net........... 15,254,305 327,495 -- 15,581,800 -- 15,581,800
GOODWILL.............................. -- -- 5,584,884 5,584,884 -- 5,584,884
OTHER ASSETS.......................... 130,914 267,127 -- 398,041 -- 398,041
------------- ------------ ----------- ------------- ------------ -------------
Total assets.................. $ 108,275,173 $ 10,310,733 $ 5,584,884 $ 124,170,790 $ 6,177,439 $ 130,348,229
============= ============ =========== ============= ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................... $ 10,106,430 $ 979,643 $ -- $ 11,086,073 $ -- $ 11,086,073
Customer deposits................... 7,003,124 73,735 -- 7,076,859 -- 7,076,859
Accrued expenses.................... 5,668,864 732,507 -- 6,401,371 -- 6,401,371
Floor plan notes payable............ 44,002,099 7,131,627 -- 51,133,726 (21,133,726) 30,000,000
Short-term borrowings............... 4,200,908 -- -- 4,200,908 (4,200,908) --
Current maturities of long-term
debt.............................. 217,095 -- -- 217,095 (169,066) 48,029
Settlement payable.................. 15,000,000 -- -- 15,000,000 -- 15,000,000
Due to related parties.............. 5,500,020 775,000 -- 6,275,020 (6,275,020) --
------------- ------------ ----------- ------------- ------------ -------------
Total current liabilities..... 91,698,540 9,692,512 -- 101,391,052 (31,778,720) 69,612,332
------------- ------------ ----------- ------------- ------------ -------------
LONG-TERM DEBT, net of current maturi-
ties................................ 10,440,329 -- -- 10,440,329 (8,589,586) 1,850,743
------------- ------------ ----------- ------------- ------------ -------------
DEFERRED TAX LIABILITY................ 1,273,357 -- -- 1,273,357 -- 1,273,357
------------- ------------ ----------- ------------- ------------ -------------
COMMITMENTS AND CONTINGENCIES.........
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock..................... -- -- -- -- -- --
Common stock........................ 9,192 108,400 (107,908) 9,684 3,516 13,200
Additional paid-in capital.......... 7,116,863 -- 6,202,613 13,319,476 46,542,229 59,861,705
Retained earnings (deficit)......... (2,263,108) 547,720 (547,720) (2,263,108) -- (2,263,108)
------------- ------------ ----------- ------------- ------------ -------------
4,862,947 656,120 5,546,985 11,066,052 46,545,745 57,611,797
Less -- Common stock in treasury, at
cost.............................. -- (37,899) 37,899 -- -- --
------------- ------------ ----------- ------------- ------------ -------------
Total stockholder's equity
(deficit)................... 4,862,947 618,221 5,584,884 11,066,052 46,545,745 57,611,797
------------- ------------ ----------- ------------- ------------ -------------
Total liabilities and
stockholder's equity
(deficit)................... $ 108,275,173 $ 10,310,733 $ 5,584,884 $ 124,170,790 $ 6,177,439 $ 130,348,229
============= ============ =========== ============= ============ =============
</TABLE>
The accompanying notes are an integral part of this pro forma consolidated
balance sheet.
F-3
<PAGE> 68
MARINEMAX, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------- PRO FORMA OFFERING PRO FORMA
MARINEMAX STOVALL ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------------ ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE.............................. $169,675,293 $18,743,463 $ -- $188,418,756 $ -- $188,418,756
COST OF SALES........................ 127,417,846 13,869,520 -- 141,287,366 -- 141,287,366
------------ ----------- ----------- ------------ --------- ------------
Gross profit................. 42,257,447 4,873,943 -- 47,131,390 -- 47,131,390
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................... 25,722,799 2,653,194 (3,344,025)(e)(g) 25,031,968 -- 25,031,968
------------ ----------- ----------- ------------ --------- ------------
Income from operations....... 16,534,648 2,220,749 3,344,025 22,099,422 -- 22,099,422
INTEREST EXPENSE, NET................ 1,380,684 261,273 (300,000)(h) 1,341,957 (988,698)(i) 363,259
------------ ----------- ----------- ------------ --------- ------------
INCOME BEFORE INCOME TAXES........... 15,153,964 1,959,476 3,644,025 20,757,465 988,698 21,746,163
PROVISION FOR INCOME TAXES........... 410,824 737,000 6,896,758(f) 8,044,582 385,592(i) 8,430,174
------------ ----------- ----------- ------------ --------- ------------
NET INCOME (LOSS).................... $ 14,743,140 $ 1,222,476 $(3,252,733) $ 12,712,883 $ 603,106 $ 13,315,989
============ =========== =========== ============ ========= ============
PRO FORMA NET INCOME PER COMMON
SHARE:
Basic.............................. $ 1.01
============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED IN COMPUTING PRO FORMA
NET INCOME PER SHARE:
Basic.............................. 13,200,000
============
</TABLE>
The accompanying notes are an integral part of this pro forma consolidated
statement.
F-4
<PAGE> 69
MARINEMAX, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE-MONTH PERIOD ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
------------------------ PRO FORMA OFFERING PRO FORMA
MARINEMAX STOVALL ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE............................ $44,341,011 $1,018,725 $ -- $45,359,736 $ -- $45,359,736
COST OF SALES...................... 34,689,070 833,110 -- 35,522,180 -- 35,522,180
----------- ---------- ----------- ----------- ----------- -----------
Gross profit.............. 9,651,941 185,615 -- 9,837,556 -- 9,837,556
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES......................... 13,457,623 863,640 (4,736,813)(e)(g) 9,584,450 -- 9,584,450
----------- ---------- ----------- ----------- ----------- -----------
Income (loss) from
operations.............. (3,805,682) (678,025) 4,736,813 253,106 -- 253,106
INTEREST EXPENSE, NET.............. 397,964 53,662 (100,000)(h) 351,626 (294,529)(i) 57,097
----------- ---------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES............................ (4,203,646) (731,687) 4,836,813 (98,520) 294,529 196,009
PROVISION (BENEFIT) FOR INCOME
TAXES............................ (426,524) (274,500) 721,036(f) 20,012 114,866(i) 134,878
----------- ---------- ----------- ----------- ----------- -----------
NET INCOME (LOSS).................. $(3,777,122) $ (457,187) $ 4,115,777 $ (118,532) $ 179,663 $ 61,131
=========== ========== =========== =========== =========== ===========
PRO FORMA NET INCOME PER COMMON
SHARE:
Basic............................ $ .00
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED IN COMPUTING PRO
FORMA NET INCOME PER SHARE:
Basic.......................... 13,200,000
===========
</TABLE>
The accompanying notes are an integral part of this pro forma consolidated
statement.
F-5
<PAGE> 70
MARINEMAX, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
------------------------- PRO FORMA OFFERING PRO FORMA
MARINEMAX STOVALL ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------------ ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE............................. $103,509,879 $7,644,279 $ -- $111,154,158 $ -- $111,154,158
COST OF SALES....................... 80,438,155 6,223,350 -- 86,661,505 -- 86,661,505
------------ ---------- ----------- ------------ ----------- ------------
Gross profit................ 23,071,724 1,420,929 -- 24,492,653 -- 24,492,653
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES.......................... 24,032,152 1,849,541 (5,085,669)(e)(g) 20,796,024 -- 20,796,029
------------ ---------- ----------- ------------ ----------- ------------
Income (loss) from
operations................ (960,428) (428,612) 5,085,669 3,696,629 -- 3,696,629
INTEREST EXPENSE, NET............... 1,000,162 (49,411) (200,000)(h) 750,751 (586,039)(i) 164,712
------------ ---------- ----------- ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES
AND UNUSUAL ITEM.................. (1,960,590) (379,201) 5,285,669 2,945,878 586,039 3,531,917
UNUSUAL ITEM -- SETTLEMENT
OBLIGATION........................ 15,000,000 -- -- 15,000,000 -- 15,000,000
------------ ---------- ----------- ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES... (16,960,590) (379,201) 5,285,669 (12,054,122) 586,039 (11,468,083)
INCOME TAX (BENEFIT) PROVISION...... (4,580,862) (161,893) 2,702(j) (4,740,053) 234,416(i) (4,505,637)
------------ ---------- ----------- ------------ ----------- ------------
NET INCOME (LOSS)................... $(12,379,728) $ (217,308) $ 5,282,967 $ (7,314,069) $ 351,623 $ (6,962,446)
============ ========== =========== ============ =========== ============
PRO FORMA NET LOSS PER COMMON SHARE:
Basic............................. $ (.53)
============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED IN COMPUTING PRO FORMA
NET INCOME PER SHARE:
Basic........................... 13,200,000
============
</TABLE>
The accompanying notes are an integral part of this pro forma consolidated
statement.
F-6
<PAGE> 71
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL:
The accompanying pro forma information presents the pro forma financial
position of MarineMax, Inc. and subsidiaries (the Company) as of March 31, 1998,
and the pro forma results of operations for the nine month period ended
September 30, 1997, and the three- and six-month periods ended December 31, 1997
and March 31, 1998, respectively.
The historical financial statements of the Company were derived from the
historical statements of income for the nine-, three- and six-month periods
ended September 30 and December 31, 1997, and March 31, 1998, respectively, and
the historical balance sheet as of March 31, 1998. See the Consolidated
Financial Statements and notes thereto for the Company included elsewhere in
this Prospectus. The historical financial statements of Stovall Marine, Inc.
(Stovall) were derived from the historical statements of income of Stovall for
the nine-, three- and six- month periods ended September 30 and December 31,
1997, and March 31, 1998, respectively, and the historical balance sheet as of
March 31, 1998. The financial statements for Stovall have not been included in
this prospectus due to the insignificance of Stovall as compared to the Company
under Rule 3-05 of Regulation S-X.
2. ACQUISITION OF STOVALL MARINE
On April 30, 1998, the Company acquired all of the issued and outstanding
common stock of Stovall in exchange for 492,306 shares of the Company's Common
Stock. The acquisition has been accounted for under the purchase method of
accounting, which resulted in the recognition of approximately $5.6 million of
goodwill, representing the excess purchase price over the estimated fair value
of net assets acquired. The goodwill is being amortized over 40 years.
F-7
<PAGE> 72
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. ADJUSTMENTS TO PRO FORMA CONSOLIDATED BALANCE SHEET:
The following table summarizes the pro forma adjustments to the balance
sheet as of March 31, 1998:
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS TOTAL OFFERING ADJUSTMENTS
----------- PRO FORMA ---------------------------------------- TOTAL OFFERING
(A) Adjustments (b) (C) (D) ADJUSTMENTS
----------- ----------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............... $ -- $ -- $46,545,745 $(34,093,286) $(6,275,020) $ 6,177,439
---------- ---------- ----------- ------------ ----------- ------------
Total current assets.............. -- -- 46,545,745 (34,093,286) (6,275,020) 6,177,439
GOODWILL.................................. 5,584,884 5,584,884 -- -- -- --
---------- ---------- ----------- ------------ ----------- ------------
Total assets...................... $5,584,884 $5,584,884 $46,545,745 $(34,093,286) $(6,275,020) $ 6,177,439
========== ========== =========== ============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Floor plan notes payable................ $ -- $ -- $ -- $(21,133,726) $ -- $(21,133,726)
Short-term borrowings................... -- -- -- (4,200,908) -- (4,200,908)
Current maturities of long-term debt.... -- -- -- (169,066) -- (169,066)
Due to related parties.................. -- -- -- -- (6,275,020) (6,275,020)
---------- ---------- ----------- ------------ ----------- ------------
Total current liabilities......... -- -- -- (25,503,700) (6,275,020) (31,778,720)
LONG-TERM DEBT, net of current
maturities.............................. -- -- -- (8,589,586) -- (8,589,586)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock............................ (107,908) (107,908) 3,516 -- -- 3,516
Additional paid-in capital.............. 6,202,613 6,202,613 46,542,229 -- -- 46,542,229
Retained earnings (deficit)............. (547,720) (547,720) -- -- -- --
---------- ---------- ----------- ------------ ----------- ------------
5,546,985 5,546,985 46,545,745 -- -- 46,545,745
Less -- Common stock in treasury, at
cost.................................. 37,899 37,899 -- -- -- --
---------- ---------- ----------- ------------ ----------- ------------
Total stockholders' equity
(deficit)....................... 5,584,884 5,584,884 $46,545,745 -- -- 46,545,745
---------- ---------- ----------- ------------ ----------- ------------
Total liabilities and
stockholders' equity
(deficit)....................... $5,584,884 $5,584,884 $46,545,745 $(34,093,286) $(6,275,020) $ 6,177,439
========== ========== =========== ============ =========== ============
</TABLE>
(a) Records the acquisition of Stovall in exchange for Common Stock of the
Company.
(b) Reflects the net proceeds from the sale by the Company of 3,515,824 shares
of Common Stock in the Offering at $15.00 per share, estimated to be
approximately $46,545,745 (after deducting underwriting discounts and
commissions and estimated offering expenses).
(c) Reflects the use of a portion of the net proceeds of the Offering to reduce
floor plan notes payable of $21,133,726, short-term borrowings of
$4,200,908, and long-term debt of $8,758,652.
(d) Reflects the settlement of certain related party payables and receivables
with proceeds from the Offering.
F-8
<PAGE> 73
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. ADJUSTMENTS TO THE PRO FORMA CONSOLIDATED STATEMENTS OF INCOME:
(e) Reflects an adjustment of approximately $3,448,000, $4,772,000 and
$5,155,000 for the nine-month, three-month and six-month periods ended
September 30, and December 31, 1997, and March 31, 1998, respectively, to
reduce officer and employee compensation based upon employment agreements
entered into in connection with the Mergers. This adjustment does not
reflect discretionary bonuses, if any, which may be paid to these
individuals.
(f) For the nine-month and three-month periods ended September 30, and December
31, 1997, reflects the provision for income taxes as if all the Company's
subsidiaries were C corporations during the period presented.
(g) Reflects goodwill amortization expense of approximately $104,000, $35,000
and $70,000 for the nine-month, three-month and six-month periods ended
September 30, and December 31, 1997, and March 31, 1998, respectively, in
connection with the acquisition of Stovall. The goodwill is being amortized
over an estimated useful life of 40 years.
(h) Reflects a reduction of the Company's borrowing rate on outstanding floor
plan balances as a result of a newly secured working capital line of credit
providing interest based on LIBOR plus 125 basis points.
(i) Reflects the elimination of interest expense resulting from the reduction of
floor plan notes payable, short-term borrowings and long-term debt by
utilizing a portion of the net proceeds of the Offering.
(j) Reflects the provision for income taxes as if all the Company's subsidiaries
were C corporations during the period presented. Effective with the Mergers,
all subsidiaries of the Company elected C corporation tax status. The
Company recorded a tax provision of approximately $1,680,000 to recognize
differences in the bases of assets and liabilities for financial reporting
and tax purposes, which is eliminated herewith.
5. PRO FORMA NET INCOME PER SHARE:
The shares used in computing pro forma net income per share are as follows:
<TABLE>
<S> <C>
Outstanding shares of Common Stock....................... 9,191,870
Shares issued to purchase Stovall........................ 492,306
Shares issued in the Offering............................ 3,515,824
----------
Pro forma, as adjusted shares.......................... 13,200,000
==========
</TABLE>
F-9
<PAGE> 74
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To MarineMax, Inc.:
We have audited the accompanying consolidated balance sheets of MarineMax,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1996, and
September 30, 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for the years ended December 31, 1995 and
1996, and the nine-month period ended September 30, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
MarineMax, Inc. and subsidiaries as of December 31, 1996, and September 30,
1997, and the results of their operations and their cash flows for the years
ended December 31, 1995 and 1996, and the nine-month period ended September 30,
1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Tampa, Florida,
March 2, 1998 (except with respect to the matters discussed in
Note 13, as to which the date is April 30, 1998)
F-10
<PAGE> 75
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, MARCH 31,
1996 1997 1998
------------ ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................ $ 2,639,276 $11,014,090 $ 5,308,153
Accounts receivable.............................. 4,990,025 6,779,176 8,813,767
Due from related parties......................... 516,393 585,913 --
Inventories...................................... 53,537,272 50,404,178 70,185,101
Prepaids and other current assets................ 462,171 530,024 2,744,758
Deferred tax asset............................... 666,581 529,212 5,838,175
----------- ----------- ------------
Total current assets..................... 62,811,718 69,842,593 92,889,954
PROPERTY AND EQUIPMENT, net........................ 4,951,848 5,389,397 15,254,305
DUE FROM RELATED PARTY............................. 54,719 54,719 --
OTHER ASSETS....................................... 37,964 86,023 130,914
----------- ----------- ------------
Total assets............................. $67,856,249 $75,372,732 $108,275,173
=========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................. $ 4,015,110 $ 6,080,006 $ 10,106,430
Customer deposits................................ 1,642,978 3,395,914 7,003,124
Accrued expenses................................. 3,504,602 4,195,239 5,668,864
Floor plan notes payable......................... 39,250,055 26,152,099 44,002,099
Short-term borrowings............................ 3,390,601 2,711,677 4,200,908
Current maturities of long-term debt............. 146,344 973,269 217,095
Settlement payable............................... -- -- 15,000,000
Due to stockholders.............................. 2,640,434 5,555,540 5,500,020
----------- ----------- ------------
Total current liabilities................ 54,590,124 49,063,744 91,698,540
----------- ----------- ------------
LONG-TERM DEBT, net of current maturities.......... 949,309 5,981,487 10,440,329
----------- ----------- ------------
DEFERRED TAX LIABILITY............................. -- -- 1,273,357
----------- ----------- ------------
COMMITMENTS AND CONTINGENCIES......................
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000
shares authorized, none issued or
outstanding................................... -- -- --
Common stock, $.001 par value; 40,000,000 shares
authorized, 8,574,957 and 7,799,844 shares
issued at December 31, 1996, and September 30,
1997, respectively............................ 8,575 7,800 9,192
Additional paid-in capital....................... 589,783 -- 7,116,863
Retained earnings................................ 11,718,458 20,319,701 (2,263,108)
----------- ----------- ------------
Total stockholders' equity............... 12,316,816 20,327,501 4,862,947
----------- ----------- ------------
Total liabilities and stockholders'
equity................................. $67,856,249 $75,372,732 $108,275,173
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-11
<PAGE> 76
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE
FOR THE YEAR ENDED NINE-MONTH FOR THE SIX-MONTH PERIOD
DECEMBER 31, PERIOD ENDED ENDED MARCH 31,
--------------------------- SEPTEMBER 30, --------------------------
1995 1996 1997 1997 1998
------------ ------------ ------------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE........................ $152,888,507 $175,060,206 $169,675,293 $87,778,550 $103,509,879
COST OF SALES.................. 116,896,249 132,641,343 127,417,846 68,531,377 80,438,155
------------ ------------ ------------ ----------- ------------
Gross profit......... 35,992,258 42,418,863 42,257,447 19,247,173 23,071,724
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES...... 28,373,608 34,449,295 25,722,799 20,075,378 24,032,152
------------ ------------ ------------ ----------- ------------
Income (loss) from
operations......... 7,618,650 7,969,568 16,534,648 (828,205) (960,428)
INTEREST EXPENSE, net.......... 948,512 1,268,027 1,380,684 524,958 1,000,162
------------ ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES AND UNUSUAL ITEM....... 6,670,138 6,701,541 15,153,964 (1,353,163) (1,960,590)
UNUSUAL ITEM -- SETTLEMENT
OBLIGATION................... -- -- -- -- 15,000,000
------------ ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES........................ 6,670,138 6,701,541 15,153,964 (1,353,163) (16,960,590)
INCOME TAX (BENEFIT)
PROVISION.................... (49,097) 20,514 410,824 (484,844) (4,580,862)
------------ ------------ ------------ ----------- ------------
NET INCOME (LOSS).............. $ 6,719,235 $ 6,681,027 $ 14,743,140 $ (868,319) $(12,379,728)
============ ============ ============ =========== ============
NET INCOME (LOSS) PER COMMON
SHARE:
Basic..................... $ .78 $ .78 $ 1.89 $ (.11) $ (1.35)
============ ============ ============ =========== ============
UNAUDITED PRO FORMA INCOME TAX
PROVISION (BENEFIT).......... $ 2,709,015 $ 2,668,467 $ 5,554,629 $ (1,935,651)
------------ ------------ ------------ ------------
UNAUDITED PRO FORMA NET INCOME
(LOSS)....................... $ 4,010,220 $ 4,012,560 $ 9,188,511 $(10,444,077)
============ ============ ============ ============
UNAUDITED PRO FORMA NET INCOME
(LOSS) PER COMMON SHARE:
Basic..................... $ .47 $ .47 $ 1.18 $ (1.14)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES USED IN
COMPUTING NET INCOME (LOSS)
PER COMMON SHARE AND
UNAUDITED PRO FORMA NET
INCOME (LOSS) PER COMMON
SHARE:
Basic..................... 8,574,957 8,574,957 7,799,844 7,799,844 9,191,870
============ ============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-12
<PAGE> 77
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996,
THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997,
AND THE SIX-MONTH PERIOD ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------ PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1995....................... 8,574,957 $8,575 $ 588,783 $ 9,665,550 $ 10,262,908
Net income................................... -- -- -- 6,719,235 6,719,235
Capital contribution......................... -- -- 1,000 -- 1,000
Distributions to stockholders................ -- -- -- (5,857,754) (5,857,754)
--------- ------ ---------- ------------ ------------
BALANCE, December 31, 1995..................... 8,574,957 8,575 589,783 10,527,031 11,125,389
Net income................................... -- -- -- 6,681,027 6,681,027
Distributions to stockholders................ -- -- -- (5,489,600) (5,489,600)
--------- ------ ---------- ------------ ------------
BALANCE, December 31, 1996..................... 8,574,957 8,575 589,783 11,718,458 12,316,816
Net income................................... -- -- -- 14,743,140 14,743,140
Capital contribution......................... -- -- 1,000 -- 1,000
Distributions to stockholders................ -- -- -- (633,455) (633,455)
Redemption of common stock................... (775,113) (775) (590,783) (5,508,442) (6,100,000)
--------- ------ ---------- ------------ ------------
BALANCE, September 30, 1997.................... 7,799,844 7,800 -- 20,319,701 20,327,501
Net loss (unaudited)......................... -- -- -- (12,379,728) (12,379,728)
Capital contributions (unaudited)............ 1,392,026 1,392 5,327,646 -- 5,329,038
Distributions to stockholders (unaudited).... -- -- -- (8,413,864) (8,413,864)
Contribution of S corporation retained
earnings.................................. -- -- 1,789,217 (1,789,217) --
--------- ------ ---------- ------------ ------------
BALANCE, March 31, 1998 (unaudited)............ 9,191,870 $9,192 $7,116,863 $ (2,262,108) $ 4,862,947
========= ====== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-13
<PAGE> 78
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
FOR THE YEAR ENDED NINE-MONTH FOR THE SIX-MONTH PERIOD
DECEMBER 31, PERIOD ENDED ENDED MARCH 31,
------------------------- SEPTEMBER 30, --------------------------
1995 1996 1997 1997 1998
----------- ----------- ------------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)................ $ 6,719,235 $ 6,681,027 $14,743,140 $ (868,319) $(12,379,728)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities
Depreciation and
amortization................ 603,341 707,055 595,173 412,898 394,904
Deferred income tax
(provision) benefit......... (71,682) (594,899) 137,369 666,581 (4,035,606)
Loss (gain) on sale of
property and equipment...... 13,365 (17,054) (318) 26,637 --
(Increase) decrease in --
Accounts receivable......... (1,383,825) (1,834,280) (1,789,151) 155,569 (2,034,591)
Due from related parties.... 94,346 (481,623) (69,520) (464,827) 640,632
Inventories................. (5,773,855) (12,575,374) 3,133,094 (16,798,344) (19,780,923)
Prepaids and other assets... (391,221) 377,772 (115,912) 555,008 (2,259,625)
(Decrease) increase in --
Accounts payable............ (911,599) 1,788,149 2,064,896 1,858,507 4,026,424
Customer deposits........... 467,956 (2,541,399) 1,752,936 1,662,470 3,607,210
Accrued expenses and other
liabilities.............. 1,108,394 1,597,567 690,637 (1,650,215) 1,473,625
Floor plan notes payable.... 5,316,611 13,538,528 (13,097,956) 13,326,668 17,850,000
Settlement payable.......... -- -- -- -- 15,000,000
----------- ----------- ----------- ----------- ------------
Net cash provided by
(used in) operating
activities............. 5,791,066 6,645,469 8,044,388 (1,117,367) 2,502,322
----------- ----------- ----------- ----------- ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment..................... (1,148,178) (1,329,898) (1,049,392) (941,206) (830,747)
Proceeds from sale of property
and equipment................. 3,939 60,201 16,988 -- --
----------- ----------- ----------- ----------- ------------
Net cash used in
investing activities... (1,144,239) (1,269,697) (1,032,404) (941,206) (830,747)
----------- ----------- ----------- ----------- ------------
</TABLE>
F-14
<PAGE> 79
MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE
NINE-MONTH
FOR THE YEAR ENDED PERIOD FOR THE SIX-MONTH PERIOD
DECEMBER 31, ENDED ENDED MARCH 31,
------------------------- SEPTEMBER 30, --------------------------
1995 1996 1997 1997 1998
----------- ----------- ------------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contribution................... 1,000 -- 1,000 -- --
Net decrease in cash overdraft......... (964,355) -- -- -- --
Net borrowings (repayments) on notes
payable to related parties........... 1,422,975 (53,996) 2,752,106 2,373,594 (871,426)
Borrowings on long-term debt........... 114,568 1,142,761 1,491,781 -- --
Repayments on long-term debt........... (200,000) (1,123,583) (1,732,678) (113,263) (397,359)
Net borrowings (repayments) on
short-term borrowings................ 1,299,460 541,141 (678,924) 3,842,032 1,489,231
Distributions to stockholders.......... (5,749,436) (5,489,600) (470,455) (5,219,883) (7,597,958)
----------- ----------- ----------- ----------- ------------
Net cash (used in) provided by
financing activities.......... (4,075,788) (4,983,277) 1,362,830 882,480 (7,377,512)
----------- ----------- ----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ 571,039 392,495 8,374,814 (1,176,093) (5,705,937)
CASH AND CASH EQUIVALENTS, beginning of
period................................. 1,675,742 2,246,781 2,639,276 6,149,772 11,014,090
----------- ----------- ----------- ----------- ------------
CASH AND CASH EQUIVALENTS, end of
period................................. $ 2,246,781 $ 2,639,276 $11,014,090 $ 4,973,679 $ 5,308,153
=========== =========== =========== =========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for
Interest............................. $ 1,881,296 $ 2,267,778 $ 2,248,500 $ 818,277 $ 1,255,101
Income taxes......................... $ 1,562 $ 10,528 $ 24,230 $ -- $ --
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Distribution declared but not yet
paid................................. $ 108,318 $ -- $ 163,000 $ -- $ 815,906
Long-term debt issued for redemption of
common stock......................... $ -- $ -- $ 6,100,000 $ 6,100,000 $ --
Acquisition of property and equipment,
in exchange for common stock......... $ -- $ -- $ -- $ -- $ 9,429,065
Assumption of long-term debt in
conjunction with the acquisition of
property and equipment............... $ -- $ -- $ -- $ -- $ 4,100,027
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-15
<PAGE> 80
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION:
MarineMax, Inc. (MarineMax) and subsidiaries (the Company) are primarily
engaged in the retail sale and service of new and used boats, motors, trailers,
marine parts and accessories in Florida, Texas, Arizona and California.
MarineMax was formed on January 23, 1998, through a capital contribution of
$500 from its founding shareholder. MarineMax effected a business combination on
March 1, 1998, in which it acquired all of the issued and outstanding common
stock of Bassett Boat Company of Florida, Gulfwind South, Inc., Gulfwind U.S.A.,
Inc., 11502 Dumas, Inc. and subsidiaries d/b/a Louis DelHomme Marine, Harrison's
Boat Center, Inc., Harrison's Marine Centers of Arizona, Inc. (collectively, the
Merged Companies) and all of the beneficial interests in Bassett Boat Company,
Bassett Realty, L.L.C., Gulfwind South Realty, L.L.C., Harrison's Realty, L.L.C.
and Harrison's Realty California, L.L.C. (collectively, the Property
Acquisitions) in exchange for 9,191,870 shares of the Company's common stock
(the Pooling).
The business combination referred to above has been accounted for under the
pooling-of-interests method of accounting. Thus, the accompanying financial
statements have been restated to include the accounts and operating results of
MarineMax and the Merged Companies for all dates and periods prior to the
combination. The Property Acquisitions have been reflected in the accompanying
financial statements as of March 1, 1998.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All significant
intercompany transactions and accounts have been eliminated.
2. SIGNIFICANT ACCOUNTING POLICIES:
FISCAL YEAR
The Company changed its fiscal year-end from December 31 to September 30 to
coincide more closely with its natural business cycle. As a result, the
accompanying financial statements present the nine-month transition period which
began January 1, 1997, and ended September 30, 1997. Results of operations
(unaudited) for the nine-month period ended September 30, 1996, were as follows:
<TABLE>
<CAPTION>
AMOUNT
------------
<S> <C>
Revenue..................................................... $136,324,982
Cost of sales............................................... 101,993,118
------------
Gross profit...................................... 34,331,864
Selling, general and administrative expenses................ 22,035,219
------------
Income from operations............................ 12,296,645
Interest expense, net....................................... 1,006,466
------------
Income before income tax provision.......................... 11,290,179
Income tax provision........................................ 526,930
------------
Net income........................................ $ 10,763,249
============
</TABLE>
INVENTORIES
New and used boat inventories are stated at the lower of cost, determined
on a specific-identification basis, or market. Parts and accessories are stated
at the lower of cost, determined on the first-in, first-out basis, or market.
F-16
<PAGE> 81
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. Useful lives for purposes
of computing depreciation are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 5-40
Machinery and equipment..................................... 5-10
Furniture and fixtures...................................... 5-10
Vehicles.................................................... 5
</TABLE>
The cost of property and equipment sold or retired and the related
accumulated depreciation are removed from the accounts at the time of
disposition, and any resulting gain or loss is included in the consolidated
statements of income. Maintenance, repairs and minor replacements are charged to
operations as incurred; major replacements and improvements are capitalized and
amortized over their useful lives.
CUSTOMER DEPOSITS
Customer deposits include amounts received from customers toward the
purchase of boats. These deposits are recognized as revenue when the related
boats are delivered to customers, or are returned to customers if the related
boat sales do not close.
LONG-LIVED ASSETS
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-lived Assets and Long-lived Assets to be Disposed Of"
(SFAS 121), requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset in question may not be recoverable. The Company groups long-lived assets
by store location for purposes of assessing the recoverability of carrying value
and measuring potential impairment. SFAS 121 was adopted in 1996 and did not
have a material effect on the Company's consolidated results of operations, cash
flows or financial position.
REVENUE RECOGNITION
Revenue from boat, motor and trailer sales and parts and service operations
is recognized at the time the boat, motor, trailer or part is delivered to the
customer or service is completed.
Revenue earned by the Company for notes placed with financial institutions
in connection with customer boat financing is recognized when the related boat
sale is recognized. Commissions earned on credit life, accident and disability
insurance sold on behalf of third-party insurance companies are also recognized
when the related boat sale is recognized. Pursuant to negotiated agreements with
financial institutions, the Company is charged back for a portion of these fees
should the customer terminate the finance contract before it is outstanding for
stipulated minimal periods of time. The chargeback reserve, which was not
material to the consolidated financial statements taken as whole as of December
31, 1996, or September 30, 1997, is based on the Company's experience for
repayments or defaults on the finance contracts.
Commissions earned on extended warranty service contracts sold on behalf of
unrelated third-party insurance companies are recognized at the later of
customer acceptance of the service contract terms as evidenced by contract
execution, or when the related boat sale is recognized. The Company is charged
back for a portion of these commissions should the customer terminate the
service contract prior to its scheduled maturity. The chargeback reserve, which
was not material to the consolidated financial statements taken as a whole as of
December 31, 1996, or September 30, 1997, is based upon the Company's experience
for repayments or defaults on the service contracts.
F-17
<PAGE> 82
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ADVERTISING AND PROMOTIONAL COSTS
Advertising and promotional costs are expensed as incurred and are included
in selling, general and administrative expenses in the accompanying consolidated
statements of operations. Total advertising and promotional expenses
approximated $1,599,000, $2,600,000 and $2,343,000 for the years ended December
31, 1995 and 1996, and the nine-month period ended September 30, 1997,
respectively.
INCOME TAXES AND UNAUDITED PRO FORMA INCOME TAX PROVISION
Certain of the Merged Companies elected S corporation status under the
provisions of the Internal Revenue Code prior to the Pooling. Accordingly,
income of these Merged Companies prior to the Pooling was passed through to the
stockholders; as such, these Merged Companies historically recorded no provision
for income taxes. The accompanying consolidated statement of income for the
nine-month period ended September 30, 1997, includes an unaudited pro forma
income tax provision assuming these Merged Companies had been taxed as C
corporations during that period.
Other Merged Companies have been taxed as C corporations and have followed
the liability method of accounting for income taxes in accordance with SFAS No.
109, "Accounting for Income Taxes" (SFAS 109). Under SFAS 109, deferred income
taxes are recorded based upon differences between the financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the underlying assets are received or
liabilities are settled.
SUPPLIER AND CUSTOMER CONCENTRATION
Dealership Agreements
The Company has entered into dealership agreements with Ray Industries,
Inc. (Ray Industries), Boston Whaler, Inc. (Boston Whaler), Mercury Marine and
Baja Marine Corporation (all subsidiaries or divisions of Brunswick Corporation)
(collectively, the Manufacturers). Approximately 84 percent of the Company's
revenue is derived from products acquired from the Manufacturers. These
agreements allow the Company to purchase, stock, sell and service boats and
products of the Manufacturers. These agreements also allow the Company to use
the Manufacturers' names, trade symbols and intellectual properties.
Although there are a limited number of manufacturers of the type of boats
and products that the Company sells, management believes that other suppliers
could provide similar boats and products on comparable terms. A change in
suppliers, however, could cause a potential loss of revenue, which would affect
operating results adversely. The Company's existing dealership agreements with
the Manufacturers are renewable subject to certain terms and conditions in the
agreements and expire in 2008.
Concentrations of Credit Risks
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash and cash equivalents
and accounts receivable. Concentrations of credit risk with respect to cash and
cash equivalents are limited primarily to local financial institutions.
Concentrations of credit risk arising from receivables are limited primarily to
manufacturers and financial institutions.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.
F-18
<PAGE> 83
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable and debt. The carrying amount of these financial instruments
approximates fair value due either to length of maturity or existence of
interest rates that approximate prevailing market rates unless otherwise
disclosed in these financial statements.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
During June 1996 and June 1997, the Financial Accounting Standards Board
issued SFAS No. 130, "Reporting Comprehensive Income" (SFAS 130), and SFAS No.
131, "Disclosures About Segments of An Enterprise and Related Information" (SFAS
131), respectively. The major provisions of these statements and their impact on
the Company are discussed below.
SFAS 130, effective for fiscal years beginning after December 15, 1997,
requires the presentation of comprehensive income in an entity's financial
statements. Comprehensive income represents all changes in equity of an entity
during the reporting period, including net income and charges directly to equity
which are excluded from net income. This statement is not anticipated to have
any impact on the Company as the Company currently does not enter into any
transactions which result in charges (or credits) directly to equity (such as
additional minimum pension liability changes, currency translation adjustments,
unrealized gains and losses on available-for-sale securities, etc.).
SFAS 131, effective for fiscal years beginning after December 15, 1997,
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to stockholders. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The Company's management believes this statement will not have any
impact on its consolidated financial statements.
INTERIM FINANCIAL INFORMATION
As is normal and customary, the interim financial statements as of March
31, 1998, and for the six-month periods ended March 31, 1997 and 1998, are
unaudited, and certain information normally included in financial statements
prepared in accordance with generally accepted accounting principles has not
been included herein. In the opinion of management, all adjustments necessary to
fairly present the financial position, results of operations and cash flows with
respect to the interim financial statements have been properly included. Due to
seasonality and other factors, the results of operations for the interim period
are not necessarily indicative of the results that will be realized for the
entire fiscal year.
3. ACCOUNTS RECEIVABLE:
Trade receivables consist of receivables from financial institutions which
provide funding for customer boat financing and amounts due from financial
institutions earned from arranging financing with the Company's customers. These
receivables are normally collected within 30 days of the sale. Trade receivables
also include amounts due from customers on the sale of boats and parts and
service. Amounts due from
F-19
<PAGE> 84
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
manufacturers represent receivables for various incentive programs and parts and
service work performed pursuant to the manufacturers' warranty coverages.
The accounts receivable balances consisted of the following as of December
31, 1996, and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Trade receivables.................................. $2,755,139 $3,589,023
Amounts due from manufacturers..................... 1,971,426 2,996,047
Other receivables.................................. 263,460 194,106
---------- ----------
$4,990,025 $6,779,176
========== ==========
</TABLE>
4. INVENTORIES:
Inventories were comprised of the following as of December 31, 1996, and
September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
New boats, motors and trailers.................... $46,719,800 $41,764,979
Used boats, motors and trailers................... 3,808,325 5,388,798
Parts, accessories and other...................... 3,009,147 3,250,401
----------- -----------
$53,537,272 $50,404,178
=========== ===========
</TABLE>
5. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following as of December 31, 1996,
and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Land.............................................. $ 859,005 $ 859,005
Buildings and improvements........................ 3,028,263 3,471,170
Machinery and equipment........................... 2,782,254 2,894,999
Furniture and fixtures............................ 1,578,675 1,778,543
Vehicles.......................................... 998,368 1,236,915
---------- -----------
9,246,565 10,240,632
Less - Accumulated depreciation and
amortization.................................... (4,294,717) (4,851,235)
---------- -----------
$4,951,848 $ 5,389,397
========== ===========
</TABLE>
F-20
<PAGE> 85
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. FLOOR PLAN NOTES PAYABLE:
Floor plan notes payable consisted of the following as of December 31,
1996, and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Floor plan notes payable to financial institution, due
when the related boats are sold or 12 months after the
advance, whichever is earlier, bearing interest at prime
less .5% (8% at September 30, 1997), collateralized by
certain receivables, inventories and property and
equipment............................................... $ 8,398,558 $ 5,634,034
Floor plan notes payable to financial institutions, due
when related boats are sold, bearing interest at rates
ranging from 7.63 to 7.91%, collateralized by certain
receivables, inventories and property and equipment..... 12,441,979 7,625,727
Floor plan notes payable to financial institution, due
when related boats are sold, bearing interest at LIBOR
plus 2.5% (8.16% at September 30, 1997), collateralized
by certain receivables, inventories and property and
equipment............................................... 4,988,971 1,502,100
Floor plan notes payable to financial institution, due
when related boats are sold, bearing interest at prime
plus .75% (9.25% at September 30, 1997), collateralized
by certain inventories.................................. 1,845,223 3,624,849
Floor plan notes payable due to financial institutions,
due when related boats are sold or 12 months after the
advance, whichever is earlier, bearing interest at rates
ranging from .5% to prime plus 4% (12.5% at September
30, 1997), collateralized by certain receivables,
inventories and property and equipment.................. 11,575,324 7,765,389
----------- -----------
$39,250,055 $26,152,099
=========== ===========
</TABLE>
The Company receives interest assistance directly from the Manufacturers.
The interest assistance varies by Manufacturer and may include periods of free
financing or reduced interest rate programs. The interest assistance may be paid
directly to the Company or the financial institution depending on the
arrangements the Manufacturer has established. Discontinuance of these programs
could result in an increase in interest expense.
The maximum borrowings permitted and total available borrowings under the
floor plan notes payable at September 30, 1997, were approximately $50,000,000
and $23,848,000, respectively. The weighted average interest rate on borrowings
outstanding under the floor plan notes payable as of December 31, 1996 and
September 30, 1997, was approximately 6.80% and 7.50%, respectively.
7. LONG-TERM DEBT:
Long-term debt was comprised of the following as of December 31, 1996, and
September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Unsecured note payable to former stockholder, due in various
quarterly installments, bearing interest at 5% for the
period January 1, 1997, through December 31, 1997, and 10%
thereafter through maturity in January 2008............... $ -- $ 5,955,419
</TABLE>
F-21
<PAGE> 86
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Mortgage note payable to financial institution, due in
monthly installments of $16,337, bearing interest at 8%,
maturing in August 2002, collateralized by property and
equipment................................................. 907,337 812,628
Various notes payable, due in monthly installments ranging
from $390 to $3,141, bearing interest at rates ranging
from 4.9% to 10.25%, maturing April 1999 through May 2017,
collateralized by property and equipment.................. 188,316 186,709
---------- -----------
1,095,653 6,954,756
Less -- Current maturities.................................. (146,344) (973,269)
---------- -----------
$ 949,309 $ 5,981,487
========== ===========
</TABLE>
The aggregate maturities of long-term debt were as follows at September 30,
1997:
<TABLE>
<CAPTION>
PERIOD ENDING
SEPTEMBER 30, AMOUNT
------------- ----------
<S> <C>
1998.................................................. $ 973,269
1999.................................................. 817,818
2000.................................................. 799,128
2001.................................................. 809,540
2002.................................................. 810,001
Thereafter............................................ 2,745,000
----------
$6,954,756
==========
</TABLE>
8. SHORT-TERM BORROWINGS:
Short-term borrowings consisted of the following as of December 31, 1996,
and September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Line of credit payable to financial institution, due on
demand, bearing interest due monthly at prime plus .5%
(9% at September 30, 1997), collateralized by a secondary
lien on certain receivables and property and equipment... $1,095,000 $ --
Unsecured line of credit payable to financial institution,
due on demand, bearing interest due monthly at prime plus
.5% (9% at September 30, 1997)........................... 2,295,601 2,711,677
---------- ----------
$3,390,601 $2,711,677
========== ==========
</TABLE>
The line of credit agreements described above provide for total maximum
borrowings of $4,750,000. Total available borrowings on the line of credit
agreements as of September 30, 1997, were approximately
F-22
<PAGE> 87
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$2,038,000. The weighted average interest rate on short-term borrowings as of
December 31, 1996 and September 30, 1997, was 9% and 8.75%, respectively.
9. INCOME TAXES:
Federal income taxes for those Merged Companies taxed as C corporations
were as follows for the years ended December 31, 1995 and 1996, and the
nine-month period ended September 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
-------- --------- -------------
<S> <C> <C> <C>
Current................................. $ 21,610 $ 614,270 $272,455
Deferred................................ (70,707) (593,756) 137,369
-------- --------- --------
$(49,097) $ 20,514 $409,824
======== ========= ========
</TABLE>
Actual income tax expense (benefit) was not materially different from
income tax expense (benefit) computed by applying the U.S. Federal Statutory
Corporate Tax Rate of 34 percent to income (loss) before income tax provision
for the years ended December 31, 1995 and 1996, and the nine-month period ended
September 30, 1997, for those Merged Companies taxed as C corporations.
Deferred income taxes reflect the impact of temporary differences between
the amount of assets and liabilities recognized for financial reporting purposes
and such amounts recognized for income tax purposes. The components of the net
deferred tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Current deferred tax assets:
Inventory........................................ $134,980 $ --
Accrued expenses................................. 432,070 368,394
Net operating loss (NOL) carryforwards........... 99,531 160,818
-------- ----------
Net current deferred tax assets.......... $666,581 $ 529,212
======== ==========
</TABLE>
As of September 30, 1997, the Company had NOL carryforwards of
approximately $498,000. The NOL carryforwards will be available to offset future
taxable income and will expire in various amounts from fiscal year 2009 through
fiscal year 2012.
Concurrent with the business combination discussed in Note 1, the Company
recorded a deferred tax liability of approximately $1,640,000 for income taxes
that will be payable by the Company upon conversion of certain of the Merged
Companies that had elected S corporation status to C corporations.
10. DUE TO STOCKHOLDERS:
Due to stockholders includes non-collateralized demand notes which bear
interest at rates ranging from 0 to 10 percent.
11. COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS
The Company leases certain land, buildings, machinery, equipment and
vehicles related to its dealerships under non-cancelable operating leases.
Rental payments, including month-to-month rentals, were approximately
$1,339,000, $1,279,000 and $1,245,000 for the years ended December 31, 1995 and
1996, and the nine-month period ended September 30, 1997, respectively. Rental
payments to related parties under both cancelable and non-cancelable operating
leases approximated $1,135,400 and $1,154,400 for the years ended
F-23
<PAGE> 88
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1995 and 1996, and $935,050 for the nine-month period ended
September 30, 1997, respectively.
Future minimum lease payments under non-cancelable operating leases were as
follows at September 30, 1997:
<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30, AMOUNT
------------- ----------
<S> <C>
1998................................................... $1,582,873*
1999................................................... 1,190,300*
2000................................................... 815,945*
2001................................................... 632,570*
2002................................................... 592,400*
Thereafter............................................. 2,144,700*
----------
$6,958,788*
==========
</TABLE>
- ---------------
Approximately $4,213,000 of the above future minimum lease payments relate to
leases of property from related parties which were canceled in connection with
the Property Acquisitions on March 1, 1998.
OTHER COMMITMENTS
The Company is party to various legal actions arising in the ordinary
course of business. The ultimate liability, if any, associated with these
matters was not determinable at September 30, 1997. While it is not feasible to
determine the outcome of these actions at this time, management believes that
these matters will not have a material adverse effect on the Company's financial
condition, results of operations or cash flows.
The Company is subject to federal and state environmental regulations,
including rules relating to air and water pollution and the storage and disposal
of gasoline, oil, other chemicals and waste. The Company believes that it is in
compliance with such regulations.
12. EMPLOYEE 401(K) PROFIT SHARING PLANS:
Certain MarineMax subsidiaries maintain defined contribution benefit plans
(the Plans). The Plans provide for matching contributions from the Company that
are limited to certain percentages of employee contributions. Additional
discretionary amounts may be contributed by the Company. The Company contributed
approximately $234,000, $339,000 and $221,000 to the Plans for the years ended
December 31, 1995 and 1996, and for the nine-month period ended September 30,
1997.
13. SUBSEQUENT EVENTS:
FLOOR PLAN NOTE PAYABLE
On April 7, 1998, the Company executed an agreement for a new working
capital line of credit with a financial institution under which the Company
plans to refinance all of its outstanding floor plan notes payable. The maximum
available borrowings under the new working capital line of credit are $105
million. The new working capital line of credit bears interest at LIBOR plus
1.25 percent, and has a three-year term.
BRUNSWICK CORPORATION SETTLEMENT
Subsequent to year-end, Brunswick Corporation and the Company disputed the
applicability of the change in control provisions in the Company's dealership
agreements to the Pooling. In order to avoid a long, costly and disruptive
dispute, the Company and Brunswick Corporation entered into a settlement
agreement
F-24
<PAGE> 89
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
on March 12, 1998, under which Brunswick Corporation consented to changes in the
ownership of certain of the Merged Companies resulting from the Pooling, and the
Company agreed to pay Brunswick Corporation $15 million by December 31, 1998.
The $15 million payable to Brunswick Corporation bears interest payable
quarterly at LIBOR plus 1.25%.
STOCK SPLIT
On April 5, 1998, the Board of Directors approved a stock split whereby
each outstanding share of Company's Common Stock was converted into
approximately 1.082 shares of Common Stock. This stock split has been
retroactively reflected in the accompanying financial statements.
STOCK AND OPTION PLANS
On April 5, 1998 and April 30, 1998, respectively, the Board of Directors
adopted and the stockholders approved the following stock and option plans:
1998 Incentive Stock Plan (the Incentive Stock Plan) -- The Incentive Stock
Plan provides for the grant of incentive and non-qualified stock options to
acquire Common Stock of the Company, the direct grant of Common Stock, the grant
of stock appreciation rights and the grant of other cash awards to key
personnel, directors, consultants, independent contractors and others providing
valuable services to the Company. A maximum of the lesser of 4,000,000 shares or
15% of the then outstanding shares of Common Stock of the Company may be issued
under the Incentive Stock Plan. The Incentive Stock Plan terminates in April
2008, and options may be granted at any time during the life of the Incentive
Stock Plan. The date on which options vest and the exercise prices of options
will be determined by the Board of Directors or the Plan Administrator.
The Incentive Stock Plan also includes an Automatic Grant Program providing
for the automatic grant of options ("Automatic Options") to non-employee
directors of the Company. Under the Automatic Grant Program, each non-employee
whose election to the Board of Directors is proposed as of the date of the
Company's initial public offering will receive an Automatic Option to acquire
10,000 shares of Common Stock on that date (an "Initial Grant"). Each subsequent
newly elected non-employee member of the Board of Directors will receive as an
Initial Grant an Automatic Option to acquire 5,000 shares of Common Stock on the
date of his or her first appointment or election to the Board of Directors. In
addition, an Automatic Option to acquire 2,500 shares of Common Stock will be
granted to each non-employee director at the meeting of the Board of Directors
held immediately after each annual meeting of stockholders (an "Annual Grant").
Each Initial Grant will vest and become exercisable in a series of three equal
and successive installments with the first installment vested on the date of
grant (or the date of election to the Board of Directors, if later) and the next
two installments 12 months and 24 months after the date of grant. Each Annual
Grant will vest and become exercisable 12 months after the date of grant. Each
Automatic Option will vest and become exercisable only if the optionholder has
not ceased serving as a director as of such vesting date. The exercise price per
share of Common Stock subject to an Initial Grant on the date of the Company's
initial public offering will be equal to the initial public offering price per
share and the exercise price per share of Common Stock subject to other
Automatic Options will be equal to 100% of the fair market value (as defined in
the Incentive Stock Plan) of the Company's Common Stock on the date such option
is granted. Each Automatic Option will expire on the tenth anniversary of the
date on which such Automatic Option was granted.
Employee Stock Purchase Plan (the Stock Purchase Plan) -- The Stock
Purchase Plan provides for up to 500,000 shares of Common Stock to be issued,
and is available to all regular, full-time employees of the Company who have
completed at least one year of continuous service.
The Stock Purchase Plan provides for implementation of up to 10 annual
offerings beginning on the first day of July in the years 1998 through 2007,
with each offering terminating on June 30 of the following year. Each annual
offering may be divided into two six-month offerings. For each offering, the
purchase price per
F-25
<PAGE> 90
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
share will be the lower of (i) 85% of the closing price of the Common Stock on
the first day of the offering or (ii) 85% of the closing price of the Common
Stock on the last day of the offering. The purchase price is paid through
periodic payroll deductions not to exceed 10% of the participant's earnings
during each offering period. However, no participant may purchase more than
$25,000 worth of Common Stock annually.
ACQUISITION OF STOVALL MARINE, INC.
On April 30, 1998, the Company acquired all of the issued and outstanding
Common Stock of Stovall Marine, Inc. (Stovall) (a Georgia corporation) in
exchange for 492,306 shares of the Company's common stock. The acquisition has
been accounted for under the purchase method of accounting, which resulted in
the recognition of approximately $5.6 million of goodwill, representing the
excess purchase price over the estimated fair value of net assets acquired. The
goodwill is being amortized over 40 years.
14. SUBSEQUENT EVENTS (UNAUDITED) WITH RESPECT TO THE PERIOD ENDED
MARCH 31, 1998:
The interim financial information as of March 31, 1998 has been prepared on
a basis of accounting consistent with the accounting policies used in the
previous fiscal period. This interim financial information should be read in
conjunction with the audited financial statements for the fiscal period ended
September 30, 1997.
The March 31, 1998, interim balance sheet reflects seasonal changes
inherent in the Company's business operations, including the increase in
inventories and floor plan notes payable (as detailed below) in anticipation of
the Company's primary selling season in most markets. In addition, the March 31,
1998, interim balance sheet reflects the Property Acquisitions and related
long-term debt and the Brunswick settlement payable.
INVENTORIES
The increase in inventories from September 30, 1997 to March 31, 1998 was
due to seasonal factors that affect the Company's business. Inventories were
comprised of the following as of March 31, 1998:
<TABLE>
<S> <C>
New boats, motors and trailers.............................. $58,935,820
Used boats, motors and trailers............................. 7,417,023
Parts, accessories and other................................ 3,832,258
-----------
$70,185,101
===========
</TABLE>
F-26
<PAGE> 91
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FLOOR PLAN NOTES PAYABLE
The increase in floor plan notes payable was a result of the increase in
inventories described above. Floor plan notes payable consisted of the following
as of March 31, 1998:
<TABLE>
<S> <C>
Floor plan notes payable due to financial institution, due
when the related boats are sold or 12 months after the
advance, whichever is earlier, bearing interest at prime
less .5 percent (8 percent at March 31, 1998),
collateralized by certain receivables, inventories and
property and equipment.................................... $11,194,204
Floor plan notes payable to financial institutions, due when
related boats are sold, bearing interest at rates ranging
from 7.63 to 7.91 percent, collateralized by certain
receivables, inventories and property and equipment....... 10,197,689
Floor plan notes payable to financial institution, due when
related boats are sold, bearing interest at LIBOR plus 2.5
percent (8.38 percent at March 31, 1998), collateralized
by certain receivables, inventories and property and
equipment................................................. 1,413,806
Floor plan notes payable due to financial institution, due
when related boats are sold, bearing interest at prime
plus .75 percent (9.25 percent at March 31, 1998),
collateralized by certain new and used boats, motors and
trailers.................................................. 3,673,031
Floor plan notes payable due to financial institutions, due
when related boats are sold or 12 months after the
advance, whichever is earlier, bearing interest at rates
ranging from 0 percent to prime plus .5 percent (9 percent
at March 31, 1998), collateralized by certain receivables,
inventories and property and equipment.................... 17,523,369
-----------
$44,002,099
===========
</TABLE>
F-27
<PAGE> 92
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the offering
described in the Registration Statement.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 22,899.38
-----------
NASD filing fee............................................. 8,262.50
-----------
Blue Sky fees and expenses.................................. 20,000.00
-----------
New York Stock Exchange fees................................ 200,000.00
-----------
Transfer agent and registrar fees...........................
-----------
Accountants' fees and expenses.............................. 500,000.00
-----------
Legal fees and expenses.....................................
-----------
Printing and engraving expenses............................. 200,000.00
-----------
Miscellaneous fees..........................................
-----------
Total....................................................... $
===========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation and Bylaws of the Registrant
provide that the Registrant will indemnify and advance expenses, to the fullest
extent permitted by the Delaware General Corporation Law, to each person who is
or was a director or officer of the Registrant, or who serves or served any
other enterprise or organization at the request of the Registrant (an
"Indemnitee").
Under Delaware law, to the extent that an Indemnitee is successful on the
merits in defense of a suit or proceeding brought against him or her by reason
of the fact that he or she is or was a director, officer, or agent of the
Registrant, or serves or served any other enterprise or organization at the
request of the Registrant, the Registrant shall indemnify him or her against
expenses (including attorneys' fees) actually and reasonably incurred in
connection with such action.
If unsuccessful in defense of a third-party civil suit or a criminal suit,
or if such a suit is settled, an Indemnitee may be indemnified under Delaware
law against both (i) expenses, including attorney's fees, and (ii) judgments,
fines, and amounts paid in settlement if he or she acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Registrant, and, with respect to any criminal action, had no
reasonable cause to believe his or her conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Registrant, where the suit is settled, an Indemnitee may be indemnified under
Delaware law only against expenses (including attorneys' fees) actually and
reasonably incurred in the defense or settlement of the suit if he or she acted
in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Registrant except that if the Indemnitee
is adjudged to be liable for negligence or misconduct in the performance of his
or her duty to the Registrant, he or she cannot be made whole even for expenses
unless a court determines that he or she is fully and reasonably entitled to
indemnification for such expenses.
Also under Delaware law, expenses incurred by an officer or director in
defending a civil or criminal action, suit, or proceeding may be paid by the
Registrant in advance of the final disposition of the suit, action, or
proceeding upon receipt of an undertaking by or on behalf of the officer or
director to repay such amount if it is ultimately determined that he or she is
not entitled to be indemnified by the Registrant. The Registrant may also
advance expenses incurred by other employees and agents of the Registrant upon
such terms and conditions, if any, that the Board of Directors of the Registrant
deems appropriate.
II-1
<PAGE> 93
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On March 1, 1998, the Registrant issued an aggregate of 9,191,870 shares of
Common Stock to the stockholders of the Merged Companies and the owners of the
Property Companies in connection with the Mergers and Property Acquisitions,
respectively. Such shares were issued as follows:
<TABLE>
<CAPTION>
SHAREHOLDER NAME NUMBER OF SHARES
- ---------------- ---------------------
<S> <C>
Richard R. Bassett.......................................... 3,813,086
William H. McGill Jr........................................ 1,516,458
William Brett McGill........................................ 167,581
Edward A. Russell........................................... 167,581
Thomas A. George and Theresa C. George...................... 167,581
Scott St. Angelo............................................ 13,713
Jerry L. Marshall........................................... 534,934
Gerald K. Pedigo............................................ 211,664
Dana Marshall King.......................................... 40,408
Barry Marshall.............................................. 40,408
Spicer Partnership, Ltd..................................... 1,247,121
Susan Dunne................................................. 18,477
Clyde Hickham............................................... 18,477
Marc Hickham................................................ 18,477
Steven Hickham.............................................. 18,477
Glenda Hickham.............................................. 8,242
Richard C. and Judith L. LaManna as joint tenants........... 316,940
Richard C. and Judith L. LaManna as Co-Trustees of the
LaManna Family Trust...................................... 104,095
Richard C. LaManna Jr....................................... 103,105
Darrell C. LaManna as Trustee of the Darrell Christopher
LaManna Separate Property Trust........................... 354,744
Darrell C. LaManna.......................................... 169,397
Richard C. LaManna III...................................... 140,909
</TABLE>
On April 30, 1998, the Registrant issued an aggregate of 492,306 shares of
Common Stock to the stockholders of Stovall Marine, Inc. in connection with the
acquisition by the Registrant of all the issued and outstanding stock of
Stovall. Such shares were issued as follows:
<TABLE>
<CAPTION>
SHAREHOLDER NAME NUMBER OF SHARES
- ---------------- ---------------------
<S> <C>
Paul Graham Stovall......................................... 164,102
Jon M. Stovall.............................................. 164,102
Robert S. Stovall........................................... 164,102
</TABLE>
All of the shares issued in connection with the foregoing Combination
Transactions were issued in reliance upon an exemption from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended, as a
transaction not involving a public offering.
ITEM 16. EXHIBITS.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
1 Form of Underwriting Agreement+
3.1 Restated Certificate of Incorporation of the Registrant*
3.2 Bylaws of the Registrant*
4 Specimen of Stock Certificate+
5 Opinion of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association*
</TABLE>
II-2
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
10.1(a) Merger Agreement between Registrant and its acquisition
subsidiary and Bassett Boat Company of Florida and Richard
Bassett*
10.1(b) Merger Agreement between Registrant and its acquisition
subsidiary and 11502 Dumas, Inc. d/b/a Louis DelHomme Marine
and its stockholders*
10.1(c) Merger Agreement between Registrant and its acquisition
subsidiary and Gulfwind USA, Inc. and its stockholders*
10.1(d) Merger Agreement between Registrant and its acquisition
subsidiary and Gulfwind South, Inc. and its stockholders*
10.1(e) Merger Agreement between Registrant and its acquisition
subsidiary and Harrison's Boat Center, Inc. and its
stockholders*
10.1(f) Merger Agreement between Registrant and its acquisition
subsidiary and Harrison's Marine Centers of Arizona, Inc.
and its stockholders*
10.1(g) Merger Agreement between Registrant and its acquisition
subsidiary and Stovall Marine, Inc. and its stockholders*
10.2(a) Contribution Agreement between Registrant and Bassett Boat
Company and its owner*
10.2(b) Contribution Agreement between Registrant and Bassett
Realty, L.L.C. and its owner*
10.2(c) Contribution Agreement between Registrant and Gulfwind South
Realty, L.L.C. and its owners*
10.2(d) Contribution Agreement between Registrant and Harrison's
Realty, L.L.C. and its owners*
10.2(e) Contribution Agreement between Registrant and Harrison's
Realty California, L.L.C. and its owners*
10.3(a) Employment Agreement between Registrant and William H.
McGill Jr.*
10.3(b) Employment Agreement between Registrant and Michael H.
McLamb+
10.3(c) Employment Agreement between Registrant and Richard R.
Bassett*
10.3(d) Employment Agreement between Registrant and Louis R.
DelHomme, Jr.*
10.3(e) Employment Agreement between Registrant and Richard C.
LaManna Jr.*
10.3(f) Employment Agreement between Registrant and Richard C.
LaManna III*
10.3(g) Employment Agreement between Registrant and Darrell C.
LaManna*
10.3(h) Employment Agreement between Registrant and Paul Graham
Stovall*
10.4 1998 Incentive Stock Plan*
10.5 1998 Employee Stock Purchase Plan*
10.6 Settlement Agreement between Brunswick Corporation and
Registrant*
10.7 Letter of Intent between Registrant and Stovall*
10.8 Restated Agreement Relating to the Purchase of MarineMax
Common Stock between Registrant and Brunswick Corporation,
dated as of April 28, 1998+
10.9 Stockholders' Agreement among Registrant, Brunswick
Corporation, and Senior Founders of Registrant, dated April
28, 1998+
10.10 Governance Agreement between Registrant and Brunswick
Corporation, dated April 28, 1998+
10.11 Agreement Relating to Acquisitions between Registrant and
Brunswick Corporation, dated April 28, 1998+
10.12 Form of Sea Ray Sales and Service Agreement+
10.13 Loan and Security Agreement between Registrant and
NationsCredit Distribution Finance, Inc.+
10.14 Guaranty and Security Agreement of NationsCredit
Distribution Finance, Inc.+
10.15 Guaranty and Security Agreement of NationsCredit
Distribution Finance, Inc. by Stovall Marine, Inc.
11 Statement regarding computation of per share earnings+++
21 List of Subsidiaries*
23.1 Consent of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association (included in Exhibit
5)*
</TABLE>
II-3
<PAGE> 95
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
23.2 Consent of Arthur Andersen LLP*
23.3 Consents of Proposed Directors*
24 Power of Attorney of Directors and Executive Officers
(included on the Signature Page of the Registration
Statement)*
27 Financial Data Schedule*
</TABLE>
- ---------------
* Previously filed
+ Filed herewith
+++ Not applicable
(b) Financial Statement Schedules
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1), or (4), or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE> 96
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Clearwater,
State of Florida, on May , 1998.
MARINEMAX, INC.
By: /s/ WILLIAM H. MCGILL JR.
------------------------------------
William H. McGill Jr.
President
In accordance with the requirements of the Securities Act of 1933, this
amendment to the registration statement was signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM H. MCGILL JR. Chairman of the Board, May , 1998
- ----------------------------------------------------- President, Chief Executive
William H. McGill Jr. Officer, and Director
(Principal Executive Officer)
/s/ MICHAEL H. MCLAMB Vice President, Chief Financial May , 1998
- ----------------------------------------------------- Officer, Secretary, and
Michael H. McLamb Treasurer (Principal Financial
and Accounting Officer)
* Senior Vice President and May , 1998
- ----------------------------------------------------- Director
Richard R. Bassett
* Senior Vice President and May , 1998
- ----------------------------------------------------- Director
Louis R. DelHomme Jr.
* Senior Vice President and May , 1998
- ----------------------------------------------------- Director
Richard C. LaManna Jr.
Senior Vice President and
- ----------------------------------------------------- Director
Paul Graham Stovall
</TABLE>
*By: /s/ WILLIAM H. MCGILL JR.
--------------------------------------------------------
William H. McGill Jr.
Attorney-in-Fact
II-5
<PAGE> 97
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
1 Form of Underwriting Agreement+
3.1 Restated Certificate of Incorporation of the Registrant*
3.2 Bylaws of the Registrant*
4 Specimen of Stock Certificate+
5 Opinion of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association*
10.1(a) Merger Agreement between Registrant and its acquisition
subsidiary and Bassett Boat Company of Florida and Richard
Bassett*
10.1(b) Merger Agreement between Registrant and its acquisition
subsidiary and 11502 Dumas, Inc. d/b/a Louis DelHomme Marine
and its stockholders*
10.1(c) Merger Agreement between Registrant and its acquisition
subsidiary and Gulfwind USA, Inc. and its stockholders*
10.1(d) Merger Agreement between Registrant and its acquisition
subsidiary and Gulfwind South, Inc. and its stockholders*
10.1(e) Merger Agreement between Registrant and its acquisition
subsidiary and Harrison's Boat Center, Inc. and its
stockholders*
10.1(f) Merger Agreement between Registrant and its acquisition
subsidiary and Harrison's Marine Centers of Arizona, Inc.
and its stockholders*
10.1(g) Merger Agreement between Registrant and its acquisition
subsidiary and Stovall Marine, Inc. and its stockholders*
10.2(a) Contribution Agreement between Registrant and Bassett Boat
Company and its owner*
10.2(b) Contribution Agreement between Registrant and Bassett
Realty, L.L.C. and its owner*
10.2(c) Contribution Agreement between Registrant and Gulfwind South
Realty, L.L.C. and its owners*
10.2(d) Contribution Agreement between Registrant and Harrison's
Realty, L.L.C. and its owners*
10.2(e) Contribution Agreement between Registrant and Harrison's
Realty California, L.L.C. and its owners*
10.3(a) Employment Agreement between Registrant and William H.
McGill Jr.*
10.3(b) Employment Agreement between Registrant and Michael H.
McLamb+
10.3(c) Employment Agreement between Registrant and Richard R.
Bassett*
10.3(d) Employment Agreement between Registrant and Louis R.
DelHomme, Jr.*
10.3(e) Employment Agreement between Registrant and Richard C.
LaManna Jr.*
10.3(f) Employment Agreement between Registrant and Richard C.
LaManna III*
10.3(g) Employment Agreement between Registrant and Darrell C.
LaManna*
10.3(h) Employment Agreement between Registrant and Paul Graham
Stovall*
10.4 1998 Incentive Stock Plan*
10.5 1998 Employee Stock Purchase Plan*
10.6 Settlement Agreement between Brunswick Corporation and
Registrant*
10.7 Letter of Intent between Registrant and Stovall*
10.8 Restated Agreement Relating to the Purchase of MarineMax
Common Stock between Registrant and Brunswick Corporation,
dated as of April 28, 1998+
10.9 Stockholders' Agreement among Registrant, Brunswick
Corporation, and Senior Founders of Registrant, dated April
28, 1998+
10.10 Governance Agreement between Registrant and Brunswick
Corporation, dated April 28, 1998+
10.11 Agreement Relating to Acquisitions between Registrant and
Brunswick Corporation, dated April 28, 1998+
10.12 Form of Sea Ray Sales and Service Agreement+
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
10.13 Loan and Security Agreement between Registrant and
NationsCredit Distribution Finance, Inc.+
10.14 Guaranty and Security Agreement of NationsCredit
Distribution Finance, Inc.+
10.15 Guaranty and Security Agreement of NationsCredit
Distribution Finance, Inc. by Stovall Marine, Inc.+
11 Statement regarding computation of per share earnings+++
21 List of Subsidiaries*
23.1 Consent of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association (included in Exhibit
5)*
23.2 Consent of Arthur Andersen LLP+
23.3 Consents of Proposed Directors*
24 Power of Attorney of Directors and Executive Officers
(included on the Signature Page of the Registration
Statement)*
27 Financial Data Schedule*
</TABLE>
- ---------------
* Previously filed
+ Filed herewith
+++ Not applicable
<PAGE> 1
Exhibit 1
MarineMax, Inc.
2,919,369 Shares(1)
Common Stock
($0.001 par value)
Underwriting Agreement
New York, New York
_________, 1998
Smith Barney Inc.
William Blair & Company L.L.C.
As Representatives of the several Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
MarineMax, Inc., a Delaware corporation (the "Company"), proposes to
sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, 2,919,369 shares of Common Stock, $0.001 par value ("Common
Stock") of the Company, and the persons named in Schedule II hereto (the
"Selling Stockholders") propose to sell to the several Underwriters shares of
Common Stock (said shares to be issued and sold by the Company and said shares
to be sold by the Selling Stockholders collectively being hereinafter called the
"Underwritten Securities"). The Selling Stockholders named in Schedule II hereto
also propose to grant to the Underwriters an option to purchase up to 437,905
additional shares of Common Stock to cover over-allotments (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities"). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as
- --------------------
(1) Plus an option to purchase from the Company and the Selling
Shareholders, up to 437,905 additional Securities to cover
over-allotments.
<PAGE> 2
Underwriters, and the terms Representatives and Underwriters shall mean either
the singular or plural as the context requires. Certain terms used herein are
defined in Section 17 hereof.
1. Representations and Warranties.
(i) The Company represents and warrants to, and agrees and the
Selling Stockholders jointly and severally represent and warrant to, and agree
with, each Underwriter as set forth below in this Section 1:
(a) The Company has prepared and filed with the Commission a
registration statement (Reg. No. 333-47873) on Form S-1, including a related
preliminary prospectus, for the registration under the Act of the Securities for
the offering and sale as contemplated hereby. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file with the
Commission either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement (including the
form of final prospectus) or (2) after the Effective Date of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b). In the
case of clause (2), the Company has included in such registration statement, as
amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and form of
final prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except to
the extent the Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised you,
prior to the Execution Time will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date on which
Option Securities are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will, comply in
all material respects with the applicable requirements of the Act and the rules
thereunder; on the Effective Date and at the Execution Time, the Registration
Statement did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on the Effective Date,
the Prospectus, if not filed pursuant to Rule 424(b), will not, and on the date
of any filing pursuant to Rule 424(b) and on the Closing Date and any settlement
date, the Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company and the Selling Shareholders make no representations or
warranties as to the
<PAGE> 3
information contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) in reliance upon and in conformity with
information furnished herein or in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(c) Each of the Company and Basset Boat Company of Florida,
11502 Dumas, Inc., Gulf Wind USA, Inc., Gulf Wind South, Inc., Harrison's Marine
Centers of Arizona, Inc., Harrison's Boat Center, Inc., Basset Boat Company,
Basset Realty, L.L.C., Gulfwind South Realty, L.L.C., Harrison's Realty, L.L.C.,
and Harrison's Realty California, L.L.C., (individually a "Subsidiary" and,
collectively, the "Subsidiaries") has been duly incorporated or organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized (except where the failure of
any Subsidiary to be in good standing has not had and will not have a material
adverse effect on the Company), with full corporate power and authority to own
or lease, as the case may be, and to operate its properties and conduct its
business as described in the Prospectus, and has valid right and authority to
operate its boat dealership business under its dealership agreements and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification.
(d) The Mergers of the Company and the Subsidiaries and the
Property Acquisitions as described in the Prospectus have been completed and
have not resulted in any violation of any material contracts, agreements or
other obligations of any of the Subsidiaries, and all the necessary consents or
waivers were obtained for the Mergers.
(e) All the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Prospectus, all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company, either directly or through wholly owned Subsidiaries, free and clear of
any perfected security interest or any other security interests, claims, liens
or encumbrances.
(f) The Company's authorized capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus; the outstanding
shares of Common Stock have been duly and validly authorized and issued and are
fully paid and nonassessable; the Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the Securities
are duly listed, and admitted and authorized for trading, subject to official
notice of issuance and evidence of satisfactory distribution, on the New York
Stock Exchange; the certificates for the Securities are in valid and sufficient
form; except as set forth in the Prospectus, the holders of outstanding shares
of capital stock of the Company are not entitled to preemptive or other rights
to subscribe for the Securities; and, except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or
-3-
<PAGE> 4
exchange any securities for, shares of capital stock of or ownership interests
in the Company are outstanding.
(g) There is no pending or, to the best of Company's
knowledge, threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries or its or their property of a character required to
be disclosed in the Registration Statement which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit thereto, which is not described or filed as
required.
(h) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit thereto, which is not described or filed as
required.
(i) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms.
(j) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as defined
in the Investment Company Act of 1940, as amended.
(k) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under the
Act and such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectus.
(l) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its Subsidiaries pursuant to, (i) the charter or
by-laws of the Company or any of its Subsidiaries, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, or instrument to which the Company or
any of its Subsidiaries is a party or bound or to which its or their property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any of its Subsidiaries of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its Subsidiaries or any of its or
their properties.
-4-
<PAGE> 5
(m) Except as set forth in the Prospectus, no holders of
securities of the Company have rights to the registration of such securities
under the Registration Statement.
(n) The consolidated historical financial statements and
schedules of the Company and its consolidated Subsidiaries included in the
Prospectus and the Registration Statement present fairly in all material
respects the financial condition, results of operations and cash flows of the
Company as of the dates and for the periods indicated, comply as to form with
the applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted therein). The
selected financial data set forth under the captions "Summary Consolidated
Financial Data" and "Selected Financial Data" in the Prospectus and Registration
Statement fairly present, on the basis stated in the Prospectus and the
Registration Statement, the information included therein. The pro forma
financial statements included in the Prospectus and the Registration Statement
include assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and events
described therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma adjustments reflect the proper application
of those adjustments to the historical financial statement amounts in the pro
forma financial statements included in the Prospectus and the Registration
Statement. The pro forma financial statements included in the Prospectus and the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the Act and the pro
forma adjustments have been properly applied to the historical amounts in the
compilation of those statements.
(o) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries or its or their property is pending or, to the
knowledge of the Company, threatened that (i) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus.
(p) Each of the Company and each of its Subsidiaries owns or
leases all such properties as are necessary to the conduct of its operations as
presently conducted.
(q) Neither the Company nor any Subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, or instrument to which it is a party
or bound or to which its property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental
-5-
<PAGE> 6
body, arbitrator or other authority having jurisdiction over the Company or such
Subsidiary or any of its properties, as applicable.
(r) Arthur Andersen LLP, which have certified certain
financial statements of the Company and its consolidated Subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules included in the Prospectus, are independent public
accountants with respect to the Company and the Subsidiaries within the meaning
of the Act and the applicable published rules and regulations thereunder.
(s) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company and the
Selling Stockholders of the Securities.
(t) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not have a
material adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries, taken as a
whole), whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus and has paid
all taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(u) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or, to the best knowledge of the
Company, is threatened or imminent, and the Company is not aware of any existing
or imminent labor disturbance by the employees of any of its or its
Subsidiaries' principal suppliers, contractors or customers, that could have a
material adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties (a "MAE") of the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the Prospectus.
(v) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance insuring the Company or any of its
Subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and its Subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; and there are
-6-
<PAGE> 7
no claims by the Company or any of its Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause; neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company nor any such Subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a material
adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus.
(w) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or any
other Subsidiary of the Company, except as described in or contemplated by the
Prospectus.
(x) The Company and each of its Subsidiaries possess all
governmental licenses, certificates, permits and other authorizations issued by
the appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the Prospectus.
(y) The Company and each of its Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
-7-
<PAGE> 8
(aa) The Company and its Subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in compliance
with all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals, or liability would not, individually or in the aggregate, have a
material adverse change in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus. Except as
set forth in the Prospectus, neither the Company nor any of its Subsidiaries has
been named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended.
(bb) The Company and its Subsidiaries are in compliance with
Environmental Laws, except for any such violations as described in the
Prospectus and the Company does not believe there is any existing or potential
violation of Environmental Laws that will have any material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole.
(cc) Each of the Company and its Subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of Section 302 of
the United States Employee Retirement Income Security Act of 1974 ("ERISA") and
the regulations and published interpretations thereunder with respect to each
"plan" (as defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company and its Subsidiaries are
eligible to participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such regulations
and published interpretations. The Company and its Subsidiaries have not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA.
(dd) The Subsidiaries are the only significant subsidiaries of
the Company as defined by Rule 1-02 of Regulation S-X.
(ee) The Company and its Subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property")
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<PAGE> 9
necessary for the conduct of the Company's business as now conducted or as
proposed in the Prospectus to be conducted.
(ff) The Company is in compliance in all material respects
with the Commission's staff legal bulletin No. 5 dated October 8, 1997 related
to Year 2000 compliance.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(ii) Each Selling Stockholder represents and warrants to, and
agrees with, each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the
Securities to be sold by such Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Securities as provided herein, such Selling
Stockholder will convey to the Underwriters good and marketable title to such
Securities, free and clear of all liens, encumbrances, equities and claims
whatsoever.
(b) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(c) Certificates in negotiable form for such Selling
Stockholder's Securities have been placed in custody, for delivery pursuant to
the terms of this Agreement, under a Custody Agreement and Power of Attorney
duly executed and delivered by such Selling Stockholder, in the form heretofore
furnished to you (the "Custody Agreement") with [ ], as Custodian (the
"Custodian"); the Securities represented by the certificates so held in custody
for each Selling Stockholder are subject to the interests hereunder of the
Underwriters; the arrangements for custody and delivery of such certificates,
made by such Selling Stockholder hereunder and under the Custody Agreement, are
not subject to termination by any acts of such Selling Stockholder, or by
operation of law, whether by the death or incapacity of such Selling Stockholder
or the occurrence of any other event; and if any such death, incapacity or any
other such event shall occur before the delivery of such Securities hereunder,
certificates for the Securities will be delivered by the Custodian in accordance
with the terms and conditions of this Agreement and the Custody Agreement as if
such death, incapacity or other event had not occurred, regardless of whether or
not the Custodian shall have received notice of such death, incapacity or other
event.
(d) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required for the consummation by
such Selling Shareholder with
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<PAGE> 10
the transactions contemplated herein, except such as may have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Securities
by the Underwriters and such other approvals as have been obtained.
(e) Neither the sale of the Securities being sold by such
Selling Shareholder nor the consummation of any other of the transactions herein
contemplated by such Selling Shareholder or the fulfillment of the terms hereof
by such Selling Shareholder will conflict with, result in a breach or violation
of, or constitute a default under any law or the charter or bylaws of such
Selling Shareholder or the terms of any indenture or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of
its Subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation, or
instrument to which such Selling Shareholder is a party or bound, or any
judgment, order or decree applicable to such Selling Shareholder of any court,
regulatory body, administrative agency, governmental body or arbitrator or other
authority having jurisdiction over such Selling Shareholder.
(f) Such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1 are
not true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Prospectus or any supplement thereto which has adversely affected or may
adversely affect the business of the Company or any of its Subsidiaries; and the
sale of Securities by such Selling Stockholder pursuant hereto is not prompted
by any information concerning the Company or any of its Subsidiaries which is
not set forth in the Prospectus or any supplement thereto.
(g) In respect of any statements in or omissions from the
Registration Statement or the Prospectus or any supplements thereto made in
reliance upon and in conformity with information furnished in writing to the
Company by such Selling Stockholder specifically for use in connection with the
preparation thereof, such Selling Stockholder hereby makes the same
representations and warranties to each Underwriter as the Company makes to such
Underwriter under paragraph (i)(b) of this Section 1.
Any certificate signed by [any officer of] any Selling
Stockholder and delivered to the Representatives or counsel for the Underwriters
in connection with the offering of the Securities shall be deemed a
representation and warranty by such Selling Stockholder, as to matters covered
thereby, to each Underwriter.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company and the Selling
Stockholders agree, severally and
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<PAGE> 11
not jointly, to sell to each Underwriter, and each Underwriter agrees, severally
and not jointly, to purchase from the Company and the Selling Stockholders, at a
purchase price of $[ ] per share, the amount of the Underwritten Securities
set forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Selling Stockholders
named in Schedule II hereto hereby grant an option to the several Underwriters
to purchase, severally and not jointly, up to 437,905 Option Securities at the
same purchase price per share as the Underwriters shall pay for the Underwritten
Securities. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the Prospectus upon written or telegraphic notice
by the Representatives to the Company and such Selling Stockholders setting
forth the number of shares of the Option Securities as to which the several
Underwriters are exercising the option and the settlement date. Delivery of
certificates for the shares of Option Securities by such Selling Stockholders,
and payment therefor to the Company and such Selling Stockholders, shall be made
as provided in Section 3 hereof. The maximum number of Option Securities which
each Selling Stockholder agrees to sell is set forth in Schedule II hereto. In
the event that the Underwriters exercise less than their full over-allotment
option, the number of Option Securities to be sold by each Selling Stockholder
listed on Schedule II shall be, as nearly as practicable, in the same proportion
as the maximum number of Option Securities to be sold by each Selling
Stockholder bears to the maximum aggregate number of Option Securities to be
sold. The number of shares of the Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of shares of the
Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on _________,
1998, or at such time on such later date not more than three Business Days after
the foregoing date as the Representatives shall designate, which date and time
may be postponed by agreement among the Representatives, the Company and the
Selling Stockholders or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the respective aggregate purchase
prices of the Securities being sold by the Company and each of the Selling
Stockholders to or upon the order of the Company and the Selling Stockholders by
wire transfer payable in same-day funds to the accounts specified by the Selling
Stockholders. Delivery of the Underwritten Securities
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<PAGE> 12
and the Option Securities shall be made through the facilities of The Depository
Trust Company unless the Representatives shall otherwise instruct.
Each Selling Stockholder will pay all applicable state transfer taxes,
if any, involved in the transfer to the several Underwriters of the Securities
to be purchased by them from such Selling Stockholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company and the Selling
Stockholders named in Schedule H hereto will deliver the Option Securities (at
the expense of the Company) to the Representatives on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company and the Selling Stockholders
named in Schedule II by wire transfer payable in same-day funds to an account
specified by the Company and the Selling Stockholders named in Schedule II
hereto. If settlement for the Option Securities occurs after the Closing Date,
the Company will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the offering
of the Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or supplement to which you
reasonably object. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule 430A, or filing of
the Prospectus is otherwise required under Rule 424(b), the Company will cause
the Prospectus, properly completed, and any supplement thereto to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly advise the
Representatives (1) when the Registration Statement, if not effective at the
Execution Time, shall have become effective, (2) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the Commission
pursuant to
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<PAGE> 13
Rule 424(b) or when any Rule 462(b) Registration Statement shall have been filed
with the Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been filed or
become effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (5) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the institution or threatening
of any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the rules
thereunder, the Company promptly will (1) notify the Representatives of any such
event; (2) prepare and file with the Commission, subject to the second sentence
of paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance; and (3) supply any
supplemented Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its Subsidiaries which will satisfy
the provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Prospectus and the Prospectus and any supplement
thereto as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such jurisdictions as
the Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service
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<PAGE> 14
of process in suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(f) The Company will not, and will cause its directors,
executive officers and all its shareholders selected by Salomon Smith Barney not
to, without the prior written consent of Salomon Smith Barney, for a period of
180 days following the Execution Time (the "Lockup"), sell, offer to sell,
solicit an offer to buy, contract to sell, grant an option to purchase, or
otherwise transfer or dispose of (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate of the Company or any
person in privity with the Company or any affiliate of the Company) directly or
indirectly, or announce the offering of, any other shares of Common Stock or any
securities convertible into, or exchangeable for, shares of Common Stock;
provided, however, that the Company may issue Common Stock (i) in connection
with the acquisition of boat dealers (provided, however, that each shareholder
of any acquired boat dealer executes a Lockup substantially to the effect
provided in this Section 5(f)); (ii) pursuant to the 1998 Employee Stock
Purchase Plan; and (iii) pursuant to the exercise of options granted under the
Company's 1998 Incentive Stock Plan.
(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(h) The Company and the Selling Stockholders (in proportion to
the number of Securities being offered by each of them, including any Option
Securities which the Underwriters shall have elected to purchase) agree to pay
the costs and expenses relating to the following matters: (i) the preparation,
printing or reproduction and filing with the Commission of the Registration
Statement (including financial statements and exhibits thereto), each
Preliminary Prospectus, the Prospectus, and each amendment or supplement to any
of them; (ii) the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
the Registration Statement, each Preliminary Prospectus, the Prospectus, and all
amendments or supplements to any of them, as may, in each case, be reasonably
requested by the Representatives for use in connection with the offering and
sale of the Securities; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this Agreement,
any blue sky memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Securities; (v)
the registration of the Securities under the Exchange Act and the listing of the
Securities on the New York Stock Exchange; (vi) any registration or
qualification of the Securities for offer and sale under the securities or blue
sky laws of the several states (including filing fees and the reasonable fees
and
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<PAGE> 15
expenses of counsel for the Underwriters relating to such registration and
qualification); (vii) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to such
filings); (viii) the transportation and other expenses incurred by or on behalf
of Company representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company and the Selling Stockholders; and (x) all other costs
and expenses incident to the performance by the Company and the Selling
Stockholders of their obligations hereunder.
(ii) Each Selling Stockholder agrees with the several
Underwriters that:
(a) Such Selling Stockholder will not, without the prior
written consent of Salomon Smith Barney, offer, sell, contract to sell, pledge
or otherwise dispose of, or file (or participate in the filing of) a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act with respect to,
any shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of this Agreement, other than shares of Common Stock disposed of as bona
fide gifts approved by Salomon Smith Barney.
(b) Such Selling Stockholder will not take any action designed
to or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(c) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as delivery of a
prospectus relating to the Securities by an underwriter or dealer may be
required under the Act, of (i) any material change in the Company's condition
(financial or otherwise), prospects, earnings, business or properties, (ii) any
change in information in the Registration Statement or the Prospectus relating
to such Selling Stockholder or (iii) any new material information relating to
the Company or relating to any matter stated in the Prospectus which comes to
the attention of such Selling Stockholder.
(d) Such Selling Stockholder will comply with the agreement
contained in Section 5(i)(h).
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy in all material
respects of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date and any settlement
date pursuant to Section 3 hereof, to the accuracy of the statements of the
Company
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<PAGE> 16
and the Selling Stockholders made in any certificates pursuant to the provisions
hereof, to the performance by the Company and the Selling Stockholders of their
obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public offering
price, if such determination occurred at or prior to 3:00 PM New York City time
on such date or (ii) 9:30 AM on the Business Day following the day on which the
public offering price was determined, if such determination occurred after 3:00
PM New York City time on such date; if filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any
such supplement, will be filed in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives
the opinion of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A.,
counsel for the Company, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Company and its Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with the requisite corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectus, and has the requisite
authority to operate its boat dealership business under dealership
agreements and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
set forth on a schedule to such opinion;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Subsidiaries
are owned by the Company free and clear of any perfected security
interest and, to the knowledge of such counsel, after due inquiry, any
other security interest, claim, lien or encumbrance;
(iii) the Mergers of the Company and the Subsidiaries as
described in the Prospectus have been completed and do not constitute
any violation of any material contracts, agreements or other
obligations of any of the Company or any of its Subsidiaries, and all
the necessary consents or waivers have been obtained for the Mergers.
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<PAGE> 17
(iv) the Company's authorized capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock (including the
Securities being sold hereunder by the Selling Stockholders) have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold hereunder have been duly and
validly authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities being sold by the Selling Stockholders
are duly listed, and admitted and authorized for trading, subject to
official notice of issuance and evidence of satisfactory distribution,
on the New York Stock Exchange; the certificates for the Securities are
in valid and sufficient form under the laws of the State of Delaware;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the
Securities; and, to the knowledge of such counsel, except as set forth
in the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
(v) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed
as an exhibit thereto, which is not described or filed as required; and
the statements in the Prospectus under the heading "Risk Factors --
Impact of Environmental and Other Regulatory Issues"; Business --
Supervision and Regulation; Environmental Matters"; and "Description of
Capital Stock," insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;
(vi) the Registration Statement has become effective under the
Act; any required filing of the Prospectus and any supplements thereto,
pursuant to Rule 424(b), have been made in the manner and within the
time period required by Rule 424(b); to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and the
Prospectus (other than the financial statements and other financial
information contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act and the rules thereunder;
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<PAGE> 18
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(ix) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and such other
approvals (specified in such opinion) as have been obtained;
(x) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or its Subsidiaries pursuant
to, (i) the charter or by-laws of the Company or its Subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or its
Subsidiaries is a party or bound or to which its or their property is
subject, or (iii) any statute, law, rule, regulation, judgment, order
or decree applicable to the Company or its Subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or its
Subsidiaries or any of its or their properties; and
(xi) to the knowledge of such counsel, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
In addition, such counsel shall advise the Representatives that no
facts have come to such counsel's attention that have caused such counsel to
believe that on the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date and on the Closing Date
included or includes any untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the financial statements and
other financial and statistical information contained therein, as to which such
counsel need express no belief);
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<PAGE> 19
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Arizona, the General Corporation Law of the State of Delaware, or the Federal
laws of the United States, to the extent it deems proper and specified in such
opinion, upon the opinion of other counsel of good standing whom it believes to
be reliable and who are satisfactory to counsel for the Underwriters, (B) as to
matters involving the Subsidiaries, upon the opinion of [ ], and (C) as to
matters of fact, to the extent it deems proper, on certificates of responsible
officers of the Company and public officials; provided that the Underwriters and
their counsel may rely on such opinions and that such counsel shall state that
the opinion of any other counsel is in form and scope satisfactory to such
counsel and it believes that they are justified in relying on such opinions.
Copies of all such opinions and certificates shall be furnished to counsel to
the Underwriters on the Closing Date. References to the Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date. The opinion
of such counsel shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(c) The Selling Stockholders shall have furnished to the
Representatives the opinion of [ ], counsel for the Selling Stockholders,
dated the Closing Date and addressed to the Representatives, to the effect that:
(i) this Agreement and the Custody Agreement and Power of
Attorney have been duly executed and delivered by the Selling
Stockholders, the Custody Agreement is valid and binding on the Selling
Stockholders and each Selling Stockholder has full legal right and
authority to sell, transfer and deliver in the manner provided in this
Agreement and the Custody Agreement the Securities being sold by such
Selling Stockholder hereunder;
(ii) the delivery by each Selling Stockholder to the several
Underwriters of certificates for the Securities being sold hereunder by
such Selling Stockholder against payment therefor as provided herein
will pass good and marketable title to such Securities to the several
Underwriters, free and clear of all liens, encumbrances, equities and
claims whatsoever;
(iii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
by any Selling Stockholder of the transactions contemplated herein,
except such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters and
such other approvals (specified in such opinion) as have been obtained;
and
(iv) neither the sale of the Securities being sold by any
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by any Selling Stockholder or the
fulfillment of the terms hereof by any Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the terms
-19-
<PAGE> 20
of any indenture or other agreement or instrument known to such counsel
and to which any Selling Stockholder is a party or bound, or any
judgment, order or decree known to such counsel to be applicable to any
Selling Stockholder of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over any
Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
[ ] or the Federal laws of the United States, to the extent it deems proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom it believes to be reliable and who are satisfactory to counsel for the
Underwriters, and (B) as to matters of fact, to the extent it deems proper, on
certificates of [responsible officers of] the Selling Stockholders and public
officials. The opinion of such counsel shall be rendered to the Underwriters at
the request of the Company and shall so state therein.
(d) The Representatives shall have received from Morgan, Lewis
& Bockius LLP, counsel for the Underwriters, such opinion dated the Closing Date
and addressed to the Representatives, with respect to the issuance and sale of
the Securities, the Registration Statement, the Prospectus (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require, and the Company and each Selling Stockholder shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. The opinion of such counsel shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplements to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse effect
on the condition (financial or
-20-
<PAGE> 21
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus.
(f) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by such Selling Stockholder, dated the
Closing Date, to the effect that the signer[s] of such certificate have
carefully examined the Registration Statement, the Prospectus, any supplement to
the Prospectus and this Agreement and that the representations and warranties of
such Selling Stockholder in this Agreement are true and correct in all material
respects on and as of the Closing Date to the same effect as if made on the
Closing Date.
(g) At the Execution Time and at the Closing Date, Arthur
Andersen LLP shall have furnished to the Representatives letters, dated
respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable
published rules and regulations thereunder and that they have performed a review
of the unaudited interim financial information of the Company for the nine-month
periods ended, respectively September 30, 1996 and September 30, 1997, the
unaudited interim financial information of the Company for the six-month periods
ended, respectively, March 31, 1997 and March 31, 1998 and the pro forma
financial information for the six-month period ended March 31, 1998 and March
31, 1997, in accordance with Statement on Auditing Standards No. 71 and stating
in effect that:
(i) in their opinion, the audited financial statements and
financial statement schedules and pro forma financial statements
included in the Registration Statement and the Prospectus and reported
on by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
Subsidiaries; their limited review, in accordance with standards
established under Statement on Auditing Standards No. 71, the unaudited
interim financial information of the Company for the Company for the
nine-month periods ended, respectively September 30, 1996 and September
30, 1997, and the pro forma financial information for the nine-month
period ended September 30, 1997, the unaudited interim financial
information of the Company for the six-month periods ended,
respectively, March 31, 1997 and March 31, 1998 and the pro forma
financial information for the three-month period ended March 31, 1998,
and as at March 31, 1998; carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the stockholders, directors, and [finance
and] [audit] committees of the Company and the Subsidiaries; and
inquiries of certain officials of the Company who
-21-
<PAGE> 22
have responsibility for financial and accounting matters of the Company
and its Subsidiaries as to transactions and events subsequent to March
31, 1998, nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements for the
nine-month periods ended, respectively September 30, 1996,
September 30, 1997 and the six-month periods ended,
respectively March 31, 1997 and March 31, 1998 included in the
Registration Statement and the Prospectus do not comply as to
form in all material respects with applicable accounting
requirements of the Act and with the published rules and
regulations of the Commission with respect to registration
statements on Form S-1; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus;
(2) with respect to the period subsequent to March
31, 1998, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
long-term debt of the Company and its Subsidiaries or capital
stock of the Company or decreases in the stockholders' equity
of the Company or decreases in working capital of the Company
and its Subsidiaries as compared with the amounts shown on the
March 31, 1998 consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period
from March 31, 1998 to such specified date there were any
decreases, as compared with the fiscal quarter ended March 31,
1998 in net revenues or income before income taxes or in total
or per share amounts of net income of the Company and its
Subsidiaries' operating income; net interest income; or net
interest income after provision for loan losses, except in all
instances for changes or decreases set forth in such letter,
in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives;
(3) the information included in the Registration
Statement and Prospectus in response to Regulation S-K, Item
301 (Selected Financial Data), Item 302 (Supplementary
Financial Information), Item 402 (Executive Compensation) and
Item 503(d) (Ratio of Earnings to Fixed Charges) is not in
conformity with the applicable disclosure requirements of
Regulation S-K;
(4) the unaudited amounts in the Summary Consolidated
Financial Data, Selected Financial Data and Management's
Discussions and Analysis of Financial Condition and Results of
Operations do not agree with the amounts set forth in the
unaudited financial statements for the same periods or were
not determined on a basis substantially consistent with that
of the corresponding amounts in the
-22-
<PAGE> 23
audited financial statements included in the Registration
Statement and the Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its Subsidiaries) set
forth in the Registration Statement and the Prospectus, including the
information set forth in the Prospectus, agrees with the accounting
records of the Company and its Subsidiaries, excluding any questions of
legal interpretation.
(iv) On the basis of a reading of the unaudited pro forma
financial statements included in the Registration Statement and the
Prospectus (the "pro forma financial statements"); carrying out certain
specified procedures; inquiries of certain officials of the Company who
have responsibility for financial and accounting matters; and proving
the arithmetic accuracy of the application of the pro forma adjustments
to the historical amounts in the pro forma financial statements,
nothing came to their attention which caused them to believe that the
pro forma financial statements do not comply as to form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such
statements.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
[The Company shall have received from Arthur Andersen LLP (and
furnished to the Representatives) a report with respect to a review of unaudited
interim financial information of the Company for the eight quarters ending
December 31, 1997, in accordance with Statement on Auditing Standards No. 71.]
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement and the
Prospectus, there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (e) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of the
Company and its Subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto) the effect
of which, in any case referred to in clause (i) or (ii) the effect of which
above, is, in the sole judgment of the Representatives, so material and adverse
as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration Statement and the
Prospectus
-23-
<PAGE> 24
Prior to the Closing Date, the Company and the Selling Stockholders
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Morgan, Lewis & Bockius, LLP, counsel for the
Underwriters, at 101 Park Avenue, New York, NY 10178, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Salomon Smith Barney on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
If the Company is required to make any payments to the Underwriters
under this Section 7 because of any Selling Stockholder's refusal, inability or
failure to satisfy any condition to the obligations of the Underwriters set
forth in Section 6, the Selling Stockholders pro rata in proportion to the
percentage of Securities to be sold by each shall reimburse the Company on
demand for all amounts so paid.
8. Indemnification and Contribution.
(a) The Company and the Selling Stockholders jointly and
severally agree to indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person who controls
any Underwriter within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration
-24-
<PAGE> 25
statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company and the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company and
the Selling Stockholders may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act and each
Selling Stockholder, to the same extent as the foregoing indemnity to each
Underwriter, but only with reference to written information relating to such
Underwriter furnished to the Company by or on behalf of such Underwriter through
the Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and each Selling
Stockholder acknowledge that the statements set forth in the last paragraph of
the cover page regarding delivery of the Securities, the legend in block capital
letters on page 2 related to stabilization, syndicate covering transactions and
penalty bids and the information under the heading "Underwriting" in any
Preliminary Prospectus or any Prospectus, (i) the sentences related to
concessions and reallowances and (ii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party
-25-
<PAGE> 26
shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and the Selling Stockholders,
jointly and severally, and the Underwriters severally agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, the Selling Stockholders and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and by the Underwriters on the other from the
offering of the Securities; provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Selling Stockholders, jointly and severally, and the Underwriters severally
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling Stockholders
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by it, and benefits received by the Underwriters
shall be deemed to
-26-
<PAGE> 27
be equal to the total underwriting discounts and commissions, in each case as
set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company or the
Selling Stockholders on the one hand or the Underwriters on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
Company, the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The liability of each Selling Stockholder under the indemnity and
contribution agreements contained in this Section 8 shall be limited to an
amount equal to the initial public offering price of the Securities sold by such
Selling Stockholder to the Underwriters. The Company and the Selling
Stockholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period,
-27-
<PAGE> 28
not exceeding five Business Days, as the Representatives shall determine in
order that the required changes in the Registration Statement and the Prospectus
or in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company, the Selling Stockholder and any nondefaulting Underwriter
for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company, the
Selling Stockholders or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Salomon Smith Barney General Counsel (fax no.:
(212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney, at
388 Greenwich Street, New York, New York, 10013, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to (fax no.:
(813) _________) and confirmed to it at (813) 531-1700, attention of the Legal
Department; or if sent to any Selling Stockholder, will be mailed, delivered or
telefaxed and confirmed to it at the address set forth in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
-28-
<PAGE> 29
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any
Rule 462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Mergers" shall have the same meaning as defined in the Registration
Statement.
"Preliminary Prospectus" shall mean any preliminary prospectus referred
to in paragraph 1(a) above and any preliminary prospectus included in
the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Property Acquisitions" shall have the same meaning as defined in the
Registration Statement.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if
no filing pursuant to Rule 424(b) is
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<PAGE> 30
required, shall mean the form of final prospectus relating to the
Securities included in the Registration Statement at the Effective
Date.
"Registration Statement" shall mean the registration statement referred
to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement that becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended
or such Rule 462(b) Registration Statement, as the case may be. Such
term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the initial registration statement.
"Salomon Smith Barney" shall mean Smith Barney Inc. or Salomon Brothers
Inc to the extent that either such party is a signatory to this
Agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
MARINEMAX, INC.
By:
--------------------------------
Name: William H. McGill, Jr.
Title: President
-30-
<PAGE> 31
Selling Stockholders
By:
-----------------------------------
Name:
Title:
Selling Stockholders
By:
-----------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
SMITH BARNEY INC.
WILLIAM BLAIR & COMPANY L.L.C.
By: SMITH BARNEY INC.
By:
-----------------------------------
Name:
Title:
For themselves and the other several Underwriters named in Schedule I to the
foregoing Agreement.
-31-
<PAGE> 32
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITTEN SECURITIES
TO BE UNDERWRITERS PURCHASED
- ------------------ ---------
<S> <C>
Smith Barney Inc. . . . . . . .
William Blair & Company L.L.C.
Total . . . . . . . . . ============
</TABLE>
<PAGE> 33
SCHEDULE II
<TABLE>
<CAPTION>
Additional Shares Total Shares To
Shares To Be Sold Over-Allotment Be Sold After
Before The Over Over- Option
Selling Shareholders Option Allotment Allotment
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dick Basset 665,600 230,457 896,057
- ---------------------------------------------------------------------------------------
Bill McGill --
- ---------------------------------------------------------------------------------------
Ed Russell 8,520 2,950 11,470
- ---------------------------------------------------------------------------------------
Tom George 26,624 9,218 35,842
- ---------------------------------------------------------------------------------------
Brett McGill 2,662 922 3,584
- ---------------------------------------------------------------------------------------
Scott St. Angelo --
- ---------------------------------------------------------------------------------------
Jerry Marshall 159,744 55,310 215,054
- ---------------------------------------------------------------------------------------
Barry Marshall 2,662 922 3,584
- ---------------------------------------------------------------------------------------
Dana King 2,662 922 3,584
- ---------------------------------------------------------------------------------------
Jerry Petigo 19,807 6,858 26,665
- ---------------------------------------------------------------------------------------
DelHomme/Spicer 191,693 66,372 258,065
- ---------------------------------------------------------------------------------------
DelHomme other --
- ---------------------------------------------------------------------------------------
Dick LaManna 58,573 20,280 78,853
- ---------------------------------------------------------------------------------------
Chris LaManna 53,248 18,437 71,685
- ---------------------------------------------------------------------------------------
Rick LaManna --
- ---------------------------------------------------------------------------------------
Graham Stovall 26,624 9,218 35,842
- ---------------------------------------------------------------------------------------
John Stovall 26,624 9,218 35,842
- ---------------------------------------------------------------------------------------
Robert Stovall 19,702 6,822 26,523
- ---------------------------------------------------------------------------------------
ALL SELLING SHAREHOLDERS 1,264,745 437,905 1,702,650
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 34
[FORM OF LOCK-UP AGREEMENT] EXHIBIT A
[LETTERHEAD OF OFFICER, DIRECTOR OR MAJOR SHAREHOLDER OF CORPORATION]
MARINEMAX, INC.
LOCK-UP LETTER
_________, 1998
SMITH BARNEY INC.
WILLIAM BLAIR & COMPANY
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, NY 10013
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $ per share (the "Common Stock"), of
MarineMax, Inc., a Delaware corporation, (the "Company") and that the
Underwriters propose to reoffer the Shares to the public.
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that without the prior written consent of Smith Barney
Inc. the undersigned will not (and, except as may be disclosed in the
Prospectus, will not announce or disclose any intention to) sell, offer to sell,
solicit an offer to buy, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of, any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of 180 days after the date of the final Prospectus relating to the offering of
the Shares to the public by the Underwriters. Prior to the expiration of such
period, the undersigned will not announce or disclose any intention to do
anything after the expiration of such period which the undersigned is
prohibited, as provided in the preceding sentence, from doing during such
period.
The undersigned agrees that the provisions of this agreement shall be
binding also upon the successors, assigns, heirs and personal representatives of
the undersigned.
<PAGE> 35
In furtherance of the foregoing, the Company and ,
its Transfer Agent, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
letter agreement.
It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Shares, you will release us from our obligations under this
letter agreement.
Very truly yours,
-------------------------
[Name of Signatory]
-35-
<PAGE> 1
Exhibit 4
TRISHO 4-17-98 5-8-98 5-12-98 SM ETHER 28 H-56281-B
INCORPORATED UNDER THE LAWS OF COMMON STOCK
THE STATE OF DELAWARE
NUMBER SHARES
[MARINE MAX LOGO]
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 567908 10 8
NEW YORK, NY SEE REVERSE FOR CERTAIN DEFINITIONS
MARINEMAX, INC.
THIS CERTIFIES THAT
is the owner of
fully paid and non-assessable Shares of the par value,
$.001 per share of the COMMON STOCK of
CERTIFICATE OF STOCK
MarineMax, Inc. (hereinafter called the "Corporation") transferable on the books
of the Corporation by said holder in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all the provisions of
the Certificate of Incorporation and all amendments thereto, copies of which are
on file at the office of the Transfer Agent, and the holder hereof, by
acceptance of this certificate, consents to and agrees to be bound by all of
said provisions. This certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
In Witness Whereof, the Corporation has caused this certificate to be
signed by the facsimile signatures of its duly authorized officers.
DATED
COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NY)
TRANSFER AGENT
AND REGISTRAR /s/ Michael H. McLamb /s/ William H. McGill, Jr.
------------------ ------------------------
BY
CHAIRMAN OF THE BOARD,
AUTHORIZED SIGNATURE SECRETARY CHIEF EXECUTIVE OFFICER AND PRESIDENT
American Bank Note Company
<PAGE> 2
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF
OF THE CORPORATION AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE SECRETARY
OF THE CORPORATION OR TO THE TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ______Custodian______
TEN ENT -- as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to
JT TEN -- as joint tenants with Minors
right of survivorship
and not as tenants in Act___________________
common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ___________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
_______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________shares
of the capital stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated______________________
X_________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 10.3(b)
EMPLOYMENT AGREEMENT
DATED AS OF APRIL 10, 1998
BETWEEN
MICHAEL H. MCLAMB
AND
MARINEMAX, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Employment.......................................................... 1
2. Full Time Occupation................................................ 1
3. Compensation and other Benefits..................................... 1
(a) Base Salary................................................ 1
(b) Bonus...................................................... 1
(c) Stock Options.............................................. 2
(d) Fringe Benefits............................................ 2
(e) Reimbursement.............................................. 2
4. Term of Employment.................................................. 2
(a) Employment Term............................................ 2
(b) Termination Under Certain Circumstances.................... 2
(c) Result of Termination...................................... 3
5. Competition and Confidential Information............................ 4
(a) Interests to be Protected.................................. 4
(b) Non-Competition............................................ 5
(c) Non-Solicitation of Employees.............................. 5
(d) Confidential Information................................... 5
(e) Return of Books and Papers................................. 5
(f) Disclosure of Information.................................. 6
(g) Assignment................................................. 6
(h) Equitable Relief........................................... 6
(i) Restrictions Separable..................................... 6
6. Miscellaneous....................................................... 6
(a) Notices.................................................... 6
(b) Indulgences................................................ 7
(c) Controlling Law............................................ 7
(d) Binding Nature of Agreement................................ 7
(e) Execution in Counterpart................................... 8
(f) Provisions Separable....................................... 8
(g) Entire Agreement........................................... 8
(h) Paragraph Headings......................................... 8
(i) Gender..................................................... 8
(j) Number of Days............................................. 8
7. Successors And Assigns.............................................. 8
</TABLE>
<PAGE> 3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of the 10 day of April, 1998, by
and between MARINEMAX, INC., a Delaware corporation ("Employer"), and MICHAEL H.
MCLAMB ("Employee").
WHEREAS, Employer desires to employ Employee, and Employee
desires to accept such employment, upon the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants set forth in this Agreement, the parties hereto agree as
follows:
1. EMPLOYMENT.
Employer employs Employee, and Employee accepts such
employment, as Vice President, Chief Financial Officer, and Treasurer of
Employer and in such other capacities and for such other duties and services as
shall from time to time be mutually agreed upon by Employer and Employee, such
employment to commence on the date hereof.
2. FULL TIME OCCUPATION.
Employee shall devote Employee's entire business time,
attention, and efforts to the performance of Employee's duties under this
Agreement, shall serve Employer faithfully and diligently, and shall not engage
in any other employment while employed by Employer.
3. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. Employer shall pay to Employee, as
full compensation for the services rendered by Employee during Employee's
employment under this Agreement, a base salary at a rate of $150,000 per annum
to be paid in equal monthly installments, or in such other periodic installments
upon which Employer and Employee shall mutually agree. Employee acknowledges
receipt of $50,000 to defray costs and expenses of Employee accepting such
employment. On at least an annual basis, Employee's performance will be reviewed
by the Compensation Committee and an increase will be made to Employee's base
salary if, in the discretion of the Compensation Committee, an increase is
warranted.
<PAGE> 4
(b) BONUS. Employee shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by the Compensation
Committee based upon such factors as may be deemed relevant by the committee,
including the performance of Employee; provided that Employee's targeted bonus
shall be not less than 40% of Employee's base salary to the extent that Employee
has performed his duties in an exemplary fashion.
(c) STOCK OPTIONS AND AWARDS. Employee shall be
granted qualified stock options under Employer's Stock Option Plan, if approved
by the shareholders, to purchase 105,600 shares of Employer's Common Stock. The
exercise price and vesting of such options are to be as follows:
1) 35,600 of such options are granted at $15 per share and are
fully vested
2) 70,000 of such options are granted at $12 per share and
vest 20 percent on each of the next five anniversaries of the
date of grant.
Such options may be exercised at any time or from time to time ending 10 years
from the date of grant. Employee shall also be eligible to participate in
Employer's Stock Option Plan to the same extent as other executive employees of
Employer in a manner consistent with Employee's compensation, position, and
tenure. Notwithstanding the foregoing, any unvested options shall vest
immediately in the event of the termination of Employee's employment as
contemplated by Section 4(b)(i), Section 4(b)(ii), Section 4(b)(iii), or Section
4(b)(vi) of this Agreement.
(d) FRINGE BENEFITS. Employee shall be entitled to
participate in any group insurance, pension, retirement, vacation, expense
reimbursement or other plans, programs, or benefits approved by the Board of
Directors and made available from time to time to employees of Employer
generally during the term of Employee's employment hereunder. The foregoing
shall not obligate Employer to adopt or maintain any particular plan, program,
or benefit.
(e) REIMBURSEMENT. Employer shall reimburse Employee
for all travel and entertainment expenses and other ordinary and necessary
business expenses incurred by Employee in connection with the business of
Employer and Employee's duties under this Agreement. The term "business
expenses" shall not include any item not deductible in whole or in part by
Employer for federal income tax purposes. To obtain reimbursement, Employee
shall submit to Employer receipts, bills or sales slips for the expenses
incurred. Reimbursements shall be made by Employer monthly within 10 days of
presentation by Employee of evidence of the expenses incurred.
<PAGE> 5
4. TERM OF EMPLOYMENT.
(a) EMPLOYMENT TERM. The term of this Agreement shall
be for a period of five years commencing as of the date hereof and from year to
year thereafter, unless and until terminated by either party giving written
notice to the other not less than 60 days prior to the end of the then-current
term.
(b) TERMINATION UNDER CERTAIN CIRCUMSTANCES.
Notwithstanding anything to the contrary herein contained:
(i) DEATH. Employee's employment shall be
automatically terminated, without notice, effective upon the date of Employee's
death.
(ii) DISABILITY. If Employee shall fail, for a
period of more than 90 consecutive days, or for 90 days within any 180 day
period, to perform any of Employee's duties under this Agreement as the result
of illness or other incapacity, Employer may, at its option and upon notice to
Employee, terminate Employee's employment affective on the date of that notice.
(iii) UNILATERAL DECISION OF EMPLOYER. Employer
may, at its option, upon notice to Employee, terminate Employee's employment
effective on the date of that notice.
(iv) UNILATERAL DECISION BY EMPLOYEE. Employee
may, at his option and upon notice to Employer, terminate Employee's employment
effective on the date of that notice.
(v) CERTAIN ACTS. If Employee engages in an act
or acts involving a felony, moral turpitude, fraud, or dishonesty, Employer may,
at its option and upon notice to Employee, terminate Employee's employment
effective on the date of that notice.
(vi) CHANGE IN CONTROL. Employee may, at his
option and upon notice to Employer, terminate Employee's employment effective on
the date of the notice in the event of a "Change of Control" of Employer, as
defined below.
(c) RESULT OF TERMINATION. In the event of the
termination of Employee's employment pursuant to Sections 4(b)(i) or (ii) above,
Employee's estate or Employee, as the case may be, shall be entitled to receive
an amount equal to Employee's base salary as provided in Section 3(a) above for
a period of one year after such
<PAGE> 6
termination plus an amount equal to any earned bonus but unpaid to the date of
such termination. In the event of the termination of Employee's employment
pursuant to Section 4(b)(iii) above, Employee shall continue to receive
Employee's fixed compensation for the remainder of the term of this Agreement
or, at Employee's option, such amount in a lump sum. In the event of the
termination of Employee pursuant to Section 4(b)(iv) or (v) above, Employee
shall receive no further compensation under this Agreement. In the event of
termination of Employee's employment pursuant to Section 4(b)(vi) above,
Employer shall pay Employee his fixed salary for the balance of the term of this
Agreement, any unpaid fringe benefits, and such bonus as may have been earned
prior to the Change in Control, all within 10 days after the termination of
employment.
(d) CHANGE IN CONTROL. The term "Change in Control"
of Employer shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect on the date
of this Agreement or, if Item 6(e) is no longer in effect, any regulations
issued by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 which serve similar purposes; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if and
when (i) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) directly or indirectly of
equity securities of Employer representing 20 percent or more of the combined
voting power of Employer's then-outstanding equity securities, except that this
provision shall not apply to an acquisition which has been approved by at least
75 percent of the members of the Board of Directors who are not affiliates or
associates of such person and by at least 80 percent of the issued and
outstanding shares of Employer's Common Stock beneficially owned by
non-affiliates of such person; (ii) during the period of this Agreement,
individuals who, at the beginning of such period, constituted the Board of
Directors of Employer (the "Original Directors"), cease for any reason to
constitute at least a majority thereof unless the election or nomination for
election of each new director was approved (an "Approved Director") by the
unanimous vote of a Board of Directors constituted entirely of Existing
Directors and/or Approved Directors; (iii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control Employer, and
such offer is consummated for the equity securities of Employer representing 20
percent or more of the combined voting power of Employer's then-outstanding
voting securities; (iv) Employer is merged, consolidated, or enters into a
reorganization transaction with another person and, as the result of such
merger, consolidation, or reorganization, less than 75 percent of the
outstanding equity securities of the surviving or resulting person shall then be
owned in the aggregate by the former stockholders of Employer; or (v) Employer
transfers substantially all of its assets to another person or entity which is
<PAGE> 7
not a wholly owned subsidiary of Employer. Sales of Employer's Common Stock
beneficially owned or controlled by Employee shall not be considered in
determining whether a Change in Control has occurred. Notwithstanding the
foregoing, none of Employer's initial public offering or the concurrent mergers
involving the Employer and its various Founding Companies shall be deemed to be
a change in control.
5. COMPETITION AND CONFIDENTIAL INFORMATION.
(a) INTERESTS TO BE PROTECTED. The parties
acknowledge that Employee will perform essential services for Employer, its
employees, and its stockholders during the term of Employee's employment with
Employer. Employee will be exposed to, have access to, and work with, a
considerable amount of Confidential Information (as defined below). The parties
also expressly recognize and acknowledge that the personnel of Employer have
been trained by, and are valuable to, Employer and that Employer will incur
substantial recruiting and training expenses if Employer must hire new personnel
or retrain existing personnel to fill vacancies. The parties expressly recognize
that it could seriously impair the goodwill and diminish the value of Employer's
business should Employee compete with Employer in any manner whatsoever. The
parties acknowledge that this covenant has an extended duration; however, they
agree that this covenant is reasonable and it is necessary for the protection of
Employer, its stockholders, and employees. For these and other reasons, and the
fact that there are many other employment opportunities available to Employee if
he should terminate his employment, the parties are in full and complete
agreement that the following restrictive covenants are fair and reasonable and
are entered into freely, voluntarily, and knowingly. Furthermore, each party was
given the opportunity to consult with independent legal counsel before entering
into this Agreement.
(b) NON-COMPETITION. During the term of Employee's
employment with Employer and for the period ending 12 months after the
termination of Employee's employment with Employer, regardless of the reason
therefor, Employee shall not (whether directly or indirectly, as owner,
principal, agent, stockholder, director, officer, manager, employee, partner,
participant, or in any other capacity) engage or become financially interested
in any competitive business conducted within the Restricted Territory (as
defined below). As used herein, the term "competitive business" shall mean any
business that sells or provides or attempts to sell or provide products or
services the same as or substantially similar to the products or services sold
or provided by Employer during Employee's employment hereunder, and the term
"Restricted Territory" shall mean any state in which Employer sells products or
provides services during Employee's employment hereunder.
<PAGE> 8
(c) NON-SOLICITATION OF EMPLOYEES. During the term of
Employee's employment and for a period of 12 months after the termination of
Employee's employment with Employee, regardless of the reason therefor, Employee
shall not directly or indirectly, for himself, or on behalf of, or in
conjunction with, any other person, company, partnership, corporation, or
governmental entity, seek to hire or hire any of Employer's personnel or
employees for the purpose of having any such employee engage in services that
are the same as or similar or related to the services that such employee
provided for Employer.
(d) CONFIDENTIAL INFORMATION. Employee shall maintain
in strict secrecy all confidential or trade secret information relating to the
business of Employer (the "Confidential Information") obtained by Employee in
the course of Employee's employment, and Employee shall not, unless first
authorized in writing by Employer, disclose to, or use for Employee's benefit or
for the benefit of, any person, firm, or entity at any time either during or
subsequent to the term of Employee's employment, any Confidential Information,
except as required in the performance of Employee's duties on behalf of
Employer. For purposes hereof, Confidential Information shall include without
limitation any materials, trade secrets, knowledge, or information with respect
to management, operational, or investment policies and practices of Employer;
any business methods or forms; any names or addresses of customers or data on
customers or suppliers; and any business policies or other information relating
to or dealing with the management, operational, or investment policies or
practices of Employer.
(e) RETURN OF BOOKS AND PAPERS. Upon the termination
of Employee's employment with Employer for any reason, Employee shall deliver
promptly to Employer all files, lists, books, records, manuals, memoranda,
drawings, and specifications; all cost, pricing, and other financial data; all
other written or printed materials that are the property of Employer (and any
copies of them); and all other materials that may contain Confidential
Information relating to the business of Employer, which Employee may then have
in Employee's possession, whether prepared by Employee or not.
(f) DISCLOSURE OF INFORMATION. Employee shall
disclose promptly to Employer, or its nominee, any and all ideas, designs,
processes, and improvements of any kind relating to the business of Employer,
whether patentable or not, conceived or made by Employee, either alone or
jointly with others, during working hours or otherwise, during the entire period
of Employee's employment with Employer or within six months thereafter.
(g) ASSIGNMENT. Employee hereby assigns to Employer
or its
<PAGE> 9
nominee, the entire right, title, and interest in and to all inventions,
discoveries, and improvements, whether patentable or not, that Employee may
conceive or make during Employee's employment with Employer, or within six
months thereafter, and which relate to the business of Employer.
(h) EQUITABLE RELIEF. In the event a violation of any
of the restrictions contained in this Section is established, Employer shall be
entitled to preliminary and permanent injunctive relief as well as damages and
an equitable accounting of all earnings, profits, and other benefits arising
from such violation, which right shall be cumulative and in addition to any
other rights or remedies to which Employer may be entitled. In the event of a
violation of any provision of subsection (b), (c), (f), or (g) of this Section,
the period for which those provisions would remain in effect shall be extended
for a period of time equal to that period beginning when such violation
commenced and ending when the activities constituting such violation shall have
been finally terminated in good faith.
(i) RESTRICTIONS SEPARABLE. If the scope of any
provision of this Agreement (whether in this Section 5 or otherwise) is found by
a Court to be too broad to permit enforcement to its full extent, then such
provision shall be enforced to the maximum extent permitted by law. The parties
agree that the scope of any provision of this Agreement may be modified by a
judge in any proceeding to enforce this Agreement, so that such provision can be
enforced to the maximum extent permitted by law. Each and every restriction set
forth in this Section 5 is independent and severable from the others, and no
such restriction shall be rendered unenforceable by virtue of the fact that, for
any reason, any other or others of them may be unenforceable in whole or in
part.
6. MISCELLANEOUS.
(a) NOTICES. All notices, requests, demands, and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made, and received (i) if
personally delivered, on the date of delivery, (ii) if by facsimile
transmission, upon receipt, (iii) if mailed, three days after deposit in the
United States mail, registered or certified, return receipt requested, postage
prepaid, and addressed as provided below, or (iv) if by a courier delivery
service providing overnight or "next-day" delivery, on the next business day
after deposit with such service addressed as follows:
<PAGE> 10
(1) If to Employer:
18167 U.S. 19 North
Suite 499
Clearwater, Florida 33764
Attention: William H. McGill Jr.
with a copy given in the manner
prescribed above, to:
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
One East Camelback Road
Phoenix, Arizona 85012
Attention: Robert S. Kant, Esq.
(2) If to Employee:
--------------------------------
--------------------------------
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 6 for the giving of notice.
(b) INDULGENCES; WAIVERS. Neither any failure nor any
delay on the part of either party to exercise any right, remedy, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power, or privilege preclude
any other or further exercise of the same or of any other right, remedy, power,
or privilege, nor shall any waiver of any right, remedy, power, or privilege
with respect to any occurrence be construed as a waiver of such right, remedy,
power, or privilege with respect to any other occurrence. No waiver shall be
binding unless executed in writing by the party making the waiver.
(c) CONTROLLING LAW. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement, shall be
governed by and construed in accordance with the laws of the state of Arizona,
notwithstanding any Arizona or other conflict-of-interest provisions to the
contrary.
<PAGE> 11
(d) BINDING NATURE OF AGREEMENT. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, and assigns, except that
no party may assign or transfer such party's rights or obligations under this
Agreement without the prior written consent of the other party.
(e) EXECUTION IN COUNTERPART. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as the
signatories.
(f) PROVISIONS SEPARABLE. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
(g) ENTIRE AGREEMENT. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings, inducements and conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
(h) PARAGRAPH HEADINGS. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
(i) GENDER. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine,
or neuter, as the context requires.
(j) NUMBER OF DAYS. In computing the number of days
for purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays, and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday, or /holiday, then the final day shall be
deemed to be the next day that is not a Saturday, Sunday, or holiday.
<PAGE> 12
7. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto;
provided that because the obligations of Employee hereunder involve the
performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement successors and assigns shall include,
but not be limited to, any individual, corporation, trust, partnership, or other
entity that acquires a majority of the stock or assets of Employer by sale,
merger, consolidation, liquidation, or other form of transfer. Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of Employer to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Employer would be required to
perform it if no such succession had taken place. Without limiting the
foregoing, unless the context otherwise requires, the term "Employer" includes
all subsidiaries of Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
MARINEMAX, INC.
By: /s/ William H. McGill Jr.
-------------------------
William H. McGill Jr.
/s/ Michael H. McLamb
-------------------------
Michael H. McLamb
<PAGE> 1
EXHIBIT 10.8
================================================================================
RESTATED AGREEMENT RELATING TO THE PURCHASE
OF MARINEMAX COMMON STOCK
between
MARINEMAX, INC.
and
BRUNSWICK CORPORATION
April 28, 1998
================================================================================
<PAGE> 2
RESTATED AGREEMENT RELATING TO THE PURCHASE
OF MARINEMAX COMMON STOCK
RESTATED AGREEMENT RELATING TO THE PURCHASE OF MARINEMAX
COMMON STOCK dated as of the 28th day of April 1998 between MARINEMAX, INC., a
Delaware corporation ("MarineMax"); and BRUNSWICK CORPORATION, a Delaware
corporation for itself and on behalf of its subsidiaries and affiliates
including the Sea Ray Division of Brunswick ("Brunswick").
R E C I T A L S
A. MarineMax has completed merger transactions (the "Mergers")
involving Bassett Boat Company of Florida, Louis DelHomme Marine, Gulfwind
Marine, USA, Gulfwind Marine South, and Harrison's Marine Centers as well as
their affiliated and subsidiary companies (collectively, the "Merged Companies")
as a result of which the Merged Companies became wholly owned subsidiaries of
MarineMax.
B. The Merged Companies sell and service various boats
manufactured by Brunswick or subsidiaries or divisions of Brunswick ("Brunswick
Affiliates," which includes the Sea Ray Division of Brunswick), including Sea
Ray pleasure boats, Boston Whaler fishing boats, and Baja high-performance boats
pursuant to various dealer agreements of even date (the "Dealer Agreements")
between the Merged Companies and the relevant Brunswick Affiliates.
C. MarineMax and Brunswick entered into a settlement agreement
dated as of March 12, 1998 (the "Settlement Agreement") pursuant to which
Brunswick and the Brunswick Affiliates consented to a change in the ownership of
each of the Merged Companies resulting from the Mergers.
D. It is the intention of MarineMax to close an initial public
offering of its Common Stock (the "IPO") as soon as practicable.
E. MarineMax intends that its growth will be achieved both
internally and through acquisitions.
F. MarineMax and Brunswick desire to reach an understanding
relating to a long-term relationship between MarineMax on the one hand and
Brunswick and the Brunswick Affiliates including the Sea Ray Division on the
other hand, including long-term dealer agreements, an ownership interest by
Brunswick in MarineMax, provisions relating to the purchase and sale of
MarineMax Common Stock in certain circumstances, and provisions relating to the
governance of MarineMax.
G. This Agreement sets forth the terms under which Brunswick
will have the opportunity to acquire an ownership interest in MarineMax.
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A G R E E M E N T
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. APPROVAL OF THE IPO. Brunswick hereby agrees that the IPO
will not violate the terms of the Dealer Agreements.
2. PURCHASE BY BRUNSWICK OF INITIAL PUBLIC OFFERING STOCK OF
MARINEMAX. MarineMax shall afford Brunswick, on an all or none basis, the
opportunity to purchase shares of the Common Stock of MarineMax that will
constitute 14.1% of the issued and outstanding Common Stock of MarineMax after
giving effect to the IPO including any overallotment option granted to the
underwriters of the IPO (the "Initial Ownership Percentage"). As soon as
practicable after the date of this Agreement, Brunswick shall inform MarineMax
whether or not it intends to purchase such shares subject to the early
termination or expiration of the pre-merger notification period under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, the effectiveness of the
registration statement filed with the Securities and Exchange Commission
relating to the IPO including the shares to be issued to Brunswick (the
"Registration Statement"), and the delivery of a final prospectus covering the
shares to be issued to Brunswick, but such indication shall not constitute a
legal obligation of Brunswick to purchase the shares and MarineMax shall have no
recourse against Brunswick if Brunswick does not purchase the shares. If
Brunswick determines to purchase the shares, Brunswick shall purchase the shares
for cash contemporaneously with the initial closing of the IPO and the closing
of any overallotment options granted to the underwriters of the IPO. The
purchase will be at the IPO price, less underwriting discounts and commissions.
The shares to be issued to Brunswick may be issued under a registration
statement different from the Registration Statement covering the shares issued
to the public in the IPO in order to reflect the different manner of
distribution (together, the "Registration Statements"). If Brunswick determines
to purchase the shares following the effectiveness of the Registration Statement
and to the extent permitted by applicable law and regulations, Brunswick will
execute standard agreements reasonably acceptable to Brunswick confirming its
suitability under applicable securities laws to make the purchase, agreeing to a
six-month lockup for any shares purchased by it, and providing to MarineMax and
MarineMax's underwriters with Brunswick's commitment to purchase such shares. If
Brunswick does not purchase the Initial Ownership Percentage as contemplated
hereby, Brunswick shall not purchase any shares of Common Stock of MarineMax for
at least six months after the completion of the IPO. Any commitment by Brunswick
to purchase shares shall expire on the earlier of (a) the completion of the IPO,
(b) the withdrawal of the Registration Statement, (c) the occurrence of a
material adverse change in the business and financial condition of MarineMax
since the date of such Registration Statement, or (d) six months from the date
of the commitment.
3. INDEMNIFICATION OF BRUNSWICK. MarineMax hereby indemnifies
and holds harmless Brunswick and each person who controls Brunswick (within the
meaning of Section 15 of the Securities Act of 1933) against any and all losses,
claims, damages, liabilities, and
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expenses (including reasonable costs of investigation and counsel fees) caused
by (a) any untrue statement of a material fact contained in the Registration
Statements in the form declared effective or in any amendment or supplement
thereto except for information relating to Brunswick furnished in writing by
Brunswick expressly for use in connection with the Registration Statements or in
any amendment or supplement thereto, or (b) any omission to state in the
Registration Statements any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, excepting such information furnished in
writing by Brunswick.
4. GENERAL.
(a) NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed given when delivered against
receipt, or upon the receipt of a facsimile copy, or three days after being
deposited in the United States mail, postage prepaid, registered or certified
mail, addressed as follows:
If to the Company, to: With a copy to:
MarineMax, Inc. O'Connor, Cavanagh, Anderson,
Attn: Mr. William H. McGill Jr. Killingsworth & Beshears, P.A.
18167 US North #499 Attn: Robert S. Kant, Esq.
Clearwater, Florida 33764 One East Camelback Road, Suite 1100
Tel: 813-531-1700 Phoenix, Arizona 85012
Fax: 813-531-0123 Tel: 602-263-2606
Fax: 602-263-2900
If to Brunswick, to: With a copy to:
Brunswick Corporation Brunswick Corporation
Attn: Mr. Peter Larson Attn: General Counsel
1 North Field Court 1 North Field Court
Lake Forest, Illinois 60045 Lake Forest, Illinois 60045
Tel: (847) 735-4822 Tel: (847) 735-4305
Fax: (847) 735-4425 Fax: (847) 735-4050
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
assigns, legal representatives, executors, heirs and successors; provided,
however, that no party hereto shall have the right to
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assign any right hereunder or delegate any obligation hereunder, in whole or in
part, without the prior written consent of the other parties hereto, and any
attempt to do so shall be void.
(c) AMENDMENT, MODIFICATION, OR WAIVER. No amendment,
modification, or waiver of any condition, provision, or term of this Agreement
shall be valid or of any effect unless made in writing, signed by the party or
parties to be bound, and specifying with particularity the nature and extent of
such amendment, modification, or waiver. Failure on the part of any party to
complain of any act or failure to act of another party or to declare another
party in default, irrespective of how long such failure continues, shall not
constitute a waiver by such party of its rights hereunder. Any waiver by any
party of any default of another party shall not affect or impair any right
arising from any other or subsequent default. Nothing herein shall limit the
remedies and rights of the parties hereto under and pursuant to this Agreement.
(d) SEVERABLE PROVISIONS; ENFORCEABILITY. Each provision of
this Agreement is intended to be severable. If any provision hereof shall be
declared by a court of competent jurisdiction to be illegal, unenforceable, or
invalid for any reason whatsoever, such illegality, unenforceability, or
invalidity shall not affect the validity of the remainder of this Agreement.
(e) ENTIRE AGREEMENT. Except for the Dealer Agreements, the
Stockholders' Agreement, the Governance Agreement, and the Agreement Relating to
Acquisitions, this Agreement, including the exhibits and schedules hereto,
contains the entire understanding and agreement among the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings, express or implied, oral or written, among the parties with
respect to such subject matter. The express terms of this Agreement shall
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof. Each of the exhibits and schedules
hereto is incorporated herein by this reference and constitutes a part of this
Agreement.
(f) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which together shall
constitute one and the same agreement. This Agreement shall become binding when
one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties hereto.
(g) GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the law of the state of Delaware,
regardless of any applicable conflict-of-law rules to the contrary.
(h) CONSTRUCTION. The parties hereto acknowledge that each
party was represented by legal counsel (or had the opportunity to be represented
by legal counsel) in connection with this Agreement and that each of them and
their counsel have reviewed and
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revised this Agreement, or have had an opportunity to do so, and that any rule
of construction to the effect that ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or any exhibits hereto or thereto.
(i) ADDITIONAL ACTIONS. Each party hereto agrees to do all
acts and things and to make, execute, and deliver such written instruments and
documents as shall from time to time be reasonably required to carry out the
terms of this Agreement.
(j) REMEDIES CUMULATIVE. The remedies of the parties hereto
under this Agreement are cumulative and shall not exclude any other remedies to
which any party may be lawfully entitled.
(k) AUTHORITY. Each individual signing below personally
represents that he or she has full authority to bind the party or parties on
whose behalf he or she is signing.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
MARINEMAX, INC.
By: /s/
------------------------------
Name:
------------------------------
Title:
------------------------------
BRUNSWICK CORPORATION
By: /s/
------------------------------
Name:
------------------------------
Title:
------------------------------
5
<PAGE> 1
Exhibit 10.9
STOCKHOLDERS' AGREEMENT
among
MARINEMAX, INC.,
BRUNSWICK CORPORATION,
and
SENIOR FOUNDERS
April 28, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS................................................................. 1
Section 1.1 "Affiliate"................................................................................ 1
Section 1.2 "Agreement"................................................................................ 1
Section 1.3 "Brunswick Shares"......................................................................... 1
Section 1.4 "Change in Control"........................................................................ 1
Section 1.5 "Common Stock"............................................................................. 2
Section 1.6 "Company".................................................................................. 2
Section 1.7 "Covered Shares"........................................................................... 2
Section 1.8 "Dealer Agreements"........................................................................ 2
Section 1.9 "Governance Agreement"..................................................................... 3
Section 1.10 "Initial Ownership Percentage"............................................................ 3
Section 1.11 "IPO"..................................................................................... 3
Section 1.12 "Mergers"................................................................................. 3
Section 1.13 "Other Designated Member"................................................................. 3
Section 1.14 "Permitted Brunswick Leakage Amount"...................................................... 3
Section 1.15 "Person".................................................................................. 3
Section 1.16 "Price Per Share"......................................................................... 3
Section 1.17 "Senior Founder".......................................................................... 3
Section 1.18 "Settlement".............................................................................. 4
Section 1.19 "Shares".................................................................................. 4
Section 1.20 "Stockholders"............................................................................ 4
Section 1.21 "Targeted Investment Percentage".......................................................... 4
Section 1.22 "Trans.................................................................................... 4
Section 1.23 "Transfer"................................................................................ 4
Section 1.24 "Transferring Senior Founder"............................................................. 4
ARTICLE II
RESTRICTIONS ON TRANSFER..................................................... 4
Section 2.1 Restrictions on Senior Founders............................................................ 4
Section 2.2 Restrictions on Brunswick.................................................................. 5
Section 2.3 Restrictions on the Company................................................................ 5
ARTICLE III
LIMITATIONS ON SENIOR FOUNDERS' TRANSFER OF COVERED SHARES................... 5
Section 3.1 Transfer of Covered Shares................................................................. 5
Section 3.2 Option of Brunswick........................................................................ 5
Section 3.3 Option of the Company...................................................................... 5
</TABLE>
i
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<TABLE>
PAGE
<S> <C> <C>
Section 3.4 Options of Non-Transferring Senior Founders................................................ 6
Section 3.5 Further Options of Non-Transferring Senior Founders........................................ 6
Section 3.6 Option of Brunswick........................................................................ 6
Section 3.7 Transfer of Covered Shares................................................................. 7
ARTICLE IV
LIMITATIONS ON BRUNSWICK'S TRANSFER OF SHARES................................ 7
Section 4.1 Transfer of Brunswick Shares............................................................... 7
Section 4.2 Option of the Company...................................................................... 7
Section 4.3 Options of Senior Founders................................................................. 7
Section 4.4 Further Options of Senior Founders......................................................... 7
Section 4.5 Transfer of Brunswick Shares............................................................... 8
ARTICLE V
PERMITTED TRANSFERS......................................................... 8
Section 5.1 Death of a Senior Founder.................................................................. 8
Section 5.2 Certain Transfers of Shares by Senior Founders............................................. 8
Section 5.3 Transfer to Brunswick Affiliate............................................................ 8
Section 5.4 Change in Control.......................................................................... 8
Section 5.5 Termination of Sea Ray Dealer Agreement.................................................... 9
ARTICLE VI
SETTLEMENT................................................................... 9
Section 6.1 Time and Place of Settlement............................................................... 9
Section 6.2 Delivery of Stock Certificate(s)........................................................... 10
ARTICLE VII
MAINTENANCE AND OTHER BRUNSWICK RIGHTS....................................... 10
Section 7.1 Maintenance Right.......................................................................... 10
Section 7.2 Right of First Refusal on Transfer of Covered Shares....................................... 10
Section 7.3 Right in the Event of Future Offerings by the Company...................................... 10
Section 7.4 Market Purchases of Brunswick.............................................................. 10
Section 7.5 Right in the Event of Issuance of New Class of Stock....................................... 10
Section 7.6 Right in the Event of Proposed Sale........................................................ 11
ARTICLE VIII
TERM OF AGREEMENT............................................................. 11
ARTICLE IX
VOTING........................................................................ 11
</TABLE>
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<TABLE>
PAGE
<S> <C> <C>
ARTICLE X
REPRESENTATION AND WARRANTIES............................................... 11
Section 10.1 Representations and Warranties of the Company............................................. 11
Section 10.2 Representations and Warranties of Brunswick............................................... 12
Section 10.3 Representations and Warranties of Senior Founders......................................... 12
ARTICLE XI
GENERAL PROVISIONS........................................................... 12
Section 11.1 Legal Impediment of the Company; Stockholder Vote......................................... 12
Section 11.2 Stock Certificate(s) To Be Marked with Legend............................................. 13
Section 11.3 Copy of Agreement To Be Kept on File...................................................... 13
Section 11.4 Subsequent Spouses to Become Bound........................................................ 13
Section 11.5 Entire Agreement; Amendment, Modification, Termination.................................... 13
Section 11.6 Controlling Law........................................................................... 14
Section 11.7 Notices................................................................................... 14
Section 11.8 Binding Nature of Agreement; No Assignment................................................ 15
Section 11.9 Execution in Counterparts................................................................. 15
Section 11.10 Provisions Severable..................................................................... 15
Section 11.11 Counting................................................................................. 15
Section 11.12 Effective Date........................................................................... 16
</TABLE>
iii
<PAGE> 5
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated as of the 28th day of April 1998
among MARINEMAX, INC., a Delaware corporation (the "Company"); BRUNSWICK
CORPORATION, a Delaware corporation for itself and on behalf of its subsidiaries
and Affiliates including the Sea Ray Division of Brunswick ("Brunswick"); and
WILLIAM H. MCGILL JR., RICHARD R. BASSETT, LOUIS R. DELHOMME, and RICHARD C.
LAMANNA JR., each of whom is the senior founder of a company that has merged
with the Company (the "Senior Founders").
R E C I T A L S
A. After the IPO as defined herein, Brunswick and the Senior
Founders will own certain issued and outstanding shares of the Company's Common
Stock.
B. The Senior Founders and Brunswick desire to set forth their
rights to purchase or acquire certain Shares and to encumber, sell, transfer, or
otherwise dispose of certain Shares whenever acquired.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 "AFFILIATE" means, with respect to a specified
Person, a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the specified Person.
SECTION 1.2 "AGREEMENT" means this Stockholders' Agreement.
SECTION 1.3 "BRUNSWICK SHARES" means that number of Shares
owned by Brunswick or an Affiliate of Brunswick.
SECTION 1.4 "CHANGE IN CONTROL" means a change in control of
the Company of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended, as in effect on the date of this Agreement, or
if Item 6(e) is no longer in effect, any regulations issued by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, which serve similar purposes, that occurs if and when:
<PAGE> 6
(a) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than the
Company or an employee benefit plan of the Company, that acquires directly or
indirectly the beneficial ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting security of the
Company and immediately after such acquisition such person is, directly or
indirectly, the beneficial owner of voting securities representing 50% or more
of the total voting power of all of the then-outstanding voting securities of
the Company; or
(b) a tender offer or exchange offer is made whereby the
effect of such offer is to take over and control the Company, and such offer is
consummated for the equity securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
voting securities; or
(c) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company as a result of
which less than seventy-five percent (75%) of the total voting power represented
by the voting securities of the surviving entity outstanding immediately after
such transaction are beneficially owned by the holders of at least seventy-five
percent (75%) of the outstanding voting securities of the Company immediately
prior to the transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in the
transaction; or
(d) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or a substantial portion of the Company's assets to
another person or entity that is not a wholly owned subsidiary of the Company
(i.e., over fifty percent (50%) of the total assets of the Company).
SECTION 1.5 "COMMON STOCK" means all shares of the Company's
Common Stock.
SECTION 1.6 "COMPANY" means MarineMax, Inc.
SECTION 1.7 "COVERED SHARES" means that portion of Transaction
Shares that a Senior Founder wishes to Transfer in any calendar year during any
period in which Section 2.1 is applicable, which portion constitutes more than
the lesser of (a) one percent (1%) of the issued and outstanding Shares existing
at the time of the proposed Transfer or (b) ten percent (10%) of the Transaction
Shares owned by such Senior Founder existing at the time of the Proposed
Transfer.
SECTION 1.8 "DEALER AGREEMENTS" means the agreements of even
date between subsidiaries of the Company, Brunswick, and any Affiliate of
Brunswick providing for the purchase, sale, and maintenance of boats and related
marine products.
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SECTION 1.9 "GOVERNANCE AGREEMENT" means that agreement of
even date between the Company and Brunswick with respect to the ownership of
Shares by Brunswick and Brunswick's conduct as a stockholder of the Company.
SECTION 1.10 "INITIAL OWNERSHIP PERCENTAGE" means fourteen and
one-tenth percent (14.1%) of the issued and outstanding Common Stock of the
Company after giving effect to the IPO, if Brunswick purchases the shares of
Common Stock of the Company as contemplated by the Agreement Relating to the
Purchase of MarineMax Common Stock between Brunswick and the Company.
SECTION 1.11 "IPO" means the initial public offering of Common
Stock of the Company.
SECTION 1.12 "MERGERS" means the merger transactions involving
the Company, Bassett Boat Company of Florida, Louis DelHomme Marine, Gulfwind
Marine USA, Gulfwind Marine South, and Harrison's Marine Centers, and their
affiliated and subsidiary companies.
SECTION 1.13 "OTHER DESIGNATED MEMBER" means any individual
designated by the Company to serve as a member of the Board of Directors of the
Company and agreed to by Brunswick, which approval will not be unreasonably
withheld by Brunswick taking into account whether such individual has the
requisite knowledge and experience in business and financial matters as to be
reasonably capable of serving as a director of a public corporation with
revenue, assets, and operations comparable to the Company.
SECTION 1.14 "PERMITTED BRUNSWICK LEAKAGE AMOUNT" means in any
calendar year that amount of Shares equal to the lesser of (a) one percent (1%)
of the issued and outstanding Shares existing at the time of a proposed Transfer
or (b) ten percent (10%) of the Brunswick Shares existing at the time of a
proposed Transfer.
SECTION 1.15 "PERSON" means any individual, corporation,
limited liability company, partnership, joint venture, trust, unincorporated
association, or other entity.
SECTION 1.16 "PRICE PER SHARE" means the average of the
closing price of the Company's Common Stock, as reported by the exchange or
other market on which the Company's Common Stock is principally traded, during
the period commencing on the trading day of an Offer and ending on the day of
the acceptance of an Offer.
SECTION 1.17 "SENIOR FOUNDER" means any of William H. McGill
Jr., Richard R. Bassett, Louis R. DelHomme, and Richard C. LaManna Jr. The term
Senior Founder also shall include, for purposes of Sections 2.1 and 2.2, any
Person that acquires shares from a Senior Founder pursuant to Sections 5.1 or
5.2 and any other Person that the Company, Brunswick, and Messrs. McGill,
Bassett, DelHomme, and LaManna unanimously agree, each
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acting in its or his sole discretion, shall be deemed a Senior Founder and who
agrees to be bound by this Agreement.
SECTION 1.18 "SETTLEMENT" means the date on which Shares are
purchased by the Company, the Senior Founders, or Brunswick pursuant to this
Agreement, as set forth in Article VI hereof.
SECTION 1.19 "SHARES" means shares of Common Stock of the
Company.
SECTION 1.20 "STOCKHOLDERS" means collectively the Senior
Founders, Brunswick, and any Brunswick Affiliate, if and for as long as they or
it remain the holders of record of Shares.
SECTION 1.21 "TARGETED INVESTMENT PERCENTAGE" means, to the
extent Brunswick acquires the Initial Ownership Percentage, nineteen percent
(19%) of the issued and outstanding Common Stock of the Company from time to
time, provided that any Shares transferred by Brunswick or any Affiliate of
Brunswick shall be deemed to continue to be owned by Brunswick in calculating
the Targeted Investment Percentage.
SECTION 1.22 "TRANSACTION SHARES" means all Shares issued to
Senior Founders (and/or to, or for the benefit of, their wives, lineal
descendants, or other members of their immediate families) by virtue of the
Mergers. A Senior Founder's Transaction Shares shall also include Transaction
Shares Transferred at any time, or from time to time to, or for the benefit of,
his wife, lineal descendants, or other members of his immediate family.
SECTION 1.23 "TRANSFER" means to sell, assign, transfer, give,
donate, pledge, deposit, alienate, bequeath, devise, permit to pass pursuant to
any proceedings involving the dissolution of a marriage, or otherwise encumber
or dispose of, in any way or manner whatsoever, excluding any Transfer to, or
for the benefit of, a Senior Founder's wife or lineal descendants or any other
member of his immediate family or, in the case of Brunswick, a Transfer to a
Brunswick Affiliate.
SECTION 1.24 "TRANSFERRING SENIOR FOUNDER" means any Senior
Founder who desires to Transfer any Covered Shares during any period in which
Section 2.1 is applicable.
ARTICLE II
RESTRICTIONS ON TRANSFER
SECTION 2.1 RESTRICTIONS ON SENIOR FOUNDERS. No Senior Founder
shall Transfer any Covered Shares, or any interest therein, whenever acquired by
such Senior Founder, during such time as the Dealer Agreements are in full force
and effect, except as expressly provided in this Agreement and in accordance
with its terms and conditions. Nothing contained in this Agreement shall
restrict the right of a Senior Founder to Transfer any or all
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Shares held by such Senior Founder to any third party if, at the time of the
proposed Transfer, (a) Brunswick owns the Targeted Investment Percentage and (b)
a majority of the members of the Board of Directors of the Company consists of
the Senior Founders and Other Designated Members. In addition, without the
approval of Brunswick, no Senior Founder may Transfer any Covered Shares, or any
interest therein, for a period of six (6) months from the date of this Agreement
unless such Shares remain subject to the terms and conditions of this Agreement.
SECTION 2.2 RESTRICTIONS ON BRUNSWICK. Except for the
Permitted Brunswick Leakage Amount or as otherwise permitted in accordance with
the terms and conditions of this Agreement, Brunswick shall not Transfer any
Brunswick Shares, or any interest therein, whenever acquired by Brunswick,
except as expressly provided in this Agreement and in accordance with its terms
and conditions. All restrictions on Brunswick also shall apply to all Affiliates
of Brunswick.
SECTION 2.3 RESTRICTIONS ON THE COMPANY. Except in accordance
with the terms and conditions of this Agreement, the Company shall not (a) cause
or permit the Transfer of any Covered Shares or any Brunswick Shares to be made
on its books, or (b) repurchase, redeem, or otherwise acquire any Covered Shares
or any Brunswick Shares.
ARTICLE III
LIMITATIONS ON SENIOR FOUNDERS' TRANSFER OF COVERED SHARES
SECTION 3.1 TRANSFER OF COVERED SHARES. At any time a Senior
Founder desires to Transfer any Covered Shares owned by him, the Transferring
Senior Founder shall first offer in writing to sell all of those Transferring
Senior Founder's Covered Shares to be transferred (a) to Brunswick in the event
that Brunswick does not own the Targeted Investment Percentage or (b) first to
the Company, then to the other Senior Founders, and then to Brunswick in the
event Brunswick owns the Targeted Investment Percentage, in any such case at the
Price Per Share, as set forth below.
SECTION 3.2 OPTION OF BRUNSWICK. For a period of twenty (20)
days after the submission of an offer to Brunswick pursuant to Section 3.1(a),
Brunswick shall have the option, exercisable by written notice to the
Transferring Senior Founder, with a copy to each of the other Senior Founders
and the Company, to purchase all or any part of the Covered Shares to be
transferred at the Price Per Share.
SECTION 3.3 OPTION OF THE COMPANY. For a period of ten (10)
days after the submission of an offer to the Company pursuant to Section 3.1(b),
the Company shall have the option, exercisable by written notice to the
Transferring Senior Founder, with a copy to each of the other Senior Founders
and Brunswick, to purchase all or any part of the Covered Shares to be
transferred at the Price Per Share.
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SECTION 3.4 OPTIONS OF NON-TRANSFERRING SENIOR FOUNDERS. If
the Company does not exercise its option to purchase all of the Transferring
Senior Founder's Covered Shares to be transferred in accordance with Section
3.3, the Transferring Senior Founder shall offer in writing to sell that portion
of the Covered Shares to be transferred that were not purchased in accordance
with Section 3.3 to the non-Transferring Senior Founders at the Price Per Share.
For a period of twenty (20) days after submission of the Transferring Senior
Founder's offer to each of the non-Transferring Senior Founders, each of the
non-Transferring Senior Founders shall have an option, exercisable by written
notice to the Transferring Senior Founder, with copies to the other
non-Transferring Senior Founders, the Company, and Brunswick, to purchase, at
the Price Per Share, that portion of the Covered Shares to be transferred not
otherwise purchased pursuant to Section 3.3 represented by the ratio that such
non-Transferring Senior Founder's then existing Transaction Shares bears to the
total number of the then existing Transaction Shares held by all of the
non-Transferring Senior Founders (or in such other amounts as may be agreed upon
by the non-Transferring Senior Founders).
SECTION 3.5 FURTHER OPTIONS OF NON-TRANSFERRING SENIOR
FOUNDERS. If one or more non-Transferring Senior Founders having an option under
Section 3.4 to purchase the remaining Covered Shares to be transferred do not
exercise their options and do not otherwise agree to purchase all of the
remaining Covered Shares to be transferred in accordance with Section 3.4, then
those non-Transferring Senior Founders who exercised their options to purchase a
portion of the Covered Shares to be transferred pursuant to Section 3.4, shall
have further options for a period of twenty (20) days to purchase the remaining
Covered Shares to be transferred at the Price Per Share; provided, however, that
if the exercise of those further options would result in the purchase of more
than that number of Covered Shares remaining to be transferred, the remaining
Covered Shares to be transferred shall be allocated to each non-Transferring
Senior Founder having the option to purchase pursuant to this Section 3.5, to
the extent of the lesser of (a) the number of remaining Covered Shares to be
transferred that such non-Transferring Senior Founder desires to purchase, or
(b) that portion of the remaining Covered Shares represented by the ratio that
such non-Transferring Senior Founder's then existing Transaction Shares bears to
the total number of the then existing Transaction Shares held by those other
non-Transferring Senior Founders desiring to exercise options pursuant to this
Section 3.5.
SECTION 3.6 OPTION OF BRUNSWICK. If the Company and the
non-Transferring Senior Founders do not exercise their options to purchase all
of the Transferring Senior Founder's Covered Shares to be transferred in
accordance with Sections 3.3, 3.4, and 3.5, the Transferring Senior Founder
shall promptly offer in writing to Brunswick to sell those Covered Shares that
were not purchased in accordance with Sections 3.3, 3.4, and 3.5 at the Price
Per Share. For a period of twenty (20) days after submission of the Transferring
Senior Founder's offer to Brunswick, Brunswick shall have an option, exercisable
by written notice to the Transferring Senior Founder with a copy to the Company,
to purchase all or any portion of the remaining Covered Shares.
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SECTION 3.7 TRANSFER OF COVERED SHARES. If options granted
pursuant to this Article III have not been exercised to purchase all of the
Covered Shares to be transferred by the end of the option periods set forth in
Sections 3.2, 3.3, 3.4, 3.5, and 3.6, then the Transferring Senior Founder shall
be free for a period of one hundred eighty (180) days thereafter to Transfer
that number of the Covered Shares for which options were not exercised. If the
Covered Shares to be transferred are not sold within the one hundred eighty
(180) day period, those Covered Shares shall continue to be subject to all of
the terms and conditions of this Agreement and the Transferring Senior Founder
shall not be permitted to Transfer any Covered Shares without again complying
with the provisions of this Article III.
ARTICLE IV
LIMITATIONS ON BRUNSWICK'S TRANSFER OF SHARES
SECTION 4.1 TRANSFER OF BRUNSWICK SHARES. At any time
Brunswick desires to Transfer any or all of the Brunswick Shares other than the
Brunswick Leakage Amount, whenever acquired by Brunswick, Brunswick shall first
offer in writing to sell all of the Brunswick Shares first to the Company and
then to the Senior Founders at the Price Per Share, as set forth below.
SECTION 4.2 OPTION OF THE COMPANY. For a period of twenty (20)
days after the submission of the offer to the Company pursuant to Section 4.1,
the Company shall have the option, exercisable by written notice to Brunswick,
with a copy to each of the Senior Founders, to purchase all or any part of the
Brunswick Shares at the Price Per Share.
SECTION 4.3 OPTIONS OF SENIOR FOUNDERS. If the Company does
not exercise its option to purchase all of the Brunswick Shares in accordance
with Section 4.2, Brunswick shall offer in writing to sell all of the Brunswick
Shares that were not purchased in accordance with Section 4.2 to the Senior
Founders at the Price Per Share. For a period of twenty (20) days after
submission of Brunswick's offer to each of the Senior Founders, each Senior
Founder shall have an option, exercisable by written notice to Brunswick, with
copies to the Company and the other Senior Founders, to purchase, at the Price
Per Share, that portion of the Brunswick Shares not otherwise purchased pursuant
to Section 4.2 represented by the ratio such Senior Founder's existing
Transaction Shares bears to the total number of Transaction Shares of all of the
Senior Founders (or in such other amounts as may be agreed upon by the Senior
Founders).
SECTION 4.4 FURTHER OPTIONS OF SENIOR FOUNDERS. If one or more
Senior Founders having an option to purchase the remaining Brunswick Shares do
not exercise their options and do not otherwise agree to purchase all of the
remaining Brunswick Shares in accordance with Section 4.3, then those Senior
Founders who exercised their options to purchase a portion of the Brunswick
Shares pursuant to Section 4.3 shall have further options for a period of twenty
(20) days to purchase the remaining Brunswick Shares at the Price Per Share;
provided, however, that if the exercise of those further options would result in
the purchase of more than that number of Brunswick Shares remaining, the
remaining Brunswick Shares shall
7
<PAGE> 12
be allocated to each Senior Founder to the extent of the lesser of (a) the
number of remaining Brunswick Shares that the Senior Founder desires to
purchase, or (b) that portion of the remaining Brunswick Shares represented by
the ratio of such Senior Founder's then existing Transaction Shares bears to the
total number of the then existing Transaction Shares held by those Senior
Founders desiring to exercise options pursuant to this Section 4.4.
SECTION 4.5 TRANSFER OF BRUNSWICK SHARES. If options granted
pursuant to this Article IV have not been exercised to purchase all of the
Brunswick Shares by the end of the option periods set forth in Sections 4.2,
4.3, and 4.4, then Brunswick shall be free for a period of one hundred eighty
(180) days thereafter to transfer that number of the Brunswick Shares for which
options were not exercised. If all of the Brunswick Shares are not so sold
within the one hundred eighty (180) day period, the remaining Brunswick Shares
shall continue to be subject to all of the terms and conditions of this
Agreement and Brunswick shall not be permitted to Transfer the Brunswick Shares
without again complying with the provisions of this Article IV.
ARTICLE V
PERMITTED TRANSFERS
SECTION 5.1 DEATH OF A SENIOR FOUNDER. Notwithstanding the
terms of any other section of this Agreement, the Senior Founders shall be
permitted to Transfer Covered Shares, without complying with the provisions of
Article III hereof, upon the death of a Senior Founder, in which case the Senior
Founder's Shares may be Transferred consistent with the terms of his will or
estate, or such applicable laws of descent and distribution, provided that in
any such case such Shares will continue to be subject to the terms of this
Agreement with the same force and effect as such Shares were owned by such
Senior Founder.
SECTION 5.2 CERTAIN TRANSFERS OF SHARES BY SENIOR FOUNDERS.
The pledge by a Senior Founder of any of his Shares to secure indebtedness or
the Transfer by a Senior Founder of any of his Shares to a trust shall not be
deemed to be a Transfer for the purposes of this Agreement and shall not be
subject to the provisions of Article III hereof, provided that such Shares will
continue to be subject to the terms of this Agreement after such pledge or
transfer to a trust with the same force and effect as such Shares were owned by
such Senior Founder.
SECTION 5.3 TRANSFER TO BRUNSWICK AFFILIATE. The Transfer of
any Shares to a Brunswick Affiliate provided such Shares will continue to be
subject to the terms of such Agreement with the same force and effect as if such
Shares were owned by Brunswick.
SECTION 5.4 CHANGE IN CONTROL AND OTHER TRANSACTIONS. The
Transfer of any Shares arising out of, or occurring in connection with, a Change
in Control of the Company or the Transfer of any Shares occurring as a result of
a transaction approved by a majority of the members of the Board of Directors of
the Company not affiliated with such transaction shall not
8
<PAGE> 13
be deemed to be a Transfer for purposes of this Agreement and shall not be
subject to the provisions hereof.
SECTION 5.5 TERMINATION OF SEA RAY DEALER AGREEMENT. In the
event of the termination of the Dealer Agreements or if a majority of the Board
of Directors of the Company does not consist of the Senior Founders and Other
Designated Members for a period of sixty (60) consecutive days, Brunswick shall
have the right upon thirty (30) days prior notice to the Company to Transfer all
but not less than all of the capital stock of the Company owned by it for cash
subject to the right of the Company to purchase such shares for cash at the
Price Per Share. Notification by the Company of the exercise of such purchase
right shall occur within thirty (30) days of the prior notice given to the
Company by Brunswick and the closing of any purchase by the Company shall occur
within thirty (30) days after the Company's purchase notice. In the event that
the Company is unable to pay cash for Brunswick's shares, the Company may
propose a full recourse promissory note due no later than one (1) year after the
repurchase date, which either shall be fully secured with collateral or be
supported by other assurances of payment, in each case, reasonably acceptable to
Brunswick. The note shall bear interest at a rate equal to the rate payable by
the Company under its principal line of credit. In the event that the Company
does not exercise its right to repurchase the shares under this Section 5.5 or
is unable to provide reasonable security or assurances as to its ability to
repay the note, Brunswick shall have the right to sell the shares in any
transaction or transactions that is not likely to result in any Person or any
Affiliate of such Person owning more than five percent (5%) of the then
outstanding shares of the Company's Common Stock, which may include a registered
secondary offering at the expense of the Company. To the extent that Brunswick
has not sold the shares one hundred eighty (180) days after the date that
Brunswick became free to sell the shares, Brunswick shall again offer the
remaining shares to the Company in accordance with the terms hereof.
ARTICLE VI
SETTLEMENT
SECTION 6.1 TIME AND PLACE OF SETTLEMENT. The Settlement for
the purchase of Shares by a party hereto pursuant to any provision of this
Agreement shall be held as soon as practical but in any event within thirty (30)
days after the date of the exercise of the last option exercised, at the
principal executive offices of the Company during regular business hours, unless
otherwise agreed to by all of the parties to the Settlement. The precise date
and hour of the Settlement shall be fixed (within the time limits specified
herein) by the purchaser of the Shares (the "Purchaser") upon at least seven (7)
days' written notice to the seller of the Shares (the "Seller"). If more than
one Purchaser is involved in a Settlement and the Purchasers cannot agree on a
time of the Settlement, the precise time of the Settlement shall be fixed by the
President of the Company (within the time limits specified herein) upon at least
seven (7) days' written notice to the Purchasers and Seller.
9
<PAGE> 14
SECTION 6.2 DELIVERY OF STOCK CERTIFICATE(S). If any Shares
are sold pursuant to this Agreement, the Seller shall deliver to the Purchaser
or Purchasers at the Settlement the stock certificate(s) representing the Shares
being sold, duly endorsed for transfer or with duly executed stock powers
attached, with any necessary documentary and transfer tax stamps affixed by the
Seller.
ARTICLE VII
MAINTENANCE AND OTHER BRUNSWICK RIGHTS
SECTION 7.1 MAINTENANCE RIGHT. Brunswick shall have the right
to maintain its ownership percentage in the Company at the Targeted Investment
Percentage as provided in Sections 7.2, 7.3, and 7.4. The Company will promptly
advise Brunswick in writing of the issuance of any Shares.
SECTION 7.2 RIGHT OF FIRST REFUSAL ON TRANSFER OF COVERED
SHARES. Brunswick shall have the right to purchase from a Transferring Senior
Founder in accordance with Section 3.2.
SECTION 7.3 RIGHT IN THE EVENT OF FUTURE OFFERINGS BY THE
COMPANY. In the event of a follow-on public offering or a private placement of
Common Stock by the Company, the Company shall offer to Brunswick the
opportunity to purchase such number of shares of Common Stock as are necessary
as a result of such follow-on public offering or private placement for Brunswick
to achieve or maintain the Targeted Investment Percentage. Any purchase by
Brunswick will occur contemporaneously with the closing of the offering upon at
least ten (10) days prior written notice to Brunswick at a per share purchase
price equal to the per share offering price, less underwriting discounts and
commissions.
SECTION 7.4 MARKET PURCHASES OF BRUNSWICK. Brunswick shall
have the right to purchase Shares in ordinary brokerage transactions in order to
achieve, and thereafter to, maintain its ownership percentage in the Company at
the Targeted Investment Percentage during any period in which Brunswick has not
been informed in writing by the Company in good faith that any such purchases by
Brunswick would have a material adverse effect on the ability of the Company to
effect a material transaction. In the event the Company so notified Brunswick of
any such restriction on the right of Brunswick to so purchase Shares, the
Company shall promptly notify Brunswick of the termination of such restriction.
SECTION 7.5 RIGHT IN THE EVENT OF ISSUANCE OF NEW CLASS OF
STOCK. In the event that the Company issues a class of capital stock other than
Common Stock, the Company shall offer to Brunswick the opportunity to purchase a
percentage of such new class of capital stock that is equal to the ratio that
the Brunswick Shares bears to the issued and outstanding Shares existing at the
time of the proposed issuance with such purchase to be on the same terms as the
issuance to third parties.
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<PAGE> 15
SECTION 7.6 RIGHT IN THE EVENT OF PROPOSED SALE. In the event
that the Company proposes to sell any capital stock (or any security convertible
into, exchangeable for, or carrying a right to acquire capital stock of the
Company) to any Person that is a competitor of Brunswick in the principal lines
of its marine business, the Company shall provide Brunswick with an opportunity
for twenty (20) days to purchase all of such securities on the same terms and
conditions as to the Brunswick competitor.
ARTICLE VIII
TERM OF AGREEMENT
Unless terminated sooner by unanimous agreement in writing of
the parties hereto, this Agreement shall terminate, without any further action
by any person or entity, on the date that is ten (10) years from the date
hereof. Notwithstanding the Transfer of any or all of his Shares by a Senior
Founder, such Senior Founder shall remain a party to this Agreement during his
lifetime. The rights of Brunswick as provided in Sections 3.2, 3.6, 7.1, 7.2,
7.3, 7.5, and 7.6 shall be applicable only during such time as the Dealer
Agreements are in full force and effect.
ARTICLE IX
VOTING
In all elections for directors of the Company, each of the
parties hereto agrees to vote such party's Shares for the board nominees
proposed by the Company's then Board of Directors that are Senior Founders or
Other Designated Members if, assuming the election of such slate, the majority
of the members of the Board of Directors of the Company will consist of the
Senior Founders and Other Designated Members. On all other matters submitted to
a vote of the stockholders of the Company at any annual or special meeting of
the stockholders, each of the parties hereto shall vote such party's Shares in
favor of all proposals and recommendations made by the Board of Directors of the
Company for approval or disapproval by the stockholders (including those
relating to a transaction that may involve a Change of Control) if, but only if,
(a) such proposals were approved by a majority of the members of the Board of
Directors of the Company and, (b) a majority of the members of the Board of
Directors of the Company consists of the Senior Founders and Other Designated
Members. In the event that a majority of the members of the Board of Directors
of the Company does not consist of the Senior Founders and Other Designated
Members for a period of sixty (60) consecutive days, this Article IX shall be of
no force and effect.
ARTICLE X
REPRESENTATION AND WARRANTIES
SECTION 10.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as follows:
11
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(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder.
(b) The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby has been duly authorized by all necessary corporate action on the part of
the Company, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby.
(c) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company and is
enforceable against the Company in accordance with its terms.
SECTION 10.2 REPRESENTATIONS AND WARRANTIES OF BRUNSWICK.
Brunswick represents and warrants as follows:
(a) Brunswick is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder.
(b) The execution and delivery of this Agreement by Brunswick
and the consummation by Brunswick of the transactions contemplated hereby has
been duly authorized by all necessary corporate action on the part of Brunswick,
and no other corporate proceedings on the part of Brunswick are necessary to
authorize this Agreement or any of the transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered by
Brunswick and constitutes a valid and binding obligation of Brunswick and is
enforceable against Brunswick in accordance with its terms.
SECTION 10.3 REPRESENTATIONS AND WARRANTIES OF SENIOR
FOUNDERS. Each Senior Founder represents and warrants that such Senior Founder
has the power and authority to execute, deliver, and perform this Agreement and
that this Agreement is the legal and binding obligation of such Senior Founder
and is enforceable against such Senior Founder in accordance with its terms.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1 LEGAL IMPEDIMENT OF THE COMPANY; STOCKHOLDER
VOTE. If the Company cannot legally purchase Shares without a vote of its
stockholders at any time the Company desires to purchase Shares under the terms
of this Agreement, then the Stockholders
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<PAGE> 17
shall vote their respective Shares so as to allow the Company to take all steps
permitted or required under the laws of the state of Delaware, as they may be
amended from time to time, to enable the Company to purchase those Shares. The
Company shall take all such steps as soon as practicable.
SECTION 11.2 STOCK CERTIFICATE(S) TO BE MARKED WITH LEGEND.
All certificate(s) representing Shares now outstanding, hereafter issued by the
Company to the Senior Founders or Brunswick Transferred on the books of the
Company shall be marked during the term of this Agreement with a legend in form
and content substantially similar to the following:
"This certificate and the shares represented hereby are held
subject to the terms and conditions of a Stockholders'
Agreement dated as of April 28, 1998, and any and all
amendments thereto, to which this Company is a party, and may
not be encumbered, sold, transferred or otherwise disposed of
except in accordance with the terms and conditions thereof. A
copy of that agreement and any and all amendments thereto is
on file and may be inspected at the principal executive
office(s) of the Company. The Company will mail, without
charge, a copy of the agreement to any Stockholder after
receiving a written request therefor."
SECTION 11.3 COPY OF AGREEMENT TO BE KEPT ON FILE. The Company
shall keep on file at its principal executive office, and shall exhibit to any
Stockholder or the Stockholder's duly authorized representative at any and all
reasonable times, an executed copy of this Agreement (together with any and all
amendments thereto) and a copy of the Company's most recent fiscal year end
balance sheet and income statement.
SECTION 11.4 SUBSEQUENT SPOUSES TO BECOME BOUND. If after the
date of execution of this Agreement, any Senior Founder shall marry, that party
shall use his best efforts to require his spouse to sign a Consent of Spouse in
form and content satisfactory to the Company.
SECTION 11.5 ENTIRE AGREEMENT; AMENDMENT, MODIFICATION,
TERMINATION. Except for the Settlement Agreement, the Dealer Agreements, the
Agreement Relating to the Purchase of MarineMax Common Stock, the Governance
Agreement, and the Agreement Relating to Acquisitions among the Company,
Brunswick, and others, this Agreement contains the entire understanding among
the parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements and
conditions, express or implied, oral or written, unless otherwise specified in
this Agreement. This Agreement may be amended, modified, or terminated at any
time or times only by unanimous written agreement of the parties hereto.
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<PAGE> 18
SECTION 11.6 CONTROLLING LAW. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement, shall be
governed by and construed in accordance with the laws of the state of Delaware,
notwithstanding any Delaware or other conflict-of-laws rules to the contrary.
SECTION 11.7 NOTICES. Unless otherwise specifically stated
herein, all notices, requests, demands, and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made, and received when delivered against receipt, twelve (12)
hours after being sent by facsimile, or seventy-two (72) hours after being sent
by registered or certified mail, postage prepaid, addressed as set forth below:
(i) If to the Company:
MarineMax, Inc.
Attention: Mr. William H. McGill Jr.
18167 US North #499
Clearwater, Florida 33764
Tel: (813) 531-1700
Fax: (813) 531-0123
With a copy to:
O'Connor, Cavanagh, Anderson, Killingsworth
& Beshears, P.A.
Attention: Robert S. Kant, Esquire
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Tel: (602) 263-2606
Fax: (602) 263-2900
(ii) If to Brunswick:
Brunswick Corporation
Attention: Mr. Peter Larson
1 North Field Court
Lake Forest, Illinois 60045
Tel: (847) 735-4822
Fax: (847) 735-4050
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<PAGE> 19
With a copy to:
Brunswick Corporation
Attention: General Counsel
1 North Field Court
Lake Forest, Illinois 60045
Tel: (847) 735-4305
Fax: (847) 735-4050
(iii) If to any other party hereto:
To that party's last address appearing on
the records of the Company.
Any party may alter the address to which communications or
copies are to be sent by giving notice of that change of address in conformity
with the provisions of this Section for the giving of notice.
SECTION 11.8 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT.
Except to the extent set forth herein, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors, and assigns, except that no party may assign or
transfer his, her, or its rights or obligations under this Agreement without the
prior written consent of the other parties hereto.
SECTION 11.9 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party hereto whose signature appears hereon, and all of
which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
SECTION 11.10 PROVISIONS SEVERABLE. The provisions of this
Agreement are independent of and severable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part. Further, if a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable as written,
such court may interpret, construe, rewrite or revise such provision, to the
fullest extent allowed by law, so as to make it valid and enforceable consistent
with the intent of the parties hereto.
SECTION 11.11 COUNTING. In computing the number of days or
hours for purposes of this Agreement, all days and hours shall be counted,
including Saturdays, Sundays and holidays; provided, however, that if the final
day or hour of any time period falls on a
15
<PAGE> 20
Saturday, Sunday or day that is a legal holiday in the state of Delaware, then
the final day or hour shall be deemed to be the next day or hour that is not, or
does not fall on, a Saturday, Sunday or day that is a legal holiday in the state
of Delaware.
SECTION 11.12 EFFECTIVE DATE. This Agreement shall be
effective upon the final closing under the IPO and Brunswick's purchase of
Shares, but no party shall take any actions inconsistent with this Agreement
after its execution, except that the Senior Founders may sell stock as Selling
Stockholders in the IPO.
16
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
MARINEMAX, INC.
By: /s/ William H. McGill, Jr.
--------------------------------
Name: /s/ William H. McGill, Jr.
Title: Chairman CEO
BRUNSWICK CORPORATION
By: /s/ Peter N. Larson
--------------------------------
Name: Peter N. Larson
Title: Chairman & Chief
Executive Officer
SENIOR FOUNDERS:
By: /s/ William H. McGill Jr.
--------------------------------
Name: William H. McGill Jr.
By: /s/ Richard R. Bassett
--------------------------------
Name: Richard R. Bassett
By: /s/ Louis R. DelHomme
--------------------------------
Name: Louis R. DelHomme
By: /s/ Richard C. LaManna Jr.
--------------------------------
Name: Richard C. LaManna Jr.
-----------------------------
17
<PAGE> 22
CONSENT OF SPOUSES
The undersigned spouses of the Senior Founders who are parties to the
Stockholders' Agreement (the "Agreement") with MARINEMAX, INC., a Delaware
corporation (the "Company"), hereby declare that they have read the Agreement in
its entirety, and being fully convinced of the wisdom and equity of the terms of
the Agreement, and in consideration of the premises and of the provisions of the
Agreement, the undersigned hereby express their acceptance of the same and do
agree to its provisions.
The undersigned further agree that in the event of the death of their
respective spouses, the dissolution of their respective marriages or any other
occurrence contemplated by the Agreement, the provisions of the Agreement shall
be binding upon them to the extent of any interest that they may have in the
Company.
The undersigned further agree that they will at any time make, execute
and deliver such instruments and documents that may be necessary to carry out
the provisions of the Agreement.
This instrument is not a present transfer or release of any rights
which the undersigned may have in any of the community property of their
respective marriages.
DATED as of the 28th day of April, 1998.
/s/ Brittany C. McGill
- --------------------------------
Spouse of William H. McGill Jr.
/s/ Corinne DelHomme
- --------------------------------
Spouse of Louis R. DelHomme
/s/ Judith L. LaManna
- --------------------------------
Spouse of Richard C. LaManna Jr.
18
<PAGE> 1
EXHIBIT 10.10
GOVERNANCE AGREEMENT
between
MARINEMAX, INC.
and
BRUNSWICK CORPORATION
April 28, 1998
<PAGE> 2
GOVERNANCE AGREEMENT
GOVERNANCE AGREEMENT dated as of April 28, 1998, between
MARINEMAX, INC., a Delaware corporation ("Company"), and BRUNSWICK CORPORATION,
a Delaware corporation for itself and on behalf of its subsidiaries and
affiliates including the Sea Ray Division of Brunswick ("Stockholder").
R E C I T A L S
A. Stockholder plans to purchase such number of shares of
Common Stock, par value $.001, of Company that will represent 14.1% of the
issued and outstanding shares of Common Stock of Company upon the closing of the
Company's initial public offering (the "IPO Shares").
B. Company, Stockholder, and others have entered into a
stockholders' agreement of even date (the "Stockholders' Agreement"), among
other things, relating to the purchase and sale of Common Stock of Company.
Terms not otherwise defined in this Agreement shall have the definitions set
forth in the Stockholders' Agreement.
C. Company and Stockholder desire to establish in this
Agreement certain terms and conditions concerning Stockholder's participation in
the corporate governance of Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements contained herein, Company and Stockholder
hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
SECTION 1.1 "AFFILIATE" means that set forth in Rule 12b-2
under the Exchange Act (as in effect on the date of this Agreement).
SECTION 1.2 "BENEFICIALLY OWN" with respect to any securities
means having "beneficial ownership" of such securities (as determined pursuant
to Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
SECTION 1.3 "COMMISSION" means the Securities and Exchange
Commission.
<PAGE> 3
SECTION 1.4 "EXCHANGE ACT" means the Securities Exchange Act
of 1934.
SECTION 1.5 "INITIAL OWNERSHIP PERCENTAGE" means fourteen and
one-tenth percent (14.1%) of the issued and outstanding Common Stock of the
Company after giving effect to the IPO if Stockholder purchases the shares of
the Company's Common Stock as contemplated by the Agreement Relating to the
Purchase of MarineMax Common Stock between Company and Stockholder.
SECTION 1.6 "PERMITTED EXCESS SHARES" means the Total Voting
Power that the Stockholder may beneficially own in excess of the Targeted
Investment Percentage as permitted by Section 2.1, Section 3.1, Section 7.5, and
Section 7.6 of the Stockholders' Agreement.
SECTION 1.7 "PERSON" means any individual, corporation,
limited liability company, partnership, joint venture, trust, unincorporated
organization, or other entity.
SECTION 1.8 "13D GROUP" means any group of Persons acquiring,
holding, voting, or disposing of Voting Securities that would be required under
Section 13(d) of the Exchange Act and the rules and regulations thereunder (as
in effect, and based on legal interpretations thereof existing, on the date
hereof) to file a statement on Schedule 13D with the Commission as a "person"
within the meaning of Section 13(d)(3) of the Exchange Act if such group
beneficially owned Voting Securities representing more than five percent (5%) of
any class of Voting Securities then outstanding.
SECTION 1.9 "STANDSTILL PERIOD" means any period of time
during which Stockholder Beneficially Owns Voting Securities representing at
least five percent (5%) of the Total Voting Power.
SECTION 1.10 "TARGETED INVESTMENT PERCENTAGE" means, to the
extent Stockholder acquires the Initial Ownership Percentage, nineteen percent
(19%) of the issued and outstanding Common Stock of the Company after giving
effect to the IPO.
SECTION 1.11 "TOTAL VOTING POWER" means at any time the total
combined voting power in the general election of directors of all the Voting
Securities then outstanding.
SECTION 1.12 "TRANSFER" means any sale, transfer, pledge,
encumbrance, or other disposition, and to "Transfer" shall mean to sell,
transfer, pledge, encumber, or otherwise dispose of.
SECTION 1.13 "VOTING SECURITIES" means at any time shares of
any class of capital stock of the Company that are then entitled to vote
generally in the election of directors.
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<PAGE> 4
ARTICLE II
STANDSTILL AND TRANSFER RESTRICTIONS
SECTION 2.1 ACQUISITION OF VOTING SECURITIES.
(a) Stockholder shall not, directly or indirectly,
Beneficially Own any Voting Securities that exceed the Targeted Investment
Percentage and the Permitted Excess Shares. Stockholder shall not permit any
Affiliate (regardless of whether such Person becomes an Affiliate of Stockholder
after the date of this Agreement) to acquire, directly or indirectly, any Voting
Securities that exceed the Targeted Investment Percentage and the Permitted
Excess Shares. Stockholder shall not be deemed to have violated this Section
2.1(a) as a result of an inadvertent acquisition of Voting Securities by
Stockholder or an Affiliate of Stockholder so long as Stockholder complies with
Section 2.1(b) promptly after Stockholder learns of any such inadvertent
acquisition.
(b) If at any time Stockholder and its Affiliates
Beneficially Own more than the Targeted Investment Percentage and the Permitted
Excess Shares other than as a result of Company purchasing or acquiring its own
Voting Securities, then Stockholder shall reasonably promptly take all action
necessary to reduce the amount of Voting Securities Beneficially Owned by such
Persons to an amount not greater than the Targeted Investment Percentage and the
Permitted Excess Shares.
SECTION 2.2 ADDITIONAL RESTRICTIONS ON TRANSFER. Stockholder
shall comply with the Stockholders' Agreement with respect to any proposed
Transfer of Voting Securities by Stockholder and Affiliates of Stockholder. In
addition, during the Standstill Period, Stockholder shall not, directly or
indirectly, Transfer, or permit any Affiliate to Transfer, any Voting Securities
to any Person (including its Affiliates and any Person that are, to
Stockholder's knowledge after reasonable inquiry, part of any 13D Group, which
includes such transferee or any of its Affiliates) that, after giving effect to
such Transfer, would Beneficially Own Voting Securities representing more than
5% of the Total Voting Power, and provided, further, that Stockholder shall have
complied in good faith with Section 2.3 in all material respects.
SECTION 2.3 FURTHER RESTRICTIONS ON CONDUCT. Except as
permitted by the Stockholders' Agreement, Stockholder covenants and agrees that
during the Standstill Period, without the prior written consent of Company:
(a) Neither Stockholder nor any Affiliate of Stockholder
shall act, alone or in concert with others, to seek to affect or influence the
control of the management or Board of Directors of Company or the business,
operations, or policies of Company;
(b) Neither Stockholder nor any Affiliate of Stockholder
shall deposit any Voting Securities in a voting trust (except a voting trust or
agreement or agreement to which Company is a party) or, except as provided in
the Stockholders' Agreement, subject any Voting
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<PAGE> 5
Securities to any arrangement or agreement with respect to the voting of such
Voting Securities or other agreement having similar effect;
(c) Neither Stockholder nor any Affiliate of Stockholder
shall make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote, or seek to influence any Person with
respect to the voting of, any Voting Securities, or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act, as in effect on the date hereof) in opposition to the recommendation of the
majority of the directors of Company with respect to any matter;
(d) Neither Stockholder nor any Affiliate of Stockholder
shall initiate, propose, or otherwise solicit any stockholders of Company for
the approval of any stockholder proposals with respect to Company or induce or
attempt to induce any other Person to initiate any stockholder proposal;
(e) Except as provided in the Stockholders' Agreement,
neither Stockholder nor any Affiliate of Stockholder shall join a partnership,
limited partnership, syndicate, or other group, or otherwise act in concert with
any other Person, for the purpose of acquiring, holding, voting, or disposing of
Voting Securities, or otherwise become a "person" within the meaning of Section
13(d)(3) of the Exchange Act;
(f) Neither Stockholder nor any Affiliate of Stockholder
shall encourage, support, or participate in any tender or exchange offer for
Voting Securities of Company without the prior written consent of Company unless
at least fifty-one percent (51%) of the then outstanding Common Stock of Company
(excluding any Common Stock Beneficially Owned by Stockholder or any Affiliate
of Stockholder) has been tendered in response to such tender offer or exchange
offer or the Company announces that it supports the tender or exchange offer;
and
(g) Neither Stockholder nor any Affiliate of Stockholder
shall take any other action inconsistent with the foregoing, provided that
nothing in this Agreement shall restrict Stockholder from exercising its rights
under the Dealer Agreements.
SECTION 2.4 REPORTS. During the Standstill Period, Stockholder
shall deliver to Company, promptly after any acquisition or Transfer of Voting
Securities, an accurate written report specifying the amount and class of Voting
Securities acquired or Transferred in such transaction and the amount of each
class of Voting Securities owned by Stockholder and Stockholders' Affiliates
after giving effect to such transaction; provided, however, that no such report
need be delivered with respect to any such acquisition or Transfer of Voting
Securities by Stockholder or any Affiliate of Stockholder that is reported in a
statement on Schedule 13D filed with the Commission and delivered to Company by
Stockholder in accordance with Section 13(d) of the Exchange Act and the rules
thereunder. Company shall be entitled to rely on such reports and statements on
Schedule 13D for all purposes of this Agreement.
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<PAGE> 6
ARTICLE III
REPRESENTATION AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company represents and warrants as follows:
(a) Company is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder.
(b) The execution and delivery of this Agreement by Company
and the consummation by Company of the transactions contemplated hereby has been
duly authorized by all necessary corporate action on the part of Company, and no
other corporate proceedings on the part of Company are necessary to authorize
this Agreement or any of the transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered by
Company, constitutes a valid and binding obligation of Company, and is
enforceable against Company in accordance with its terms.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.
Stockholder represents and warrants as follows:
(a) Stockholder is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder.
(b) The execution and delivery of this Agreement by
Stockholder and the consummation by Stockholder of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Stockholder, and no other corporate proceedings on the part of Stockholder
are necessary to authorize this Agreement or any of the transactions
contemplated hereby.
(c) This Agreement has been duly executed and delivered by
Stockholder, constitutes a valid and binding obligation of Stockholder, and is
enforceable against Stockholder in accordance with its terms.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 NOTICES. Unless otherwise specifically stated
herein, all notices, requests, demands, and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made, and received when delivered
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<PAGE> 7
against receipt, twelve (12) hours after being sent by facsimile, or seventy-two
(72) hours after being sent by registered or certified mail, postage prepaid,
addressed as set forth below:
If to the Company, to: With a copy to:
MarineMax, Inc. O'Connor, Cavanagh, Anderson,
Attn: Mr. William H. McGill Jr. Killingsworth & Beshears P.A.
18167 US North #499 Attn: Robert S. Kant, Esq.
Clearwater, Florida 33764 One East Camelback Road, Suite 1100
Tel: 813-531-1700 Phoenix, Arizona 85012
Fax: 813-531-0123 Tel: 602-263-2606
Fax: 602-263-2900
If to the Stockholder, to: With a copy to:
Brunswick Corporation Brunswick Corporation
Attn: Mr. Peter Larson Attn: General Counsel
1 North Field Court 1 North Field Court
Lake Forest, Illinois 60045 Lake Forest, Illinois 60045
Tel: (847) 735-4822 Tel: (847) 735-4305
Fax: (847) 735-4425 Fax: (847) 735-4050
SECTION 4.2 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Stockholder and Company, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or future exercise
thereof or the exercise of any right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 4.3 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns; except, however,
Stockholder may not transfer or assign any of its rights hereunder without the
written consent of Company.
SECTION 4.4 GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the laws of the state of Delaware.
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<PAGE> 8
SECTION 4.5 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts thereof signed by the other party hereto.
SECTION 4.6 SPECIFIC PERFORMANCE. Company and Stockholder each
acknowledges and agrees that the parties' respective remedies at law for a
breach or threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of that fact, agrees that, in the event of a
breach or threatened breach by Company or Stockholder of the provisions of this
Agreement, in addition to any remedies at law, Stockholder and Company,
respectively, without posting any bond shall be entitled to obtain equitable
relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy which may then
be available.
SECTION 4.7 TERMINATION. This Agreement shall be inoperative
during any period that Stockholder and its Affiliates Beneficially Own less than
five percent (5%) of the Voting Securities and neither Stockholder nor its
Affiliates take any action or pursue any course of conduct that could result in
Stockholder and its Affiliates owning more than a total of five percent (5%) of
the Voting Securities. This Agreement shall terminate and be of no further force
and effect upon the earlier of (a) ten (10) years from the date of this
Agreement, (b) such time, if any, that a majority of the members of the Board of
Directors of Company has not consisted of the Senior Founders and Other
Designated Members for a period of sixty (60) consecutive days, or (c) the date
on which Brunswick and its Affiliates have owned a total of less than five
percent (5%) of the Voting Securities for two (2) consecutive years.
Notwithstanding the foregoing, Brunswick shall be bound by the provisions of
Section 2.3 and shall take no actions inconsistent therewith for a period of six
(6) months after the termination of the Dealer Agreements as a result of
termination by Brunswick for cause.
SECTION 4.8 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. It is hereby stipulated
and declared to be the intention of the parties that they would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable.
SECTION 4.9 EFFECTIVE DATE. This Agreement shall be effective
upon the final closing under the IPO and Brunswick's purchase of Voting
Securities, but no party shall take any actions inconsistent with this Agreement
after its execution except that the Senior Founders may sell securities as
Selling Stockholders in the IPO.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
MARINEMAX, INC.
By: /s/ William H. McGill, Jr.
Title: Chairman CEO
Date: April 30, 1998
BRUNSWICK CORPORATION
By: /s/ Peter N. Larson
Title: Chairman & Chief Executive Officer
Date: April 30, 1998
8
<PAGE> 1
EXHIBIT 10.11
AGREEMENT RELATING TO ACQUISITIONS
between
MARINEMAX, INC.
and
BRUNSWICK CORPORATION
April 28, 1998
<PAGE> 2
AGREEMENT RELATING TO ACQUISITIONS
AGREEMENT RELATING TO ACQUISITIONS dated as of the 28th day of April
1998 among MARINEMAX, INC., a Delaware corporation (the "Company"); and
BRUNSWICK CORPORATION, a Delaware corporation for itself and on behalf of its
subsidiaries and divisions including the Sea Ray Division of Brunswick
("Brunswick").
R E C I T A L S
A. The Company has completed merger transactions (the "Mergers")
involving Bassett Boat Company of Florida, Louis DelHomme Marine, Gulfwind
Marine, USA, Gulfwind Marine South, and Harrison's Marine Centers as well as
their affiliated and subsidiary companies (collectively, the "Merged Companies")
as a result of which the Merged Companies became wholly owned subsidiaries of
the Company.
B. The Merged Companies sell and service various boats manufactured by
Brunswick or subsidiaries or divisions of Brunswick ("Brunswick Affiliates"),
including Sea Ray pleasure boats, Boston Whaler fishing boats, and Baja
high-performance boats, pursuant to the Dealer Agreements.
C. The Company, Brunswick, and Sea Ray entered into a settlement
agreement dated as of March 12, 1998 (the "Settlement Agreement") pursuant to
which Brunswick and the Brunswick Affiliates consented to a change in the
ownership of each of the Merged Companies resulting from the Mergers.
D. It is the intention of the Company to close an initial public
offering of its Common Stock (the "IPO").
E. The Company's growth will be achieved both internally and through
acquisitions.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 "AGREEMENT" means this Agreement Relating to Acquisitions.
SECTION 1.2 "BRUNSWICK BOAT DEALERS" means boat dealers having dealer
agreements with Brunswick or a Brunswick Affiliate relating to Sea Ray boats.
<PAGE> 3
SECTION 1.3 "COMPANY" means MarineMax, Inc.
SECTION 1.4 "DEALER AGREEMENTS" means the agreements of even date
between the Merged Companies, Brunswick, and any Brunswick Affiliate providing
for the purchase, sale, and maintenance of boats and related marine products.
SECTION 1.5 "IPO" means the initial public offering of Common Stock of
the Company.
SECTION 1.6 "MERGERS" means the merger transactions involving the
Company, Bassett Boat Company of Florida, Louis DelHomme Marine, Gulfwind Marine
USA, Gulfwind Marine South, and Harrison's Marine Centers, and their affiliated
and subsidiary companies.
SECTION 1.7 "PERSON" means any individual, corporation, limited
liability company, partnership, joint venture, trust, unincorporated
association, or other entity.
ARTICLE II
FUTURE ACQUISITIONS
SECTION 2.1 BASE ACQUISITIONS. Subject to the procedures set forth in
Schedule A, acquisitions by the Company in any fiscal year of the Company of
Brunswick Boat Dealers with total revenue not to exceed 20% of the Company's
revenue in its previous fiscal year shall be mutually agreed upon by Brunswick
and the Company through cooperative efforts in good faith (the "Base
Acquisitions"), in each case to the extent that any such Brunswick Boat Dealer
desires to be acquired by the Company. In considering Base Acquisitions,
reasonable efforts will be made to include a balance of dealers that are
successful and those that are not. In considering Base Acquisitions, Brunswick
and the Company recognize the need to maximize the value of the stock of the
Company to its stockholders. Brunswick and the Company agree that the revenue of
the Company for the Company's newly adopted fiscal year ended September 30, 1997
shall be deemed to be $233 million. Brunswick and the Company will meet once a
year, or more frequently as they shall mutually determine, to consider proposed
Base Acquisitions with the goal of agreeing upon Base Acquisitions for the next
succeeding year. In presenting possible acquisitions to Brunswick, the Company
shall follow the procedures set forth in Schedule A to this Agreement. Brunswick
will not unreasonably withhold its consent to any Base Acquisition.
Notwithstanding the foregoing, Brunswick hereby approves and will support the
acquisition by the Company of each Brunswick Boat Dealer identified on Schedule
B and C to this Agreement to the extent that any such Brunswick Boat Dealer
desires to be acquired by the Company, provided that the acquisitions listed on
Schedule B shall not count against the 20% revenue cap.
SECTION 2.2 ADDITIONAL ACQUISITIONS. Purchases of Brunswick Boat
Dealers by the Company in addition to those in accordance with Section 2.1 will
be discussed by Brunswick and the Company at the request of either of them upon
at least 30 days prior notice to the other ("Additional Acquisitions").
Brunswick's consent to any Additional Acquisition may be granted or withheld in
Brunswick's discretion.
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<PAGE> 4
SECTION 2.3 CERTAIN OTHER PROVISIONS RELATING TO THE ACQUISITIONS.
After such time, if any, that Brunswick informs the Company in writing that
Brunswick's sales of Sea Ray boats to the Company constituted 49% or more of its
sales of Sea Ray boats to all Brunswick Boat Dealers including the Company for
any fiscal year of Brunswick (the "49% Cap"), Brunswick and the Company will
negotiate in good faith the standards for acquisitions of Brunswick Boat Dealers
by the Company during the next succeeding fiscal year of Brunswick provided that
Brunswick may grant or withhold its consent to any acquisition in its sole
discretion for so long as the Company exceeds the 49% Cap. If the Company falls
under the 49% Cap, it may propose in accordance with Section 2.1 acquisitions
that fall within the 49% Cap and Brunswick's consent may not be unreasonably
withheld.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.1 ENTIRE AGREEMENT; AMENDMENT, MODIFICATION, TERMINATION.
Except for the Settlement Agreements, the Dealer Agreements, the Agreement
Relating to the Purchase of MarineMax Common Stock, the Stockholders' Agreement,
and the Governance Agreement, this Agreement contains the entire understanding
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements and conditions, express or implied, oral or written, unless
otherwise specified in this Agreement. This Agreement may be amended, modified
or terminated at any time or times only by unanimous written agreement of the
parties hereto.
SECTION 3.2 CONTROLLING LAW. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement, shall be governed
by and construed in accordance with the laws of the state of Delaware,
notwithstanding any Delaware or other conflict-of-laws rules to the contrary.
SECTION 3.3 TERMINATION. This Agreement shall terminate in the event
the Dealer Agreements have been terminated by Brunswick due to the actions of
the Company and its Affiliates.
SECTION 3.4 NOTICES. Unless otherwise specifically stated herein, all
notices, requests, demands, and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made, and received when delivered against receipt, 12 hours after being sent by
facsimile, or 72 hours after being sent by registered or certified mail, postage
prepaid, addressed as set forth below:
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<PAGE> 5
(i) If to the Company:
MarineMax, Inc.
Attention: Mr. William H. McGill Jr.
18167 US North #499
Clearwater, Florida 33764
Tel: (813) 531-1700
Fax: (813) 531-0123
With a copy to:
O'Connor, Cavanagh, Anderson, Killingsworth
& Beshears, P.A.
Attention: Robert S. Kant, Esquire
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Tel: (602) 263-2606
Fax: (602) 263-2900
(ii) If to Brunswick:
Brunswick Corporation
Attention: Mr. Peter Larson
1 North Field Court
Lake Forest, Illinois 60045
Tel: (847) 735-4822
Fax: (847) 735-4425
With a copy to:
Brunswick Corporation
Attention: General Counsel
1 North Field Court
Lake Forest, Illinois 60045
Tel: (847) 735-4305
Fax: (847) 735-4050
Any party may alter the address to which communications or copies are
to be sent by giving notice of that change of address in conformity with the
provisions of this Section for the giving of notice.
SECTION 3.5 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. Except to the
extent set forth herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto
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<PAGE> 6
and their respective heirs, personal representatives, successors, and assigns,
except that no party may assign or transfer his, her, or its rights or
obligations under this Agreement without the prior written consent of the other
parties hereto.
SECTION 3.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party hereto whose signature appears hereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
SECTION 3.7 PROVISIONS SEVERABLE. The provisions of this Agreement are
independent of and severable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
Further, if a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable as written, such court may interpret,
construe, rewrite or revise such provision, to the fullest extent allowed by
law, so as to make it valid and enforceable consistent with the intent of the
parties hereto.
SECTION 3.8 COUNTING. In computing the number of days or hours for
purposes of this Agreement, all days and hours shall be counted, including
Saturdays, Sundays and holidays; provided, however, that if the final day or
hour of any time period falls on a Saturday, Sunday or day that is a legal
holiday in the state of Delaware, then the final day or hour shall be deemed to
be the next day or hour that is not, or does not fall on, a Saturday, Sunday or
day that is a legal holiday in the state of Delaware.
5
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
MARINEMAX, INC.
By: /s/ William H. McGill, Jr.
Name: William H. McGill, Jr.
Title: Chairman CEO
BRUNSWICK CORPORATION
By: /s/ Peter N. Larson
Name: Peter N. Larson
Title: Chairman & Chief Executive Officer
6
<PAGE> 8
SCHEDULE A
1. Brunswick will not be asked to review a candidate for
acquisition (a "Candidate") unless and until such Candidate has agreed to
Brunswick and any Applicable Brunswick Affiliate (collectively, the "Brunswick
Grantor") being informed of such possible acquisition.
2. The Brunswick Grantor and the Company will be provided with
financial statements of the Candidate prepared by the Candidate, and will
discuss expected future financial performance and the Company's business plans
for the Candidate.
3. The Candidate, the Company or a wholly-owned subsidiary of
the Company, as applicable, will agree to enter into a Dealer Agreement
substantially similar to the existing Dealer Agreements.
4. In reviewing Candidates for Base Acquisitions, the Brunswick
Grantor may consider any relevant facts and circumstances (taking into
consideration the Candidate's prospects under Company ownership), including but
not limited to the Candidate's qualifications and abilities to perform the
Dealer Agreement obligations, the effects that approval would have on the
resulting territory configuration and adjacent or other dealer sales, and the
Company's capabilities to successfully operate the dealership.
5. The Brunswick Grantor shall not unreasonably withhold its
consent to a Base Acquisition; provided that in making its decision, any of the
following circumstances, without limitation, shall be deemed to be reasonable
grounds to withhold consent.
(A) The offer or entering into of the applicable
Dealer Agreement or the resulting
relationship would require compliance by the
Brunswick Grantor with any applicable
federal, state or local franchise disclosure
or business opportunity law, regulation,
rule or order;
(B) The Candidate does not submit the
information and data requested by the
Brunswick Grantor;
(C) The approval or entering into of the
applicable Dealer Agreement would be
contrary to or cause a breach or default of
any contractual rights granted by the
Brunswick Grantor to a third party, or would
violate or be contrary to any applicable
federal, state or local law, regulation,
rule or order;
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<PAGE> 9
(D) The Brunswick Grantor is enjoined from the
entering into of the applicable Dealer
Agreement, or is threatened with litigation
or an administrative or other proceeding in
which it could be asserted that Brunswick is
prohibited by law, contract or otherwise
from the entering into of such a Dealer
Agreement; or
(E) The products listed on the applicable Dealer
Agreement are no longer sold by Brunswick,
including but not limited to instances where
the assets or business related to such
products has been sold or transferred to a
nonaffiliated third party.
6. The purchase and sale agreement will include language that
it is subject to the consent of the Brunswick Grantor, which shall be deemed
given upon approval of the Acquisition, subject to the original information
given to the Brunswick Grantor being accurate at the time of acquisition.
7. Any approval given with respect to a Base Acquisition shall
terminate if the Base Acquisition is not completed within six months from the
date that approval is given.
8
<PAGE> 10
SCHEDULE B
Stovall Tire & Marine, Inc.
9
<PAGE> 11
SCHEDULE C
Cochran Marine
Skipper Bud of North Carolina
10
<PAGE> 1
EXHIBIT 10.12
SEA RAY
SALES AND SERVICE AGREEMENT
THIS AGREEMENT made this _____ day of ___________ 1998 between the SEA
RAY DIVISION of Brunswick Corporation, a Delaware corporation (hereinafter
referred to as "Sea Ray"), having its principal place of business located at
2600 Sea Ray Boulevard, Knoxville, Tennessee 37914 (Fax No. 423/971-6423)
and____________________, a ____________ corporation (hereinafter referred to as
"Dealer"), having its principal place of business located at __________________
___________________________(Fax No.: __________), and Dealer's parent
corporation, MarineMax, Inc., a Delaware corporation, having its principal place
of business located at 18167 U.S. North #499, Clearwater, Florida 33764 (Fax No.
813/531-0123), whereby in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. *Appointment of Dealer. Sea Ray hereby appoints Dealer as a
non-exclusive dealer for the retail sale, display, and servicing of the
following Sea Ray's products and repair parts now or hereafter sold by Sea Ray
using the Sea Ray Identification, as such term is defined in Paragraph 13
(hereinafter referred to as "Products") as now or hereafter described in the
then current Sea Ray Products and Programs Manual applicable to all domestic Sea
Ray dealers selling comparable Products (hereinafter referred to as "Manual").
Presently such Products are limited to the following:
Dealer Sea Ray
Lagunas, Parts and Accessories ___________ ____________
Sea Rayders, Parts and Accessories ___________ ____________
Sport Boats, Parts and Accessories ___________ ____________
Sport Cruisers, Parts and Accessories ___________ ____________
Sport Yachts, Parts and Accessories ___________ ____________
Yachts, Parts and Accessories ___________ ____________
- ---------------------
* Both parties must initial the Product and Dealer Location(s) descriptions to
be included in this Agreement.
<PAGE> 2
Dealer acknowledges that Products sold by other Sea Ray dealers may be resident
in the below described area of primary responsibility. Sea Ray reserves the
right in its sole discretion (but shall have no obligation) from time to time to
adopt, change, and enforce programs, practices, and procedures, as Sea Ray may
deem appropriate under applicable law and business circumstances, and Dealer
agrees to comply with such programs, practices and procedures. Sea Ray agrees
that it will enforce such programs which its has implemented from time to time
on a uniform basis.
2. *Location. Dealer shall sell at retail, display, and service
Products solely within the following non-exclusive area of primary
responsibility which may be shared by other dealers (hereinafter referred to as
the "APR"), solely from the following locations described in Exhibit A
(hereinafter referred to as "Dealer Locations"), which Dealer Locations are both
sales and service facilities unless otherwise specified herein in writing. APR
is defined as the geographical area described in Exhibit A which is in proximity
to Dealer locations, and is based upon such areas that are customarily
designated by Sea Ray and applicable to its domestic dealers.
Dealer shall not delete, change or add to the above Dealer Locations without the
prior written consent of Sea Ray, which consent shall not be unreasonably
withheld, and Sea Ray may consider any relevant facts and consequences as part
of such approval process, including but not limited to the Dealer's
qualifications and abilities to perform the Agreement obligations from the
proposed Dealer Location, the effect such a grant would have on the resulting
APR configuration and adjacent Sea Ray dealer sales, the Dealer's financial
capabilities to successfully operate the business from the Dealer Location, and
whether the Dealer will have adequate personnel to manage the business at the
Dealer Location. Sea Ray may upon the giving of at least one (1) year's prior
written notice, and provided a cure does not occur during that notice period,
delete from this Agreement any Dealer Location where Dealer has failed to meet
the material obligations (including but not limited to maintaining Master Dealer
Certification), performance standards, terms, conditions, representations,
warranties, and covenants applicable to that Dealer Location as more
specifically described in this Agreement. Provided that similar restrictions
apply to all domestic Sea Ray dealers selling comparable Products, Dealer shall
not sell, advertise, solicit for sale, or offer for resale Products outside of
the APR, nor will Dealer sell Products internationally or to others for the
purpose of resale without the prior written consent of Sea Ray.
3. Dealer's Responsibilities. Dealer agrees to:
A. Devote its best efforts to aggressively promote, display,
advertise and sell Products at each Dealer Location in accordance with the terms
of this Agreement and all applicable federal, state and local laws. Dealer shall
display and utilize at each Dealer Location signs, graphics and image elements
with Sea Ray's Identification, subject to approval by Sea Ray, that will
positively reflect the Sea Ray image and promote the retail sale of Products.
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B. Purchase and carry on hand at all times a sufficient
inventory of current Products to meet the reasonable demand of customers at each
Dealer Location and to meet Sea Ray's Minimum Stock Requirements as outlined in
the then current Manual.
C. Maintain at each Dealer Location (unless a sales location
only and then service is to be provided at another Dealer Location) a service
department which Dealer agrees to staff, train and equip to promptly and
professionally service Products; and maintain at each Dealer Location parts and
supplies to properly service Products on a timely basis.
D. Perform any and all necessary rigging, installation and
inspection services prior to delivery to the purchaser as required by the then
current Manual, and perform post-sale service of all Products originally sold by
Dealer and/or brought to Dealer for service. Dealer shall advise all purchasers
that dealers in other locations are not required to provide warranty and service
work for the purchasers and all such work is the responsibility of the selling
Dealer. Dealer shall instruct the purchaser to contact it prior to moving the
Product so arrangements for warranty or service work can be made. However,
Dealer may be required to provide or arrange for warranty and service work for
Product regardless of the area or condition of sale. Dealer will secure all
Product inventory against weathering and damage and maintain such inventory in a
like new and unused condition.
E. Furnish purchasers with Sea Ray's limited warranty on new
Products and with information and training as to the safe and proper operation
and maintenance of Products.
F. Complete and mail Sea Ray's warranty registration card and
In-Service Checklist immediately upon delivery of the Products to the purchaser
and assist Sea Ray in performing Product defect and recall campaigns. In the
event Dealer fails to return said card to Sea Ray as prescribed herein, Dealer
agrees to indemnify Sea Ray against any liability, loss or damage which it may
sustain as a result of said failure.
G. Maintain complete Product sales and service records and
report to Sea Ray on a regular basis the name and address of purchasers of
Products, to the extent required by federal state and local laws.
H. Achieve sales performance in accordance with fair and
reasonable sales levels established by Sea Ray after consultation with Dealer,
as more specifically described in Paragraph 14 below.
I. (1) Submit complete annual financial statements for the
Dealer within ninety (90) days after the end of the Dealer's fiscal year using
the Sea Ray financial statement form; (2) submit complete financial statements
for the Dealer on a quarterly basis within forty-five (45) days following the
quarter end and submit this information on the Sea Ray financial statement form;
and, (3) consent to full and open disclosure of financial information concerning
Dealer, between Sea Ray and any financial institution or company that finances
Dealer's Product inventory.
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J. Conduct business in manner that preserves and enhances the
reputation of both Sea Ray and Dealer for providing quality products and
services.
K. Maintain an ability to purchase Product inventory via
flooring and/or self financing that is customary to the ability to carry on hand
and display Sea Ray's current Product models as indicated on Exhibit A of this
Agreement. It is generally acceptable to have a commitment of financing and/or
flooring equal to forty percent (40%) of the annual goal or $1,000,000.00
(escalated each year by an amount equal to the increase in the CPI-All Items
Index), whichever is greater.
L. Allow the application of any rebates or account credits
owed to Dealer to and as an offset against any losses, debts or monies owed to
Sea Ray by Dealer, including but not limited to losses or debts applicable to
open Product accounts, unpaid retail show space, and to any losses relating to
Dealer flooring or financing.
M. Indemnify and hold harmless Sea Ray and its affiliated
credit agencies from any and all claims or losses whatsoever as a result of
Dealer's failure to meet its obligations to Sea Ray or Sea Ray affiliated credit
agencies.
N. Use its best efforts to maintain a CSI rating sufficient to
maintain Sea Ray's image in the marketplace.
O. Comply with those Dealer obligations that may be imposed or
established by Sea Ray and which are included in the then current Manual.
P. Maintain a financial condition which is adequate to satisfy
and perform its obligations under this Agreement.
Q. Within no more than three (3) years from the date of this
Agreement, obtain and thereafter maintain Master Dealer Certification for each
Dealer Location (except those specifically excluded on Exhibit A), as such
Master Dealer Certification requirements shall be established from time to time
by Sea Ray, which Master Dealer Certification requirements shall be the same as
those applicable to all domestic Sea Ray dealers who participate in the Master
Dealer Certification program. For other Dealer Locations which are added to this
Agreement after the execution of this Agreement, Dealer shall obtain and
maintain Master Dealer Certification within no more than two (2) years from the
date such Dealer Location has been added to this Agreement, provided that Dealer
shall not be required to obtain such Master Dealer Certification for such
additional Dealer Locations where it is not economically justifiable for Dealer
to do so, and at the time of the grant of such additional Dealer Location Sea
Ray has agreed such Master Certification shall not be required.
R. Unless required by applicable law, maintain the
confidentiality of information regarding Sea Ray Products, Programs, and
pricing, including but not limited to the Master Dealer Program, and not
disclose such information to any third party who sells, manufactures or
distributes product that is competitive with the products of Sea Ray.
Information shall consist of anything that Dealer may observe on the premises of
Sea Ray as
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well as presented to Dealer by Sea Ray verbally or in writing, including but not
limited to introduction of new models, new programs or incentives and any
information relating to novel boat building technology of Sea Ray. If Dealer is
requested or required to disclose any confidential information under applicable
law, it is agreed that Sea Ray will be provided with prompt notice of any such
request or requirement so that Sea Ray may seek an appropriate protective order
or waive Dealer's compliance with the provisions of this Agreement.
4. Orders. Dealer agrees to submit orders to Sea Ray in a manner and
format prescribed from time to time by Sea Ray applicable to all domestic Sea
Ray dealers selling comparable Products. Any order which does not comply with
Sea Ray's terms and conditions need not be filled by Sea Ray. Any additional or
different terms submitted by Dealer will be void and of no effect. Sea Ray's
terms and conditions of sale applicable to all domestic Sea Ray dealers selling
comparable Products shall solely apply. Dealer cancellation of orders will be
subject to Sea Ray's then current cancellation policy applicable to all domestic
Sea Ray dealers selling comparable Products. All orders submitted by Dealer are
subject to acceptance by Sea Ray.
5. Prices. The Products (including parts) sold to the Dealer by Sea Ray
shall be on the basis of price lists generally published by Sea Ray from time to
time for its domestic dealers generally, less any applicable discounts allowed
by Sea Ray's programs. Sea Ray shall have the right to revise the price lists or
applicable discounts on programs generally available to all of its domestic
dealers. The Products prices charged to Dealer will be the lowest price then
charged to other domestic dealers subject to Dealer meeting all the requirements
and conditions of Sea Ray's applicable programs, and provided that Sea Ray may
in good faith, charge lesser prices to other dealers to meet existing
competitive circumstances, for unusual and nonordinary business circumstances,
or for limited duration promotional programs. Sea Ray shall have no obligation
to reimburse Dealer for any loss which Dealer may sustain by reason of any
change in price, program, or discount. Terms of payment will be as specified
from time to time by Sea Ray. Dealer will pay Sea Ray the lesser of 1.5% late
charges per month on any past due invoice, or the maximum interest rate
permitted by applicable federal and state law. Sea Ray may reasonably refuse
shipment for any credit reason, including Dealer's failure to pay for a prior
shipment. Dealer will reimburse Sea Ray for all necessary costs in collecting
past due accounts, including attorney fees and court costs. Sea Ray retains a
security interest and lien on all Products sold to Dealer and all proceeds
arising out of the sale of Products until Products are paid for in full in cash,
and Dealer hereby agrees to execute and/or file with appropriate government
agencies such agreements and statements that reasonably may be requested by Sea
Ray to confirm and perfect such security interest.
6. Shipments. All shipments of Products shall be made f.o.b. that Sea
Ray factory designated by Sea Ray, at which time title shall pass. Dealer shall
pay all applicable shipping, transportation, delivery and handling charges for
Products ordered. If Dealer fails to accept delivery of any Product order,
Dealer shall reimburse Sea Ray for any costs incurred in returning such Products
to Sea Ray unless the Products are defective. If Sea Ray ships Products not
ordered by Dealer, Dealer shall have the right to refuse delivery, in which
event Sea Ray shall pay all costs incurred in returning same to Sea Ray.
Shipments shall be subject
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to Sea Ray's production schedule and availability of materials or transportation
equipment. No liability shall be sustained by Sea Ray by reason of it not
filling any order due to circumstances beyond its control such as, but not
limited to, labor disputes, natural disasters, accidents to machinery, material
shortages or regulations.
7. Risk of Loss. If Products ordered by Dealer are transported in Sea
Ray's trucks, or a common carrier contracted by Sea Ray, risk of loss shall pass
to Dealer upon delivery to Dealer. If Products are shipped by common carrier
contracted by the Dealer, risk of loss shall pass to Dealer at the time the
Products or parts are delivered to such carrier. If Products ordered by Dealer
are transported by ocean freight, risk of loss shall pass to Dealer at the time
the Products are delivered to the United States port for shipment, with the
Product covered by ocean freight insurance being invoiced to the Dealer. Sea Ray
will assist Dealer in the processing and collection of any claims against the
carrier contracted by Sea Ray.
8. Payment - Claims. All sales of Products to Dealer shall be paid for
in advance by Dealer, unless otherwise agreed between Sea Ray and Dealer. All
claims for shortage or damages or unacceptable goods shall be made at the time
of arrival of the shipment. The failure of Dealer to give such notification
shall constitute a waiver of any such claim. Dealer shall cause to be paid or
shall make reimbursement to Sea Ray in full for any and all taxes, duties, or
other charges imposed by federal, state, municipal or other governmental
authority upon any purchase or sale under this Agreement.
9. Product Modification. Sea Ray shall have the right to discontinue
the sale of Products or to modify the design and components of Products at any
time; provided, however, that Sea Ray shall notify Dealer, prior to shipment, of
any major design changes with respect to Products previously ordered by Dealer,
in which event Dealer shall have the right to terminate such order within five
(5) days after such notification by providing written notice to Sea Ray. The
failure to provide such timely written notification shall be deemed an
acceptance by Dealer of such changes.
10. Warranties. Dealer agrees to:
A. Sell Products only on the basis of Sea Ray's published
applicable limited warranty and make no other warranty or representations
concerning the limited warranty, express or implied, either verbally or in
writing.
B. Furnish and make known to the first-use purchaser at the
time of delivery the appropriate operations and maintenance manual provided by
Sea Ray, the Product installation instructions, if any, together with Sea Ray's
applicable written limited warranty, including all disclaimers and limitations
thereto.
C. Expressly inform the purchaser in writing that no Sea Ray
warranty applies if the Product is "used", which includes personal or
demonstration use by the Dealer unless Sea Ray expressly authorizes such
warranty in writing or the existing balance of the warranty is transferrable and
is transferred. In addition, no warranty applies if the design or
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material of the Product is substantially modified without the express written
authorization of Sea Ray.
D. Provide timely warranty service on all Products presented
to Dealer by purchasers in accordance with Sea Ray's then current warranty
service program applicable to all domestic Sea Ray dealers selling comparable
products. Dealer agrees to make all claims for reimbursement under Sea Ray's
then applicable warranty service program in the manner prescribed by Sea Ray.
Sea Ray may revise its warranty service program from time to time, providing
Dealer with written notification of all revisions and those revisions will
supersede all previous programs.
Sea Ray agrees to honor all legitimate warranty claims on Products when made by
purchaser through Dealer in the manner prescribed by Sea Ray. Sea Ray shall
respond to all proper and legitimate warranty claims submitted by Dealer within
that period of time described in the Manual. Sea Ray agrees to pay or credit all
accepted and undisputed claims within sixty (60) days after receipt of all
required paperwork.
11. Indemnity for Boat Show Space Obtained from Sea Ray. If Dealer
obtains and exhibits boats at boat show space originally obtained from Sea Ray,
then Dealer hereby agrees to defend and indemnify Sea Ray from any and all
claims, expenses, including attorney fees, cause of action and suits arising
directly or indirectly out of Dealer's use of the Sea Ray space.
12. Repossession or Repurchase of Product by Sea Ray. Dealer shall be
liable to and reimburse Sea Ray for any and all losses or deficiencies on the
sale or disposition of any merchandise purchased by Dealer pursuant to this
Agreement which is repossessed or repurchased by Sea Ray for any reason
whatsoever. Dealer agrees to pay Sea Ray a twenty percent (20%) restocking fee
in connection with all repossessions or repurchases. Dealer shall also be liable
for any and all discounts, volume rebates or other sales incentives paid to
Dealer on merchandise repurchased, all attorney's fees, court costs and expenses
incurred in connection with such repossession or repurchase. Dealer agrees to
provide Sea Ray, upon request, guarantees or other adequate security to cover
any repurchase or financial obligations that Sea Ray may assume in connection
with Dealer's flooring or financing.
13. Trademarks and Service Marks. Dealer acknowledges that Sea Ray or
its affiliated companies are the exclusive owners of various trademarks, service
marks, trade designations and trade dress (collectively "Identification") which
Sea Ray uses in connection with Products and its business. Dealer is authorized
to use Identification only in the manner prescribed by Sea Ray, only in
connection with the promotion and sale of Products and only until the expiration
or termination of this Agreement. Dealer shall not use Identification or
advertise outside of the APR without Sea Ray's express written consent.
Authorization shall not be interpreted as a license for use of Identification.
Dealer acquires no proprietary rights with respect to Identification and this
authorization shall terminate simultaneously with the termination or expiration
of this Agreement. In the event of expiration or termination of this Agreement,
Dealer shall immediately discontinue use of Identification in any way
whatsoever.
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14. Performance Standards. Sea Ray, after consultation with Dealer, may
establish reasonable standards of sales performance of the Dealer, which
standards may be established for each model year, or more frequently. Such
standards will be based on factors such as population, sales potential, economic
conditions at the Dealer Locations, competition from other marine dealerships in
the APR, past sales history, number of Dealer Locations, and any special
circumstances that may affect the sale of Products or the Dealer. Such standards
shall be consistent with standards established for all domestic Sea Ray dealers
selling comparable Products. Sales performance under this Agreement for the
period indicated are agreed to as shown on attached Exhibit A, the Dealer
Commitment Acknowledgment. Generally, such standards will be that Dealer will
sell that amount of Products in the APR at least equal to the same market share
percentage such Products are sold nationally by all Sea Ray dealers.
15. No Agency Created. It is understood and agreed that Dealer is not,
nor shall it at any time represent itself to be, the agent, employee,
representative or franchisee of Sea Ray. Dealer shall not enter into any
contract or commitment in the name of or on behalf of Sea Ray.
16. Term of Agreement - Termination:
A. The term of this Agreement shall be from the date of
signing by Sea Ray until July 31, 2008 (hereinafter the "Initial Term") subject,
however, to the provisions set forth below which allow for an earlier
termination and termination after the Initial Term.
B. This Agreement may be terminated by Sea Ray upon the giving
of at least sixty (60) days written notice to Dealer prior to the 31st of July
of each year during the Agreement term, provided that by July 31 of each such
year: (1) Dealer fails or refuses to place a minimum stocking order of next
model year's Products as outlined in the then current Manual, or (2) Dealer
fails to meet its financial obligations as they become due to either Sea Ray or
lender(s) financing Products.
C. This Agreement may be terminated at any time by a party
where good cause exists, provided at least sixty (60) days written notice has
been given and there has not been complete cure (if curable) of the claimed
deficiencies within such sixty (60) day notice period. Good cause is defined as
the other party to this Agreement materially breaching, defaulting or failing to
comply with any material Agreement covenant, term, condition, representation,
warranty or obligation that is applicable to such other party. Where good cause
exists that constitutes bad faith, such good cause shall be deemed to not be
curable or subject to cure and termination may occur at the end of the sixty
(60) day notice period.
D. This Agreement may be terminated at any time by the mutual
consent of the parties.
E. This Agreement may be immediately terminated by a party
upon written notice to the other party if any of the following occur with regard
to the other party: (1) the other party becomes insolvent or takes or fails to
take any action which constitutes an admission of inability to pay debts as they
mature; (2) the other party make a general assignment for the benefit of
creditors to an agent authorized to liquidate any substantial
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amount of assets; (3) the other party becomes a subject of an "order for relief"
within the meaning of the United States Bankruptcy Code; or (4) the other party
applies to a court for the appointment of a receiver for any assets or
properties.
F. This Agreement may be terminated immediately by Sea Ray
upon the occurrence of those matters described in Paragraph 19.A. below.
G. This Agreement may be terminated by Sea Ray
(notwithstanding and in addition to the provisions of subparagraph C and other
subparagraphs) upon the giving of at least ten (10) days prior written notice to
Dealer where there are unpaid sums due and owing to Sea Ray that remain unpaid,
in whole or part, at the end of such notice period, unless such amount is
disputed in good faith by Dealer.
H. At the end of the Initial Term and thereafter, Sea Ray may
terminate this Agreement upon the giving of at least one hundred eighty (180)
days written notice to Dealer (which notice may be given prior to the end of the
Initial Term), where in Sea Ray's reasonable belief the continuation of the
Agreement after such Initial Term would make the Agreement subject to a
relationship law or dealer protection statute not applicable to the Dealer
relationship during the Initial Term and where Sea Ray cannot modify this
Agreement, which modification would be executed by Dealer, to not have the
effect of such statute apply.
I. At the end of the Initial Term and thereafter, Sea Ray may
terminate this Agreement upon the giving of at least sixty (60) days prior
written notice to Dealer (which notice may be given prior to the end of the
Initial Term), where in Sea Ray's sole and reasonable discretion Sea Ray decides
for good and justifiable business reasons that the extension or continuation of
such Agreement is not in Sea Ray's best interests.
J. Upon termination of this Agreement (including expiration
and failure to extend the Agreement or enter a new agreement), Dealer shall
offer to sell to Sea Ray, at Dealer's net purchase price (not including
transportation and freight or financing costs), taking into consideration any
applicable discounts previously allowed by Sea Ray's programs, Dealer's entire
stock of Products in a new and unused condition. Any repurchase of Products by
Sea Ray is conditioned upon Dealer's ability to demonstrate clear and
unencumbered title to Products repurchased, delivery of all title documentation
requested by Sea Ray and the Dealer's execution of a limited power of attorney
on behalf of Sea Ray for purposes of executing all necessary title
documentation.
K. If Sea Ray terminates, or Sea Ray and Dealer mutually
terminate, this Agreement prior to its expiration date, provided the termination
is not for quality of service, fraud, or financial instability or insolvency of
Dealer, Sea Ray will nevertheless continue to sell warranty parts and
accessories for Products to Dealer on a cash on delivery basis for a period not
to exceed twelve 12 months in order that Dealer may continue to provide warranty
service on Products which have outstanding warranties.
L. Any period of time described herein shall be modified to
include such different period of time as may be required by applicable law.
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M. Dealer agrees and consents to Sea Ray filing a declaratory
judgment action in any tribunal of competent jurisdiction to determine its right
to terminate this Agreement.
N. Sea Ray may terminate this Agreement immediately at such
time that a majority of the members of the Board of Directors of Marine Max,
Inc. does not consist of Senior Founders and other Designated Members for a
period of sixty (60) consecutive days, as such terms are defined in the
Stockholder's Agreement between MarineMax, Inc. and Brunswick Corporation.
O. This Agreement may be terminated by Sea Ray where Dealer
makes a fraudulent misrepresentation that is material to the Agreement and is
not curable, or if curable is not cured within ten (10) days after Dealer's
receipt of a written notice from Sea Ray.
17. Extension. This Agreement shall be extended for yearly terms
(ending through July 31st of each year) after the Initial Term of this
Agreement, unless and until terminated as described in Paragraph 16 above.
18. Governing Law. This Agreement has been signed by Dealer on the date
reflected below, and shall become binding upon the date this Agreement is
subsequently executed by Sea Ray at its headquarters in Tennessee, U.S.A. This
Agreement shall be governed, interpreted and construed in accordance with the
internal laws of the State of Tennessee, U.S.A. without regard to applicable
conflicts of law.
19. Assignability.
A. This appointment and Agreement is made and entered into
with the distinct understanding that it is personal with the Dealer and is not
assignable, delegable or subject to subcontract, in whole or part, unless the
prior written consent of Sea Ray is obtained. Any such prohibited assignment,
delegation or subcontract shall, at Sea Ray's option, be deemed void. Unless
first approved by Sea Ray in writing, any purported assignment, delegation or
subcontracting of Dealer's rights and obligations under this Agreement may
immediately render this Agreement, at Sea Ray's option, terminated.
B. This Agreement, in whole or part, is assignable, delegable
and subject to subcontract by Sea Ray, provided that Sea Ray shall remain
obligated to perform the covenants, obligations, representations and warranties
under this Agreement. Sea Ray may assign this Agreement to a nonaffiliated third
party who acquires the business or assets of Sea Ray, provided that the
purchaser agrees to assume and perform the obligations of Sea Ray under this
Agreement, in which event Sea Ray shall be released from any post assignment
obligations and liabilities arising under this Agreement.
20. Notices. Any written notice given pursuant to this Agreement shall
be either hand delivered or mailed by Registered or Certified Mail, return
receipt requested, to the party at the respective principal place of business
first above written. Notice may also be given by
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fax if a copy is also mailed in the manner described herein. Such notice shall
be deemed to be given upon first receipt. A change of address may be given by
such notice.
21. Entire Agreement - Non-Waiver - Separability - Release. This
Agreement contains the entire agreement between the parties with respect to the
matters set forth herein and may not be amended or modified except by written
instrument signed by Sea Ray and Dealer that expressly states that the writing
constitutes a rider or modification to this Agreement, provided that Sea Ray may
at its sole discretion and from time to time make changes to the Manual upon the
giving of notice to Dealer. This Agreement replaces all prior agreements made
between the parties, provided that each party shall remain obligated to the
other for any monies owed under such prior agreements. Failure on the part of
Sea Ray or Dealer to enforce any term of this Agreement shall not constitute a
waiver thereof. Any provision of this Agreement which in any way contravenes or
is unenforceable under applicable law shall not apply and shall be deemed
separable and not to be a part of this Agreement without affecting the validity
of the remaining provisions.
22. Guarantee. As a condition for Sea Ray's entering into this
Agreement, the parent of Dealer has signed this document as evidence of its
irrevocable guarantee of the Dealer's performance of all the duties and
obligations provided for in this Agreement.
23. Disputes. All disputes, controversies or claims connected with,
arising out of, or relating to this Agreement, or any modification, extension or
renewal thereof, or to any causes of action that result from such relationship,
shall be subject exclusively to the remedy of arbitration described herein,
including but not limited to sums due under this Agreement, the interpretation,
performance or nonperformance of this Agreement, any claim for damages or
rescission, a breach or default of this Agreement, the creation, termination or
nonrenewal of this Agreement (such as a dispute regarding the causes, validity
or circumstances of the termination, nonextension, or nonrenewal), and trade
regulations or antitrust claims, whether such controversies or claims are in law
or equity or include claims based upon contract, statute, tort or otherwise. All
controversies shall be conducted in accordance with the American Arbitration
Association Commercial Arbitration Rules.
The arbitration shall be governed by the United States Arbitration Act,
9 U.S.C. Section 1-16, as amended, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. The place of
the arbitration shall be at Chicago, Illinois. Dealer consents to personal
jurisdiction of such court, including the federal and state courts located in
the State of Illinois. The arbitrator is not empowered to and shall not award
damages in excess of actual damages and in no event shall the arbitrator award
punitive, special or consequential damages, or prejudgment interest.
This Paragraph shall survive the expiration or termination of this
Agreement.
Except for sums owing to Sea Ray all arbitration claims and proceedings
must be instituted within one (1) year after the cause of action arises, and the
failure to institute
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arbitration proceedings within such period shall constitute an absolute bar to
the institution of any proceedings and a waiver and relinquishment of all such
claims.
24. Miscellaneous. Except as expressly described to the contrary in
this Agreement, the rights and remedies of each party are not exclusive and
where consent or approval is to be given that party may withhold such consent or
approval for any reason. As defined herein, a domestic Sea Ray dealer shall be
an authorized Sea Ray dealer whose area of primary responsibility is located
solely within the continental United States.
IN WITNESS WHEREOF, Sea Ray and Dealer have executed this Agreement as
of the date first above written
SEA RAY DIVISION OF
BRUNSWICK CORPORATION
By:___________________________ By:_________________________
WILLIAM J. BARRINGTON
PRESIDENT
Date________________________ Date________________________
MARINEMAX, INC.
By:_________________________
Date________________________
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Notes:
1. As a condition of entering into this Agreement, the predecessor to Dealer
will execute a release of all prior claims.
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EXHIBIT A
TO
SEA RAY SALES AND SERVICE AGREEMENT
DEALER AREA OF PRIMARY RESPONSIBILITY (PAR. 2):
See Exhibit A-1.
DEALER LOCATIONS (PAR.2):
See Exhibit A-2.
DEALER LOCATIONS NOT SUBJECT TO MASTER DEALER CERTIFICATION (PAR. 3.Q.):
All locations are subject to Master Dealer Certification.
AGREED TO SALES PERFORMANCE BY DEALER LOCATION (PAR. 14):
Exhibit A-3 for 1998 Model Year.
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EXHIBIT 10.13
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is dated April 7, 1998, between
MARINEMAX, INC., a Delaware corporation ("Company"), and NATIONSCREDIT
DISTRIBUTION FINANCE, INC., a North Carolina corporation with its principal
place of business at 3350 Cumberland Circle, Suite 1000, Atlanta, Georgia 30339
("Lender").
WITNESSETH:
WHEREAS, Company has requested a credit facility up to $105,000,000
from Lender, and Lender has agreed to provide such facility on the terms set
forth herein;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable equally
to both the singular and plural forms of such terms):
"Account" means accounts, receivables, chattel paper and other rights
to payment arising from the sale or lease of goods or provision of services in
the ordinary course of business, including all amounts payable by, and rights
and claims against, any manufacturer or vendor of Inventory, such as volume
purchase discounts, advertising rebates, price protection, warranty work,
incentives and credits.
"Advance" means an advance made by Lender to Company pursuant to
Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"Approved Vendor" means a manufacturer or vendor that is (a) requested
by Company to Lender, in writing, for establishment of a direct floorplan
funding arrangement under this Agreement, and (b) approved by Lender.
"Borrowing Base" means the sum of the following for Company and its
Subsidiaries, determined on a consolidated basis: (a) the lesser of $105,000,000
or the sum of (i) 100% of the cost (including freight charges) of Eligible New
Inventory that is aged less than 366 days from date of delivery to Company or
its Subsidiary, plus (ii) 90% of the cost (including freight charges) of
Eligible New Inventory that is aged more than 365 days, but not more than 730
days, from date of delivery to Company or its Subsidiary, (b) the lesser of
$25,000,000 or the sum of (i) 80% of NADA Wholesale Value of Eligible Used
Inventory that has been held by Company or its Subsidiaries for not more than
180 days, plus (ii) 72% of the NADA Wholesale Value of Eligible Used Inventory
that has been held by Company or its Subsidiaries for more than 180 days, but
not more than 365 days, (c) the lesser of $15,000,000 or 75% of the cost
(excluding freight charges) of Eligible Parts Inventory, plus (d) the lesser of
$25,000,000 or 80% of the net book value of Eligible Accounts.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
A hereto (as modified with the consent of Lender from time to time), in form and
detail satisfactory to Lender.
"Business Day" means a day of the year on which banks are open for
business in Atlanta, Georgia.
"Capital Lease" means any capital lease or sublease, as defined in
accordance with GAAP.
<PAGE> 2
"Change in Control" means an acquisition by any person or entity of
more than 5.0% of the beneficial ownership of the voting stock of Company,
except acquisitions (a) effected as part of the IPO, (b) by Richard Bassett,
Louis DelHomme, William H. McGill, Jr., Jerry Marshall, Richard C. LaManna, or
any of their family members or trusts, (c) by Brunswick Corporation, or any of
its Subsidiaries, or (d) consummated after receipt of Lender's prior written
consent, which shall not be unreasonably withheld.
"Collateral" has the meaning set forth in Section 4.01 hereof.
"Committed Advance" means an unfunded approval that has been issued to
an Approved Vendor by Lender, pursuant to which Lender commits to fund Company's
or its Subsidiary's obligations under a purchase order submitted by Company or
the Subsidiary to such Approved Vendor.
"Commitment" means $105,000,000.
"Company" means MarineMax, Inc., a Delaware corporation.
"Compliance Certificate" means a certificate of an officer of Company
acceptable to Lender, and in form and substance satisfactory to Lender, (a)
certifying that such officer has no knowledge that a material Default or
material Event of Default has occurred and is continuing, or if a material
Default or material Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action being taken or proposed to be taken with
respect thereto, and (b) setting forth detailed calculations with respect to the
covenants described in Section 6.01(a), (b) and (c) hereof.
"Consolidated Collateral" means the following assets of Company and its
Subsidiaries, whether now owned or hereafter acquired and wherever located: (a)
all Accounts; (b) all Inventory; (c) all other goods, equipment, fixtures and
furniture; and (d) all insurance policies and proceeds relating to the
foregoing; all books and records relating to the foregoing; and all proceeds and
products of the foregoing.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or obligation of another in any manner, whether
directly or indirectly, including without limitation any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or any security for the payment of
thereof, (b) to purchase Property or services for the purpose of assuring the
owner of such Debt of its payment, or (c) to maintain the solvency, working
capital, equity, cash flow, fixed charge or other coverage ratio, or any other
financial condition of the primary obligor so as to enable the primary obligor
to pay any Debt or to comply with any agreement relating to any Debt or
obligation.
"Current Ratio" means the ratio, calculated for Company and its
Subsidiaries on a consolidated basis, of (a) cash plus accounts receivable plus
inventory plus prepaid expenses, as defined in accordance with GAAP, to (b)
current liabilities determined in accordance with GAAP.
"Debt" means all obligations, contingent or otherwise, which in
accordance with GAAP should be classified on the balance sheet as
liabilities,and in any event including Capital Leases, Contingent Liabilities
that are required to be disclosed and quantified in notes to financial
statements in accordance with GAAP, and liabilities secured by any Lien on any
Property, regardless of whether such secured liability is with or without
recourse.
"Default" means any event specified in Section 7.01 hereof, for which
any requirement for the giving of notice or lapse of time has not yet been
satisfied.
"Eligible Account" means an Account of Company or its Subsidiaries
that:
(a) constitutes amounts payable by a vendor or manufacturer of
Inventory for returns, volume purchase discounts, advertising
rebates, price protection, warranty work, incentives, credits
or similar items, or is any other Account approved by Lender
from time to time;
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(b) is subject to a perfected, first priority Lien in favor of
Lender, free from any other Lien;
(c) has not remained unpaid more than 90 days, and can be
confirmed with the vendor or manufacturer by Lender;
(d) when aggregated with all other Accounts payable by the Account
obligor (excluding Brunswick Corporation and its
Subsidiaries), does not exceed 5% of total Accounts, unless
Lender has specifically approved the concentration level for
such obligor;
(e) is not owing by an Account obligor located or otherwise
resident outside the United States;
(f) is not payable by an Account obligor who has suspended
business, has made an assignment for the benefit of creditors,
is insolvent, or is the subject of a voluntary or involuntary
proceeding under any bankruptcy law or other law for the
relief of debtors;
(g) is not subject to any material condition, contingency,
allowance, defense, dispute, off-set or counterclaim; and
(h) otherwise constitutes collateral reasonably acceptable to
Lender for borrowing purposes.
"Eligible New Inventory" means Inventory of Company or its Subsidiaries
that (a) is subject to a perfected, first priority Lien in favor of Lender, free
from any other Lien other than those acceptable to Lender in its sole
discretion, (b) is located at Company's or its Subsidiaries' facilities, or was
delivered to a retail purchaser within the last six business days, or was
delivered within the last 10 business days under a purchase agreement for a
lease transaction, (c) does not constitute Used Inventory or Eligible Parts
Inventory, and (d) otherwise constitutes collateral reasonably acceptable to
Lender for borrowing purposes.
"Eligible Parts Inventory" means Inventory of Company or its
Subsidiaries that (a) consists of parts and accessories for boats and trailers,
(b) is subject to a perfected, first priority Lien in favor of Lender, free from
any other Lien other than those acceptable to Lender in its sole discretion, (b)
is located at any of Company's or its Subsidiaries' facilities, (c) does not
constitute Eligible New Inventory or Used Inventory, and (d) otherwise
constitutes collateral reasonably acceptable to Lender for borrowing purposes.
"Eligible Used Inventory" means Used Inventory that (a) is subject to a
perfected, first priority Lien in favor of Lender, free from any other Lien
other than those acceptable to Lender in its sole discretion, (b) is located on
Company's or its Subsidiaries' facilities, or was delivered to a retail
purchaser within the last six business days, or was delivered within the last 10
business days under a purchase agreement for a lease transaction, (c) does not
constitute Eligible New Inventory or Eligible Parts Inventory, and (d) otherwise
constitutes collateral reasonably acceptable to Lender for borrowing purposes.
"Environmental Law" means any Law or other authorization or requirement
of any Governmental Body relating to actual or threatened emissions, discharges
or releases of pollutants, contaminants, or hazardous or toxic materials, or
otherwise relating to pollution or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"Event of Default" means any of the events specified in Section 7.01 of
this Agreement, provided any requirement for the giving of notice or lapse of
time has been satisfied.
"Fixed Charges Coverage Ratio" means the ratio, calculated for Company
and its Subsidiaries on a consolidated basis, of (a) pre-tax net income plus
interest expense, to (b) interest expense plus amounts paid or scheduled to be
paid on funded debt (excluding revolving loans owing hereunder) and Capital
Leases, all determined in accordance with GAAP. This ratio shall be measured for
the most recent 12 month period (determined during the first fiscal year on an
annualized basis from the date of the IPO).
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
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"Governmental Body" means any governmental official, or state,
commonwealth, federal, foreign, territorial, or other court or governmental
body, including any subdivision, agency, department, commission, board, bureau
or instrumentality.
"Guaranties" means the guaranties delivered to Lender by Guarantors, as
amended or modified from time to time with Lender's written consent.
"Guarantor" means any of the Individual Guarantors (unless they have
been released pursuant to Section 6.01(d) hereof) or Subsidiary Guarantors.
"Hazardous Materials" means any substances or materials subject to any
Environmental Law, including without limitation materials listed in 49 C.F.R.
Section 172.101, hazardous waste as defined in the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.., the Resource
Conservation Recovery Act, 42 U.S.C. Section 6901 et seq. or the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.., explosive or
radioactive materials, hazardous or toxic wastes or substances, petroleum or
petroleum distillates, asbestos or material containing asbestos, or any other
materials or substances designated as hazardous or toxic under any federal,
state or local Law.
"Individual Guarantors" means Richard R. Bassett, Louis R. DelHomme,
Jr., William H. McGill, Jr., Jerry Marshall and Richard C. LaManna, Jr., until
their guaranties are released pursuant to Section 6.01(d) hereof.
"Interest Payment Date" means the 15th day of each calendar month,
commencing April 15, 1998.
"Inventory" means inventory and goods held for sale or lease in the
ordinary course of business, raw materials, work in process, and materials used
or consumed in the business; returned and repossessed goods; replacements and
substitutions therefor; and parts, additions and accessions relating thereto.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any acquisition of, or beneficial interest in, partnership or
membership interests, capital stock or other securities of any Person, or any
advance or capital contribution to or other investment in any Person (except
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business).
"IPO" means an initial public offering of Company's common stock that,
when aggregated with any amounts contributed by Brunswick Corporation, results
in at least $50,000,000 of net proceeds contributed to Company.
"Law" means any law, regulation, order or decree of any Governmental
Body.
"Lender" means NationsCredit Distribution Finance, Inc., a North
Carolina corporation.
"Leverage Ratio" means the ratio, calculated for Company and its
Subsidiaries on a consolidated basis, of total liabilities determined in
accordance with GAAP, to Tangible Net Worth.
"LIBOR" means the 90 day London Interbank Offered Rate published in the
Eastern Edition of the Wall Street Journal on the last business day of Lender's
accounting month, effective for the next accounting month.
"License" means any license, permit or other authorization by any
Governmental Body or third Person necessary or appropriate for Company or any of
its Subsidiaries to own or operate their businesses or Properties.
"Lien" means any security interest, lien, pledge, encumbrance, charge
or adverse claim of any kind, including without limitation any agreement to give
or not to give any lien, or any conditional sale or other title retention
agreement.
"Litigation" means any proceeding, claim or investigation by or before
any Governmental Body.
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<PAGE> 5
"Loan Papers" means this Agreement, the Guaranties, and all financing
statements, certificates, instruments and agreements delivered by any Person
hereunder, as they are modified or extended in accordance with their terms.
"Material Adverse Change" means a material and adverse change in
Company's and its Subsidiaries' financial condition, Properties or business
operations, taken as a whole.
"NADA Wholesale Value" means the wholesale value published in the most
recent NADA Small Boat Appraisal Guide, but if no wholesale value is available
for the boat in such guide, then it shall be the wholesale value published in
the most recent BUC Used Boat Price Guide.
"Operating Lease" means any operating lease or sublease, as defined in
accordance with GAAP.
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, trust, Governmental Body, association, unincorporated
organization or other entity.
"Plan" means any single employer plan, multiple employer plan or
multi-employer plan, within the meaning of ERISA, established by Company or any
of its Subsidiaries, or otherwise maintained at any time for any of Company's
and its Subsidiaries' employees.
"Property" means all types of real, personal, tangible or intangible
property.
"Retail Paper" means chattel paper and other instruments arising from
Company's or any of its Subsidiaries' sale or lease of goods or provision of
services in the ordinary course of business.
"Rights" means rights, remedies, powers and privileges.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities (including Contingent Liabilities) of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (d) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute an unreasonably
small capital.
"Subsidiary" means, as to any Person, any corporation or limited
liability company at least 50% of whose securities having ordinary voting power
(other than securities having such power only by reason of happening of a
contingency) are owned by such Person, or one or more Subsidiaries of that
Person, or a combination thereof.
"Subsidiary Guarantor" means each Subsidiary of Company that has
delivered a guaranty to Lender of Company's obligations hereunder.
"Tangible Net Worth" means, calculated for Company and its Subsidiaries
on a consolidated basis, shareholders' equity determined in accordance with
GAAP, minus items treated as intangibles under GAAP, amounts owing by any
employee, officer or other affiliate, and any other asset that cannot be
identified as tangible to Lender's satisfaction.
"Taxes" means all taxes, assessments, fees or other charges imposed by
any Law or Governmental Body.
"Termination Date" means April 1, 01.
"Used Inventory" means Inventory of Company or its Subsidiaries that
has been (a) previously sold at retail, (b) registered, documented or titled in
any state or jurisdiction, (c) purchased or acquired by Company or its
Subsidiaries from a source other than the manufacturer, or (d) held by Company
or its Subsidiaries for more than
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two years (and in the case of Inventory covered by this clause (d), then Company
and its Subsidiaries shall be deemed to have held such Inventory as "Used
Inventory" only from such two year date onward).
ARTICLE II
ADVANCES
2.01. ADVANCES.
(a) Lender shall, subject to the terms and conditions set forth herein,
make Advances to Company from time to time until the Termination Date, to fund
Company's and its Subsidiaries' acquisition of Inventory and for general working
capital and operational purposes. Company may borrow, repay and reborrow in
accordance with this Agreement. In no event may total outstanding Advances, plus
all Committed Advances, exceed the Commitment.
(b) Company may use the proceeds of Advances to fund its and its
Subsidiaries' acquisition of Inventory, for its and its Subsidiaries' working
capital purposes and for other purposes satisfactory to Lender. No more than
$10,000,000 (unless real estate is pledged to Lender's satisfaction) may be
outstanding at any time for Advances used by Company for other working capital
purposes.
(c) Lender will send Company statements from time to time listing the
amount of each Advance. If Company does not agree with a statement, it must
immediately notify Lender in writing of the objections. Company's failure to
notify Lender of an objection within 10 business days shall constitute an
acceptance of the statement.
(d) In lieu of a promissory note or other instrument evidencing the
indebtedness hereunder, Lender will maintain records reflecting Company's
outstanding indebtedness. Failure to make notation of any Advance, however, will
not affect the obligations of Company. Entries in such records will be presumed
correct, absent manifest error.
2.02. MAKING ADVANCES. Company shall notify Lender at least one
Business Day prior to any proposed Advance; such notification may be oral, but
must be confirmed by telecopy or in writing by the date of the Advance. An
Approved Vendor may contact Lender directly for approvals constituting Committed
Advances, and Lender will disburse the proceeds of Advances under such approvals
directly to the vendor. Other Advances will be disbursed to Company to an
account or address specified by it. Lender may assume that the proceeds of
Advances are being used by Company to acquire Inventory, unless Company notifies
Lender to the contrary at the time that the Advance is being made. Each date of
borrowing must be a Business Day.
2.03. PREPAYMENT AND REPAYMENT OF ADVANCES.
(a) Company may terminate the Commitment, upon 30 days prior written
notice to Lender, and on the date specified for termination of the Commitment,
all outstanding Advances, accrued interest and charges, and other amounts owing
to Lender will be due and payable in full.
(b) Any Advance used to pay the settlement fee under Company's
settlement agreement with Brunswick Corporation will be due and payable 180 days
after the Advance is made. At Company's request, and with Lender's approval,
such Advance may be converted to a term loan on its due date, with the rates and
terms to be mutually agreed upon at such time. On the Termination Date, Company
shall repay all outstanding Advances, accrued interest and charges, and all
other amounts owing to Lender.
(c) In no event may the amount of outstanding Advances used for the
acquisition of Inventory (including Committed Advances for which Company has
received the applicable Inventory) exceed the current Borrowing Base.
Concurrently with delivery of each Borrowing Base Certificate hereunder, Company
shall repay a principal amount of Advances equal to any such excess.
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2.04. INTEREST ON ADVANCES. Advances shall bear interest at a per annum
rate equal to LIBOR plus 1.25%. Accrued interest is due and payable on each
Interest Payment Date. During the existence of an Event of Default, at the
option of Lender, amounts owing hereunder shall bear interest at a per annum
rate equal to LIBOR plus 4.25%, due and payable on demand.
2.05. COMPUTATIONS AND MANNER OF PAYMENTS. Interest will be calculated
on a simple interest basis for a year of 360 days, based on actual days elapsed.
If any payment is due on a date that is not a Business Day, the due date will be
extended to the next Business Day. Lender may, at any time and without notice to
Company, apply monies received in payment of Company's obligations in such order
of application as Lender shall determine. All payments shall be made in United
States dollars and without set-off, counterclaim or other defense. Company
specifically agrees that it will not delay payment of any obligations to Lender,
or assert any defense or set-off with respect to said obligations, on account of
a dispute between Company or one of its Subsidiaries and the vendor or
manufacturer of any Inventory.
ARTICLE III
CONDITIONS PRECEDENT
3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to fulfillment of the following conditions precedent:
(a) Lender shall be satisfied, in its sole discretion, with Company's
and each Guarantor's financial condition, Properties, business, affairs or
prospects as of the effective date.
(b) Company shall have executed and delivered to Lender all of
Company's Loan Papers, in form and substance satisfactory to Lender. Each
Guarantor shall have delivered his or its Guaranty, in form and substance
satisfactory to Lender.
(c) Company and its Subsidiaries shall have delivered such financing
statements and lien filings as Lender shall request to record and perfect the
Liens granted to Lender under the Loan Papers. Lender shall have received such
UCC and Lien search reports as it shall deem appropriate to evidence that its
Liens on the Consolidated Collateral are first priority Liens, subject only to
other Liens acceptable to Lender in its sole discretion.
(d) Lender shall have received a certificate of a duly authorized
officer of Company, certifying that (i) no Default or Event of Default exists,
(ii) the representations and warranties set forth in Article V hereof are true
and correct in all material respects, (iii) Company has complied with all
agreements and conditions to be complied with by it under the Loan Papers by
such date, (iv) the attached copies of the settlement agreement with and related
promissory note in favor of Brunswick Corporation are true and complete, without
amendment, and are in full force and effect, and (v) an attached copy of
Company's Form S-1 Registration Statement is true and complete, without
amendment except as shown, and reflects all filings made with the Securities and
Exchange Commission in connection with Company's IPO.
(e) Lender shall have received a certificate of the secretary or
member, as applicable, of each of Company and its Subsidiaries, certifying (i)
that attached copies of its articles of incorporation, bylaws or other
organizational documents are true and complete, and in full force and effect,
without amendment except as shown, (ii) that an attached copy of resolutions
authorizing execution and delivery of the Loan Papers is true and complete, and
that such resolutions are in full force and effect, were duly adopted, have not
been amended, modified, or revoked, and constitute all resolutions adopted with
respect to this loan transaction, and (iii) to the incumbency, name and
signature of each officer or representative authorized to sign the Loan Papers
on behalf of the entity. Lender may conclusively rely on this certificate until
it is otherwise notified by Company in writing.
(f) Lender shall have received an opinion of counsel to Company and
Guarantors (i) that Company has full power and authority to execute and deliver
its Loan Papers; (ii) that the Loan Papers constitute the legal,
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<PAGE> 8
valid and binding respective obligations of Company and Guarantors, enforceable
in accordance with their terms; and (iii) as to such other matters, and
otherwise in form and substance, satisfactory to Lender.
(g) Lender shall have received evidence of insurance as required under
Sections 4.03 and 6.09 hereof. Lender shall have received a copy of Company's
settlement agreement with Brunswick Corporation, providing for a waiver of the
change of control provisions with respect to the merger of the founding
dealerships.
(h) The merger of the founding dealerships into wholly-owned
Subsidiaries of Company shall have been completed without material deviation
from the pro-forma financial statements previously delivered to Lender.
(i) Lender shall have received copies of all appraisals and
environmental assessments that have been performed with respect to Company's and
its Subsidiaries' real estate, and such appraisals and environmental assessments
shall be in form and substance satisfactory to Lender.
(j) Lender shall have received evidence satisfactory to it that Company
and each of its Subsidiaries is duly organized, validly existing and in good
standing in its jurisdiction of organization, and is duly qualified and in good
standing in all other appropriate jurisdictions.
(k) All proceedings of Company and its Subsidiaries taken in connection
with the transactions contemplated hereby, and all documents incidental thereto,
shall be satisfactory in form and substance to Lender. Lender shall have
received copies of all documents or other evidence that it may reasonably
request in connection with such transactions.
3.02. REQUESTS FOR ADVANCES. Each request for an Advance and each
funding of an Advance by Lender (including the disbursement of an Advance
directly to an Approved Vendor) shall constitute a representation by Company
that on each of the dates of the request and funding, the following are true:
(a) the representations and warranties contained in Article V
hereof are true and correct in all material respects on such
date, as though made on and as of such date, and
(b) no event has occurred or exists, or would result from such
Advance, that could constitute a Default or Event of Default.
Lender may condition any Advance upon Lender's receipt, in form and substance
acceptable to it, of such other information as it may deem necessary or
appropriate. Notwithstanding the foregoing, even if the foregoing conditions are
not satisfied on the applicable disbursement date, Lender may fund a Committed
Advance that was committed when such conditions were satisfied, without being
deemed to have waived any conditions precedent nor to have established any
course of dealing.
ARTICLE IV
SECURITY INTEREST
4.01. SECURITY INTERESTS IN COLLATERAL. As security for all present and
future obligations of Company and its Subsidiaries to Lender, whether or not
arising under this Agreement, and of whatever kind, now due or to become due,
absolute or contingent, joint or several, Company hereby grants to Lender a
continuing security interest and Lien on the following assets of Company,
whether now owned or hereafter acquired and wherever located (collectively,
"Collateral"):
(a) all of Company's Accounts;
(b) all of Company's Inventory;
(c) all of Company's other goods, equipment, fixtures and
furniture; and
(d) all insurance policies and proceeds relating to the foregoing;
all books and records relating to the foregoing; and all
proceeds and products of the foregoing.
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4.02. DUTIES RELATING TO COLLATERAL. So long as this Agreement is in
effect or any amounts are owing to Lender, Company agrees that it shall, and
shall cause each of its Subsidiaries to:
(a) Keep accurate and complete records of the Consolidated Collateral;
keep all books and records relating to the Consolidated Collateral at Company's
address specified under or pursuant to Section 8.02 hereof; and provide at least
30 days advance written notice to Lender of any change in the location of any
such books and records;
(b) Promptly report and pay all Taxes and other charges against the
Consolidated Collateral; maintain a perfected, first priority Lien in favor of
Lender in the Consolidated Collateral, subject only to other Liens permitted
hereunder; and discharge all other Liens that from time to time attach to or are
asserted against the Consolidated Collateral;
(c) Pay all transportation and storage charges on the Consolidated
Collateral; and pay all rents and other amounts, if any, for the use of premises
on which any of the Consolidated Collateral is kept; and
(d) Take all actions appropriate for the collection and enforcement of
Accounts, and for the perfection of any liens securing Accounts; permit Lender
upon reasonable request to contact Account obligors to verify information
provided by Company or its Subsidiaries, and assist Lender in such verification
process; and after a Default or Event of Default, not adjust, settle or
compromise the amount, payment or performance of any obligations relating to
Accounts, without the prior consent of Lender.
4.03. INSURANCE OF COLLATERAL. Company shall, and shall cause each of
its Subsidiaries to, keep all Inventory insured for full value against all
insurable risks, on terms and with insurers reasonably acceptable to Lender, and
with Lender as the loss payee, assignee or additional insured, as appropriate.
Company shall provide notice to Lender in writing at least 10 days before
changing or canceling any policy. Each policy shall require the insurer to give
not less than 30 days prior written notice to Lender of cancellation, and shall
provide that Lender's interest will not be impaired by any act or neglect of
Company, its Subsidiaries or any other Person nor by any use of the premises for
purposes more hazardous than are permitted by the policy.
4.04. FURTHER ASSURANCES. Company shall, and shall cause its
Subsidiaries to, execute such financing statements and other instruments and
agreements, and shall take such actions, as Lender shall request from time to
time to evidence or perfect any Lien granted under the Loan Papers. Unless
prohibited by Law, Company authorizes Lender to execute and file any financing
statement or other instrument or agreement on behalf of Company or its
Subsidiaries for the foregoing purposes. The parties agree that a copy of this
Agreement, any Guaranty of a Subsidiary Guarantor, or any financing statement
may be filed as a financing statement in any appropriate jurisdiction, to the
extent permitted by Law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Company represents and warrants that the following are true and
correct:
5.01. ORGANIZATION AND QUALIFICATION. Each of Company and its
Subsidiaries is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of its state of
organization. Each of Company and its Subsidiaries is qualified to do business
in all jurisdictions where the nature of its business or Properties require such
qualification. Each Subsidiary of Company is listed on Exhibit C hereto.
5.02. DUE AUTHORIZATION; VALIDITY. The Board of Directors of Company
has duly authorized the execution, delivery and performance of its Loan Papers.
No consent of any shareholders of Company is required as a prerequisite to the
validity and enforceability of its Loan Papers. Company has full legal right,
power and authority to execute, deliver and perform under its Loan Papers. Such
Loan Papers constitute the legal, valid and binding obligations of Company,
enforceable in accordance with their terms (subject as to enforcement of
remedies
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to any applicable bankruptcy, reorganization, moratorium, or similar Laws or
principles of equity affecting creditors' rights generally).
5.03. GUARANTIES. Each Subsidiary Guarantor has full legal right,
power and authority to execute, deliver and perform under its Loan Papers. The
Board of Directors or members of each Subsidiary Guarantor have duly authorized
the execution, delivery and performance of its Loan Papers. No consent of any
shareholders or members of a Subsidiary Guarantor is required as a prerequisite
to the validity and enforceability of its Loan Papers. Each Guarantor's Loan
Papers constitute the legal, valid and binding obligation of such Guarantor,
enforceable in accordance with their terms(subject as to enforcement of remedies
to any applicable bankruptcy, reorganization, moratorium, or similar Laws or
principles of equity affecting creditors' rights generally).
5.04. CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution or
delivery of any Loan Papers, and performance thereunder, do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien on any Properties of Company or any Subsidiary Guarantor under, or require
any consent, approval or action by or notice to any Governmental Body or other
Person (other than consents already obtained) pursuant to, the articles of
incorporation, bylaws or other organizational documents of Company or any
Subsidiary Guarantor, or any Law or material agreement to which Company, any
Subsidiary Guarantor or any of their Properties is subject.
5.05. FINANCIAL STATEMENTS. The financial statements of Company and its
Subsidiaries delivered to Lender fairly present Company's and its Subsidiaries'
results of operation, and Company's and its Subsidiaries financial conditions as
of the dates and for the periods shown, all in accordance with GAAP. Company's
financial statements (and notes thereto) reflect all material liabilities,
direct and contingent, of Company and its Subsidiaries that are required to be
disclosed in accordance with GAAP. None of Company and its Subsidiaries has
material Contingent Liabilities, liabilities for Taxes, forward or long-term
commitments, or unrealized or anticipated losses from any unfavorable
commitments that are not reflected in such financial statements. Each of Company
and its Subsidiaries is Solvent. To the best of Company's knowledge, each
Individual Guarantor, at the time of execution and delivery of his Guaranty, is
Solvent.
5.06. LITIGATION. Except as disclosed to Lender, there is no Litigation
pending or, to the best of Company's knowledge, threatened against Company or
any of its Subsidiaries on the date hereof that involves a claim for damages or
reasonably expected potential liability of $500,000 or more. There is no pending
or, to the best of Company's knowledge, threatened Litigation against Company or
any of its Subsidiaries that could result in a Material Adverse Change.
5.07. LAWS REGULATING INCURRENCE OF DEBT. No proceeds of any Advance
will be used directly or indirectly to acquire any securities, without the prior
written consent of Lender. No Advance will be used to purchase or carry margin
stock (as defined in applicable Federal Reserve regulations), nor to extend
credit to others to do so. None of Company or its Subsidiaries is subject to
regulation under any Law that prohibits or restricts its incurrence of Debt in
any material respect.
5.08. LICENSES, TITLE TO PROPERTIES, ETC. Each of Company and its
Subsidiaries possesses all material Licenses and is not in violation thereof in
any material respect. Each of Company and its Subsidiaries has full power,
authority and legal right to own and operate its Properties, and to conduct its
business. Each of Company and its Subsidiaries has good and indefeasible title
(fee or leasehold, as applicable) to its Properties, subject to no Lien of any
kind, except as permitted hereunder. None of Company and its Subsidiaries is in
violation of its articles of incorporation, bylaws or other organizational
documents, any award of any arbitrator, or any Law or material agreement to
which Company, any of its Subsidiaries or any of their Properties is subject. No
business or Property of Company or its Subsidiaries is affected by any strike,
lock-out or other labor dispute, material casualty, earthquake, embargo or act
of God. No event or circumstance has occurred or exists that constitutes or
could reasonably be expected to constitute a violation of, or breach or default
under, Company's settlement agreement with Brunswick Corporation.
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5.09. OUTSTANDING DEBT AND LIENS. Company and its Subsidiaries have no
outstanding Debt, Contingent Liabilities or Liens, except as expressly permitted
hereunder.
5.10. TAXES. Each of Company and its Subsidiaries has filed all Tax
returns and reports which are required to be filed, and has paid all Taxes, to
the extent due and payable. All Tax liabilities of Company and its Subsidiaries
are adequately provided for on their books (including interest and penalties)
and adequate reserves have been established therefor in accordance with GAAP.
Except as disclosed to Lender, no taxing authority has notified Company or any
of its Subsidiaries of any material deficiency in a Tax return nor asserted any
material Tax liability in excess of that already paid.
5.11. EMPLOYEE BENEFITS. All employee benefits are provided in
accordance with all applicable Laws. Each Plan satisfies the minimum funding
standards under all applicable laws, and has no accumulated deficiency. None of
Company or its Subsidiaries has incurred any withdrawal liability nor engaged in
any prohibited transaction with respect to a Plan. None of Company or its
Subsidiaries has failed to make any payment to a Plan as required under
applicable laws, and no reportable event (as defined under ERISA) has occurred.
None of Company or its Subsidiaries has received any notice from any
Governmental Body or administrator of any potential termination of a Plan, and
no circumstance or event exists that could constitute grounds for the
termination of or appointment of a trustee to administer any Plan.
5.12. ENVIRONMENTAL LAWS. Company has delivered to Lender copies of all
environmental studies and reports conducted or received by Company or its
Subsidiaries in connection with any of their Properties. All Licenses have been
obtained or filed that are required under any Environmental Laws, unless the
failure to obtain or file same could not result in a Material Adverse Change. No
Hazardous Materials are generated or produced at or in connection with any
Properties or operations of Company or its Subsidiaries, and no Hazardous
Materials in any material amounts are released onto any Properties of Company or
its Subsidiaries.
5.13. DISCLOSURE. None of Company and its Subsidiaries has made a
material misstatement of fact, or failed to disclose any fact necessary to make
the facts disclosed not misleading, to Lender during the course of application
for and negotiation of this Agreement or otherwise in connection with any
transactions contemplated hereby. There is nothing known to Company or its
Subsidiaries that could materially adversely affect Company's or any of its
Subsidiaries' financial condition, Properties or business operations, or that
could result in a Material Adverse Change, which is not set forth herein or in
notices hereafter delivered to Lender.
ARTICLE VI
COVENANTS
So long as this Agreement is in effect or any amounts are owing to
Lender, Company agrees as follows:
6.01. FINANCIAL COVENANTS; GUARANTIES.
(a) Company shall maintain a Current Ratio of at least 1.20 to 1
at all times following completion of the IPO.
(b) Company shall maintain a Leverage Ratio of not more than 2.75 to 1
at the end of each month ending on or after completion of the IPO.
(c) Company shall maintain an Fixed Charges Coverage Ratio of at
least 1.0 to 1 at the end of each month.
(d) Prior to consummation of an IPO satisfying the next sentence,
Company shall cause each principal of any dealership acquired by or merged into
or consolidated with Company or any of its Subsidiaries to deliver to Lender a
guaranty in form and substance satisfactory to Lender, within 15 days following
the acquisition, merger or consolidation. Lender shall release all Guaranties of
Individual Guarantors upon Company's completion of an IPO without material
deviation from the pro-forma financial statements delivered to Lender prior to
the date hereof.
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6.02. DEBT; OPERATING LEASES. Company shall not, and shall not permit
any of its Subsidiaries to, incur, assume or be liable in any manner for any
Debt, except (a) Debt under the Loan Papers, (b) existing Debt shown on Exhibit
B hereto, (c) Capital Leases and Debt incurred to acquire equipment used in
Company's or the Subsidiary's business (including refinancings thereof), in an
amount not to exceed $1,000,000 in the aggregate at any time, (d) Debt incurred,
assumed or otherwise owing by Company its Subsidiaries in connection with an
acquisition or merger, as approved by Lender in its reasonable discretion, (e)
other Debt subordinated to repayment of amounts owing hereunder on terms
satisfactory to Lender, and otherwise acceptable to Lender in its sole
discretion, and (f) trade payables incurred and paid in the ordinary course of
business. Company and its Subsidiaries shall not enter into or be party to
Operating Leases requiring total rental payments during any fiscal year in
excess of $2,000,000 in the aggregate.
6.03. CONTINGENT LIABILITIES. Company shall not, and shall not permit
any of its Subsidiaries to, incur, assume or be liable in any manner for any
Contingent Liabilities, except (a) those resulting from the endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
Contingent Liabilities of Company and its Subsidiaries relating to Debt secured
solely by real property of Company and its Subsidiaries, and in existence on the
date hereof, (c) existing Contingent Liabilities shown on Exhibit B hereto, (d)
Contingent Liabilities of Company created in connection with an acquisition or
merger, as approved by Lender in its reasonable discretion, and (e) Contingent
Liabilities of Company for obligations of its direct or indirect wholly-owned
Subsidiaries.
6.04. LIENS. Company shall not, and shall not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any of its Properties,
except (a) Liens hereunder, (b) Liens on real estate securing existing Debt, as
shown on Exhibit B hereof, (c) Liens effected by or relating to Capital Leases
or other Debt permitted under Section 6.02(c) hereof, encumbering only the
assets leased thereunder or acquired with proceeds thereof, (d) Liens
satisfactory to Lender securing Debt or Contingent Liabilities permitted under
Section 6.02(d) or (e) hereof, or Section 6.03(b) hereof, and (e) Tax,
mechanics' and materialmen's Liens relating to amounts that are not yet due and
payable, or that are being contested in good faith by appropriate proceedings,
for which adequate reserves have been established.
6.05. AMENDMENT OF ORGANIZATIONAL DOCUMENTS; IPO. Company shall not,
and shall not permit any of its Subsidiaries to, amend or modify, or permit the
amendment or modification of, its articles of incorporation, bylaws or other
organizational documents in any material respect, without the prior written
consent of Lender (which will not be unreasonably withheld). The IPO shall be
completed not later than September 30, 1998, without material deviation from the
financial statements delivered to Lender prior to the date hereof, and otherwise
on terms reasonably satisfactory to Lender.
6.06. LAWS, LICENSES AND MATERIAL AGREEMENTS.
(a) Company shall, and shall cause its Subsidiaries to, obtain and
comply in all material respects with all applicable Laws and Licenses. Company
and its Subsidiaries shall maintain all Plans such that the representation and
warranty in Section 5.11 hereof is true at all times.
(b) Company shall, and shall cause its Subsidiaries to, maintain and
comply in all material respects with all material agreements necessary or
appropriate for their businesses and Properties, other than defaults arising
under due on sale clauses in mortgages and deeds of trust securing the Debt
shown on Exhibit B hereto. Company shall comply with its settlement agreement
with Brunswick Corporation in all material respects. Company shall not take any
action or suffer to exist any circumstance that could violate, or constitute a
breach under or grounds for termination of, such agreement.
6.07. DISPOSITION OF ASSETS. Company shall not, and shall not permit
any of its Subsidiaries to, sell, transfer, encumber or lease any of their
assets, except (a) sales or leases of Inventory in the ordinary course of
business, (b) dispositions of obsolete or useless assets, (c) transfers of
Inventory between wholly-owned Subsidiaries of Company, and (d) dispositions of
Retail Paper in the ordinary course of business. Upon any sale of
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Retail Paper by Company or any of its Subsidiaries in the ordinary course of
business, Lender's Liens in such Retail Paper shall be automatically released,
without any further action by Lender.
6.08. MERGERS; INVESTMENTS; BUSINESS. Company shall not, and shall not
permit any Subsidiary of Company to, merge into, consolidate with or make any
Investment in any Person, permit any other Person to merge into or consolidate
with it, or form or acquire any new Subsidiary, without Lender's prior written
consent (which shall not be unreasonably withheld), except mergers or
consolidations of a wholly-owned Subsidiary of Company with or into Company or
another wholly-owned Subsidiary. Lender expressly acknowledges that it is
Company's growth strategy to pursue strategic acquisitions that are beneficial
to its business. Within 15 days after Company's acquisition or formation of any
direct or indirect Subsidiary hereafter, Company shall deliver to Lender a
revised Exhibit C hereto, and shall cause the new Subsidiary to deliver a
Guaranty and Lien filings in form and substance satisfactory to Lender. None of
Company and its Subsidiaries shall change the nature of its business as now
conducted.
6.09. INSURANCE. Except as otherwise required by Section 4.03 hereof,
Company shall, and shall cause each Subsidiary to, (a) keep its insurable
Properties adequately insured at all times by financially sound and reputable
insurers to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies similarly
situated and in the same or similar businesses, (b) maintain in full force and
effect public liability and workers compensation insurance, in amounts customary
for such similar companies to cover normal risks, by insurers satisfactory to
Lender, and (c) maintain such other insurance as may be required by Law or
reasonably requested by Lender. Company shall deliver evidence of renewal of
each insurance policy on or before the date of its expiration, and from time to
time shall deliver to Lender, upon demand, evidence of the maintenance of such
insurance. Company shall promptly deliver to Lender copies of all reports
provided to insurers by Company or any of its Subsidiaries.
6.10. INSPECTION RIGHTS. Company shall, and shall cause its
Subsidiaries to, permit Lender, upon reasonable notice and during normal
business hours, to examine and make copies of and abstracts from any of their
books and records, to inspect their Properties and to discuss their affairs with
any of their directors, officers, managerial employees or accountants, all as
Lender may reasonably request.
6.11. RECORDS; CHANGES IN GAAP; YEAR 2000 COMPATIBILITY. Company shall,
and shall cause its Subsidiaries to, keep adequate books and records in
conformity with GAAP. Company shall not change its fiscal year nor change, or
permit any of its Subsidiaries to change, its method of financial accounting
except in accordance with GAAP. In connection with any change in accounting
methods resulting from a change in GAAP, Company and Lender shall make
appropriate alterations to the covenants set forth in Section 6.01 hereof,
reflecting such change. Company shall take all action necessary to assure that
its and its Subsidiaries' computer-based systems are able to operate and
effectively process data having dates on or after January 1, 2000.
6.12. REPORTING REQUIREMENTS. Company shall furnish to Lender:
(a) By the 15th day of each month, a Borrowing Base Certificate
prepared on a consolidated basis for Company and its Subsidiaries as of the
close of business for the preceding month and accompanied by detailed Inventory,
accounts payable aging and receivable aging reports, in form and substance
satisfactory to Lender and certified as true and complete by an officer of
Company;
(b) As soon as available and in any event within 20 days after the
end of each month, a balance sheet and statement of income of Company and its
Subsidiaries for such month and for the portion of the fiscal year ending with
such month, prepared on a consolidated basis in accordance with GAAP in
reasonable detail, and certified by an officer of Company (in a manner
satisfactory to Lender) as fairly presenting the financial condition and results
of operations of Company and its Subsidiaries, together with a Compliance
Certificate;
(c) As soon as available and in any event within 120 days after
the end of each fiscal year of Company, an audited balance sheet and statements
of income and cash flows of Company and its Subsidiaries for such fiscal year,
prepared on a consolidated basis in accordance with GAAP in reasonable detail
and accompanied
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by an unqualified opinion of independent certified public accountants acceptable
to Lender, together with a Compliance Certificate;
(d) Promptly upon receipt thereof, copies of all material reports
or letters submitted to Company or any of its Subsidiaries by any auditors or
accountants in connection with any annual, interim or special audit;
(e) As soon as possible but at least 60 days prior to the
commencement of each fiscal year, a monthly business plan of Company and its
Subsidiaries for such year, including a projected balance sheet and income
statements, accompanied by a statement of assumptions and certified by an
officer of Company in a manner acceptable to Lender;
(f) Promptly upon the filing thereof, copies of all filings made
by Company or any of its Subsidiaries with the Securities and Exchange
Commission;
(g) As soon as possible and in any event within five Business Days
after knowledge thereof by an officer of Company or any of its Subsidiaries, a
notice of the occurrence of any material Default or material Event of Default,
setting forth the details thereof, and the action being taken or proposed to be
taken with respect thereto;
(h) As soon as possible and in any event within five Business
Days, notice of any Litigation pending or threatened against Company or any of
its Subsidiaries which, if determined adversely, could result in damages in
excess of $500,000 or more or any other Material Adverse Change, together with a
statement of an officer of Company describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto;
(i) Promptly after filing or receipt thereof, copies of all
reports and notices that Company or any of its Subsidiaries furnishes to or
receives from any holders of any Debt or Contingent Liability relating to a
material breach, default or event of default thereunder, or otherwise relating
to any event or circumstance that could result in a material Default or material
Event of Default; and
(j) Promptly upon request, such information concerning the
Borrowing Base, Accounts, Inventory, Company's, its Subsidiaries' or any
Individual Guarantor's financial condition, Properties, business, affairs or
prospects, and other matters, as Lender may from time to time reasonably
request.
6.13. TRANSACTIONS WITH AFFILIATES. Except as permitted herein, Company
shall not, and shall not permit any of its Subsidiaries to, enter into or be
party to a transaction with an Affiliate (except Company or a direct or indirect
wholly-owned Subsidiary of Company), except on terms no less favorable than
could be obtained on an arm's-length basis with a Person that is not an
Affiliate. Company shall not, and shall not permit any of its Subsidiaries to,
make any loans or advances to any of its officers, shareholders or other
Affiliates (except a direct or indirect wholly-owned Subsidiary of Company),
except advances made for customary travel expenses incurred in the conduct of
Company's business. Company shall not, and shall not permit any of its
Subsidiaries to, make any loans or advances to any Subsidiary of Company, unless
such Subsidiary is directly or indirectly wholly-owned by Company and has
executed a Guaranty and Lien filings in favor of Lender, in form and substance
satisfactory to Lender.
ARTICLE VII
EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT. Each of the following shall be an "Event of
Default" hereunder, if the same shall occur for any reason whatsoever, whether
voluntary or involuntary, by operation of Law or otherwise:
(a) Company shall fail to pay any principal owing hereunder when
due; or Company or any Guarantor shall fail to pay any interest or other amounts
payable under any Loan Papers within 15 days after the due date therefor;
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(b) Any material representation or warranty of Company or any
Guarantor made in connection with this Agreement or any transactions
contemplated hereby shall be incorrect or misleading in any material respect
when given;
(c) Company or any Guarantor shall fail to perform or observe any
other term or covenant contained in any of their respective Loan Papers, and
such default shall not be cured within 30 days after the earlier of knowledge
thereof by an officer of Company or such Guarantor, as applicable, or after
written notice of the default is delivered by Lender to Company, but if the
default is subject to cure and the cure is being diligently pursued by
appropriate means at the end of such 30 days, then Company or Guarantor, as
applicable, shall have an additional 30 days thereafter to complete the cure;
(d) Any provision of any Loan Papers shall, for any reason, not be
valid and binding on Company or any Guarantor; any Guarantor shall not have had
full legal right, power and capacity to execute, deliver and perform under his
or its Guaranty, when such Guaranty was delivered to Lender; any Guarantor shall
not have been Solvent when he or it delivered his or its Guaranty to Lender; any
Guarantor shall revoke, terminate or repudiate his or its Guaranty, or any
Guaranty shall, for any reason, not be valid and binding on the applicable
Guarantor, except due to the Guaranty's release pursuant to Section 6.01(d)
hereof; or any breach, default or event of default shall occur or exist under
any Loan Papers after any applicable grace period;
(e) Any of the following shall occur: (i) Company or any Guarantor
shall make an assignment for the benefit of creditors, be insolvent or unable to
pay its debts as they come due, cease doing business as a going concern or cease
to be Solvent; (ii) Company or any Guarantor shall petition any Governmental
Body for the appointment of a trustee, receiver or liquidator of it or any of
its assets, or shall commence any proceedings under any bankruptcy,
reorganization, insolvency, moratorium, liquidation or other debtor relief Laws;
(iii) any petition shall be filed, or any such proceedings shall be commenced,
against Company or any Guarantor under any such Laws and the same is not
dismissed or otherwise discharged within 90 days, or an order, judgment or
decree shall be entered approving such petition or appointing any trustee,
receiver or liquidator for Company or any Guarantor, or any of their assets; or
(iv) any final order, judgment or decree shall be entered decreeing Company's or
any Guarantor's dissolution, split-up or divestiture of assets;
(f) Any lender(s) under any of the real estate Debt shown on
Exhibit B hereto shall declare such Debt due and payable prior to its stated
maturity as a result of breach of a due-on-sale clause, and such action shall
result in a Material Adverse Change; Company or any of its Subsidiaries shall
fail to make any payment when due with respect to any other Debt or Contingent
Liability of $500,000 or more in the aggregate, and such failure shall continue
after any applicable grace period; Company or any of its Subsidiaries shall fail
to observe any term or condition of any agreement relating to any other Debt or
Contingent Liability of $500,000 or more in the aggregate, and such failure
shall continue after any applicable grace period; or any such other Debt or
Contingent Liability shall be declared to be due and payable, or required to be
prepaid, prior to the stated maturity thereof;
(g) Company and its Subsidiaries shall have any final judgment(s)
outstanding against them for the payment of $1,000,000 or more in excess of
insurance, and such judgment(s) shall remain unstayed and unpaid for over 30
days;
(h) There shall be an issuance of an order of attachment against
Company, any of its Subsidiaries or any material portion of their Properties, or
there shall be damage to or destruction of a substantial part of Company's or
any of its Subsidiaries' assets that is not covered by insurance;
(i) Any investigation or proceeding shall be instituted against
Company or any of its Subsidiaries under or with respect to any Environmental
Laws that could reasonably be expected to result in any penalty, fine,
remediation costs or other damages of $1,000,000 or more in excess of insurance;
(j) Company shall have any material change in its management,
without prior consent of Lender, or there shall be a Change in Control; or
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(k) Lender shall determine that there has been a Material Adverse
Change.
7.02. REMEDIES UPON DEFAULT. If an Event of Default described in
Section 7.01(e) hereof shall occur with respect to Company, all amounts owing to
Lender shall, to the extent permitted by applicable Law, become immediately due
and payable without any action by Lender, and without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind, all of which are hereby waived to the fullest extent permitted by
Law. If any other Event of Default shall occur and be continuing, Lender may do
any one or more of the following from time to time:
(a) Declare all Advances, interest and other amounts owing to
Lender immediately due and payable, whereupon they shall be due and payable
without diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby waived to the
fullest extent permitted by Law;
(b) Terminate or reduce the Commitment; and/or
(c) Exercise any other Rights afforded under any agreement, by
Law, at equity or otherwise, including those Rights of a secured party under the
Uniform Commercial Code in effect in any jurisdiction where the Collateral is
kept. Such Rights shall include the right to cancel any Committed Advances, to
direct Company to return any Inventory to a vendor or manufacturer thereof for
credit or refund, to enter any of Company's premises with or without legal
process, but without force, and/or to take possession of and remove Collateral,
and books and records relating to Collateral. At Lender's request during an
Event of Default, Company will assemble, prepare for removal and make available
to Lender at a place to be designated by Lender which is reasonably convenient
to both parties such items of Collateral as Lender may from time to time
request. During the continuance of an Event of Default, Lender may take control
of any funds generated by the Collateral, notify Account obligors to make
payment to an account or location designated by Lender, and in Lender's name or
Company's name, demand, collect, receipt for, settle, compromise, sue for,
repossess, accept returns of, foreclose or realize upon any Collateral,
including without limitation Accounts and related instruments and security
therefor. Company waives any and all rights that it may have to a notice prior
to seizure by Lender of any Collateral. Ten days written notice of a public sale
date or the date after which a private sale may occur shall be a reasonable
notice. Lender shall not be chargeable with responsibility for the accuracy or
validity of any document or for the existence or value of any Collateral, and
shall not be liable for failure to collect any amounts owing on an Account or
instrument. Company waives all relief from all appraisement, valuation,
deficiency or exemption laws now in force or hereafter enacted. LENDER SHALL NOT
BE LIABLE FOR ANY ACT OR OMISSION OF ITS OFFICERS, AGENTS OR EMPLOYEES, ABSENT
GROSS NEGLIGENCE OR WILFUL MISCONDUCT.
7.03. POWER OF ATTORNEY. Company hereby irrevocably appoints Lender,
including any officer or employee of Lender as Lender may designate, as
Company's true and lawful attorney-in-fact with power of substitution to do the
following acts on behalf of Company during the continuance of any Event of
Default: to prepare, execute and deliver in the name of Company security
instruments, financing statements, lien filings and certificates of title
relating to Collateral; to endorse Company's name upon any notes, checks,
drafts, money orders and other forms of instruments made payable to Company and
relating to Collateral; and generally to perform all acts and do all things
necessary and proper in connection with the transactions contemplated hereby or
in discharge of the powers hereby conferred, including the making of affidavits
and the acknowledgment of instruments as fully as if done by Company. The
foregoing powers are coupled with an interest and shall be irrevocable, as long
as the Commitment or any obligations of Company to Lender remain outstanding.
7.04. CUMULATIVE RIGHTS. All Rights available to Lender under the Loan
Papers shall be cumulative of and in addition to all other Rights under any
other agreement, at Law or in equity. The acceptance by Lender at any time and
from time to time of partial payment of any amount owing under any Loan Papers
shall not be deemed to be a waiver of any Event of Default then existing.No
waiver by Lender of an Event of Default shall be deemed to be a waiver of any
Event of Default other than such Event of Default. No delay or omission by
Lender in exercising any Right under the Loan Papers shall impair such Right or
be construed as a waiver thereof or an acquiescence therein, nor shall any
single or partial exercise of any Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
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7.05. PERFORMANCE BY LENDER; EXPENDITURES. Should any covenant of
Company fail to be performed in accordance with the terms of the Loan Papers,
Lender may, at its option, attempt to perform such covenant on behalf of
Company. It is expressly understood, however, that Lender does not assume and
shall never have any liability or responsibility for the performance of any
obligations of Company. Any amounts expended or incurred by Lender in the
performance of any such act or in the enforcement of this Agreement (including
reasonable attorneys' fees) shall constitute part of the obligations secured
hereunder, will bear interest at the default rate hereunder and will be payable
upon demand.
7.06. CONTROL. None of the provisions hereof shall be deemed to give
Lender any right to exercise control over the affairs and/or management of
Company or any of its Subsidiaries, which the parties agree is retained by
Company and its Subsidiaries.
ARTICLE VIII
MISCELLANEOUS
8.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of any Loan Papers, nor consent to any departure by Company or any Guarantor
therefrom, shall be effective unless the same shall be in writing and signed by
Lender, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8.02. NOTICES. Unless otherwise provided herein, all notices, demands
and other communications under the Loan Papers shall be in writing and shall be
personally delivered, sent by telecopy or telex (answerback received), or sent
by certified mail, postage prepaid, to the following addresses:
(a) If to Company or any of its Subsidiaries:
MarineMax, Inc.
18167 U.S. 19 North, Suite 499
Clearwater, Florida 33764
Attention: Michael McLamb
Fax: (813) 531-0123
with a copy to:
Robert S. Kant
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012-1656
Fax: (602) 263-2900
(b) If to Lender:
NationsCredit Distribution Finance, Inc.
1000 Holcomb Woods Parkway, Suite 240
Roswell, Georgia 30076
Attention: Marine Group Operations Manager
Fax: (770) 643-3178
Or to such other address as any party shall hereafter designate in
written notice to the other party. All notices, demands and other communications
will be effective when so personally delivered or sent by telecopy or telex, or
five days after being so mailed; provided, however, that notices to Lender
pursuant to Article II hereof shall only be effective when received.
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8.03. PARTIES IN INTEREST. The Loan Papers shall bind and inure to the
benefit of the parties hereto, and their successors and assigns. Lender may from
time to time assign its rights or obligations hereunder, but Company may not
assign or transfer its rights or obligations hereunder (whether voluntarily or
by operation of Law), without the prior written consent of Lender.
8.04. COSTS, EXPENSES AND TAXES. Company agrees to pay on demand (a)
all costs and expenses (including reasonable attorneys' fees) of Lender in
connection with any extension, modification, waiver or release of any Loan
Papers, and (b) all costs and expenses of Lender incurred in any work-out or
enforcement of any Loan Papers, including reasonable attorneys' fees and the
costs and expenses of environmental or other consultants. Company shall pay any
stamp, debt, recordation, withholding and other Taxes payable in connection with
any Loan Papers or payments thereunder (other than Taxes on the overall net
income of Lender), and agrees to save Lender harmless from and against all
liabilities relating to any Taxes. All payments by Company shall be made free
and clear of and without deduction for any Taxes of any nature now or hereafter
existing.
8.05. INDEMNIFICATION BY COMPANY. COMPANY AGREES TO INDEMNIFY, DEFEND
AND HOLD HARMLESS LENDER, ITS AFFILIATES, AND ALL OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS, ATTORNEYS AND ASSIGNS, FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST
ANY OF THEM IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN PAPERS, ANY
TRANSACTION RELATED HERETO OR THERETO, OR ANY ACT, OMISSION OR TRANSACTION OF
COMPANY, ANY GUARANTOR OR ANY OF THEIR AFFILIATES, OR ANY OF THEIR
DIRECTORS,OFFICERS, AGENTS, EMPLOYEES OR REPRESENTATIVES; PROVIDED, HOWEVER,
THAT COMPANY SHALL NOT INDEMNIFY, DEFEND AND HOLD HARMLESS ANY INDEMNIFIED
PERSON FOR LOSSES OR DAMAGES THAT COMPANY PROVES WERE CAUSED BY SUCH PERSON'S
WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR OTHER NEGLIGENCE. LENDER SHALL NOT BE
LIABLE TO COMPANY OR ANY GUARANTOR FOR ANY CONSEQUENTIAL DAMAGES. This indemnity
shall survive repayment of Company's obligations to Lender.
8.06. HAZARDOUS WASTE INDEMNIFICATION. Company shall indemnify and hold
harmless Lender, its Affiliates, and all of their directors, officers,
employees, representatives, agents, successors, attorneys and assigns, from and
against any loss, damage, cost, expense or liability directly or indirectly
arising out of or attributable to the use, generation, manufacture, treatment,
production, storage, release, threatened release, discharge, disposal or
presence of any Hazardous Materials on, under or about Company's or any
Guarantor's property or operations or property leased to Company or any
Guarantor, including but not limited to attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). This
indemnity shall survive repayment of Company's obligations to Lender.
8.07. DISCLAIMER OF WARRANTY. COMPANY ACKNOWLEDGES THAT LENDER HAS MADE
NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO ANY INVENTORY OR OTHER
CONSOLIDATED COLLATERAL, INCLUDING ANY WARRANTY OF MERCHANTABILITY. COMPANY
IRREVOCABLY WAIVES ANY CLAIMS AGAINST LENDER WITH RESPECT TO THE INVENTORY AND
OTHER CONSOLIDATED COLLATERAL WHETHER FOR BREACH OF WARRANTY OR OTHERWISE. Any
such claims shall not alter, diminish or otherwise impair Company's or any
Guarantor's liabilities or obligations to Lender under the Loan Papers. Lender
does not assume any obligations of Company or its Subsidiaries relating to the
Inventory, any Accounts, any contract obligations, or any other obligations or
duties arising from the Consolidated Collateral.
8.08. RATE PROVISION. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall Company or any Guarantor be obligated to
pay any amount in excess of the maximum amount of interest permitted under
applicable Law. If from any circumstance Lender shall ever receive anything of
value deemed excess interest under applicable Law, an
18
<PAGE> 19
amount equal to such excess shall be applied to the reduction of the principal
amount of outstanding Advances and any remainder shall be refunded to the payor.
8.09. SEVERABILITY; COUNTERPARTS. If any provision of any Loan Papers
is held to be illegal, invalid or unenforceable under present or future Laws
during the term thereof, such provision shall be fully severable, and the Loan
Papers shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof. This Agreement and
the other Loan Papers may be executed in any number of counterparts.
8.10. GOVERNING LAW. This Agreement and the other Loan Papers shall be
governed by and construed in accordance with the laws of the State of Georgia.
The state and federal courts located in Atlanta, Georgia, including the U.S.
District Court for the Northern District of Georgia, shall have jurisdiction to
determine any claim or dispute pertaining to this Agreement. The parties
expressly submit and consent to such jurisdiction, and waive any claim of
inconvenient forum.
8.11. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS
OF ANY FORUM STATE, THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS OR
ANY RELATED MATTERS.
8.12. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Loan and Security Agreement is executed as of
the date first set forth above.
MARINEMAX, INC.
By /s/ Michael H. McLamb
-------------------------------------
Title:
NATIONSCREDIT DISTRIBUTION FINANCE, INC.
By /s/ C. Thomas Anderson
-------------------------------------
Title:
19
<PAGE> 1
EXHIBIT 10.14
NATIONS CREDIT
GUARANTY AND SECURITY AGREEMENT
1. GUARANTY. To induce NATIONSCREDIT DISTRIBUTION FINANCE, INC. ("NDF") to
extend credit to MARINEMAX, INC., a Delaware corporation ("Debtor"), and in
consideration of the benefits to accrue to the undersigned (jointly and
severally, if more than one) ("Guarantor"), Guarantor hereby
unconditionally guarantees and promises to pay to NDF on demand all
Indebtedness of Debtor. As used herein, "Indebtedness" means any and all
amounts owing to NDF from time to time by Debtor, whether principal,
interest, fees, charges, expenses or other amounts, and whether owing
jointly or severally.
Demand for payment may be made hereunder at any time that an "Event of
Default" exists under the Loan and Security Agreement of even date herewith
between Debtor and NDF (as such agreement may be modified, renewed or
extended, "Loan Agreement"). Unless otherwise defined, terms are used
herein as defined in the Loan Agreement.
This is a continuing guaranty covering all present and future Indebtedness
of Debtor to NDF and shall include Indebtedness revived after being
satisfied. If, due to a bankruptcy proceeding, lawsuit or any other
circumstances, NDF ever returns or otherwise disgorges any Indebtedness
previously paid, then Guarantor shall remain obligated to NDF hereunder for
the amount so repaid or recovered to the same extent as if such amount had
never been received by NDF.
2. UNCONDITIONAL NATURE OF GUARANTY. Guarantor agrees: that NDF may, without
notice or demand, from time to time renew, compromise, extend, accelerate
or otherwise change the time for payment of, or otherwise change the terms
of any Loan Papers, the Indebtedness or any part thereof, take and hold
security for the payment of this agreement or the Indebtedness, exchange,
enforce, waive, impair or release any such security, apply such security
and direct the order or manner of sale thereof as NDF in its discretion may
determine, and release, compound or substitute any one or more endorsers or
guarantors; that NDF shall not be required to proceed against Debtor or any
other person, proceed against or exhaust any security held for the
Indebtedness, or pursue any other remedy available to NDF before making
demand hereunder and proceeding against Guarantor; that until payment in
full of all obligations of Debtor to NDF, Guarantor shall not have any
right of subrogation, contribution, assignment of Indebtedness or
reimbursement for payments made by Guarantor hereunder, nor any right to
participate in any security now or hereafter held by NDF; that any act by
NDF that injures or increases the risk of Guarantor or exposes Guarantor to
greater liability shall not discharge any obligations hereunder; and that
all presentments, demands for performance, notices of non-performance,
protests, notices of protest, notices of dishonor and notices of acceptance
of this agreement and of the existence or creation of additional
Indebtedness are hereby waived. Guarantor waives all rights and defenses
arising out of an election of remedies, such as nonjudicial foreclosure
with respect to security for any Indebtedness, even though that election of
remedies has destroyed Guarantor's rights of subrogation and reimbursement
against Debtor. Guarantor acknowledges that this agreement is necessary to
the conduct and promotion of the business of Guarantor, and can be expected
to benefit such business. Guarantor's obligations hereunder shall not be
discharged, impaired or affected by: the power or authority or lack thereof
of Debtor to incur the Indebtedness, the validity or invalidity of any
documents evidencing or securing the Indebtedness, NDF's failure to
disclose any information that may be available to NDF regarding any
defaults by Debtor or Debtor's ability to repay the Indebtedness, or any
offsets, counterclaims or defenses (other than payment in full of the
Indebtedness) that Guarantor may have to its obligations hereunder, all of
which are hereby waived by Guarantor.
3. COLLATERAL. As security for the Indebtedness and for all present and future
obligations of Guarantor to NDF, of whatever kind, now due or to become
due, absolute or contingent, and whether joint, several, or joint and
several, Guarantor hereby grants to NDF a continuing security interest in
the following (collectively, "Collateral"), whether now owned or hereafter
acquired, and wherever located: all of Guarantor's Accounts; all of
Guarantor's Inventory; all of Guarantor's other goods, equipment, fixtures
and furniture; all insurance policies and proceeds relating to the
foregoing; all books and records relating to the foregoing; and all
proceeds and products of the foregoing. Guarantor will sign all papers
necessary to effect and perfect the assignments and security interests
hereby granted, and will bear all costs of recordation and perfection.
4. COVENANTS. So long as any amounts are owing by Guarantor to NDF or this
agreement is in effect, Guarantor agrees that it shall comply with all its
agreements with NDF, and shall:
(a) Not sell, transfer, encumber, lease or use any item of Collateral
without NDF's prior written consent, except for the sale of inventory
in the ordinary course of business, or as otherwise permitted in the
Loan Agreement");
(b) Keep accurate and complete records of the Collateral, and during
reasonable hours, permit NDF to inspect the Collateral and to inspect
and make copies of Guarantor's books and records;
(c) Promptly report and pay all taxes and other charges against Collateral;
maintain a perfected security interest in favor of NDF in the
Collateral, subject only to other liens permitted under the Loan
Agreement or otherwise acceptable to NDF in its reasonable discretion;
and discharge all other liens, encumbrances, assessments, charges and
adverse claims that attach to or are asserted against any Collateral;
(d) Keep the Collateral insured for full value against all insurable risks
with NDF as the loss payee, as its interest may appear, with
endorsements satisfactory to NDF, and notify NDF in writing 10 days
before changing or canceling any such policy; and
(e) Deliver to NDF such financial statements and other information relating
to the Collateral and Guarantor's financial condition, assets and
prospects as required under the Loan Agreement, or as NDF shall
reasonably request from time to time.
5. DEFAULTS. Any Event of Default shall constitute a default hereunder.
6. REMEDIES. During a default hereunder, NDF may, at its option and without
notice, demand immediate payment of any or all obligations owing by
Guarantor to NDF. NDF shall have all the rights and remedies available at
law, in equity or by agreement, including those of a secured party under
the Uniform Commercial Code in effect in any jurisdiction where Collateral
is kept. Such rights shall include the right to cancel any committed but
unfunded advances, to enter Guarantor's premises with or without legal
process, but without breach of the peace, and/or to take possession of and
remove Collateral, and books and records relating to Collateral. At NDF's
request, Guarantor will assemble, prepare for removal and make available to
NDF at a place designated by NDF such items of Collateral as NDF may from
time to time request. During the continuance of a default, NDF may take
control of any funds generated by the Collateral, and in NDF's name or
Guarantor's name, demand, collect, receipt for, settle, compromise, sue
for, repossess, accept returns of, foreclose or realize upon any
Collateral. Guarantor waives any and all rights that it may have to a
notice prior to seizure by NDF of any Collateral. Guarantor agrees that
private sale to a manufacturer, distributor or vendor of any item financed
by NDF at the amount owed to NDF on that item, less a reasonable restocking
charge, shall be a commercially reasonable method of disposition. Ten days
written notice of a public sale date or the date after which a private sale
may occur shall be reasonable notice. To the fullest extent permitted by
law, Guarantor waives relief from any appraisement, valuation,
anti-deficiency, homestead, exemption or usury laws now or hereafter in
effect. Guarantor shall pay all costs and expenses (including reasonable
attorneys fees) incurred by NDF in enforcing the Indebtedness or this
agreement.
7. MODIFICATION; EXPENSES. This agreement can be changed only by a writing
signed by the parties. If Guarantor fails to perform any act required
hereunder, including the payment and discharge of taxes, liens, adverse
claims and insurance premiums relating to the Collateral, NDF may (but
shall not be required to) perform such act. Amounts incurred by NDF in the
performance of any such act or in the enforcement of this agreement shall
be part of the obligations secured hereby, bear interest at the default
interest rate provided in the Loan Agreement and be payable upon demand.
<PAGE> 2
8. POWER OF ATTORNEY. Guarantor hereby irrevocably appoints NDF, including any
officer or employee of NDF, as Guarantor's lawful attorney-in-fact with
power of substitution to do the following acts on behalf of Guarantor
during the continuance of any Event of Default: to execute and deliver in
the name of Guarantor financing statements and amendments, lien filings,
certificates of title and other instruments relating to Collateral; to
endorse Guarantor's name on any checks, money orders and other instruments
payable to Guarantor and relating to any Collateral; and generally to
perform all acts and do all things appropriate to discharge Guarantor's
duties hereunder, including making affidavits and acknowledging instruments
as fully as if done by Guarantor. The foregoing powers are coupled with an
interest and are irrevocable as long as the Loan Agreement is in effect or
any Indebtedness is outstanding.
9. RATE LIMITATION. It is not the intention of any party to this agreement to
make an agreement violative of any applicable laws relating to maximum
permissible rates of interest. In no event shall Guarantor be obligated to
pay any amount in excess of the maximum amount of interest permitted under
applicable law. If NDF ever receives anything of value deemed excess
interest under applicable law, such excess will be applied to principal or
refunded to the payor.
10. MISCELLANEOUS. Time is of the essence in the performance of Guarantor's
duties, but NDF's failure to insist upon strict compliance with this
agreement shall not be deemed a waiver of any rights. A waiver by NDF on
any one occasion shall not be construed as a bar to or waiver of any right
or remedy on any future occasion. All inspections by NDF are for the
benefit of NDF only, and may not be relied upon by Guarantor or any other
person. All rights and remedies of NDF hereunder are cumulative. Terms are
used herein as defined in the Uniform Commercial Code. A copy of this
agreement or any financing statement may be filed as a financing statement
in any appropriate jurisdiction, to the extent permitted by applicable law.
Notices shall be sent hereunder as provided in Section 8.02 of the Loan
Agreement.
11. ASSIGNMENT. This agreement shall inure to the benefit of and be binding
upon the parties hereto, and their successors and assigns; provided,
however, that Guarantor must have NDF's written consent before Guarantor
can assign any of its rights or obligations under this agreement.
12. JOINT AND SEVERAL OBLIGATIONS. Guarantor agrees that its obligations under
this agreement are joint and several with each other Guarantor that is
party to this agreement. NDF may demand and receive payment from any
Guarantor in any order, and may from time to time extend, modify, waive or
release the obligations of any Guarantor, release or impair any security
for any Guarantor's obligations, or otherwise take or omit to take any
action with respect to any Guarantor, in every case without affecting the
obligations of any other Guarantor hereunder. NDF shall not be required to
proceed against any other Guarantor, or pursue any other remedy, prior to
making any demand upon a Guarantor hereunder.
13. TERMINATION. This agreement may be terminated by Guarantor by delivery to
NDF of written notice of revocation as to future transactions, which notice
must be received at least 30 days prior to the effective date of the
termination. Any such termination shall not affect the continuing liability
of Guarantor with respect to Indebtedness created or committed prior to the
effective date of the termination, and all rights, remedies and covenants
hereunder shall extend until indefeasible payment of all such amounts.
14. LAW. This agreement shall be governed by the laws of the State of Georgia.
The state and federal courts located in Atlanta, Georgia, including the
U.S. District Court for the Northern District of Georgia, shall have
jurisdiction to determine any claim or dispute pertaining to this
agreement. The parties expressly consent to such jurisdiction, and waive
any claims of inconvenient forum.
15. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF ANY
FORUM STATE, GUARANTOR WAIVES TRIAL BY JURY IN ANY DISPUTE OR PROCEEDING
RELATING IN ANY WAY TO THIS AGREEMENT OR ANY RELATED MATTERS.
16. ENTIRE AGREEMENT. This agreement constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings
relating to the subject matter hereof. THIS WRITTEN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
GUARANTOR ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREEMENT.
Effective as of April , 1998.
BASSETT BOAT COMPANY
By /s/ Michael H. McLamb
--------------------------------------------
Michael H. McLamb, Vice President
BASSETT REALTY, L.L.C.
By /s/ Michael H. McLamb
--------------------------------------------
Michael H. McLamb, Authorized Representative
BASSETT BOAT COMPANY OF FLORIDA
By /s/ Michael H. McLamb
--------------------------------------------
Michael H. McLamb, Vice President
GULFWIND SOUTH, INC.
By /s/ Michael H. McLamb
--------------------------------------------
Michael H. McLamb, Vice President
GULFWIND SOUTH REALTY, L.L.C.
By /s/ Michael H. McLamb
--------------------------------------------
Michael H. McLamb, Authorized Representative
- 2 -
<PAGE> 3
GULFWIND USA, INC.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
HARRISON'S BOAT CENTER, INC.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
HARRISON'S REALTY CALIFORNIA, L.L.C.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Authorized Representative
HARRISON'S MARINE CENTERS OF ARIZONA, INC.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
HARRISON'S REALTY, L.L.C.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Authorized Representative
11502 DUMAS, INC.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
DELHOMME REALTY, INC.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
9149 WALLISVILLE ROAD INTERESTS, INC. DBA DELHOMME SERVICE CENTER
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
600 DEL LAGO BLVD., INC. DBA LOUIS DELHOMME MARINE-DEL LAGO
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
7940 W. I-30 INTERESTS, INC.
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
AIRTEX INTERESTS, INC. DBA LOUIS DELHOMME MARINE - AIRTEX
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
SOUTH SHORE INTERESTS, INC. DBA LOUIS DELHOMME MARINE - SOUTH SHORE
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
NASA ROAD INTERESTS, INC. DBA LOUIS DELHOMME MARINE - NASA ROAD
By /s/ Michael H. McLamb
----------------------------------------------------------------
Michael H. McLamb, Vice President
- 3 -
<PAGE> 4
REEDER ROAD INTERESTS, INC. DBA LOUIS DELHOMME MARINE
By /s/ Michael H. McLamb
-------------------------------------------------------------------------
Michael H. McLamb, Vice President
LAKE LEWISVILLE INTERESTS, INC. DBA LOUIS DELHOMME MARINE - LAKE LEWISVILLE
By /s/ Michael H. McLamb
-------------------------------------------------------------------------
Michael H. McLamb, Vice President
- 4 -
<PAGE> 1
EXHIBIT 10.15
[NATIONS CREDIT LOGO]
GUARANTY AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
1. GUARANTY. To induce NATIONSCREDIT DISTRIBUTION FINANCE, INC. ("NDF") to
extend credit to MARINEMAX, INC., a Delaware corporation ("Debtor"), and in
consideration of the benefits to accrue to the undersigned (jointly and
severally, if more than one) ("Guarantor"), Guarantor hereby
unconditionally guarantees and promises to pay to NDF on demand all
Indebtedness of Debtor. As used herein, "Indebtedness" means any and all
amounts owing to NDF from time to time by Debtor, whether principal,
interest, fees, charges, expenses or other amounts, and whether owing
jointly or severally.
Demand for payment may be made hereunder at any time that an "Event of
Default" exists under the Loan and Security Agreement of even date herewith
between Debtor and NDF (as such agreement may be modified, renewed or
extended, "Loan Agreement"). Unless otherwise defined, terms are used
herein as defined in the Loan Agreement.
This is a continuing guaranty covering all present and future Indebtedness
of Debtor to NDF and shall include Indebtedness revived after being
satisfied. If, due to a bankruptcy proceeding, lawsuit or any other
circumstances, NDF ever returns or otherwise disgorges any Indebtedness
previously paid, then Guarantor shall remain obligated to NDF hereunder for
the amount so repaid or recovered to the same extent as if such amount had
never been received by NDF.
2. UNCONDITIONAL NATURE OF GUARANTY. Guarantor agrees: that NDF may, without
notice or demand, from time to time renew, compromise, extend, accelerate
or otherwise change the time for payment of, or otherwise change the terms
of any Loan Papers, the Indebtedness or any part thereof, take and hold
security for the payment of this agreement or the Indebtedness, exchange,
enforce, waive, impair or release any such security, apply such security
and direct the order or manner of sale thereof as NDF in its discretion may
determine, and release, compound or substitute any one or more endorsers or
guarantors; that NDF shall not be required to proceed against Debtor or any
other person, proceed against or exhaust any security held for the
Indebtedness, or pursue any other remedy available to NDF before making
demand hereunder and proceeding against Guarantor; that until payment in
full of all obligations of Debtor to NDF, Guarantor shall not have any
right of subrogation, contribution, assignment of Indebtedness or
reimbursement for payments made by Guarantor hereunder, nor any right to
participate in any security now or hereafter held by NDF; that any act by
NDF that injures or increases the risk of Guarantor or exposes Guarantor to
greater liability shall not discharge any obligations hereunder; and that
all presentments, demands for performance, notices of non-performance,
protests, notices of protest, notices of dishonor and notices of acceptance
of this agreement and of the existence or creation of additional
Indebtedness are hereby waived. Guarantor waives all rights and defenses
arising out of an election of remedies, such as nonjudicial foreclosure
with respect to security for any Indebtedness, even though that election of
remedies has destroyed Guarantor's rights of subrogation and reimbursement
against Debtor. Guarantor acknowledges that this agreement is necessary to
the conduct and promotion of the business of Guarantor, and can be expected
to benefit such business. Guarantor's obligations hereunder shall not be
discharged, impaired or affected by: the power or authority or lack thereof
of Debtor to incur the Indebtedness, the validity or invalidity of any
documents evidencing or securing the Indebtedness, NDF's failure to
disclose any information that may be available to NDF regarding any
defaults by Debtor or Debtor's ability to repay the Indebtedness, or any
offsets, counterclaims or defenses (other than payment in full of the
Indebtedness) that Guarantor may have to its obligations hereunder, all of
which are hereby waived by Guarantor.
3. COLLATERAL. As security for the Indebtedness and for all present and future
obligations of Guarantor to NDF, of whatever kind, now due or to become
due, absolute or contingent, and whether joint, several, or joint and
several, Guarantor hereby grants to NDF a continuing security interest in
the following (collectively, "Collateral"), whether now owned or hereafter
acquired, and wherever located: all of Guarantor's Accounts; all of
Guarantor's Inventory; all of Guarantor's other goods, equipment, fixtures
and furniture; all insurance policies and proceeds relating to the
foregoing; all books and records relating to the foregoing; and all
proceeds and products of the foregoing. Guarantor will sign all papers
necessary to effect and perfect the assignments and security interests
hereby granted, and will bear all costs of recordation and perfection.
4. COVENANTS. So long as any amounts are owing by Guarantor to NDF or this
agreement is in effect, Guarantor agrees that it shall comply with all its
agreements with NDF, and shall:
(a) Not sell, transfer, encumber, lease or use any item of Collateral
without NDF's prior written consent, except for the sale of inventory
in the ordinary course of business, or as otherwise permitted in the
Loan Agreement");
(b) Keep accurate and complete records of the Collateral, and during
reasonable hours, permit NDF to inspect the Collateral and to inspect
and make copies of Guarantor's books and records;
(c) Promptly report and pay all taxes and other charges against Collateral;
maintain a perfected security interest in favor of NDF in the
Collateral, subject only to other liens permitted under the Loan
Agreement or otherwise acceptable to NDF in its reasonable discretion;
and discharge all other liens, encumbrances, assessments, charges and
adverse claims that attach to or are asserted against any Collateral;
(d) Keep the Collateral insured for full value against all insurable risks
with NDF as the loss payee, as its interest may appear, with
endorsements satisfactory to NDF, and notify NDF in writing 10 days
before changing or canceling any such policy; and
(e) Deliver to NDF such financial statements and other information relating
to the Collateral and Guarantor's financial condition, assets and
prospects as required under the Loan Agreement, or as NDF shall
reasonably request from time to time.
5. DEFAULTS. Any Event of Default shall constitute a default hereunder.
6. REMEDIES. During a default hereunder, NDF may, at its option and without
notice, demand immediate payment of any or all obligations owing by
Guarantor to NDF. NDF shall have all the rights and remedies available at
law, in equity or by agreement, including those of a secured party under
the Uniform Commercial Code in effect in any jurisdiction where Collateral
is kept. Such rights shall include the right to cancel any committed but
unfunded advances, to enter Guarantor's premises with or without legal
process, but without breach of the peace, and/or to take possession of and
remove Collateral, and books and records relating to Collateral. At NDF's
request, Guarantor will assemble, prepare for removal and make available to
NDF at a place designated by NDF such items of Collateral as NDF may from
time to time request. During the continuance of a default, NDF may take
control of any funds generated by the Collateral, and in NDF's name or
Guarantor's name, demand, collect, receipt for, settle, compromise, sue
for, repossess, accept returns of, foreclose or realize upon any
Collateral. Guarantor waives any and all rights that it may have to a
notice prior to seizure by NDF of any Collateral. Guarantor agrees that
private sale to a manufacturer, distributor or vendor of any item financed
by NDF at the amount owed to NDF on that item, less a reasonable restocking
charge, shall be a commercially reasonable method of disposition. Ten days
written notice of a public sale date or the date after which a private sale
may occur shall be reasonable notice. To the fullest extent permitted by
law, Guarantor waives relief from any appraisement, valuation,
anti-deficiency, homestead, exemption or usury laws now or hereafter in
effect. Guarantor shall pay all costs and expenses (including reasonable
attorneys fees) incurred by NDF in enforcing the Indebtedness or this
agreement.
<PAGE> 2
7. MODIFICATION; EXPENSES. This agreement can be changed only by a writing
signed by the parties. If Guarantor fails to perform any act required
hereunder, including the payment and discharge of taxes, liens, adverse
claims and insurance premiums relating to the Collateral, NDF may (but
shall not be required to) perform such act. Amounts incurred by NDF in the
performance of any such act or in the enforcement of this agreement shall
be part of the obligations secured hereby, bear interest at the default
interest rate provided in the Loan Agreement and be payable upon demand.
8. POWER OF ATTORNEY. Guarantor hereby irrevocably appoints NDF, including any
officer or employee of NDF, as Guarantor's lawful attorney-in-fact with
power of substitution to do the following acts on behalf of Guarantor
during the continuance of any Event of Default: to execute and deliver in
the name of Guarantor financing statements and amendments, lien filings,
certificates of title and other instruments relating to Collateral; to
endorse Guarantor's name on any checks, money orders and other instruments
payable to Guarantor and relating to any Collateral; and generally to
perform all acts and do all things appropriate to discharge Guarantor's
duties hereunder, including making affidavits and acknowledging instruments
as fully as if done by Guarantor. The foregoing powers are coupled with an
interest and are irrevocable as long as the Loan Agreement is in effect or
any Indebtedness is outstanding.
9. RATE LIMITATION. It is not the intention of any party to this agreement to
make an agreement violative of any applicable laws relating to maximum
permissible rates of interest. In no event shall Guarantor be obligated to
pay any amount in excess of the maximum amount of interest permitted under
applicable law. If NDF ever receives anything of value deemed excess
interest under applicable law, such excess will be applied to principal or
refunded to the payor.
10. MISCELLANEOUS. Time is of the essence in the performance of Guarantor's
duties, but NDF's failure to insist upon strict compliance with this
agreement shall not be deemed a waiver of any rights. A waiver by NDF on
any one occasion shall not be construed as a bar to or waiver of any right
or remedy on any future occasion. All inspections by NDF are for the
benefit of NDF only, and may not be relied upon by Guarantor or any other
person. All rights and remedies of NDF hereunder are cumulative. Terms are
used herein as defined in the Uniform Commercial Code. A copy of this
agreement or any financing statement may be filed as a financing statement
in any appropriate jurisdiction, to the extent permitted by applicable law.
Notices shall be sent hereunder as provided in Section 8.02 of the Loan
Agreement.
11. ASSIGNMENT. This agreement shall inure to the benefit of and be binding
upon the parties hereto, and their successors and assigns; provided,
however, that Guarantor must have NDF's written consent before Guarantor
can assign any of its rights or obligations under this agreement.
12. JOINT AND SEVERAL OBLIGATIONS. Guarantor agrees that its obligations under
this agreement are joint and several with each other Guarantor that is
party to this agreement. NDF may demand and receive payment from any
Guarantor in any order, and may from time to time extend, modify, waive or
release the obligations of any Guarantor, release or impair any security
for any Guarantor's obligations, or otherwise take or omit to take any
action with respect to any Guarantor, in every case without affecting the
obligations of any other Guarantor hereunder. NDF shall not be required to
proceed against any other Guarantor, or pursue any other remedy, prior to
making any demand upon a Guarantor hereunder.
13. TERMINATION. This agreement may be terminated by Guarantor by delivery to
NDF of written notice of revocation as to future transactions, which notice
must be received at least 30 days prior to the effective date of the
termination. Any such termination shall not affect the continuing liability
of Guarantor with respect to Indebtedness created or committed prior to the
effective date of the termination, and all rights, remedies and covenants
hereunder shall extend until indefeasible payment of all such amounts.
14. LAW. This agreement shall be governed by the laws of the State of Georgia.
The state and federal courts located in Atlanta, Georgia, including the
U.S. District Court for the Northern District of Georgia, shall have
jurisdiction to determine any claim or dispute pertaining to this
agreement. The parties expressly consent to such jurisdiction, and waive
any claims of inconvenient forum.
15. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF ANY
FORUM STATE, GUARANTOR WAIVES TRIAL BY JURY IN ANY DISPUTE OR PROCEEDING
RELATING IN ANY WAY TO THIS AGREEMENT OR ANY RELATED MATTERS.
16. ENTIRE AGREEMENT. This agreement constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings
relating to the subject matter hereof. THIS WRITTEN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
GUARANTOR ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREEMENT.
Effective as of May 1, 1998.
STOVALL MARINE, INC.
By /s/ Michael H. McLamb
---------------------
Michael H. McLamb, Vice President
-2-
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use
of our report (and to all references to our Firm) included in or made a part of
Registration Statement.
ARTHUR ANDERSEN LLP
Tampa, Florida,
May 21, 1998
