<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1998
REGISTRATION NO. 333-47873
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
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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<S> <C>
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)
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If any of the securities being registered in this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<S> <C> <C>
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001(2).......................... $83,495,584 $24,631.20(3)
==================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
(2) Includes 437,905 shares of Common Stock subject to the Underwriters'
over-allotment option.
(3) Of this amount, $22,899.38 was paid with the initial filing.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<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 4, 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.
<TABLE>
<CAPTION>
====================================================================================================================
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) $ $ $ $
====================================================================================================================
</TABLE>
(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
[GRAPHICS -- GATEFOLD, SHOWING PRODUCT OFFERINGS AND RETAIL FACILITIES, AND MAP
SHOWING LOCATIONS]
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
</TABLE>
<TABLE>
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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.
<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
$22,744,000, and pro forma net income of approximately $13,560,000 (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. 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. 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.
4
<PAGE> 6
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. See "Business -- Dealer Agreements With Brunswick" and
"Risk Factors -- Risks Related to Internal Growth and Operation Strategies;
Management of Growth."
5
<PAGE> 7
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 (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. 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
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------- ----------------------------------
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............... 86,798 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... 19,298 22,665 28,137 34,174 21,829 25,426 24,736
-------- -------- -------- -------- -------- -------- ----------
Income (loss) from
operations................ 5,447 6,769 7,856 8,244 12,503 16,831 22,396
Interest expense, net....... (1,187) (484) (1,035) (1,350) (1,068) (1,538) (510)
-------- -------- -------- -------- -------- -------- ----------
Income (loss) before tax
provision................. 4,260 6,285 6,820 6,895 11,435 15,293 21,886
Income tax provision
(benefit)................. 1 1 (49) 21 527 410 8,429
-------- -------- -------- -------- -------- -------- ----------
Net income (loss)........... $ 4,259 $ 6,284 $ 6,869 $ 6,874 $ 10,908 $ 14,884 $ 13,456
======== ======== ======== ======== ======== ======== ==========
Net income (loss) per share: Basic................................................ $ 1.62 $ 1.02
======== ==========
Weighted average number of shares: Basic.......................................... 9,191,870 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... 19,925 38,728 20,492
------- -------- ----------
Income (loss) from
operations................ (678) (15,656) 4,001
Interest expense, net....... (598) (1,052) (217)
------- -------- ----------
Income (loss) before tax
provision................. (1,275) (16,708) 3,784
Income tax provision
(benefit)................. (485) (4,581) 1,494
------- -------- ----------
Net income (loss)........... $ (791) $(12,127) $ 2,289
======= ======== ==========
Net income (loss) per share: $ (1.32) $ 1.017
======== ==========
Weighted average number of s 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)
-------- ------------ --------------
<S> <C> <C> <C>
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>
- ---------------
(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,
including the elimination of the Brunswick settlement obligation, and (c)
the consummation of the Offering. See "Risk Factors -- Necessity for
Manufacturers' Consent to Dealer Acquisitions and Market Expansion" and 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.
7
<PAGE> 9
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
8
<PAGE> 10
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's 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
9
<PAGE> 11
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 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
10
<PAGE> 12
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
11
<PAGE> 13
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 finance the boat purchases of its customers.
Instead, the Company works with independent financial institutions to provide
credit for its purchasers in a timely and efficient manner and at competitive
rates.
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.
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
12
<PAGE> 14
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 "Business -- Strategy" and "Risk Factors -- Necessity for
Manufacturers' Consent to Dealer Acquisitions and Market Expansion."
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."
13
<PAGE> 15
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 referral fees resulting from the Company's placement of customer
financing. 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 referral fees received by the Company in connection with such financing
depends on the arrangements that the Company has secured from various lenders.
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
14
<PAGE> 16
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,
15
<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 and have historically been used for gasoline service stations.
As a consequence, it is possible that historical site activities or current
neighboring activities have affected 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.
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. Some of the guarantors are
directors or officers of the Company or are holders of more than 5% of its
Common Stock. 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, directors, and
officers. Additionally, the Company has entered into leases of real property
with directors or officers of the Company or holders of more than 5% of its
Common Stock or with entities controlled by such persons. Because of the
relationships between these parties, these leases have not been negotiated on an
arms'-length basis. 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 "Certain Transactions."
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<PAGE> 18
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
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
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<PAGE> 19
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."
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.
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<PAGE> 20
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 Company's Restated
Certificate of Incorporation exempts from the application of Section 203 each of
the persons receiving Common Stock in the Combination Transactions. 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 management information system interface will continue to
properly interface with the Company's systems 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.
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<PAGE> 21
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 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 Mergers. In order to avoid a
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<PAGE> 22
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."
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.
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<PAGE> 23
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," 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."
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."
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 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, Richard C. LaManna III became Vice President and
Secretary of the Company and Darrell C. LaManna became Vice President of the
Company. See "Management -- Employment Agreements" and "Certain
Transactions -- The Mergers and Property Acquisitions."
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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 significantly through the acquisition of
additional recreational boat dealers. As of the date of this Prospectus, the
Company has no binding agreements to effect any acquisitions and is not engaged
in any active negotiations to acquire any other dealers. There can be no
assurance that any acquisitions will be consummated on terms favorable to the
Company, if at all. 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........................... 2,890 9,093 55,636
Retained earnings.................................... 1,964 1,963 1,963
------- ------- -------
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....................... 86,798 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........................... 19,298 22,665 28,137 34,174 21,829 25,426 24,736
-------- -------- -------- -------- -------- ---------- ----------
Income from operations.............. 5,447 6,769 7,856 8,244 12,503 16,831 22,396
Interest expense, net............... (1,187) (484) (1,035) (1,350) (1,068) (1,538) (510)
-------- -------- -------- -------- -------- ---------- ----------
Income before tax provision......... 4,260 6,285 6,820 6,895 11,435 15,293 21,886
Income tax provision (benefit)...... 1 1 (49) 21 527 410 8,429
-------- -------- -------- -------- -------- ---------- ----------
Net income.......................... $ 4,259 $ 6,284 $ 6,869 $ 6,874 $ 10,908 $ 14,884 $ 13,456
======== ======== ======== ======== ======== ========== ==========
Net income (loss) per common share: Basic................................................. $ 1.62 $ 1.02
==== =====
Weighted average number of shares: Basic.................................................. 9,191,870 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........................... 19,925 38,728 20,492
------- ---------- ----------
Income from operations.............. (678) (15,656) 4,001
Interest expense, net............... (598) (1,052) (217)
------- ---------- ----------
Income before tax provision......... (1,275) (16,708) 3,784
Income tax provision (benefit)...... (485) (4,581) 1,494
------- ---------- ----------
Net income.......................... $ (791) $ (12,127) $ 2,289
======= ========== ==========
Net income (loss) per common share: $ (1.32) $ 0.17
==== ======
Weighted average number of shares: B 9,191,870 13,200,000
======= =========
OTHER DATA:
Number of stores(3)................. 21 23
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.................... $10,120 $ 7,349 $ 7,381 $ 8,146 $20,661 $ 1,191 $ 1,215 $ 39,171
Total assets....................... 43,786 49,474 58,191 74,037 83,722 108,275 124,171 130,348
Long-term debt (including current
portion).......................... 2,852 2,324 2,172 2,118 10,068 10,657 10,657 1,899
Total stockholders' equity......... 17,248 15,425 16,445 17,475 25,577 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,
including the elimination of the Brunswick settlement obligation, and (c)
the consummation of the Offering. See "Risk Factors -- Necessity for
Manufacturers' Consent to Dealer Acquisitions and Market Expansion" and 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........... 28,137 18.4% 34.174 19.5% 21,829 16.0% 25,426 15.0%
-------- -------- -------- --------
Operating income..... 7,856 5.1% 8,244 4.7% 12,503 9.2% 16,831 9.9%
Interest expense,
net................ 1,035 0.7% 1,350 0.8% 1,068 0.8% 1,538 0.9%
-------- -------- -------- --------
Income (loss) before
income taxes....... 6,820 4.4% 6,895 3.9% 11,435 8.4% 15,293 9.0%
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------------------
1997 1998
----------------- ------------------
<S> <C> <C> <C> <C>
Revenue.............. $87,779 100.00% $103,510 100.00%
Cost of sales........ 68,531 78.07% 80,438 77.71%
------- --------
Gross profit......... 19,247 21.93% 23,072 22.29%
Selling, general, and
administrative
expenses........... 19,925 22.70% 38,728 37.41%
------- --------
Operating income..... (678) (0.77%) (15,656) (15.13%)
Interest expense,
net................ 598 0.68% 1,052 1.02%
------- --------
Income (loss) before
income taxes....... (1,275) (1.45%) (16,708) (16.14%)
</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 $18.8 million or 94.5% to
$38.7 million for the six-month period ended March 31, 1998 from $19.9 million
for the six-month period ended March 31, 1997. Selling, general, and
administrative expenses as a percentage of revenue increased to 37.4% in 1998
from 22.7% in 1997. Substantially all of the increase is attributable to the
$15.0 million obligation under the Settlement Agreement the Company entered into
with Brunswick.
Interest Expense, net. Interest expense, net increased approximately
$500,000 or 75.9% to $1.1 million in 1998 from approximately $600,000 in 1997.
Interest expense, net as a percentage of revenue increased to 1.0% in 1998 from
0.7% 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
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 $3.6 million, or 16.5%, to $25.4
million for the nine-month period ended September 30, 1997 from $21.8 million
for the nine-month period ended September 30, 1996. Selling, general, and
administrative expenses as a percentage of revenue decreased to 15.0% in 1997
from 16.0% 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
$470,000, or 44.0%, to $1.5 million in 1997 from $1.0 million in 1996. Interest
expense, net as a percentage of revenue increased to 0.9% in 1997 from 0.8% 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 21.5%, to $34.2
million in 1996 from $28.1 million in 1995. Selling, general, and administrative
expenses as a percentage of revenue increased to 19.5% in 1996 from 18.4% 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
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
$315,000, or 30.4%, to $1.3 million in 1996 from $1.0 million in 1995. Interest
expense, net as a percentage of revenue increased to 0.8% in 1996
29
<PAGE> 31
from 0.7% 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 periods ended March 31, 1997 and 1998, cash flows used by
operating activities approximated $1.0 million and $6.4 million, respectively.
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 $4.1 million, $8.4 million, $6.2 million,
and $7.1 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 $868,000, 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 $747,000. For the six-month period ended March
31, 1998, the cash flows used by financing activities approximated $7.7 million.
For the nine-month periods ended September 30, 1996 and 1997, the cash flows
provided by financing activities approximated $100,000 and $1.0 million,
respectively. For the calendar years ended December 31, 1995 and 1996, cash
flows used by financing activities were $4.5 million and $5.4 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
30
<PAGE> 32
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. 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.
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 $22,744,000, and pro forma net income of $13,560,000
(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.
33
<PAGE> 35
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 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
34
<PAGE> 36
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 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
35
<PAGE> 37
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 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>
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.
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<PAGE> 38
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 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." Mercury Marine is the world's largest producer of
marine propulsion products. 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
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<PAGE> 39
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.
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 receives a fee from the lender for
arranging customer financing, typically subject to a charge-back against a
portion of the fee if the customer repays the loan or defaults within 180 days,
or as designated.
The Company also is able to offer certain types of credit-life, accident
and disability, and property and casualty insurance to its customers. The
Company receives a referral fee, generally 20% to 30% of the underlying premium,
on each policy sold to its customers. Credit-life insurance policies provide for
repayment
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of the boat loan if the purchaser dies while the loan is outstanding. Accident
and disability insurance policies provide for payment of the monthly loan
obligations during any period in which the purchaser is disabled. Property and
casualty insurance covers loss or damage to the boat. The Company has recently
entered into arrangements with various insurance companies to offer enhanced
insurance policies covering the Company's customers. One of the Company's
strategies is to generate increased referral 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, 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.
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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, 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.
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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. 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.
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The Dealer Agreements with Brunswick do not restrict sales of 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. 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 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
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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's 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; (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,
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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" 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.
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.
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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
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
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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 and have historically been used for gasoline service stations.
As a consequence, it is possible that historical site activities or current
neighboring activities have affected 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.
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 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
46
<PAGE> 48
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 --
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.
47
<PAGE> 49
(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.
48
<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
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.
49
<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. 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."
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
50
<PAGE> 52
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 only for cause, as
defined in the respective agreements. 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.
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
51
<PAGE> 53
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 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
52
<PAGE> 54
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 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.............. 3,813,087 39.37% 665,600 3,147,487 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)....... 524,139 5.41% 58,573 465,566 3.53%
Richard C. LaManna III.......... 140,907 1.45% 0 140,907 1.07%
Paul Graham Stovall............. 164,102 1.69% 26,624 137,478 1.04%
Darrell C. LaManna(5)........... 524,139 5.41% 53,248 470,891 3.57%
Michael H. McLamb............... 35,600(6) 0.36% 0 35,600(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)......... 7,965,553 82.25% 995,738 6,969,815 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................ 211,655 2.19% 19,807 191,858 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.
(6) Represents vested options to acquire such shares.
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<PAGE> 56
(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>
SHARES
NUMBER OF BENEFICIALLY OWNED
SHARES IN AFTER EXERCISE
SELLING STOCKHOLDERS OVERALLOTMENT --------------------
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
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."
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<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
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<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. The Company has agreed to indemnify
Brunswick against certain liabilities, including liabilities under the
Securities Act, in connection with any 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.
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<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.
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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. 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 acquired companies for all dates and
periods prior to the combinations.
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.......... 2,890,482 -- 6,202,613 9,093,095 46,542,229 55,635,324
Retained earnings (deficit)......... 1,963,273 547,720 (547,720) 1,963,273 -- 1,963,273
------------- ------------ ----------- ------------- ------------ -------------
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........................... 25,426,392 2,653,194 (3,344,025)(e)(g) 24,735,561 -- 24,735,561
------------ ----------- ----------- ------------ --------- ------------
Income from operations....... 16,831,055 2,220,749 3,344,025 22,395,829 -- 22,395,829
INTEREST EXPENSE, NET................ 1,537,587 261,273 (300,000)(h) 1,498,860 (988,698)(i) 510,162
------------ ----------- ----------- ------------ --------- ------------
INCOME BEFORE INCOME TAXES........... 15,293,468 1,959,476 3,644,025 20,896,969 988,698 21,885,667
PROVISION FOR INCOME TAXES........... 409,824 737,000 6,896,758(f) 8,043,582 385,592(i) 8,429,174
------------ ----------- ----------- ------------ --------- ------------
NET INCOME (LOSS).................... $ 14,883,644 $ 1,222,476 $(3,252,733) $ 12,853,387 $ 603,106 $ 13,456,493
============ =========== =========== ============ ========= ============
PRO FORMA NET INCOME PER COMMON
SHARE:
Basic.............................. $ 1.02
============
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......................... 13,362,836 863,640 (4,736,813)(e)(g) 9,489,663 -- 9,489,663
----------- ---------- ----------- ----------- ----------- -----------
Income (loss) from
operations.............. (3,710,895) (678,025) 4,736,813 347,893 -- 347,893
INTEREST EXPENSE, NET.............. 450,266 53,662 (100,000)(h) 403,928 (294,529)(i) 109,399
----------- ---------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES............................ (4,161,161) (731,687) 4,836,813 (56,035) 294,529 238,494
PROVISION (BENEFIT) FOR INCOME
TAXES............................ (426,524) (274,500) 721,036(f) 20,012 114,866(i) 134,878
----------- ---------- ----------- ----------- ----------- -----------
NET INCOME (LOSS).................. $(3,734,637) $ (457,187) $ 4,115,777 $ (76,047) $ 179,663 $ 103,616
=========== ========== =========== =========== =========== ===========
PRO FORMA NET INCOME PER COMMON
SHARE:
Basic............................ $ .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-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......................... 38,728,268 1,849,541 (20,085,669)(e)(g)(j) 20,492,140 -- 20,492,140
------------ ---------- ------------ ------------ ----------- ------------
Income (loss) from
operations............... (15,656,544) (428,612) 20,085,669 4,000,513 -- 4,000,513
INTEREST EXPENSE, NET.............. 1,052,463 (49,411) (200,000)(h) 803,052 (586,039)(i) 217,013
------------ ---------- ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES............................ (16,709,007) (379,201) 20,285,669 3,197,461 586,039 3,783,500
PROVISION (BENEFIT) FOR INCOME
TAXES............................ (4,580,862) (161,893) 6,002,702(k) 1,259,947 234,416(i) 1,494,363
------------ ---------- ------------ ------------ ----------- ------------
NET INCOME (LOSS).................. $(12,128,145) $ (217,308) $ 14,282,967 $ 1,937,514 $ 351,623 $ 2,289,137
============ ========== ============ ============ =========== ============
PRO FORMA NET INCOME PER COMMON
SHARE:
Basic............................ $ .17
============
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 elimination of the one time Brunswick Settlement Agreement
charge of $15.0 million for the six-month period ended March 31, 1998.
(k) 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. Also, reflects the
elimination of the tax benefit recognized in connection with the Brunswick
Settlement Agreement charge.
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........................ 11,132,411 13,739,143 15,254,305
DUE FROM RELATED PARTY............................. 54,719 54,719 --
OTHER ASSETS....................................... 37,964 86,023 130,914
----------- ----------- ------------
Total assets............................. $74,036,812 $83,722,478 $108,275,173
=========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................. $ 4,015,098 $ 6,080,006 $ 10,106,430
Customer deposits................................ 1,642,978 3,395,914 7,003,124
Accrued expenses................................. 3,504,602 4,182,182 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............. 221,771 1,104,109 217,095
Settlement payable............................... -- -- 15,000,000
Due to stockholders.............................. 2,640,434 5,555,540 5,500,020
----------- ----------- ------------
Total current liabilities................ 54,665,539 49,181,527 91,698,540
----------- ----------- ------------
LONG-TERM DEBT, net of current maturities.......... 1,896,246 8,963,726 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, 9,966,983 and 9,191,870 shares
issued at December 31, 1996, and September 30,
1997, respectively............................ 9,967 9,192 9,192
Additional paid-in capital....................... 6,807,202 984,828 2,889,726
Retained earnings................................ 10,657,858 24,583,205 1,964,029
----------- ----------- ------------
Total stockholders' equity............... 17,475,027 25,577,225 4,862,947
----------- ----------- ------------
Total liabilities and stockholders'
equity................................. $74,036,812 $83,722,478 $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....... 28,136,550 34,174,417 25,426,392 19,924,928 38,728,268
------------ ------------ ------------ ----------- ------------
Income (loss) from
operations.......... 7,855,708 8,244,446 16,831,055 (677,755) (15,656,544)
INTEREST EXPENSE, net........... 1,035,405 1,349,623 1,537,587 597,662 1,052,463
------------ ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME TAX
(BENEFIT) PROVISION........... 6,820,303 6,894,823 15,293,468 (1,275,417) (16,709,007)
INCOME TAX (BENEFIT)
PROVISION..................... (49,097) 20,514 409,824 (484,844) (4,580,862)
------------ ------------ ------------ ----------- ------------
NET INCOME (LOSS)............... $ 6,869,400 $ 6,874,309 $ 14,883,644 $ (790,573) $(12,128,145)
============ ============ ============ =========== ============
NET INCOME (LOSS) PER COMMON
SHARE:
Basic...................... $ .69 $ .69 $ 1.62 $ (.09) $ (1.32)
============ ============ ============ =========== ============
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)........................ $ 4,160,385 $ 4,205,842 $ 9,329,015 $(10,192,494)
============ ============ ============ ============
UNAUDITED PRO FORMA NET INCOME
(LOSS) PER COMMON SHARE:
Basic...................... $ .42 $ .42 $ 1.01 $ (1.11)
============ ============ ============ ============
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...................... 9,966,983 9,966,983 9,191,870 9,191,870 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...................... 9,966,983 $9,967 $ 6,325,648 $ 9,088,929 $ 15,424,544
Net income.................................. -- -- -- 6,869,400 6,869,400
Capital contributions....................... -- -- 408,557 -- 408,557
Distributions to stockholders............... -- -- -- (6,257,386) (6,257,386)
--------- ------ ----------- ------------ ------------
BALANCE, December 31, 1995.................... 9,966,983 9,967 6,734,205 9,700,943 16,445,115
Net income.................................. -- -- -- 6,874,309 6,874,309
Capital contributions....................... -- -- 72,997 -- 72,997
Distributions to stockholders............... -- -- -- (5,917,394) (5,917,394)
--------- ------ ----------- ------------ ------------
BALANCE, December 31, 1996.................... 9,966,983 9,967 6,807,202 10,657,858 17,475,027
Net income.................................. -- -- -- 14,883,644 14,883,644
Capital contributions....................... -- -- 276,851 -- 276,851
Distributions to stockholders............... -- -- -- (958,297) (958,297)
Redemption of common stock.................. (775,113) (775) (6,099,225) -- (6,100,000)
--------- ------ ----------- ------------ ------------
BALANCE, September 30, 1997................... 9,191,870 9,192 984,828 24,583,205 25,577,225
Net loss (unaudited)........................ -- -- -- (12,128,145) (12,128,145)
Capital contributions (unaudited)........... -- -- 115,681 -- 115,681
Distributions to stockholders (unaudited)... -- -- -- (8,701,814) (8,701,814)
Contribution of S corporation retained
earnings................................. -- -- 1,789,217 (1,789,217) --
--------- ------ ----------- ------------ ------------
BALANCE, March 31, 1998 (unaudited)........... 9,191,870 $9,192 $ 2,889,726 $ 1,964,029 $ 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)................ $ 6,869,400 $ 6,874,309 $14,883,644 $ (790,573) $(12,128,145)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities
Depreciation and
amortization................ 852,808 941,576 792,559 470,788 528,236
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) 1,788,137 2,064,908 1,858,507 4,026,424
Customer deposits........... 467,956 (2,541,399) 1,752,936 1,662,470 3,607,209
Accrued expenses and other
liabilities.............. 1,108,394 1,597,567 677,580 (1,650,215) 1,486,682
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............. 6,190,698 7,073,260 8,369,233 (981,731) 2,900,293
----------- ----------- ----------- ----------- ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment..................... (1,148,178) (1,329,897) (1,049,393) (941,206) (868,398)
Proceeds from sale of property
and equipment................. 3,939 60,201 16,988 -- --
----------- ----------- ----------- ----------- ------------
Net cash used in
investing activities... (1,144,239) (1,269,696) (1,032,405) (941,206) (868,398)
----------- ----------- ----------- ----------- ------------
</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) (1,123,581) (1,732,680) (120,804) (469,731)
Net borrowings (repayments) on
short-term borrowings................ 1,299,460 541,141 (678,924) 3,842,032 1,489,231
Distributions to stockholders.......... (6,149,068) (5,917,394) (795,297) (5,347,978) (7,885,908)
----------- ----------- ----------- ----------- ------------
Net cash (used in) provided by
financing activities.......... (4,475,420) (5,411,069) 1,037,986 746,844 (7,737,834)
----------- ----------- ----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ 571,039 392,495 8,374,814 (1,176,093) (5,705,939)
CASH AND CASH EQUIVALENTS, beginning of
period................................. 1,675,742 2,246,781 2,639,276 6,149,772 11,014,092
----------- ----------- ----------- ----------- ------------
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............................. $ 1,968,189 $ 2,349,374 $ 2,405,403 $ 890,980 $ 1,307,402
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 $ --
Stockholder contributions of property
and equipment, treated as capital
contributions........................ $ 341,056 $ -- $ 2,366,568 $ -- $ 1,175,000
Assumption of long-term debt from
stockholders in conjunction with
contributions of property and
equipment............................ $ -- $ -- $ 2,150,000 $ -- $ 1,075,000
Stockholder payments on long-term debt,
treated as capital contributions..... $ 66,501 $ 72,997 $ 59,283 $ 7,542 $ 15,681
</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. 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 Pooled Companies) 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 Pooled Companies for all dates and periods prior to the
combination.
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................ 21,829,061
------------
Income from operations............................ 12,502,803
Interest expense, net....................................... 1,067,671
------------
Income before income tax provision.......................... 11,435,132
Income tax provision........................................ 526,930
------------
Net income........................................ $ 10,908,202
============
</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 Pooled Companies elected S corporation status under the
provisions of the Internal Revenue Code prior to the Pooling. Accordingly,
income of these Pooled Companies prior to the Pooling was passed through to the
stockholders; as such, these Pooled 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 Pooled Companies had been taxed as C
corporations during that period.
Other Pooled 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.............................................. $ 3,255,962 $ 4,504,533
Buildings and improvements........................ 9,955,090 11,384,566
Machinery and equipment........................... 2,782,254 3,026,428
Furniture and fixtures............................ 1,578,675 1,778,543
Vehicles.......................................... 998,368 1,236,915
----------- -----------
18,570,349 21,930,985
Less - Accumulated depreciation and
amortization.................................... (7,437,938) (8,191,842)
----------- -----------
$11,132,411 $13,739,143
=========== ===========
</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
Note payable to financial institution, due in monthly
installments of $15,609, bearing interest at 9%, maturing
in May 2002, with outstanding principal of $1,538,382 due
at maturity date, collateralized by property and
equipment................................................. -- 1,715,971
</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
Note payable to financial institution, due in monthly
installments of $5,597, bearing interest at 8.75%,
maturing in June 2003, collateralized by property and
equipment................................................. 491,080 472,917
Note payable to financial institution, due in monthly
installments of $3,537, bearing interest at 6%, maturing
in October 2013, collateralized by property and
equipment................................................. 413,029 408,567
Note payable to financial institution, due in monthly
installments of $3,333, bearing interest at 9.5%, maturing
in May 2003, with outstanding principal of $47,286 due at
maturity date, collateralized by property and equipment... -- 200,000
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.................. 306,571 502,333
---------- -----------
2,118,017 10,067,835
Less -- Current maturities.................................. (221,771) (1,104,109)
---------- -----------
$1,896,246 $ 8,963,726
========== ===========
</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................................................. $ 1,104,109
1999................................................. 985,240
2000................................................. 919,383
2001................................................. 940,573
2002................................................. 2,475,123
Thereafter........................................... 3,643,407
-----------
$10,067,835
===========
</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 Pooled 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 Pooled 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 Pooled
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 $890,600,
$1,114,600 and $879,600 for the years ended December 31, 1995 and 1996, and the
nine-month period ended September 30, 1997, respectively. Rental payments to
related parties approximated
F-23
<PAGE> 88
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$326,000 and $370,000 for the years ended December 31, 1995 and 1996, and
$231,000 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................................................... $1,082,847
1999................................................... 733,938
2000................................................... 363,602
2001................................................... 179,970
2002................................................... 140,100
Thereafter............................................. 245,000
----------
$2,745,457
==========
</TABLE>
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 on March 12, 1998, under which Brunswick Corporation consented to
changes in the ownership of certain of the Pooled Companies resulting from the
Pooling, and the Company agreed to pay Brunswick Corporation
F-24
<PAGE> 89
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$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 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
F-25
<PAGE> 90
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
F-26
<PAGE> 91
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> 92
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> 93
<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 Agreement Relating to the Purchase of MarineMax Common Stock
between Registrant and Brunswick Corporation, dated 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++
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+
</TABLE>
II-3
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
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
++ To be filed by amendment
+++ 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> 95
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 1, 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 1, 1998
- ----------------------------------------------------- President, Chief Executive
William H. McGill Jr. Officer, and Director
(Principal Executive Officer)
/s/ MICHAEL H. MCLAMB Vice President, Chief Financial May 1, 1998
- ----------------------------------------------------- Officer, and Treasurer
Michael H. McLamb (Principal Financial and
Accounting Officer)
* Senior Vice President and May 1, 1998
- ----------------------------------------------------- Director
Richard R. Bassett
* Senior Vice President and May 1, 1998
- ----------------------------------------------------- Director
Louis R. DelHomme Jr.
* Senior Vice President and May 1, 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> 96
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 Agreement Relating to the Purchase of MarineMax Common Stock
between Registrant and Brunswick Corporation, dated 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> 97
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
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
++ To be filed by amendment
+++ Not applicable
<PAGE> 1
Exhibit 5
O'CONNOR CAVANAGH
The Law Offices of
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears
A Professional Association
Robert S. Kant
602-263-2606
File No.: 34112-1
May 1, 1998
MarineMax, Inc.
18167 U.S. 19 North, Suite 499
Clearwater, FL 33764
RE: REGISTRATION STATEMENT ON FORM S-1
MARINEMAX, INC.
Ladies and Gentlemen:
As legal counsel to MarineMax, Inc., a Delaware corporation (the
"Company"), we have assisted in the preparation of the Company's Registration
Statement on Form S-1, Registration No. 333-47873 (the "Registration
Statement"), filed with the Securities and Exchange Commission in connection
with the registration under the Securities Act of 1933, as amended, of the
shares of common stock of the Company covered by the Registration Statement
(the "Shares"). The facts, as we understand them, are set forth in the
Registration Statement.
With respect to the opinion set forth below, we have examined
originals, certified copies, or copies otherwise identified to our satisfaction
as being true copies, only of the following:
A. The Restated Certificate of Incorporation of the Company;
B. The Bylaws of the Company;
C. The Registration Statement; and
D. The Resolutions of the Board of Directors of the Company
relating to the organization of the Company and the approval of the filing of
the Registration Statement and the transactions in connection therewith.
Subject to the assumptions that (i) the documents and signatures
examined by us are genuine and authentic and (ii) the persons executing the
documents examined by us have the
<PAGE> 2
Exhibit 5 -- Continued
O'Connor Cavanagh
MarineMax, Inc.
May 1, 1998
Page 2
legal capacity to execute such documents, and subject to the further
limitations and qualifications set forth below, it is our opinion that, when
(a) the Registration Statement as then amended shall have been declared
effective by the Commission, (b) the Underwriting Agreement shall have been
duly executed and delivered, and (c) the Shares have been duly issued,
executed, authenticated, delivered, paid for and sold by the Company as
described in the Registration Statement and in accordance with the provisions
of the Underwriting Agreement, the Shares will be validly issued, fully paid
and nonassessable.
Please be advised that we are members of the State Bar of Arizona,
and our opinion is limited to the legality of matters under the laws of the
State of Arizona and the General Corporation Laws of the state of Delaware.
Further, our opinion is based solely upon existing laws, rules and regulations,
and we undertake no obligation to advise you of any changes that may be brought
to our attention after the date hereof.
We hereby expressly consent to any reference to our firm in the
Registration Statement, the inclusion of this Opinion as an exhibit to the
Registration Statement, and to the filing of this Opinion with any other
appropriate governmental agency.
Very truly yours,
<PAGE> 1
EXHIBIT 10.1.g
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT OF MERGER
AND
PLAN OF REORGANIZATION
DATED AS OF THE _____ DAY OF _______________, 1998
BY AND AMONG
MARINEMAX, INC.,
STOVALL ACQUISITION CORP.
(A SUBSIDIARY OF MARINEMAX, INC.),
STOVALL MARINE, INC.
AND
THE STOCKHOLDERS NAMED HEREIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. THE MERGER............................................................................................. 4
1.1 Delivery of Filing of Articles of Merger............................................. 4
1.2 Effective Time....................................................................... 4
1.3 Articles/Certificate of Incorporation, Bylaws and Board of Directors of
Surviving Corporation................................................................ 4
1.4 Certain Information With Respect to the Capital Stock of COMPANY,
MARINEMAX and NEWCO........................................................................... 5
1.5 Effect of Merger..................................................................... 5
1.6 Accounting Treatment................................................................. 6
2. CONVERSION AND CANCELLATION OF STOCK.......................................................... 6
2.1 Manner of Conversion and Cancellation................................................ 6
3. DELIVERY OF MERGER CONSIDERATION.............................................................. 7
3.1 Time and Manner of Delivery.......................................................... 7
3.2 Surrender of COMPANY Stock........................................................... 7
3.3 Escrow of Portion of MARINEMAX Stock................................................. 7
4. CLOSING....................................................................................... 8
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE
STOCKHOLDERS.................................................................................. 8
(A) Representations and Warranties of COMPANY and the
STOCKHOLDERS......................................................................... 8
5.1 Due Organization..................................................................... 9
5.2 Authorization........................................................................ 9
5.3 Capital Stock of COMPANY............................................................. 9
5.4 Transactions in Capital Stock, Organization Accounting............................... 10
5.5 No Bonus Shares...................................................................... 10
5.6 Subsidiaries and Affiliates.......................................................... 10
5.7 Predecessor Status; Etc.............................................................. 10
5.8 Spin-off by COMPANY.................................................................. 10
5.9 Financial Statements................................................................. 10
5.10 Liabilities and Obligations.......................................................... 11
5.11 Accounts and Notes Receivable........................................................ 12
5.12 Permits and Intangibles.............................................................. 12
5.13 Environmental Matters................................................................ 12
5.14 Personal Property.................................................................... 13
5.15 Significant Customers; Material Contracts and Commitments............................ 14
5.16 Real Property........................................................................ 14
5.17 Insurance............................................................................ 16
5.18 Compensation; Employment Agreements; Organized Labor Matters......................... 16
5.19 Employee Plans....................................................................... 16
5.20 Compliance with ERISA................................................................ 17
5.21 Conformity with Law; Litigation...................................................... 18
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
5.22 Taxes................................................................................ 19
5.23 No Violations........................................................................ 19
5.24 Government Contracts................................................................. 20
5.25 Absence of Changes................................................................... 20
5.26 Deposit Accounts; Powers of Attorney................................................. 21
5.27 Validity of Obligations.............................................................. 21
5.28 Relations with Governments........................................................... 22
5.29 Prohibited Activities................................................................ 22
5.30 Disclosure........................................................................... 22
(B) Representations and Warranties of STOCKHOLDERS....................................... 23
5.31 Authority: Ownership................................................................. 23
5.32 Preemptive Rights.................................................................... 23
5.33 No Intention to Dispose of MARINEMAX Stock........................................... 23
6. REPRESENTATIONS OF MARINEMAX AND NEWCO........................................................ 23
6.1 Due Organization..................................................................... 23
6.2 Authorization........................................................................ 24
6.3 Capital Stock of MARINEMAX and NEWCO................................................. 24
6.4 Transactions in Capital Stock; Organization Accounting............................... 24
6.5 [Intentionally Deleted].............................................................. 24
6.6 Financial Statements................................................................. 24
6.7 [Intentionally Deleted].............................................................. 24
6.8 Validity of Obligations.............................................................. 24
6.9 MARINEMAX Stock...................................................................... 24
6.10 Disclosure........................................................................... 25
7. COVENANTS PRIOR TO CLOSING.................................................................... 25
7.2 Conduct of Business Pending the Merger............................................... 25
7.3 Prohibited Activities................................................................ 26
7.4 [Intentionally Deleted].............................................................. 27
7.5 [Intentionally Deleted.]............................................................. 27
7.6 Agreements........................................................................... 28
7.7 Notification of Certain Matters...................................................... 28
7.8 Delivery of Schedules; Amendment of Schedules........................................ 28
7.9 [Intentionally Deleted].............................................................. 29
7.10 Final Financial Statements........................................................... 29
7.11 Further Assurances................................................................... 29
7.12 [Intentionally Deleted].............................................................. 29
7.13 Compliance with the Hart-Scott Act................................................... 29
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS
AND COMPANY................................................................................... 30
8.1 Representations and Warranties; Performance of Obligations........................... 30
8.2 Satisfaction......................................................................... 30
8.3 No Litigation........................................................................ 30
8.4 Real Estate Leases................................................................... 30
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.5 Consents and Approvals............................................................... 31
8.6 Good Standing Certificates........................................................... 31
8.7 No Material Adverse Change........................................................... 31
8.8 [Intentionally Deleted].............................................................. 31
8.9 Secretary's Certificate.............................................................. 31
8.10 Employment Agreements................................................................ 31
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF MARINEMAX AND
NEWCO......................................................................................... 31
9.1 Representations and Warranties; Performance of Obligations........................... 32
9.2 No Litigation........................................................................ 32
9.3 Secretary's Certificate.............................................................. 32
9.4 No Material Adverse Effect........................................................... 32
9.5 STOCKHOLDERS' Release................................................................ 32
9.6 Satisfaction......................................................................... 33
9.7 Real Estate Leases................................................................... 33
9.8 Consents and Approvals............................................................... 33
9.9 Good Standing Certificates........................................................... 33
9.10 STOCKHOLDERS' Guarantees............................................................. 33
9.11 Employment Agreements................................................................ 33
9.12 Specific Indemnification Agreement................................................... 33
9.13 [Intentionally Deleted].............................................................. 34
9.14 Investment Agreements................................................................ 34
10. COVENANTS OF MARINEMAX AND THE STOCKHOLDERS AFTER
CLOSING....................................................................................... 34
10.1 Assumption of STOCKHOLDERS' Guarantees............................................... 34
10.2 Preservation of Tax Treatment........................................................ 34
10.3 Preparation and Filing of Tax Returns................................................ 34
10.4 [Intentionally Deleted].............................................................. 35
10.5 Preservation of Employee Benefit Plans............................................... 35
10.6 Dividends............................................................................ 35
10.7 [Intentionally Deleted].............................................................. 35
11. INDEMNIFICATION............................................................................... 35
11.1 General Indemnification by the STOCKHOLDERS.......................................... 35
11.2 Indemnification by MARINEMAX......................................................... 36
11.3 Third Person Claims.................................................................. 36
11.4 Limitations on Indemnification....................................................... 37
.............................................................................................. 38
11.5 Environmental Indemnification by the STOCKHOLDERS.................................... 38
12. TERMINATION OF AGREEMENT...................................................................... 40
12.1 Termination.......................................................................... 40
12.2 Liabilities in Event of Termination.................................................. 40
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
13. NONCOMPETITION................................................................................ 40
13.1 Prohibited Activities................................................................ 40
13.2 Damages.............................................................................. 41
13.3 Reasonable Restraint................................................................. 42
13.4 Severability; Reformation............................................................ 42
13.5 Independent Covenant................................................................. 42
13.6 Materiality.......................................................................... 42
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION..................................................... 42
14.1 STOCKHOLDERS......................................................................... 42
14.2 MARINEMAX AND NEWCO.................................................................. 43
14.3 Damages.............................................................................. 44
14.4 Survival............................................................................. 44
15. [Intentionally Deleted]. .................................................................... 44
16. FEDERAL SECURITIES ACT REPRESENTATIONS........................................................ 44
16.1 Compliance with Law......................................................... 44
16.2 Economic Risk; Sophistication........................................................ 44
17. GENERAL....................................................................................... 45
17.1 Cooperation.......................................................................... 45
17.2 Successors and Assigns............................................................... 45
17.3 Entire Agreement..................................................................... 45
17.4 Counterparts......................................................................... 45
17.5 Brokers and Agents................................................................... 45
17.6 Expenses............................................................................. 46
17.7 Notices.............................................................................. 46
17.8 Governing Law........................................................................ 47
17.9 Survival of Representations and Warranties........................................... 47
17.10 Exercise of Rights and Remedies...................................................... 47
17.11 Time................................................................................. 48
17.12 Reformation and Severability......................................................... 48
17.13 Remedies Cumulative.................................................................. 48
17.14 Captions............................................................................. 48
17.15 Amendments and Waivers............................................................... 48
17.16 Execution by Facsimile; Delivery of Original Signed Agreement........................ 48
</TABLE>
iv
<PAGE> 6
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "Agreement")
is made as of the _____ day of __________________, 1998, by and among MARINEMAX,
INC., a Delaware corporation ("MARINEMAX"), STOVALL ACQUISITION CORP., a
Delaware corporation ("NEWCO"), STOVALL MARINE, INC., a Georgia corporation (the
"COMPANY"), and PAUL GRAHAM STOVALL ("P.G. Stovall"), ROBERT S. STOVALL ("R.S.
Stovall") and JON M. STOVALL ("J.M. Stovall")(P.G. Stovall, R.S. Stovall and
J.M. Stovall may be referred to individually herein as a "STOCKHOLDER" and
collectively as the "STOCKHOLDERS").
WHEREAS, NEWCO is a corporation duly organized and existing under the
laws of the State of Delaware, having been incorporated solely for the purpose
of completing the transactions set forth herein, and is a wholly-owned
subsidiary of MARINEMAX.
WHEREAS, the respective Boards of Directors of NEWCO and COMPANY (which
together are hereinafter collectively referred to as "Constituent Corporations")
deem it advisable and in the best interests of the Constituent Corporations and
their respective stockholders that NEWCO merge with and into COMPANY pursuant to
this Agreement and the applicable provisions of the laws of the States of
Delaware and Georgia;
WHEREAS, the STOCKHOLDERS and Board of Directors of COMPANY and the
stockholders and Board of Directors of NEWCO have approved and adopted this
Agreement, and intend it to be a plan of reorganization pursuant to Sections
368(a)(1)(A) and Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended (the "Code"), and intend the reorganization to be accounted for as a
"purchase" for accounting purposes;
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party(ies)" mean(s) the COMPANY.
"Acquisition Company" shall mean NEWCO.
"Affiliates" has the meaning set forth in Section 5.6.
<PAGE> 7
"Articles of Merger" shall mean those Articles or Certificates of
Merger with respect to the Merger substantially in the forms attached as Annex I
hereto or with such other changes therein as may be required by applicable state
laws.
"Balance Sheet Date" means December 31, 1997.
"Charter Documents" has the meaning set forth in Section 5.1.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"Code" shall have the meaning set forth in the third recital of this
Agreement.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COMPANY Financial Statements" has the meaning set forth in Section
5.9.
"COMPANY Stock" has the meaning set forth in Section 2.1.
"Constituent Corporations" has the meaning set forth in the second
recital of this Agreement.
"Delaware GCL" means the Delaware General Corporation Law, as it may be
amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Effective Time" shall mean the time as of which the Merger becomes
effective.
"Environmental Laws" has the meaning set forth in Section 5.13.
"Escrow and Security Agreement" has the meaning set forth in Section
3.3.
"Final COMPANY Financial Statements" has the meaning set forth in
Section 7.10.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Hart-Scott Act"" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
"Indemnification Deductible" has the meaning set forth in Section 11.4.
2
<PAGE> 8
"Indemnified Party" has the meaning set forth in Section 11.3.
"Indemnifying Party" has the meaning set forth in Section 11.3.
"IRS" shall mean the Internal Revenue Service.
"Lease Agreements" has the meaning set forth in Section 8.4.
"MARINEMAX" has the meaning set forth in the first paragraph of this
Agreement.
"MARINEMAX Charter Documents" has the meaning set forth in Section 6.1.
"MARINEMAX Stock" means the common stock, par value $.001 per share, of
MARINEMAX.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"Merger" means the merger of NEWCO with and into COMPANY pursuant to
this Agreement and the applicable provisions of the laws of the State of
Delaware and the State of Georgia.
"NEWCO" has the meaning set forth in the first paragraph of this
Agreement.
"NEWCO Stock" means the common stock, par value $.001 per share, of
NEWCO.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Restricted Period" means that period of time defined in Section 13.1.
"Returns" means any returns, reports or statements (including, without
limitation, any information returns) required to be filed for purposes of a
particular Tax.
"Schedules" means the schedules attached hereto which reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"Statutory Liens" has the meaning set forth in Section 7.3.
3
<PAGE> 9
"STOCKHOLDERS" has the meaning set forth in the first paragraph of this
Agreement.
"Surviving Corporation" shall mean COMPANY as the surviving party in
the Merger.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add on minimum tax, or other taxes, assessments,
duties, fees, levies or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to tax
or additional amounts with respect thereto.
"Territory" has the meaning set forth in Section 13.1.
"Third Person" has the meaning set forth in Section 11.3.
"Transfer Taxes" has the meaning set forth in Section 17.6.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE MERGER
1.1 DELIVERY OF FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause the Articles of Merger to be signed, verified and filed
with the Secretary of State of the State of Delaware and the Secretary of State
of the State of Georgia and stamped receipt copies of each such filing to be
delivered to MARINEMAX at the Effective Time.
1.2 EFFECTIVE TIME. At the Effective Time, NEWCO shall be merged with
and into COMPANY in accordance with the Articles of Merger, the separate
existence of NEWCO shall cease, COMPANY shall be the surviving party in the
Merger. The Merger will be effected in a single transaction.
1.3 ARTICLES/CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF
DIRECTORS OF SURVIVING CORPORATION. At the Effective Time:
(i) the Articles/Certificate of Incorporation of COMPANY then
in effect shall be the Articles/Certificate of Incorporation of the Surviving
Corporation until changed as provided by applicable law;
4
<PAGE> 10
(ii) the Bylaws of COMPANY then in effect shall become the
Bylaws of the Surviving Corporation; and subsequent to the Effective Time, such
Bylaws shall be the Bylaws of the Surviving Corporation until they shall
thereafter be duly amended;
(iii) the Board of Directors of the Surviving Corporation
shall consist of the persons who are on the Board of Directors of COMPANY
immediately prior to the Effective Time, provided that William H. McGill, Jr.
shall be elected as a director of the Surviving Corporation effective as of the
Effective Time; the Board of Directors of the Surviving Corporation shall hold
office subject to the provisions of the laws of the State of Georgia and of the
Articles/Certificate of Incorporation and Bylaws of the Surviving Corporation;
and
(iv) the officers of COMPANY immediately prior to the
Effective Time shall continue as the officers of the Surviving Corporation in
the same capacity or capacities, and effective at the Effective Time William H.
McGill, Jr. shall be appointed as Vice President of the Surviving Corporation
and Michael H. McLamb, as Assistant Secretary of the Surviving Corporation, each
of such officers to serve, subject to the provisions of the Articles/Certificate
of Incorporation and Bylaws of the Surviving Corporation, until his successor is
duly elected and qualified.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF COMPANY,
MARINEMAX AND NEWCO. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of COMPANY,
MARINEMAX and NEWCO as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and
outstanding capital stock of COMPANY is as set forth on Schedule 5.3 hereto;
(ii) immediately prior to the Effective Time, the authorized
capital stock of MARINEMAX will consist of Forty Million (40,000,000) shares of
MARINEMAX Stock, and Five Million (5,000,000) shares of preferred stock, par
value $.001 per share, of which the number of issued and outstanding shares is
set forth on Schedule 6.3 hereof.
(iii) as of the date of this Agreement, the authorized capital
stock of NEWCO consists of One Thousand (1,000) shares of NEWCO Stock, of which
One Hundred (100) shares are issued and outstanding.
1.5 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the Delaware GCL and the
Georgia Business Corporation Code of the State of Georgia. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of COMPANY shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of NEWCO shall be merged with and into COMPANY, and
5
<PAGE> 11
COMPANY, as the Surviving Corporation, shall be fully vested therewith. At the
Effective Time, the separate existence of NEWCO shall cease and, in accordance
with the terms of this Agreement, the Surviving Corporation shall possess all of
the rights, privileges, immunities and franchises, of a public, as well as of a
private, nature, and all property, real, personal and mixed, and all debts due
on all accounts whatsoever, including, without limitation, subscriptions to
shares, and all taxes, including those due and owing and those accrued, and all
other choses in action, and all and every other interest of or belonging to or
due to COMPANY, and NEWCO shall be taken and deemed to be transferred to, and
vested in, the Surviving Corporation without further act or deed; and all of the
respective properties, rights and privileges, powers and franchises and all and
every other interest of COMPANY and NEWCO shall be thereafter be the property of
the Surviving Corporation as they were of COMPANY and NEWCO prior to the Merger;
the title to any real estate, or interest therein, whether by deed or otherwise,
under the laws of the state of incorporation vested in COMPANY and NEWCO, shall
not revert or be in any way impaired by reason of the Merger; and the assets,
liabilities, reserves, and accounts of COMPANY shall be taken up on the books of
the Surviving Corporation at the amounts at which they respectively were carried
on the books of COMPANY, subject to such adjustments as may be appropriate in
giving effect to the Merger and the accounting for the Merger as a purchase
transaction. Except as otherwise provided herein, the Surviving Corporation
shall thenceforth be responsible and liable for all the liabilities and
obligations of COMPANY and NEWCO and any claim existing, or action or proceeding
pending, by or against COMPANY or NEWCO may be prosecuted as if the Merger had
not taken place, or the Surviving Corporation may be substituted in their place.
Neither the rights of creditors nor any liens upon the property of COMPANY or
NEWCO shall be impaired by the Merger, and all debts, liabilities and duties of
COMPANY and NEWCO shall attach to the Surviving Corporation, and may be enforced
against such Surviving Corporation to the same extent as if said debts,
liabilities and duties had been incurred or contracted by such Surviving
Corporation. The separate corporate existence of any direct or indirect
subsidiary of Company existing prior to the Merger shall continue unaffected by
the Merger, and such subsidiaries shall be subsidiaries of the Surviving
Corporation at the Effective Time.
1.6 ACCOUNTING TREATMENT. The Merger shall be accounted for as a
purchase, in accordance with GAAP and the rules and regulations of the SEC.
2. CONVERSION AND CANCELLATION OF STOCK
2.1 MANNER OF CONVERSION AND CANCELLATION. The manner of converting the
shares of the outstanding capital stock of COMPANY (the "COMPANY Stock"), and
the cancellation of the NEWCO Stock, issued and outstanding immediately prior to
the Effective Time, respectively, shall be as follows:
As of the Effective Time:
6
<PAGE> 12
(i) all of the shares of COMPANY Stock issued and outstanding
immediately prior to the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, automatically shall be deemed to
represent the right to receive the number of shares of MARINEMAX Stock set forth
on Annex II hereto with respect to such holder;
(ii) all shares of COMPANY Stock that are held by COMPANY as
treasury stock shall be canceled and retired and no shares of MARINEMAX Stock or
other consideration shall be delivered or paid in exchange therefor; and
(iii) each share of NEWCO Stock issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of MARINEMAX, automatically be cancelled.
All MARINEMAX Stock received by the STOCKHOLDERS pursuant to this
Agreement shall, except for restrictions on resale or transfer described in
Section 16 hereof have the same rights as all the other shares of outstanding
MARINEMAX Stock by reason of the provisions of the Certificate of Incorporation
of MARINEMAX or as otherwise provided by the Delaware GCL. All voting rights of
such MARINEMAX Stock received by the STOCKHOLDERS shall be fully exercisable by
the STOCKHOLDERS and the STOCKHOLDERS shall not be deprived nor restricted in
exercising those rights.
3. DELIVERY OF MERGER CONSIDERATION
3.1 TIME AND MANNER OF DELIVERY. At the Closing, or as soon thereafter
as reasonably practicable, but in no event more than Fifteen (15) days after the
Closing, the STOCKHOLDERS shall receive the respective number of shares of
MARINEMAX Stock as set forth on Annex II hereto; provided, however, that the
STOCKHOLDERS shall have previously surrendered all of COMPANY Stock to MARINEMAX
as provided in Section 3.2 below.
3.2 SURRENDER OF COMPANY STOCK. The STOCKHOLDERS shall deliver to
MARINEMAX at the Closing the certificates representing COMPANY Stock, duly
endorsed in-blank by the STOCKHOLDERS, or accompanied by in-blank stock powers,
and with all necessary transfer tax and other revenue stamps, pursuant to
applicable law, acquired at the STOCKHOLDERS' expense, affixed and canceled,
such COMPANY Stock to be free and clear of all liens, claims, rights, charges
and encumbrances of every nature whatsoever. The STOCKHOLDERS agree promptly to
cure any deficiencies with respect to the endorsement of the stock certificates
or other documents of conveyance with respect to such COMPANY Stock or with
respect to the stock powers accompanying the COMPANY Stock.
3.3 ESCROW OF PORTION OF MARINEMAX STOCK. At the Closing, each of the
STOCKHOLDERS agrees to deliver or cause to be delivered into escrow for a period
of one (1) year following the Effective Time an aggregate of ten percent (10%)
of the MARINEMAX
7
<PAGE> 13
Stock delivered to each such STOCKHOLDER pursuant to this Agreement for purposes
of securing the obligations, representations and warranties of the STOCKHOLDERS
arising under this Agreement and all documents executed in connection herewith,
such escrow to be governed by an escrow and security agreement in the form
attached hereto as ANNEX III (the "Escrow and Security Agreement"). STOCKHOLDERS
each agree to execute and deliver the Escrow and Security Agreement at the
Closing effective at the Effective Time.
4. CLOSING
At or prior to the Closing, the parties shall take all actions
necessary to prepare to (i) effect the Merger (including, without limitation, if
permitted by applicable state law, the filing with the appropriate state
authorities of the Articles of Merger specifying the Effective Time as the
delayed effective time of the Merger), and (ii) effect the conversion and
delivery of shares referred to in Section 3 hereof; provided, however, that such
actions shall not include the actual completion of the Merger or the conversion
and delivery of the shares referred to in Section 3 hereof, each of which
actions shall be deemed taken at the Effective Time as herein provided. In the
event that the conditions precedent contained in and this Agreement are not
satisfied or waived and this Agreement is thereby terminated, MARINEMAX hereby
covenants and agrees to do all things required by the Delaware GCL and by the
Georgia Business Corporation Code of the State of Georgia in order to stop or
rescind the Merger effected by the filing of the Articles of Merger as described
in this Section. The taking of the actions described in clauses (i) and (ii)
above shall take place at a closing (the "Closing") to be held following the
satisfaction or waiver of the conditions precedent set forth in Sections 8 and 9
hereof on such date as the STOCKHOLDERS and MARINEMAX shall determine (the
"Closing Date") at the offices of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, P.A., One East Camelback Road, Suite 1100, Phoenix, Arizona 85012. At
the Effective Time (x) the Articles of Merger shall be or shall have been filed
with the appropriate state authorities so that the Merger shall be effective at
the Effective Time, and (y) the parties shall be deemed to have consummated the
transactions contemplated by this Agreement, including, without limitation, the
conversion and delivery of shares, which the STOCKHOLDERS shall be entitled to
receive pursuant to the Merger referred to in Section 3 hereof. The time at
which the actions described in the preceding clauses (x) and (y) occur shall be
referred to as the "Effective Time."
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE
STOCKHOLDERS
(A) REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE STOCKHOLDERS. the
COMPANY and the STOCKHOLDERS jointly and severally represent and warrant that
all of the following representations and warranties in this Section 5(A) are
true, complete and correct at the date of this Agreement and, subject to Section
7.8 hereof, shall be true, complete, and correct at the time of Closing and at
the Effective Time and that such representations and
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warranties shall survive the Closing and the Effective Time. For purposes of
this Section 5(A), the term COMPANY shall mean and refer to COMPANY and all
other Acquired Parties, if any.
5.1 DUE ORGANIZATION. COMPANY is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia, and has
the requisite power and authority to carry on its business as it is now being
conducted. COMPANY is duly qualified to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership, sales or
leasing of its properties makes such qualification necessary, except (i) as set
forth on Schedule 5.1 or (ii) where the failure to be so authorized or qualified
would not have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise), of COMPANY taken as a
whole (as used herein with respect to COMPANY, or with respect to any person, a
"Material Adverse Effect"). Schedule 5.1 sets forth the jurisdiction in which
COMPANY is incorporated and contains a list of all jurisdictions in which
COMPANY is authorized or qualified to do business. True, complete and correct
copies of the Articles/Certificate of Incorporation and Bylaws, each as amended,
of COMPANY (the "Charter Documents") are attached hereto in Schedule 5.1. The
stock records of COMPANY, as heretofore made available to MARINEMAX, are correct
and complete in all material respects. There are no minutes in the possession of
COMPANY or the STOCKHOLDERS which have not been supplied to MARINEMAX, and all
of such minutes are correct and complete in all respects. The most recent
minutes of COMPANY, which are dated no earlier than ten (10) business days prior
to the date hereof, affirm and ratify all prior acts of COMPANY, and of its
officers and directors on behalf and for the benefit of COMPANY.
5.2 AUTHORIZATION. The representatives of COMPANY executing this
Agreement have the authority to enter into and bind COMPANY to the terms of this
Agreement. COMPANY has the full legal right, power and authority to enter into
this Agreement and the Merger, subject to the terms of the approval of the
STOCKHOLDERS and the Board of Directors of COMPANY described on Schedule 5.2,
executed copies of which are attached thereto.
5.3 CAPITAL STOCK OF COMPANY. The authorized capital stock of COMPANY
is as set forth in Schedule 5.3. All of the issued and outstanding shares of the
capital stock of COMPANY are owned by the STOCKHOLDERS in the amounts set forth
on Schedule 5.3 and further, except as set forth in Schedule 5.3, are owned free
and clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. The STOCKHOLDERS are the
sole stockholders of COMPANY. All of the issued and outstanding shares of the
capital stock of COMPANY have been duly authorized and validly issued, are fully
paid and nonassessable, are owned of record and beneficially by the STOCKHOLDERS
and further, such shares were offered, issued, sold and delivered by COMPANY in
compliance with all applicable state and federal laws concerning the issuance of
securities. Further, none of such shares were issued in violation of any
preemptive rights of any past or present stockholder.
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5.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except as
set forth on Schedule 5.4, COMPANY has not acquired or redeemed any COMPANY
Stock since the Balance Sheet Date. Except as set forth on Schedule 5.4, (i) no
option, warrant, call, conversion right or commitment of any kind exists which
obligates COMPANY to issue any of its capital stock; (ii) COMPANY has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof. Schedule 5.4 also includes complete
and accurate copies of all stock option or stock purchase plans, including,
without limitation, a list of all outstanding options, warrants or other rights
to acquire shares of COMPANY's stock.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of COMPANY Stock have been issued pursuant to awards, grants or bonuses.
5.6 SUBSIDIARIES AND AFFILIATES. Except as set forth on Schedule 5.6,
COMPANY has no subsidiaries. Except as set forth on Schedule 5.6, COMPANY does
not presently own, of record or beneficially, or control, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in any corporation, association or business entity, nor is
COMPANY, directly or indirectly, a participant in any joint venture, partnership
or other non-corporate entity. None of the STOCKHOLDERS have any equity
investment in any "Affiliates." The term "Affiliates" shall mean all entities
that directly or indirectly engage in any business that sells, rents, or leases
boating, nautical or other similar lifestyle entertainment products and
services, leases or owns real property used in any such business, and in which
any of the STOCKHOLDERS are officers or directors, or in which any of the
STOCKHOLDERS, directly or indirectly, own or control ten percent (10%) or more
of the equity securities of the entity.
5.7 PREDECESSOR STATUS; ETC. Set forth in Schedule 5.7 is a listing of
all names of all predecessor companies of COMPANY, including the names of any
entities acquired by COMPANY (by stock purchase, merger or otherwise) or owned
by COMPANY or from whom COMPANY previously acquired material assets, in any
case, from the earliest date upon which any STOCKHOLDER acquired his or her
stock in any COMPANY. Except as disclosed on Schedule 5.7, COMPANY has not been,
within such period of time, a subsidiary or division of another corporation or a
part of an acquisition which was later rescinded.
5.8 SPIN-OFF BY COMPANY. Except as set forth on Schedule 5.8, there has
not been any sale, spin-off or split-up of material assets of either COMPANY or
any other person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
COMPANY since December 31, 1997.
5.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are copies of
the following financial statements of COMPANY (the "COMPANY Financial
Statements"): COMPANY's audited Balance Sheets as of December 31, 1996 and
September 30, 1997, and
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Statements of Operations, Shareholders' Equity and Cash Flows for the year ended
December 31, 1996, and for the nine month period ended September 30, 1997; and
COMPANY's unaudited Balance Sheets as of December 31, 1997 and March 31, 1998,
and Statements of Operations, Shareholders' Equity and Cash Flows for the year
ended December 31, 1997 and for the three month periods ended December 31, 1997
and March 31, 1998, respectively. COMPANY Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated and for the periods prior thereto (except as noted thereon or
on Schedule 5.9). Except as set forth on Schedule 5.9, COMPANY'S Balance Sheets
as of December 31, 1996, September 30, 1997, and December 31, 1997 each present
fairly in all material respects the financial position of COMPANY as of the
dates indicated thereon, and COMPANY's Statements of Operations, Shareholders'
Equity and Cash Flows referenced herein present fairly in all material respects
the results of operations for the periods indicated thereon.
5.10 LIABILITIES AND OBLIGATIONS. COMPANY has delivered to MARINEMAX a
true, complete and accurate list (which is set forth on Schedule 5.10) as of the
Balance Sheet Date of (i) all material liabilities of COMPANY which are not
reflected on the balance sheet of COMPANY at the Balance Sheet Date or otherwise
reflected in COMPANY Financial Statements at the Balance Sheet Date which by
their nature would be required in accordance with GAAP to be reflected in such
balance sheet, and (ii) all loan agreements, indemnity or guaranty agreements,
bonds, mortgages, liens, pledges or other security agreements to which COMPANY
or any of its assets is bound and which individually or in the aggregate involve
sums in excess of $25,000. Except as set forth on Schedule 5.10, since the
Balance Sheet Date, COMPANY has not incurred any material liabilities of any
kind, character and description, whether accrued, absolute, secured or
unsecured, contingent or otherwise, other than liabilities incurred in the
ordinary course of business. COMPANY has also delivered to MARINEMAX on Schedule
5.10, in the case of those contingent liabilities related to pending or
threatened litigation, or other liabilities incurred under the agreements listed
pursuant to Section 5.10(ii) which are not fixed or otherwise accrued or
reserved, a good faith and reasonable estimate of the maximum amount which
COMPANY reasonably expects will be payable. For each such contingent liability
or liability for which the amount is not fixed or is contested, COMPANY has
provided to MARINEMAX the following information:
(i) a summary description of the liability
together with the following:
(a) copies of all relevant documentation
relating thereto; and
(b) amounts claimed and any other action or
relief sought;
(ii) the name of each court or agency before
which such claim, suit or proceeding is pending;
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<PAGE> 17
(iii) the date such claim, suit or proceeding was instituted;
and
(iv) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with respect to each such
liability. If no estimate is provided, the estimate shall for purposes of this
Agreement be deemed zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. COMPANY has delivered to MARINEMAX
a true, complete and accurate list (which is set forth on Schedule 5.11) of the
accounts and notes receivable of COMPANY, as of the Balance Sheet Date,
including any such amounts which are not reflected in the balance sheet as of
the Balance Sheet Date, and including receivables from and advances to employees
and the STOCKHOLDERS. Except to the extent reflected on Schedule 5.11, such
accounts, notes and other receivables are collectible in the amounts shown on
Schedule 5.11, net of reserves reflected in the balance sheet as of the Balance
Sheet Date.
5.12 PERMITS AND INTANGIBLES. COMPANY and its employees hold all
licenses, franchises, permits and authorizations (governmental or otherwise) the
absence of any of which could have a Material Adverse Effect on COMPANY's
business, including, without limitation, all licenses, franchises, rights and
authorizations from Brunswick Corporation and Ray Industries, Inc., necessary or
beneficial for the business of COMPANY. COMPANY has delivered to MARINEMAX an
accurate list and summary description (which is set forth on Schedule 5.12) of
all such licenses, franchises, permits and authorizations, including permits,
titles (including motor vehicle titles and current registrations), fuel permits,
licenses, franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights owned or held by COMPANY or any of its employees
(including interests in software or other technology systems, programs and
intellectual property) (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on Schedule
5.13). The licenses, franchises, permits and authorizations listed on Schedules
5.12 and 5.13 are valid, and COMPANY has not received any notice that any
entity, governmental or otherwise, intends to cancel, limit, terminate or not
renew any such license, franchise, permit or authorization. COMPANY has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in the licenses, franchises,
permits and authorizations listed on Schedules 5.12 and 5.13 and is not in
violation of any of the foregoing except where such non-compliance or violation
would not have a Material Adverse Effect on COMPANY. Except as specifically
provided in Schedule 5.12, the transactions contemplated by this Agreement will
not result in a default under or a breach or violation of, or adversely affect
the rights and benefits afforded to COMPANY by, any such licenses, franchises,
permits or authorizations.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, and
except where any failure to comply or action would not have a Material Adverse
Effect, (i) COMPANY has complied with and is in compliance with all federal,
state, local and foreign statutes (civil and criminal), laws, ordinances,
regulations, rules, notices, permits, judgments, orders and decrees
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<PAGE> 18
applicable to COMPANY or any of its properties, assets, operations and
businesses relating to environmental protection (collectively "Environmental
Laws") including, without limitation, Environmental Laws relating to air, water,
land and the generation, storage, use, handling, transportation, treatment or
disposal of Hazardous Wastes and Hazardous Substances including petroleum and
petroleum products (as such terms are defined in any applicable Environmental
Law); (ii) COMPANY has obtained and adhered to all necessary permits and other
approvals necessary to treat, transport, store, dispose of and otherwise handle
Hazardous Wastes and Hazardous Substances, a list of all of such permits and
approvals is set forth on Schedule 5.13; (iii) COMPANY has reported to the
appropriate authorities, to the extent required by all Environmental Laws, all
past and present sites owned and operated by COMPANY where Hazardous Wastes or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled; (iv) there have been no releases or threats of releases (as defined in
Environmental Laws) at, from, in or on any property owned or operated by COMPANY
except as permitted by Environmental Laws; (v) COMPANY and STOCKHOLDERS know of
no on-site or off-site location to which COMPANY has transported or disposed of
Hazardous Wastes and Hazardous Substances or arranged for the transportation of
Hazardous Wastes and Hazardous Substances, which site is the subject of any
federal, state, local or foreign enforcement action or any other investigation
which is reasonably likely to lead to any claim against COMPANY, MARINEMAX or
NEWCO for any clean-up cost, remedial work, damage to natural resources,
property damage or personal injury, including, without limitation, any claim
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended; and (vi) COMPANY has no contingent liability in connection
with any release of any Hazardous Waste or Hazardous Substance into the
environment.
5.14 PERSONAL PROPERTY. COMPANY has delivered to MARINEMAX a true,
complete and accurate list (which is set forth on Schedule 5.14) of (x) all
personal property included (or that will be included) in "depreciable plant,
property and equipment" on the December 31, 1997 balance sheet of COMPANY; (y)
all other personal property owned by COMPANY with an individual value in excess
of $20,000 (i) as of the Balance Sheet Date and (ii) acquired since the Balance
Sheet Date; and (z) all leases and agreements in respect of personal property,
including, in the case of each of (x), (y) and (z), (1) true, complete and
correct copies of all such leases, and (2) an indication as to which assets are
currently owned, or were formerly owned, by the STOCKHOLDERS, relatives of the
STOCKHOLDERS, or Affiliates of COMPANY. Except as set forth on Schedule 5.14,
(i) all material personal property used by COMPANY in its business is either
owned by COMPANY or leased by COMPANY pursuant to a lease included on Schedule
5.14, (ii) all of the personal property listed on Schedule 5.14 is in good
working order and condition, ordinary wear and tear excepted, and (iii) all
leases and agreements included on Schedule 5.14 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms.
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5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. COMPANY
has delivered to MARINEMAX a true, complete and accurate list (which is set
forth on Schedule 5.15) of (i) all significant current customers, it being
understood and agreed that a "significant customer," for purposes of this
Section, means a customer (or person or entity) representing 5% or more of
COMPANY's annual revenues as of the Balance Sheet Date. Except to the extent set
forth on Schedule 5.15, none of COMPANY's significant current customers have
canceled or substantially reduced or, to the best knowledge and belief of
COMPANY and the STOCKHOLDERS after due inquiry, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by COMPANY.
COMPANY has listed on Schedule 5.15 all material contracts, commitments
and similar agreements (other than the customer contracts referred to above) to
which COMPANY is a party or by which it or any of its properties are bound
(including, without limitation, contracts with significant customers, joint
venture or partnership agreements, contracts with any labor organizations,
strategic alliances and options to purchase land), other than agreements listed
on Schedule 5.14, 5.15 or 5.16, (a) in existence as of the Balance Sheet Date
and (b) entered into since the Balance Sheet Date, and in each case has attached
a true, complete and correct copy of such agreements to Schedule 5.15 hereto.
COMPANY has complied with all material commitments and obligations pertaining to
it, and is not in default under any contracts or agreements listed on Schedule
5.15 and no notice of default under any such contract or agreement has been
received. COMPANY has also set forth on Schedule 5.15 a true, accurate and
complete summary description of all plans or projects involving the opening of
new operations, expansion of existing operations, the acquisition of any
personal property, business or assets requiring, in any event, the payment of
more than $50,000 by COMPANY.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real property
owned, leased or used by COMPANY at the date hereof and all other real property,
if any, used by COMPANY in the conduct of its business. Except as set forth in
Schedule 5.16 hereto,
(i) All real property owned, leased or used
by COMPANY is zoned for the conduct of COMPANY'S business thereon pursuant to
the zoning regulations of the applicable cities, towns, villages or townships or
any other governmental bodies. The uses to which such real property are
presently put (including the location of all buildings and other improvements
thereon) comply in all material respects with the applicable provisions of such
zoning regulations without the benefit of the legal non-conforming use principle
of law, or other regulations of such cities, towns, villages or townships or any
other governmental bodies.
(ii) As to any real property leased, owned
or used by COMPANY there are no material agreements, commitments or
understandings pursuant to which COMPANY, or its successors in interest are
required to dedicate any part of the real property or to grant any easement,
water rights, rights-of-way, or license for ingress and egress or other
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<PAGE> 20
use in respect to any part of the real property, whether on account of the
development of adjacent or nearby real property or otherwise. Other than as
provided in the leases of the real property owned by COMPANY and leased to
others, except as set forth in Schedule 5.16 hereto, no person has any material
easement, license or other right whatsoever with respect to such real property.
(iii) COMPANY holds good and marketable fee
simple title to the real property identified on Schedule 5.16 hereto as owned by
COMPANY and good leasehold title to the real property identified on Schedule
5.16 as leased or used by COMPANY, in each case free and clear of all material
mortgages, charges, claims, liens, encumbrances, leases, options to purchase,
rights of first refusal, contracts of sale, easements, reservations and
restrictions, except those matters identified in any title reports set forth in
Schedule 5.16. No part of such lands is affected by any restrictions imposed by
any governmental authority affecting construction of structures thereon or the
use thereof by COMPANY other than building codes and zoning classifications.
(iv) The STOCKHOLDERS and COMPANY do not,
either individually or collectively, have any knowledge of any fact or condition
existing that would result or could result in the termination or material
reduction of the current access to and from the real property owned or leased or
used by COMPANY to existing public roads and highways, or of any reduction in
sewer or other utility services presently serving such real property. The real
property currently owned, leased or used by COMPANY has direct access to public
roads and highways.
(v) As to the real property owned by
COMPANY, neither the STOCKHOLDERS nor COMPANY has received any notice from any
insurance company of any material defects or inadequacies in the real property
or any part thereof that would materially and adversely affect the insurability
of the real property or the premiums for the insurance thereof.
(vi) As to the real property owned by
COMPANY, neither the STOCKHOLDERS nor COMPANY has failed to disclose any
material conditions of disrepair or other adverse conditions or defects with
respect to the real property or any portion thereof of which any STOCKHOLDER or
COMPANY has knowledge or which, with the exercise of reasonable diligence, any
of them should have known.
(vii) True, complete and correct copies of
all leases and agreements in respect of all real property leased or used by
COMPANY are attached to Schedule 5.16, and an indication as to which such
properties, if any, are currently owned, or were formerly owned, by the
STOCKHOLDERS or affiliates of COMPANY or the STOCKHOLDERS is included in
Schedule 5.16, and except as set forth on Schedule 5.16, all of such leases
included on Schedule 5.16 are in full force and effect and constitute valid and
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<PAGE> 21
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms.
5.17 INSURANCE. COMPANY has delivered to MARINEMAX (i) a true, accurate
and complete list as of the Balance Sheet Date of all insurance policies carried
by COMPANY; (ii) an accurate list of all insurance loss runs or workers
compensation claims received for the past three (3) policy years; (iii) true,
complete and correct copies of all insurance policies currently in effect; and
(iv) a certificate of insurance evidencing that all insurance policies of the
COMPANY are in full force and effect. Such insurance policies evidence all of
the insurance that COMPANY is required to carry pursuant to all of its contracts
and other agreements and pursuant to all applicable laws. All of such insurance
policies are currently in full force and effect and shall remain in full force
and effect through the Effective Time. Since January 1, 1994, no insurance
carried by COMPANY has been canceled by the insurer and COMPANY has not been
denied coverage.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
COMPANY has delivered to MARINEMAX a true, complete and accurate list (which is
set forth on Schedule 5.18) showing all officers, directors and key employees of
COMPANY, listing all employment agreements that do not provide for at-will
employment terminable without penalty or that pertain to any officers, directors
or key employees of COMPANY and the rate of compensation (and the portions
thereof attributable to salary, bonus and other compensation, respectively) of
each of such persons as of (i) the Balance Sheet Date and (ii) the date hereof.
COMPANY has provided to MARINEMAX true, complete and correct copies of any
employment agreements for persons listed on Schedule 5.18 and has attached such
copies to Schedule 5.18. Since the Balance Sheet Date, there have been no
increases in the compensation payable or any special bonuses to any officer,
director, key employee or other employee of COMPANY, except ordinary salary
increases implemented on a basis consistent with past practices.
Except as set forth on Schedule 5.18, (i) COMPANY is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
arrangement with any labor union; (ii) no employees of COMPANY are represented
by any labor union or covered by any collective bargaining agreement; (iii) to
the best knowledge and belief of COMPANY and the STOCKHOLDERS after due inquiry,
no campaign to establish such representation is in progress; and (iv) there is
no pending or, to the best knowledge and belief of COMPANY and the STOCKHOLDERS
after due inquiry, threatened, labor dispute involving COMPANY and any group of
its employees nor has COMPANY experienced any labor interruptions over the past
three years. COMPANY believes its relationship with employees to be good.
5.19 EMPLOYEE PLANS. The STOCKHOLDERS have delivered to MARINEMAX a
true, complete and accurate schedule (Schedule 5.19) showing all employee
benefit plans of COMPANY (including COMPANY's subsidiaries, if any), including,
without limitation, all
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employment agreements and other agreements or arrangements containing "golden
parachute" or other similar provisions, and deferred compensation agreements,
together with true, complete and correct copies of such plans, agreements and
any trusts related thereto, and classifications of employees covered thereby
existing as of the Balance Sheet Date. Except for the employee benefit plans, if
any, described on Schedule 5.19, COMPANY (including COMPANY's subsidiaries, if
any) does not sponsor, maintain or contribute to any plan program, fund or
arrangement that constitutes an "employee pension benefit plan," nor does
COMPANY have any obligation to contribute to or accrue or pay any benefits under
any deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of ERISA), or any nonqualified deferred compensation
arrangement). For the purposes of this Agreement, the term "employee pension
benefit plan" shall have the same meaning as is given that term in Section 3(2)
of ERISA. Neither COMPANY nor any Acquired Party has sponsored, maintained or
contributed to any employee pension benefit plan other than the plans set forth
on Schedule 5.19, nor is COMPANY or any Acquired Party required to contribute to
any retirement plan pursuant to the provisions of any collective bargaining
agreement establishing the terms and conditions or employment of any of
COMPANY's or any Acquired Party's employees.
Neither COMPANY nor any Acquired Party is now, or can as a result of
its past activities become, liable to the Pension Benefit Guaranty Corporation
or to any multiemployer employee pension benefit plan under the provisions of
Title IV of ERISA.
All employee benefit plans listed on Schedule 5.19 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations.
All accrued contribution obligations of COMPANY and any Acquired Party
with respect to any plan listed on Schedule 5.19 have either been fulfilled in
their entirety or are fully reflected on the December 31, 1997 balance sheet of
COMPANY as of the Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All such plans listed on Schedule 5.19 that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
are, and have been so qualified and have been determined by the IRS to be so
qualified, and copies of such determination letters are included as part of
Schedule 5.19 hereof. Except as disclosed on Schedule 5.20, all reports and
other documents required to be filed with any governmental agency or distributed
to plan participants or beneficiaries (including, without limitation, actuarial
reports, audits or tax returns) have been timely filed or distributed, and
copies thereof that have been filed for tax years 1995 and 1996 are included as
part of Schedule 5.20 hereof. Neither STOCKHOLDERS, any such plan listed in
Schedule 5.19 or administrator thereof, nor COMPANY has engaged in any
transaction prohibited under the provisions of Section 4975 of
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<PAGE> 23
the Code or Section 406 of ERISA or any other breach of fiduciary responsibility
that could subject STOCKHOLDERS, such administrator or COMPANY to a tax or
penalty on prohibited transactions imposed by Section 4975 of the Code or to any
liability under Section 502(i) of ERISA. No such plan listed in Schedule 5.19
has incurred an accumulated finding deficiency, as defined in Section 412(a) of
the Code and Section 302(1) of ERISA; and COMPANY has not incurred any liability
for excise tax or penalty due to the IRS nor any liability to the Pension
Benefit Guaranty Corporation. It is further represented and warranted that:
(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan intended to qualify under
Section 401(a) of the Code without notice to and approval by the IRS;
(ii) no plan listed in Schedule 5.19 subject to the provisions
of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that phrase
is defined in Section 4043 of ERISA) with respect to any plan listed in Schedule
5.19;
(iv) COMPANY has not incurred any liability under Section 4062
of ERISA; and
(v) no circumstances exist pursuant to which COMPANY could
have any direct or indirect liability whatsoever (including, without limitation,
any liability to any multiemployer plan or the Pension Benefit Guaranty
Corporation under Title IV of ERISA or to the IRS for any excise tax or
penalty), or be subject to any statutory lien to secure payment of any such
liability with respect to any plan now or heretofore maintained or contributed
to by any entity other than COMPANY that is, or at any time was, a member of a
"controlled group" (as defined in Section 412(n)(6)(B) of the Code) that
includes COMPANY.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or Schedule 5.13, COMPANY is not in violation of any law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over COMPANY which would have a Material Adverse Effect; and
except to the extent set forth on Schedule 5.10, Schedule 5.13 or Schedule 5.21,
there are no material claims, actions, suits or proceedings, pending or, to the
best knowledge and belief of COMPANY and the STOCKHOLDERS after due inquiry,
threatened against or affecting, COMPANY, at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over COMPANY, and
no notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received. COMPANY has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in applicable federal, state and local statutes,
ordinances, permits, licenses,
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orders, approvals, variances, rules and regulations, including all such permits,
licenses, orders and other governmental approvals set forth on Schedules 5.12
and 5.13, and is not in violation of any of the foregoing which would have a
Material Adverse Effect.
5.22 TAXES. COMPANY (including all the Acquired Parties) has timely
filed all required federal, state and other tax returns, filings and extension
requests with respect to all Taxes for all fiscal periods ended on or before the
Balance Sheet Date; and except as set forth on Schedule 5.22, there are no
examinations in progress or claims against any Acquired Party for federal, state
or other Taxes (including, without limitation, related penalties and interest)
for any period or periods prior to and including the Balance Sheet Date, and no
notice of any such claim for Taxes, whether pending or threatened, has been
received. All Tax, including, without limitation, all related interest and
penalties (whether or not shown on any tax return) owed by any of the Acquired
Parties, or with respect to any payment made or deemed made by any of the
Acquired Parties has been paid. The amounts shown as accruals for Taxes on
COMPANY Financial Statements are sufficient for the payment of all Taxes of the
kinds indicated (including, without limitation, penalties and interest) for all
fiscal periods ended on or before the Balance Sheet Date. Copies of (i) any tax
examinations; (ii) extensions of statutory limitations; and (iii) the federal,
state and local income tax returns and franchise tax returns of COMPANY
(including the Acquired Parties) for the last three (3) fiscal years, or such
shorter period of time as any of them shall have existed, are attached hereto as
Schedule 5.22. If COMPANY is an S-Corporation, the STOCKHOLDERS made a valid
election under the provisions of Subchapter S of the Code and COMPANY has
appropriately not, within the past five years, been taxed under the provisions
of Subchapter C of the Code. COMPANY has a taxable year ended on December 31
and, if COMPANY is an S-Corporation, COMPANY has not made an election to retain
a fiscal year ending on a date other than December 31 pursuant to Section 444 of
the Code. COMPANY's methods of accounting have not changed in the past five
years.
5.23 NO VIOLATIONS. COMPANY is not in violation of any Charter
Document. Neither COMPANY nor, to the best knowledge and belief of COMPANY and
the STOCKHOLDERS after due inquiry, any other party thereto, is in material
default under any lease, instrument, agreement, license or permit set forth on
Schedules 5.12 through 5.19 (inclusive), or any other material agreement to
which it is a party or by which its properties are bound (the "Material
Documents"); and, except as set forth in Schedule 5.23, (a) the rights and
benefits of COMPANY under the Material Documents will not be materially
adversely affected by the transactions contemplated hereby and (b) the execution
of this Agreement and the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby will not result in any
material violation or breach or constitute a default under, any of the terms or
provisions of any of the Material Documents or Charter Documents. Except as set
forth on Schedule 5.23, none of the Material Documents requires notice to, or
the consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect, and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation,
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acceleration or loss of any right or benefit arising thereunder. Except as set
forth on Schedule 5.23, none of the Material Documents prohibits the use or
publication by COMPANY, MARINEMAX or NEWCO of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts COMPANY from freely providing services to any other customer or
potential customer of COMPANY, MARINEMAX, or NEWCO.
5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24,
COMPANY is not now a party to any governmental contracts subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth on Schedule 5.25, there has not been:
(i) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of COMPANY;
(ii) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or business of
COMPANY;
(iii) any change in the authorized capital of COMPANY or its
outstanding securities or any change in its ownership interests or any grant of
any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or
distribution in respect of the capital stock of COMPANY, or any direct or
indirect redemption, purchase or other acquisition of any of the capital stock
of COMPANY;
(v) any increase in the compensation, bonus, sales commissions
or fee arrangement payable or to become payable by COMPANY to any of its
officers, directors, the STOCKHOLDERS, employees, consultants or agents, except
for ordinary and customary bonuses and salary increases for employees in
accordance with past practices of COMPANY;
(vi) any work interruptions, labor grievances or claims filed,
or any event or condition of any character, materially and adversely affecting
the business of COMPANY;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material asset, property or right of COMPANY to any person,
including, without limitation, the STOCKHOLDERS or their affiliates;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to COMPANY, including, without
limitation, any indebtedness or obligation of any STOCKHOLDERS or any affiliate
thereof;
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(ix) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
properties or rights of COMPANY or requiring consent of any party to the
transfer and assignment of any such assets, properties or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any assets, properties or rights outside of
the ordinary course of COMPANY's business;
(xi) any waiver of any material rights or claims of COMPANY;
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which COMPANY is a party or by
which any of COMPANY's assets are bound;
(xiii) any transaction by COMPANY outside the ordinary course
of its business;
(xiv) any cancellation or termination of a material contract
with a customer or client of COMPANY prior to the scheduled termination date; or
(xv) any other distribution of property or assets by COMPANY
other than in the ordinary course of COMPANY's business.
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. COMPANY has delivered to
MARINEMAX an accurate schedule (which is set forth on Schedule 5.26) as of the
date of this Agreement of:
(i) the name of each financial institution in which COMPANY
has accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or
have access thereto. Schedule 5.26 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from COMPANY and a description of the terms of such power.
5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by COMPANY and the performance of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors and the
stockholders of COMPANY and this
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Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid, binding and enforceable obligation of COMPANY. The
execution and delivery of this Agreement by each of the STOCKHOLDERS and the
performance of the transactions contemplated herein is a legal, valid, binding
and enforceable obligation of the STOCKHOLDERS and each of them, each having the
appropriate legal capacity to execute and deliver this Agreement.
5.28 RELATIONS WITH GOVERNMENTS. Except for political contributions
made in a lawful manner which, in the aggregate, do not exceed $10,000 per year
for each year in which any STOCKHOLDER has been a stockholder of COMPANY,
COMPANY has not made, offered or agreed to offer anything of value to any
governmental, official, political party or candidate for government office, nor
has COMPANY or any STOCKHOLDER otherwise taken any action which would cause
COMPANY to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any law of similar effect. If political contributions made by
COMPANY have exceeded $10,000 per year for each year in which any STOCKHOLDER
has been a stockholder of COMPANY, each contribution in the amount of $5,000 or
more is accurately described on Schedule 5.28 hereto.
5.29 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.29,
COMPANY has not, between the Balance Sheet Date and the date hereof, taken any
of the actions prohibited by Section 7.3 hereof.
5.30 DISCLOSURE. This Agreement, including the annexes and Schedules
hereto, together with the other information furnished to MARINEMAX by COMPANY
and the STOCKHOLDERS in connection herewith, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein and therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the foregoing does not
apply to statements contained in or omitted from any of such documents made or
omitted in reliance upon information furnished by MARINEMAX. If, prior to the
Closing, COMPANY or the STOCKHOLDERS become aware of any fact or circumstance
that would affect the accuracy of any representation or warranty of COMPANY or
the STOCKHOLDERS in this Agreement in any material respect, COMPANY and the
STOCKHOLDERS shall immediately give notice of such fact or circumstance to
MARINEMAX. However, subject to the provisions of Section 7.8, such notification
shall not relieve either COMPANY or the STOCKHOLDERS of their respective
obligations under this Agreement, and, subject to the provisions of Section 7.8,
at the sole option of MARINEMAX, the truth and accuracy of any and all
representations and warranties of COMPANY and/or STOCKHOLDERS, or on behalf of
COMPANY and/or STOCKHOLDERS, made at the date of this Agreement and on the
Closing Date and at the Effective Time, shall be a precondition to the
consummation of the Merger and the other transactions contemplated herein.
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(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. STOCKHOLDERS
jointly and severally represent and warrant that the representations and
warranties set forth below are true at the date of this Agreement and, subject
to Section 7.8 hereof, shall be true at the time of Closing and at the Effective
Time, and that such representations and warranties shall survive the Closing and
the Effective Time.
5.31 AUTHORITY: OWNERSHIP. STOCKHOLDERS have the full legal right,
capacity, power and authority to enter into this Agreement. STOCKHOLDERS own
beneficially and of record all of the shares of COMPANY Stock identified in
Schedule 5.3 as being owned by STOCKHOLDERS, and, except as set forth on
Schedule 5.3, such COMPANY Stock is owned free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind.
5.32 PREEMPTIVE RIGHTS. STOCKHOLDERS do not have, or hereby waive, any
preemptive or other right to acquire shares of COMPANY Stock or MARINEMAX Stock
that STOCKHOLDERS have or may have had other than rights of any STOCKHOLDER to
acquire MARINEMAX Stock pursuant to (i) this Agreement, or (ii) any option
granted by MARINEMAX.
5.33 NO INTENTION TO DISPOSE OF MARINEMAX STOCK. No STOCKHOLDER is
under any binding commitment or contract to sell, exchange or otherwise dispose
of any shares of MARINEMAX Stock to be received pursuant to this Agreement.
6. REPRESENTATIONS OF MARINEMAX AND NEWCO
MARINEMAX and NEWCO represent and warrant that all of the following
representations and warranties in this Section 6 are true at the date of this
Agreement and, subject to Section 7.8 hereof, shall be true, complete and
correct on the Closing Date and at the Effective Time, and that such
representations and warranties shall survive the Closing and the Effective Time.
6.1 DUE ORGANIZATION. MARINEMAX and NEWCO are each corporations duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and each has the requisite power and authority to carry on its
business as it is now being conducted. MARINEMAX and NEWCO are each qualified to
do business and are each in good standing in each jurisdiction in which the
nature of its business makes such qualification necessary, except where the
failure to be so authorized or qualified would not have a Material Adverse
Effect. True, complete and correct copies of the Certificate of Incorporation
and Bylaws, each as amended, of MARINEMAX and NEWCO (the "MARINEMAX Charter
Documents") are all attached hereto on Schedule 6.1.
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6.2 AUTHORIZATION. The respective representatives of MARINEMAX and
NEWCO executing this Agreement have the authority to enter into and bind
MARINEMAX and NEWCO to the terms of this Agreement. MARINEMAX and NEWCO have the
full legal right, power and authority to enter into this Agreement and the
Merger.
6.3 CAPITAL STOCK OF MARINEMAX AND NEWCO. The authorized capital stock
of MARINEMAX and NEWCO is as set forth in Sections 1.4(ii) and (iii),
respectively. All of the issued and outstanding shares of the capital stock of
NEWCO are owned by MARINEMAX and all of the issued and outstanding shares of the
capital stock of MARINEMAX are owned by the persons set forth on Schedule 6.3
hereof.
6.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING. Except as
set forth on Schedule 6.4, (i) no option, warrant, call, conversion right or
commitment of any kind exists which obligates MARINEMAX or NEWCO to issue any of
their respective authorized but unissued capital stock; and (ii) neither
MARINEMAX nor NEWCO has any obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any distribution in respect thereof.
6.5 [INTENTIONALLY DELETED].
6.6 FINANCIAL STATEMENTS. MARINEMAX has previously provided
consolidated financial statements of MARINEMAX as of December 31, 1997, as set
forth on pages F-10 through F-23 of the Registration Statement of MARINEMAX as
filed with the SEC on March 12, 1998, and as attached as Schedule 6.4 hereto, to
the COMPANY and the STOCKHOLDERS.
6.7 [INTENTIONALLY DELETED].
6.8 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by MARINEMAX and NEWCO and the performance of the transactions
contemplated herein have been duly and validly authorized by the respective
Boards of Directors of MARINEMAX and NEWCO, and this Agreement has been duly and
validly authorized by all necessary corporate action and is a legal, valid and
binding obligation of MARINEMAX and NEWCO.
6.9 MARINEMAX STOCK. At the time of issuance thereof, the MARINEMAX
Stock to be delivered to the STOCKHOLDERS pursuant to this Agreement will
constitute valid and legally issued shares of MARINEMAX, fully paid and
nonassessable, and with the exception of restrictions upon resale set forth in
Section 16 hereof, will be identical in all respects (which do not include the
form of certificate upon which it is printed or the presence or absence of a
CUSIP number on any such certificate) to the MARINEMAX Stock issued and
outstanding as of the date hereof by reason of the provisions of the Delaware
GCL. The shares of MARINEMAX Stock to be issued to the STOCKHOLDERS pursuant to
this Agreement will not
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be registered under the 1933 Act, and will be issued to the STOCKHOLDERS
pursuant to a valid exemption from registration under the 1933 Act and
applicable state securities laws.
6.10 DISCLOSURE. The information furnished by MARINEMAX and NEWCO to
COMPANY and the STOCKHOLDERS in connection with this Agreement, does not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing does
not apply to statements contained in or omitted from any of such information
made or omitted in reliance upon information furnished by COMPANY or the
STOCKHOLDERS.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Closing Date, COMPANY will afford to the officers and
authorized representatives of MARINEMAX and the Other Founding Companies access
to all of COMPANY's and any Acquired Party's sites, properties, books and
records and will furnish MARINEMAX with such additional financial and operating
data and other information as to the business and properties of COMPANY and any
Acquired Party as MARINEMAX and NEWCO may from time to time reasonably request.
COMPANY will cooperate with MARINEMAX and NEWCO, its and their representatives,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with any documents or materials required by this
Agreement. MARINEMAX, NEWCO, the STOCKHOLDERS and COMPANY will treat all
information obtained in connection with the negotiation and performance of this
Agreement as confidential in accordance with the provisions of Section 14
hereof.
(b) Between the date of this Agreement and the Closing Date, MARINEMAX
will afford to the officers and authorized representatives of COMPANY access to
all of MARINEMAX's and NEWCO's sites, properties, books and records and will
furnish COMPANY with such additional financial and operating data and other
information as to the business and properties of MARINEMAX and NEWCO as COMPANY
may from time to time reasonably request. MARINEMAX and NEWCO will cooperate
with COMPANY, its representatives, auditors and counsel in the preparation of
any documents or other material which may be required in connection with any
documents or materials required by this Agreement. COMPANY will cause all
information obtained in connection with the negotiation and performance of this
Agreement to be treated as confidential in accordance with the provisions of
Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING THE MERGER. Between the date of this
Agreement and the Effective Time, COMPANY shall, and Company shall cause all
Acquired Parties to, except as set forth on Schedule 7.2:
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(i) carry on its business in substantially the same manner as
it has heretofore and not introduce any material new method of management,
operation or accounting;
(ii) maintain its properties and facilities, including those
held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) perform in all material respects all of its respective
obligations under agreements relating to or affecting its respective assets,
properties or rights;
(iv) use all reasonable efforts to keep in full force and
effect present insurance policies or other comparable insurance coverage;
(v) use its reasonable efforts to maintain and preserve its
business organization intact, retain its respective present key employees and
maintain its respective relationships with suppliers, customers and others
having business relations with COMPANY or any Acquired Party, as applicable;
(vi) maintain compliance with all material permits, laws,
rules and regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities;
(vii) maintain present debt and lease instruments and not
enter into new or amended debt or lease instruments, without the knowledge and
consent of MARINEMAX (which consent shall not be unreasonably withheld),
provided that debt and/or lease instruments may be replaced without the consent
of MARINEMAX if such replacement instruments are on terms at least as favorable
to COMPANY or any Acquired Party, as applicable, as the instruments being
replaced; and
(viii) maintain or reduce present salaries and commission
levels for all officers, directors, employees and agents except for ordinary and
customary bonus and salary increases for employees in accordance with past
practices of COMPANY or any Acquired Party, as applicable.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, between
the date of this Agreement and the Effective Time, COMPANY shall not, and
Company shall cause all Acquired Parties to not, without prior written consent
of MARINEMAX:
(i) make any change in its Articles/Certificate of
Incorporation or Bylaws;
(ii) issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any kind other
than in connection with the exercise of options or warrants listed in Schedule
5.4;
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(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase, redeem
or otherwise acquire or retire for value any shares of its stock;
(iv) enter into any contract or commitment or incur or agree
to incur any liability or make any capital expenditures, except if it is in the
normal course of business (consistent with past practice) or involves an amount
not in excess of $50,000;
(v) create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except (1) with respect to purchase money liens incurred in
connection with the acquisition of equipment with an aggregate cost not in
excess of $50,000 necessary or desirable for the conduct of its business, (2)
(a) liens for taxes either not yet due or being contested in good faith and by
appropriate proceedings (provided that with respect to contested taxes, adequate
reserves have been established and are being maintained) or (b) materialmen's,
mechanics', workers', repairmen's, employees' or other like liens arising in the
ordinary course of its business (the liens set forth in clause (2) above may be
referred to herein as "Statutory Liens"), or (3) liens set forth on Schedule
5.10 and/or 5.15 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the normal course of business;
(vii) negotiate for the acquisition of any business or the
start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(ix) waive any material rights or claims of COMPANY or any
Acquired Party, as applicable, provided that COMPANY or any Acquired Party, as
applicable, may negotiate and adjust bills in the course of good faith disputes
with customers in a manner consistent with past practice of COMPANY, or any
Acquired Party, as applicable;
(x) commit a material breach or amend or terminate any
material agreement, permit, license or other right of COMPANY or any Acquired
Party, as applicable; or
(xi) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
7.4 [INTENTIONALLY DELETED].
7.5 [INTENTIONALLY DELETED.]
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7.6 AGREEMENTS. The STOCKHOLDERS and COMPANY shall terminate (i) any
stockholders agreements, voting agreements, voting trusts, options, warrants and
employment agreements between COMPANY, any Acquired Party and any of COMPANY'S
or any Acquired Party's employees. Such termination agreements are listed on
Schedule 7.6 and copies thereof shall be attached thereto.
7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDERS and COMPANY shall
give prompt notice to MARINEMAX of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of COMPANY as defined in Section 5 or the
STOCKHOLDERS contained herein to be untrue or inaccurate in any material respect
at or prior to the Closing, and (ii) any material failure of any STOCKHOLDER or
COMPANY to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by such person hereunder. MARINEMAX and NEWCO shall
give prompt notice to COMPANY of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of MARINEMAX or NEWCO contained herein to be untrue
or inaccurate in any material respect at or prior to the Closing, and (ii) any
material failure of MARINEMAX or NEWCO to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this Section 7.7 shall not be deemed to (i)
modify the representations or warranties hereunder of the party delivering such
notice, which modification may only be made pursuant to Section 7.8; (ii) modify
the conditions set forth in Sections 8 and 9; or (iii) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
7.8 DELIVERY OF SCHEDULES; AMENDMENT OF SCHEDULES. The Schedules
required by this Agreement from the respective parties hereto shall be delivered
at the execution of this Agreement. Each party hereto agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Effective Time to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules, provided however, that supplements and amendments to Schedules 5.10,
5.11, 5.14 and 5.15 shall only have to be delivered at the Closing Date, unless
such Schedule is to be amended to reflect an event occurring other than in the
ordinary course of business. Notwithstanding the foregoing sentence, no
amendment or supplement to a Schedule prepared by COMPANY or the STOCKHOLDERS
that constitutes or reflects an event or occurrence that would have a Material
Adverse Effect may be made unless MARINEMAX consents to such amendment or
supplement; and provided further, that no amendment or supplement to a Schedule
prepared by MARINEMAX or NEWCO that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect may be made unless the
COMPANY consents to such amendment or supplement. For all purposes of this
Agreement, including without limitation for purposes of determining whether the
conditions set forth in Sections 8.1 and 9.1 have been fulfilled, the Schedules
hereto shall
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be deemed to be the Schedules as amended or supplemented pursuant to this
Section 7.8. In the event that COMPANY seeks to amend or supplement a Schedule
pursuant to this Section 7.8, and MARINEMAX does not consent to such amendment
or supplement, this Agreement shall be deemed terminated by mutual consent as
set forth in Section 12.1(i) hereof. In the event that MARINEMAX or NEWCO seeks
to amend or supplement a Schedule pursuant to this Section 7.8 and the COMPANY
does not consent to such amendment or supplement, this Agreement shall be deemed
terminated by mutual consent as set forth in Section 12.1(i) hereof. No party to
this Agreement shall be liable to any other party if this Agreement shall be
terminated pursuant to the provisions of this Section 7.8. No amendment of or
supplement to a Schedule shall be made later than twenty-four (24) hours prior
to the Effective Time.
7.9 [INTENTIONALLY DELETED].
7.10 FINAL FINANCIAL STATEMENTS. COMPANY shall provide prior to the
Closing Date, and MARINEMAX shall have had sufficient time to review the
unaudited consolidated balance sheets of COMPANY as of the end of all months and
fiscal quarters following the Balance Sheet Date, and the unaudited consolidated
statement of income, cash flows and retained earnings of COMPANY for all months
and fiscal quarters ended after the Balance Sheet Date and on or before February
28, 1997 (collectively, the "Final COMPANY Financial Statements"), disclosing no
material adverse change in the financial condition of COMPANY or the results of
its operations from the COMPANY Financial Statements as of the Balance Sheet
Date. The Final COMPANY Financial Statements shall have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated and with past periods (except as noted therein). Except as noted in
the Final COMPANY Financial Statements, all of such financial statements will
present fairly the results of operations of COMPANY for the periods indicated
therein.
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents and take such other actions as may be reasonably necessary or
convenient to carry out the transactions contemplated hereby, including, without
limitation, all further instruments, documents and actions as may be reasonably
required by MARINEMAX's independent public accountants and attorneys.
7.12 [INTENTIONALLY DELETED]
7.13 COMPLIANCE WITH THE HART-SCOTT ACT. All parties to this Agreement
hereby recognize that one or more filings under the Hart-Scott Act may be
required in connection with the transactions contemplated herein. If it is
determined by the parties to this Agreement that filings under the Hart-Scott
Act are required, then: (i) each of the parties hereto agrees to cooperate and
use its best efforts to comply with the Hart-Scott Act, (ii) such compliance by
the STOCKHOLDERS and COMPANY shall be deemed a condition precedent in addition
to the conditions precedent set forth in Section 9 of this Agreement, and such
compliance by
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MARINEMAX and NEWCO shall be deemed a condition precedent in addition to the
conditions precedent set forth in Section 8 of this Agreement, and (iii) the
parties agree to cooperate and use their best efforts to cause all filings
required under the Hart-Scott Act to be made. If filings under the Hart-Scott
Act are required, the costs and expenses thereof (including filing fees) shall
be borne by MARINEMAX.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS
AND COMPANY
The obligations of the STOCKHOLDERS and COMPANY with respect to actions
to be taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the conditions in this Section 8. As of the
Closing Date, if any of such conditions have not been satisfied, the
STOCKHOLDERS (acting in unison) shall have the right to terminate this
Agreement, or in the alternative, waive any condition not so satisfied. Any act
or action of the STOCKHOLDERS in consummating the Closing or delivering
certificates representing the COMPANY Stock shall constitute a waiver of any
conditions not so satisfied. However, no such waiver shall be deemed to affect
the survival of the representations and warranties of MARINEMAX and NEWCO
contained in Section 6 hereof.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of MARINEMAX and NEWCO contained in Section 6
shall be true and correct in all material respects as of the Closing Date and
the Effective Time as though such representations and warranties had been made
on and as of such date and time; all of the terms, covenants and conditions of
this Agreement to be complied with and performed by MARINEMAX and NEWCO on or
before the Closing Date shall have been duly complied with and performed in all
material respects; and certificates to the foregoing effect dated the Closing
Date and effective both on the Closing Date and at the Effective Time, and
signed by the President or any Vice President of MARINEMAX shall have been
delivered to the STOCKHOLDERS.
8.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be approved by COMPANY and its counsel.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger and no governmental agency or body shall have taken any
other action or made any request of COMPANY as a result of which the management
of COMPANY deems it inadvisable to proceed with the transactions hereunder.
8.4 REAL ESTATE LEASES. COMPANY shall have entered into new lease
agreements pertaining to the real property and facilities located at (i) 5840
I-75 South, Forest Park, Georgia;
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(ii) 1850 Bald Ridge Marina Road, Cumming, Georgia; (iii) 5577 Marina Parkway,
Appling, Georgia; and (iv) 2649 North Cobb Parkway, Kennesaw, Georgia, in the
forms attached hereto as Annex IV (the "Lease Agreements"), and such Lease
Agreements shall terminate and supersede any existing lease agreements with
respect to the foregoing properties.
8.5 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made, and no
action or proceeding shall have been instituted or threatened to restrain or
prohibit the Merger, and no governmental agency or body shall have taken any
other action or made any request of COMPANY as a result of which COMPANY deems
it inadvisable to proceed with the transactions contemplated herein.
8.6 GOOD STANDING CERTIFICATES. MARINEMAX and NEWCO each shall have
delivered to COMPANY a certificate, dated as of a date no later than ten (10)
days prior to the Closing Date, duly issued by the Delaware Secretary of State
and in each state in which MARINEMAX or NEWCO is authorized to do business,
showing that each of MARINEMAX and NEWCO is in good standing and authorized to
do business.
8.7 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to MARINEMAX or NEWCO that would constitute a Material
Adverse Effect.
8.8 [INTENTIONALLY DELETED].
8.9 SECRETARY'S CERTIFICATE. COMPANY shall have received a certificate
or certificates, dated the Closing Date and signed by the secretary of MARINEMAX
and of NEWCO, certifying the truth and correctness of attached copies of the
MARINEMAX's and NEWCO's respective Certificates of Incorporation (including
amendments thereto), Bylaws (including amendments thereto), and resolutions of
the boards of directors and, if required, the stockholders of MARINEMAX and
NEWCO, in each case approving MARINEMAX's and NEWCO's entering into this
Agreement and the consummation of the transactions contemplated hereby.
8.10 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 9.11
shall have been afforded the opportunity to enter into an employment agreement
substantially in the form attached hereto as Annex V.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF MARINEMAX AND NEWCO
The obligations of MARINEMAX and NEWCO with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of all of the conditions in this Section 9. As of the
Closing Date, all conditions not satisfied shall be deemed to have been waived,
except that no such waiver shall be deemed to affect the survival
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of the representations and warranties of COMPANY and the STOCKHOLDERS contained
in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the STOCKHOLDERS, and COMPANY as defined in
Section 5 hereof, contained in this Agreement shall be true and correct in all
material respects as of the Closing Date and the Effective Time with the same
effect as though such representations and warranties had been made on and as of
such date and time; all of the terms, covenants and conditions of this Agreement
to be complied with or performed by the STOCKHOLDERS and COMPANY on or before
the Closing Date or the Effective Time, as the case may be, shall have been duly
performed or complied with in all material respects; and the STOCKHOLDERS shall
have delivered to MARINEMAX certificates to the foregoing effect dated the
Closing Date and effective both on the Closing Date and at the Effective Time,
and signed by each of the STOCKHOLDERS.
9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger and no governmental agency or body shall have taken any
other action or made any request of MARINEMAX as a result of which the
management of MARINEMAX deems it inadvisable to proceed with the transactions
hereunder.
9.3 SECRETARY'S CERTIFICATE. MARINEMAX shall have received a
certificate, dated the Closing Date and signed by the secretary of COMPANY,
certifying the truth and correctness of attached copies of the Charter Documents
(including amendments thereto), Bylaws (including amendments thereto), and
resolutions of the board of directors and the STOCKHOLDERS approving COMPANY's
entering into this Agreement and the consummation of the transactions
contemplated hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to COMPANY that would constitute a Material Adverse
Effect, and COMPANY shall not have suffered any material loss or damages to any
of its properties or assets, whether or not covered by insurance, which change,
loss or damage materially affects or impairs the ability of COMPANY to conduct
its business.
9.5 STOCKHOLDERS' RELEASE. The STOCKHOLDERS shall have executed and
delivered to MARINEMAX an instrument at the Closing releasing COMPANY as of the
Effective Time from (a) any and all claims of the STOCKHOLDERS against COMPANY
and MARINEMAX and (b) obligations of COMPANY and MARINEMAX to the STOCKHOLDERS,
except for (i) items specifically identified on Schedules 5.10 and 5.15 as being
claims of or obligations to the STOCKHOLDERS, (ii) continuing obligations to the
STOCKHOLDERS relating to their employment by COMPANY and (iii) obligations
arising under this Agreement or the transactions contemplated hereby. The
STOCKHOLDER Release
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to be delivered pursuant to this Section shall be in form and content as set
forth in Annex VI hereto.
9.6 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to MARINEMAX.
9.7 REAL ESTATE LEASES. MARINEMAX and NEWCO shall have approved the
forms and terms of the Lease Agreements as described and set forth in Section
8.4 and Annex IV hereof.
9.8 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 5.23 shall have been obtained;
and no action or proceeding shall have been instituted or threatened to restrain
or prohibit the Merger and no governmental agency or body shall have taken any
other action or made any request of MARINEMAX as a result of which MARINEMAX
deems it inadvisable to proceed with the transactions hereunder.
9.9 GOOD STANDING CERTIFICATES. COMPANY shall have delivered to
MARINEMAX certificates, dated as of a date no earlier than ten (10) days prior
to the Closing Date, duly issued by the appropriate governmental authority in
COMPANY's and all Acquired Parties' states of incorporation and, unless waived
by MARINEMAX, in all states in which COMPANY and all Acquired Parties are
authorized to do business, showing COMPANY and all Acquired Parties are in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for COMPANY and all Acquired Parties for all
periods prior to the Closing have been filed and paid.
9.10 STOCKHOLDERS' GUARANTEES. STOCKHOLDERS shall each have executed
and delivered a guaranty securing the obligations of MARINEMAX arising under
that certain Loan Agreement and Security Agreement, by and between NationsCredit
Distribution Finance, Inc. and MARINEMAX.
9.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 9.11
shall enter into an employment agreement effective as of the Effective Time,
substantially in form and content as attached hereto as Annex V.
9.12 SPECIFIC INDEMNIFICATION AGREEMENT. The STOCKHOLDERS shall have
delivered a specific indemnification agreement in favor of MARINEMAX and NEWCO,
in form and content satisfactory to MARINEMAX in its sole discretion, pursuant
to which the STOCKHOLDERS shall agree to hold MARINEMAX and NEWCO harmless for,
from and against certain specific items for which indemnification shall be
required.
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9.13 [INTENTIONALLY DELETED].
9.14 INVESTMENT AGREEMENTS. STOCKHOLDERS shall each have executed and
delivered to MARINEMAX and NEWCO an investment agreement, in form and content as
set forth in Annex VII attached hereto (the "Investment Agreement").
10. COVENANTS OF MARINEMAX AND THE STOCKHOLDERS AFTER CLOSING
10.1 ASSUMPTION OF STOCKHOLDERS' GUARANTEES. MARINEMAX shall use its
commercially reasonable best efforts to have the STOCKHOLDERS released from any
and all guarantees on any indebtedness that they personally guaranteed and from
any and all pledges of assets that they pledged to secure such indebtedness for
the benefit of COMPANY, with all such guarantees on indebtedness being assumed
by MARINEMAX, except for the guarantees referenced in Section 9.10 hereof.
10.2 PRESERVATION OF TAX TREATMENT. Except as contemplated by this
Agreement after the Effective Time, MARINEMAX shall not, and shall not permit
any of its subsidiaries, to undertake any act that would jeopardize the tax-free
status of the reorganization contemplated by this Agreement, including, without
limitation, the retirement or reacquisition, directly or indirectly, of all or
part of the MARINEMAX Stock issued in connection with the transactions
contemplated hereby.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) COMPANY shall, if possible, file or cause to be filed all
separate Returns of any Acquired Party for all taxable periods that end at or
before the Effective Time, which Returns as to the taxable periods that end at
or before the Effective Time shall be acceptable to the STOCKHOLDERS in their
reasonable judgment. Notwithstanding the foregoing, the STOCKHOLDERS shall file
or cause to be filed all separate federal income tax returns (and any state and
local tax returns filed on the basis similar to that of S corporations under
federal income tax rules) of any Acquired Party for all taxable periods that end
at or before the Effective Time. Each STOCKHOLDER shall pay or cause to be paid
all Tax liabilities (in excess of all amounts already paid with respect thereto
or properly accrued or reserved with respect thereto on COMPANY Financial
Statements) shown by such returns to be due.
(ii) MARINEMAX shall file or cause to be filed all separate
Returns of, or that include, any Acquired Party for all taxable periods ending
after the Effective Time.
(iii) Each party hereto shall, and shall cause its
subsidiaries and affiliates to, provide to each of the other parties hereto such
cooperation and information as any of them reasonably may request in filing any
Return, amended Return or claim for refund, determining a liability for Taxes or
a right to refund of Taxes or in conducting any audit or other proceeding
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in respect of Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by any taxing authority and relevant records
concerning the ownership and tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Returns pursuant to this Agreement shall bear all costs of filing such
Returns.
(iv) Each of COMPANY, NEWCO, MARINEMAX and each STOCKHOLDER
shall treat the transaction as a plan of reorganization pursuant to Section
368(a)(1)(A) and Section 368(a)(2)(E) of the Code.
10.4 [INTENTIONALLY DELETED].
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Effective
Time, MARINEMAX shall not terminate any health insurance, life insurance or
401(k) plan in effect at COMPANY until such time as MARINEMAX is able to replace
such plan with a plan that is applicable to MARINEMAX and all of its then
existing subsidiaries, provided that MARINEMAX shall have no obligation to
provide replacement plans that have the same terms and provisions as the
existing plans, provided, further, that any new health insurance plan shall
provide for coverage for preexisting conditions. At the Effective Time, the
employees of COMPANY will be the employees of the Surviving Corporation provided
that this provision is for purposes of clarifying that the Merger, in and of
itself, will not have any impact on the employment status of any employee and
provided, further that this provision shall not in any way limit the management
rights of the Surviving Corporation or MARINEMAX to assess work force needs and
make appropriate adjustments as necessary or desirable within their discretion
(subject to applicable laws).
10.6 DIVIDENDS. The COMPANY and all Acquired Parties shall not declare
or pay any dividends or distributions to any of the STOCKHOLDERS, or COMPANY, as
applicable.
10.7 [INTENTIONALLY DELETED].
11. INDEMNIFICATION
The STOCKHOLDERS, MARINEMAX and NEWCO each make the following covenants
that are applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The STOCKHOLDERS
jointly and severally covenant and agree that they will indemnify, defend,
protect and hold harmless MARINEMAX, NEWCO, COMPANY and the Surviving
Corporation at all times,
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from and after the date of this Agreement for, from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by MARINEMAX, NEWCO,
COMPANY or the Surviving Corporation as a result of or arising from (a) any
breach of the representations and warranties of the STOCKHOLDERS or COMPANY set
forth herein or on the Schedules or certificates delivered in connection
herewith; (b) any breach of any agreement on the part of the STOCKHOLDERS or
COMPANY under this Agreement; and (c) any environmental matters set forth in
Section 11.5 hereof. For purposes of this Section 11, the term COMPANY shall
refer to COMPANY and all other Acquired Parties, if any.
11.2 INDEMNIFICATION BY MARINEMAX. MARINEMAX covenants and agrees that
it will indemnify, defend, protect and hold harmless the STOCKHOLDERS at all
times from and after the date of this Agreement for, from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by the STOCKHOLDERS as a
result of or arising from (a) any breach by MARINEMAX or NEWCO of their
representations and warranties set forth herein or on the schedules or
certificates attached hereto; (b) any breach of any agreement or any
nonfulfillment of any agreement on the part of MARINEMAX or NEWCO under this
Agreement; or (c) any liabilities which the STOCKHOLDERS may incur due to
MARINEMAX's or NEWCO's failure to be responsible for the liabilities and
obligations of COMPANY as provided in Section 1 hereof (except to the extent
that MARINEMAX or NEWCO has claims against the STOCKHOLDERS by reason of such
liabilities).
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1, 11.2 or 11.5
hereof hereinafter (the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or of the commencement of such action or
proceeding. Such notice shall state the nature and the basis of such claim and a
reasonable estimate of the amount thereof. The Indemnifying Party shall have the
right to defend and settle, at its own expense and by its own counsel, any such
matter so long as the Indemnifying Party pursues the same in good faith and
diligently, provided that the Indemnifying Party shall not settle any criminal
proceeding or agree to any nonmonetary remedy without the prior written consent
of the Indemnified Party, whose consent may be withheld in its sole discretion.
If the Indemnifying Party undertakes to defend or settle, it shall promptly
notify the Indemnified Party of its intention to do so, and the Indemnified
Party shall cooperate with the Indemnifying Party and its counsel in the defense
thereof and in any settlement thereof. Such cooperation shall include, but shall
not be limited to, furnishing the Indemnifying Party with any books, records or
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information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
provided that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents counsel for the Indemnifying Party from representing
Indemnified Party, Indemnified Party shall have the right to participate in such
matter through counsel of its own choosing and Indemnifying Party will reimburse
the Indemnified Party for the reasonable expenses of such counsel. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (a) as set forth in the preceding sentences, and (b) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any
Third Person's claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by said Third Person. Upon agreement as to a settlement between said
Third Person and the Indemnifying Party, the Indemnifying Party shall, in
exchange for a complete release from the Indemnified Party, promptly (x) in the
case of MARINEMAX being the Indemnifying Party, pay to the Indemnified Party the
amount agreed to in such settlement, and (y) in the case of the STOCKHOLDERS
being the Indemnifying Party, cause the MARINEMAX Stock held in escrow to be
used in such settlement; and the Indemnified Party shall, from that moment on,
bear full responsibility for any additional costs of defense which it
subsequently incurs with respect to such claim and all additional costs of
settlement or judgment. If the Indemnifying Party does not undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, and
the Indemnifying Party shall reimburse the Indemnified Party in the manner set
forth above in this Section 11.3 for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person's claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a complete release of the Indemnifying
Party, unless the Indemnifying Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for insurance proceeds in determining
the amount of any indemnification obligation under this Section.
11.4 LIMITATIONS ON INDEMNIFICATION. MARINEMAX, NEWCO, the Surviving
Corporation and the other persons or entities entitled to indemnification
pursuant to Section 11.1, 11.2 or 11.5 shall not assert any claim for
indemnification hereunder against the
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STOCKHOLDERS until such time as, and solely to the extent that, the aggregate of
all claims that such persons may have against the STOCKHOLDERS shall exceed the
sum of $250,000 (the "Indemnification Deductible"); and after such
Indemnification Deductible amount has been attained, only claims in excess of
such amount shall be indemnified hereunder. The STOCKHOLDERS shall not assert
any claim for indemnification hereunder against MARINEMAX or NEWCO until such
time as, and solely to the extent that, the aggregate of all claims which the
STOCKHOLDERS may have against MARINEMAX or NEWCO shall exceed the sum of
$250,000.
No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
The liability of the Company for breaches of its representations and
warranties contained in this Agreement and for any indemnification obligation
herein shall cease as of the Effective Time, and MARINEMAX and Surviving
Corporation may recover for such breaches and recover for such indemnification
only from the MARINEMAX Stock held in escrow pursuant to and as provided in the
Escrow and Security Agreement, except to the extent specific and separate
indemnification is provided by the STOCKHOLDERS.
MARINEMAX and Surviving Corporation may recover for indemnification
hereunder only from the MARINEMAX Stock held in escrow pursuant to and as
provided in the Escrow and Security Agreement, except to the extent specific and
separate indemnification is provided by the STOCKHOLDERS. It is hereby
understood and agreed that STOCKHOLDERS may only satisfy an indemnification
obligation through payment of stock, such stock to be valued as described
immediately below. Notwithstanding any term of this Agreement to the contrary,
no provision of this Agreement shall limit or be deemed to limit any liability
or remedy one party may have against any other parties hereto that arises by
statute or any applicable federal, state or local law.
For purposes of calculating the value of the MARINEMAX Stock received
by STOCKHOLDERS, MARINEMAX Stock shall be valued at $13.00 per share.
No provision of this Agreement or in this Section 11 shall limit or be
deemed to limit any liability or remedy one party may have against any other
parties hereto with respect to a claim of fraud.
11.5 ENVIRONMENTAL INDEMNIFICATION BY THE STOCKHOLDERS. The
STOCKHOLDERS jointly and severally covenant and agree that they will indemnify,
defend, protect and hold harmless MARINEMAX, NEWCO, COMPANY and the Surviving
Corporation at all times, from and after date of this Agreement for, from and
against all claims, damages, actions, suit, proceedings, demands, assessments,
adjustments, costs and expenses (including
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specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by MARINEMAX, NEWCO, COMPANY or the Surviving
Corporation as a result of or arising from: (i) any use, generation,
transportation, storage, treatment, disposal or presence of Hazardous Wastes
and/or Hazardous Substances occurring on or prior to the Effective Time
including, without limitation, any waste or other disposal activities or
releases which occurred at a facility on which any portion of the COMPANY'S (or
its predecessors') business was conducted, any waste or other disposal
activities or releases which occurred off of any such facility with regard to
wastes and other substances generated on such facility, and any waste or other
disposal activities or releases which occurred on real estate at any time
whether or not the COMPANY (or its predecessors) owned or leased such real
estate at the time such waste or other disposal activities or releases were
engaged in, and whether or not the COMPANY performed such waste or other
disposal activities or releases; (ii) any past, present or threatened spills,
discharges, leaks, emissions, injections, escapes, dumping, pumping, pouring,
emptying, leaching, leaking, disposing or any releases or threatened releases as
defined now or in the future under any applicable Environmental Law, to surface
waters, groundwaters, soil, ambient air or otherwise into the environment
occurring as a result of any activities of the COMPANY (or its predecessors') on
or prior to the Effective Time, including, without limitation, both those
releases or incidents involving potential or actual environmental contamination
which required notification or reporting to appropriate federal, state or local
officials or agencies, or clean-up or remedial activities and those releases or
incidents which occurred prior to the effective date of any requirements
imposing such notification or reporting obligations or clean-up or remedial
activities, but which would have been subject to such obligations if they had
occurred subsequent to the effective date of such requirements; (iii) the
exposure of and resulting consequences to any persons, including, without
limitation, employees of the COMPANY, to any mineral, chemical or industrial
product, raw material intermediate, by-product or Hazardous Waste and/or
Hazardous Substance created, stored, treated, generated, processed, handled or
originating at a facility at which the COMPANY (or any of its predecessors)
conducted business on or prior to the Effective Time or otherwise used by the
COMPANY (or any of its predecessors) in the conduct of its or their business;
(iv) any violations or claim of violations by the COMPANY, or pertaining to its
properties, of Environmental Laws, occupational or employee health and safety
laws or otherwise arising out of or under such laws, which violations or alleged
violations occurred prior to the Effective Time; (v) any and all actions,
failures to act and negligence in monitoring, maintaining and upkeep of on-site
generation, storage, treatment, transportation and disposal operations on or
prior to the Effective Time; (vi) any installation, use, removal, maintenance or
monitoring of storage tanks or related facilities on or prior to the Effective
Time; or (vii) any violations, fees, obligations or failures to comply with any
and all Environmental Laws, permit requirements, authorizations, orders and
other administrative or legal directives on or prior to the Effective Time.
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12. TERMINATION OF AGREEMENT
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time solely:
(i) by mutual consent of the boards of directors of MARINEMAX,
NEWCO and COMPANY;
(ii) by the STOCKHOLDERS or COMPANY (acting through its board
of directors), on the one hand, or by MARINEMAX (acting through its board of
directors), on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by July
31, 1998, unless the failure of such transactions to be consummated is due to
the willful failure of the party seeking to terminate this Agreement to perform
any of its obligations under this Agreement or satisfy any conditions precedent
set forth in this Agreement and over which such party has influence or to the
extent required to be performed by such party prior to the Effective Time.
(iii) by the STOCKHOLDERS or COMPANY, on the one hand, or by
MARINEMAX, on the other hand, if a material breach or default shall be made by
the other party in the observance or in the due and timely performance of any of
the covenants or agreements contained herein, and the curing of such default
shall not have been made on or before the Closing Date or by the STOCKHOLDERS or
COMPANY, if the conditions set forth in Section 8 hereof have not been satisfied
or waived as of the Closing Date, as applicable, or by MARINEMAX, if the
conditions set forth in Section 9 hereof have not been satisfied or waived as of
the Closing Date; or
(iv) pursuant to Section 7.8 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement including, without
limitation, legal and audit costs and out-of-pocket expenses.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. The STOCKHOLDERS will not, for a period of
five (5) years following the Effective Time (the "Restricted Period"), for any
reason whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
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(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative, in
any business that sells, rents and leases boating, nautical or other similar
lifestyle entertainment products and services, in direct competition with
MARINEMAX or any of the subsidiaries thereof, within 100 mile radius of where
COMPANY, any Acquired Party, MARINEMAX or any of its or their existing or future
subsidiaries conduct business (the "Territory");
(ii) call upon any person who is or becomes during the
Restricted Period an employee of MARINEMAX (including the subsidiaries thereof)
in a sales representative or managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of MARINEMAX
(including the subsidiaries thereof);
(iii) call upon any person or entity that is, or becomes
during the Restricted Period, or which has been, within one (1) year prior to
the Effective Time, a customer of MARINEMAX (including the subsidiaries
thereof), of COMPANY, or any Acquired Party for the purpose of soliciting or
selling products or services in direct competition with MARINEMAX within the
Territory;
(iv) call upon any prospective acquisition candidate, on any
STOCKHOLDERS own behalf or on behalf of any competitor in the business of
selling, renting and leasing boating, nautical or other similar lifestyle
entertainment products and services, which candidate, to the actual knowledge of
such STOCKHOLDER after due inquiry, was called upon by MARINEMAX (including any
subsidiary thereof) or for which, to the best knowledge and belief of such
STOCKHOLDER after due inquiry, MARINEMAX (or any subsidiary thereof) made an
acquisition analysis, for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of
MARINEMAX and its subsidiaries, COMPANY, or other Acquired Party to any person,
firm, partnership, corporation or business for any reason or purpose whatsoever
except to the extent that COMPANY or any Acquired Party has in the past
disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any STOCKHOLDER from acquiring as an investment not more than three
percent (3%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over-the-counter market.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
MARINEMAX as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to MARINEMAX for which it
would have no other adequate remedy, each STOCKHOLDER agrees that the foregoing
covenant may be enforced
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by MARINEMAX in the event of breach by such STOCKHOLDER, by injunctions and
restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
STOCKHOLDERS in light of the activities and business of MARINEMAX (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of MARINEMAX.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth herein are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the fullest
extent the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any STOCKHOLDER
against MARINEMAX (including the subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by MARINEMAX of such covenants. It is specifically agreed that the period of
five (5) years stated at the beginning of this Section 13, during which the
agreements and covenants of each STOCKHOLDER made in this Section 13 shall be
effective, shall be computed by excluding from such computation any time during
which such STOCKHOLDER is in violation of any provision of this Section 13. The
covenants contained in Section 13 shall not be affected by any breach of any
other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
13.6 MATERIALITY. COMPANY and the STOCKHOLDERS hereby agree that this
covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The STOCKHOLDERS recognize and acknowledge that they
had in the past, currently have, and in the future may possibly have, access to
certain confidential information of COMPANY, any Acquired Party, and/or
MARINEMAX and its subsidiaries, such as operational policies, and pricing and
cost policies that are valuable, special and unique assets of COMPANY's, any
Acquired Party, and/or MARINEMAX and its subsidiaries' respective businesses.
The STOCKHOLDERS each agree that they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
MARINEMAX, (b) following the Closing, such information may be disclosed by the
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<PAGE> 48
STOCKHOLDERS as is required in the course of performing their duties for
MARINEMAX or the Surviving Corporation, and (c) to counsel and other advisers,
provided that such advisers (other than counsel) agree to the confidentiality
provisions of this Section 14.1, unless (i) such information becomes known to
the public generally through no fault of the STOCKHOLDERS, (ii) disclosure is
required by law or the order of any governmental authority under color of law,
provided, that prior to disclosing any information pursuant to this clause (ii),
the STOCKHOLDERS shall, if possible, give prior written notice thereof to
MARINEMAX and provide MARINEMAX with the opportunity to contest such disclosure,
or (iii) the disclosing party reasonably believes that such disclosure is
required in connection with the defense of a lawsuit against the disclosing
party. In the event of a breach or threatened breach by any of the STOCKHOLDERS
of the provisions of this Section, MARINEMAX shall be entitled to an injunction
restraining such STOCKHOLDERS from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
MARINEMAX from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages. In the event the transactions
contemplated by this Agreement are not consummated, the STOCKHOLDERS shall have
none of the above-mentioned restrictions on their ability to disseminate
confidential information with respect to COMPANY.
14.2 MARINEMAX AND NEWCO. MARINEMAX and NEWCO recognize and acknowledge
that they had in the past and currently have access to certain confidential
information of COMPANY, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of COMPANY's business.
MARINEMAX and NEWCO agree that, prior to the Closing, or if the transactions
contemplated by this Agreement are not consummated, they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to authorized
representatives of COMPANY, and (b) to counsel and other advisers, provided that
such advisers (other than counsel) agree to the confidentiality provisions of
this Section 14.1, unless (i) such information becomes known to the public
generally through no fault of MARINEMAX or NEWCO, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), MARINEMAX
and NEWCO shall, if possible, give prior written notice thereof to COMPANY and
the STOCKHOLDERS and provide COMPANY and the STOCKHOLDERS with the opportunity
to contest such disclosure, or (iii) the disclosing party reasonably believes
that such disclosure is required in connection with the defense of a lawsuit
against the disclosing party, and (d) to the public to the extent necessary or
advisable in connection with applicable securities laws. In the event of a
breach or threatened breach by MARINEMAX or NEWCO of the provisions of this
Section, COMPANY and the STOCKHOLDERS shall be entitled to an injunction
restraining MARINEMAX and NEWCO from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
COMPANY and the STOCKHOLDERS from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
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<PAGE> 49
14.3 DAMAGES. Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Sections 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against them by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Section 14
shall survive the termination of this Agreement for a period of five (5) years
from the Effective Time.
15. [INTENTIONALLY DELETED].
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The STOCKHOLDERS acknowledge that the shares
of MARINEMAX Stock to be delivered to the STOCKHOLDERS pursuant to this
Agreement have not been and will not be registered under the Act and therefore
may not be resold without compliance with the Act. The MARINEMAX Stock to be
acquired by such STOCKHOLDERS pursuant to this Agreement is being acquired
solely for their own respective accounts, for investment purposes only, and with
no present intention of distributing, selling or otherwise disposing of it in
connection with a distribution. The STOCKHOLDERS jointly and severally covenant,
warrant and represent that none of the shares of MARINEMAX Stock issued to such
STOCKHOLDERS will be offered, sold, assigned, pledged, hypothecated, transferred
or otherwise disposed of except after full compliance with all of the applicable
provisions of the Act and the rules and regulations of the SEC. The certificates
evidencing the MARINEMAX Stock delivered to the STOCKHOLDERS pursuant to this
Agreement will bear a legend substantially in the form set forth below and
containing such other information as MARINEMAX may deem necessary or
appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
ACT AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF SUCH ACTS.
THE SHARES MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE
DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER SUCH ACTS
OR THE RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH REGISTRATION IS NOT REQUIRED.
16.2 ECONOMIC RISK; SOPHISTICATION. The STOCKHOLDERS are able to bear
the economic risk of an investment in the MARINEMAX Stock to be acquired
pursuant to this Agreement and can afford to sustain a total loss of such
investment and have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits
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<PAGE> 50
and risks of the proposed investment in the MARINEMAX Stock. The STOCKHOLDERS
have had an adequate opportunity to ask questions and receive answers from the
officers of MARINEMAX concerning any and all matters relating to the
transactions described herein including, without limitation, the background and
experience of the current and proposed officers of MARINEMAX, the business,
operations and financial condition of MarineMax, and any plans for additional
acquisitions and the like. The STOCKHOLDERS have asked any and all questions in
the nature described in the preceding sentence and all questions have been
answered to their satisfaction.
17. GENERAL
17.1 COOPERATION. COMPANY, the STOCKHOLDERS, MARINEMAX and NEWCO shall
each deliver or cause to be delivered to the other on the Closing Date, and at
such other times and places as shall be reasonably agreed to, such additional
instruments as the other may reasonably request for the purpose of carrying out
this Agreement. COMPANY will cooperate and use its reasonable efforts to have
the present officers, directors and employees of COMPANY cooperate with
MARINEMAX on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any tax return filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods ending at or prior to the Effective
Time.
17.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of MARINEMAX, and the heirs and legal representatives of the
STOCKHOLDERS.
17.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
annexes attached hereto) and the documents delivered pursuant hereto constitute
the entire agreement and understanding among the STOCKHOLDERS, COMPANY, NEWCO
and MARINEMAX and supersede any prior agreement and understanding relating to
the subject matter of this Agreement. This Agreement, upon execution,
constitutes a valid and binding agreement of the parties hereto enforceable in
accordance with its terms and may be modified or amended only by a written
instrument executed by the STOCKHOLDERS, COMPANY, NEWCO and MARINEMAX, acting
through their respective officers, duly authorized by their respective Boards of
Directors.
17.4 COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, all of which shall be deemed an original and all of which together
shall constitute but one and the same instrument.
17.5 BROKERS AND AGENTS. Except as disclosed on Schedule 17.5, each
party represents and warrants that it employed no broker or agent in connection
with this transaction
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<PAGE> 51
and agrees to indemnify the other parties hereto against all loss, cost, damages
or expense arising out of claims for fees or commission of brokers employed or
alleged to have been employed by such indemnifying party.
17.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, MARINEMAX will pay the fees, expenses and disbursements of
MARINEMAX and its agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments thereto,
including all costs and expenses incurred in the performance and compliance with
all conditions to be performed by MARINEMAX under this Agreement, including the
fees and expenses of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears,
P.A., Arthur Andersen, L.L.P., and any other person or entity retained by
MARINEMAX. Each STOCKHOLDER shall pay all sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") imposed in connection with the Merger, other than Transfer
Taxes, if any, imposed by the State of Delaware. Each STOCKHOLDER shall file all
necessary documentation and Returns with respect to such Transfer Taxes. In
addition, each STOCKHOLDER acknowledges that he or she, and not COMPANY or
MARINEMAX, will pay all taxes due upon receipt of the consideration payable
pursuant to Section 2 hereof, and will assume all tax risks and liabilities of
such STOCKHOLDER in connection with the transactions contemplated hereby.
17.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party.
(a) If to MARINEMAX, or NEWCO, addressed to them at:
MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attn: William H. McGill, Jr.
with copies to:
O'Connor Cavanagh
One East Camelback Road
Suite 1100
Attn: Robert S. Kant, Esq. and John B. Furman, Esq.
Phoenix, Arizona 85012
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(b) If to the STOCKHOLDERS, addressed to them at:
_______________________________
_______________________________
_______________________________
Attn: _________________________
With copies to:
Stephen Drahos, Esq.
559 Dutch Valley Road
Atlanta, Georgia 30324
(c) If to COMPANY, addressed to it at:
Stovall Marine, Inc.
5840 I-75 South
Forest Park, Georgia 30030
Attn: _________________________
with copies to:
Stephen Drahos, Esq.
559 Dutch Valley Road
Atlanta, Georgia 30324
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 17.7 from time to time.
17.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware, notwithstanding any conflict of laws
principles applicable in such state.
17.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
17.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single
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<PAGE> 53
breach or default be deemed a waiver of any other breach or default occurring
before or after that waiver.
17.11 TIME. Time is of the essence with respect to this Agreement.
17.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
17.13 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
17.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
17.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of MARINEMAX, NEWCO, COMPANY and the STOCKHOLDERS who hold or
who will hold at least 50% of the MARINEMAX Stock issued or to be issued upon
consummation of the Merger. Any amendment or waiver effected in accordance with
this Section 17.15 shall be binding upon each of the parties hereto, any other
person receiving MARINEMAX Stock in connection with the Merger and each future
holder of such MARINEMAX Stock.
17.16 EXECUTION BY FACSIMILE; DELIVERY OF ORIGINAL SIGNED AGREEMENT.
This Agreement may be executed by facsimile, and shall be deemed effectively
executed upon the receipt by all parties hereto of the last page of this
Agreement duly executed by the other parties hereto. Each party to this
Agreement agrees to deliver six (6) original, inked and signed copies of the
execution page of this Agreement within four (4) days of faxing the executed
last page hereof.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MARINEMAX:
MARINEMAX, INC., a Delaware
corporation
By: /s/_____________________
Name:_______________________
Title:______________________
NEWCO:
STOVALL ACQUISITION CORP., a
Delaware corporation
By: /s/_____________________
Name:_______________________
Title:______________________
COMPANY:
STOVALL MARINE, INC., a Georgia
corporation
By: /s/_____________________
Name:_______________________
Title:______________________
STOCKHOLDERS:
/s/_________________________
PAUL GRAHAM STOVALL
/s/_________________________
ROBERT S. STOVALL
/s/_________________________
JON M. STOVALL
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<PAGE> 55
CONSENT OF SPOUSE
The undersigned spouse of Paul Graham Stovall, who is a party to the
foregoing Agreement of Merger and Plan of Reorganization, pertaining to the
merger of Stovall Acquisition Corp., a Delaware corporation with, and into
Stovall Marine, Inc., a Georgia corporation (the "Agreement"), hereby declares,
contemporaneously with the execution of the Agreement, that she has read the
Agreement in its entirety, and being fully convinced of the wisdom of the terms
of the Agreement, and in consideration of the premises and of the provisions of
the Agreement, hereby expresses her consent to the execution and consummation of
the Agreement by Paul Graham Stovall.
The undersigned further agrees that in the event of the death of Paul
Graham Stovall, the dissolution of their marriage, or any occurrence
contemplated by the Agreement that gives rise to any liability or obligation of
Paul Graham Stovall, the provisions of the Agreement shall be binding upon her
to the extent of any community property she may now have or hereafter acquire,
and any and all separate property that she hereafter acquires which arises
(directly or indirectly) from any consideration given to Paul Graham Stovall,
pursuant to the Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times,
make, execute and deliver such instruments and documents as may be reasonable
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this ____ day of _________________, 1998.
/s/_____________________________
Spouse of Paul Graham Stovall
State of _________________ )
) ss.
County of ________________ )
The foregoing was acknowledged before me this ___ day of ____________,
1998 by ________________.
__________________________________
Notary Public
50
<PAGE> 56
CONSENT OF SPOUSE
The undersigned spouse of Robert S. Stovall, who is a party to the
foregoing Agreement of Merger and Plan of Reorganization, pertaining to the
merger of Stovall Acquisition Corp., a Delaware corporation with and into
Stovall Marine, Inc., a Georgia corporation (the "Agreement"), hereby declares,
contemporaneously with the execution of the Agreement, that she has read the
Agreement in its entirety, and being fully convinced of the wisdom of the terms
of the Agreement, and in consideration of the premises and of the provisions of
the Agreement, hereby expresses her consent to the execution and consummation of
the Agreement by Robert S. Stovall.
The undersigned further agrees that in the event of the death of Robert
S. Stovall, the dissolution of their marriage, or any occurrence contemplated by
the Agreement that gives rise to any liability or obligation of Robert S.
Stovall, the provisions of the Agreement shall be binding upon her to the extent
of any community property she may now have or hereafter acquire, and any and all
separate property that she hereafter acquires which arises (directly or
indirectly) from any consideration given to Robert S. Stovall, pursuant to the
Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times,
make, execute and deliver such instruments and documents as may be reasonable
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this ____ day of _________________, 1998.
/s/_________________________
Spouse of Robert S. Stovall
State of _________________ )
) ss.
County of ________________ )
The foregoing was acknowledged before me this ___ day of ____________,
1998 by _______________.
____________________________________
Notary Public
51
<PAGE> 57
CONSENT OF SPOUSE
The undersigned spouse of Jon M. Stovall, who is a party to the
foregoing Agreement of Merger and Plan of Reorganization, pertaining to the
merger of Stovall Acquisition Corp., a Delaware corporation with and into
Stovall Marine, Inc., a Georgia corporation (the "Agreement"), hereby declares,
contemporaneously with the execution of the Agreement, that she has read the
Agreement in its entirety, and being fully convinced of the wisdom of the terms
of the Agreement, and in consideration of the premises and of the provisions of
the Agreement, hereby expresses her consent to the execution and consummation of
the Agreement by Jon M. Stovall.
The undersigned further agrees that in the event of the death of Jon M.
Stovall, the dissolution of their marriage, or any occurrence contemplated by
the Agreement that gives rise to any liability or obligation of Jon M. Stovall,
the provisions of the Agreement shall be binding upon her to the extent of any
community property she may now have or hereafter acquire, and any and all
separate property that she hereafter acquires which arises (directly or
indirectly) from any consideration given to Jon M. Stovall, pursuant to the
Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times,
make, execute and deliver such instruments and documents as may be reasonable
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this ____ day of _________________, 1998.
/s/_________________________
Spouse of Jon M. Stovall
State of _________________ )
) ss.
County of ________________ )
The foregoing was acknowledged before me this ___ day of ____________,
1998 by ________________.
___________________________________
Notary Public
52
<PAGE> 1
Exhibit 10.3.a
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among
Gulfwind USA, Inc., a Florida corporation (the "Company"), and a wholly-owned
subsidiary of MarineMax, Inc., a Delaware corporation ("MarineMax"), MarineMax,
and William H. McGill, Jr. ("Executive") is entered into and effective as of the
1st day of March, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience is such business.
B. Executive desires to be employed hereunder by the Company
in a confidential relationship wherein Executive, in the course of his
employment with the Company, has and will continue to become familiar with and
aware of information as to the customers of the Company and those of other
companies affiliated with MarineMax, their specific manner of doing business,
including, without limitation, the processes, techniques and trade secrets
utilized by the Company and MarineMax, and their future plans with respect
thereto, all of which has been and will be established and maintained at great
expense to the Company and MarineMax; such information being recognized by
Executive to be proprietary to the Company and MarineMax, and a trade secret and
constituting valuable goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive
desires to accept such employment, pursuant to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each, it
is hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and
Executive hereby agrees to act, as President of the Company, and as Chairman of
the Board, President and Chief Executive Officer of Company's parent, MarineMax.
As such, Executive shall have responsibilities, duties and authority reasonably
accorded to, expected of, and consistent with Executive's position as, President
of the Company and will report directly to the Board of Directors of the Company
(the "Board"). Executive hereby accepts this employment upon the terms and
conditions herein contained and, subject to paragraph 1(c) hereof, agrees to
devote his best efforts and substantially all of his business time and attention
to promote and further the business of the Company and MarineMax.
<PAGE> 2
(b) Executive shall faithfully adhere to,
execute and fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the
Company or in the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by
Executive, the Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the
base salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to
receive an annual bonus in such an amount, if any, to be determined by a
committee of the Board based upon such factors as may deemed relevant by the
Board, in its sole discretion, including, without limitation, the performance of
Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage
for Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
2
<PAGE> 3
(ii) Reimbursement for business travel
and other out-of-pocket expenses reasonably incurred by Executive in the
performance of his services pursuant to this Agreement. All reimbursable
expenses shall be appropriately documented in reasonable detail by Executive
upon submission of any request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive
with other executive perquisites as may be available to or deemed appropriate
for Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that
time, within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which
is, at that time, or which has been, within one (1) year prior to that time, a
customer of the Company, MarineMax or any of the subsidiaries of MarineMax,
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company, MarineMax or its subsidiaries
within the Territory;
3
<PAGE> 4
(iv) call upon any prospective
acquisition candidate, on Executive's own behalf or on behalf of any competitor,
which candidate was, to Executive's actual knowledge after due inquiry, either
called upon by the Company or MarineMax, or for which the Company or MarineMax
made an acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring for investment purposes only not
more than three percent (3%) of the capital stock of a competing business, whose
stock is traded on a national securities exchange or on an over-the-counter or
similar market.
(b) Because of the difficulty of measuring
economic losses to the Company and MarineMax as a result of a breach of the
foregoing covenant, and because of the immediate and irreparable damage that
could be caused to the Company and MarineMax for which they would have no other
adequate remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the
foregoing covenants in this paragraph 3 impose a reasonable restraint on
Executive in light of the activities and business of the Company or MarineMax,
as the case may be (including MarineMax's other subsidiaries) on the date of the
execution of this Agreement and the current plans of MarineMax (including
MarineMax's other subsidiaries); but it is also the intent of the Company and
Executive that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company and MarineMax, as the
case may be (including MarineMax's other subsidiaries) throughout the term of
this covenant, whether before or after the date of termination of the employment
of Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company or
MarineMax (including MarineMax's other subsidiaries), or similar activities or
business in locations the operation of which, under such circumstances, does not
violate clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Executive's obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the
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Company or MarineMax (including MarineMax's other subsidiaries) shall thereafter
enter the same, similar or a competitive (i) business, (ii) course of activities
or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of Executive
against the Company or MarineMax, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by MarineMax or the
Company of such covenants. It is specifically agreed that the period of two (2)
years following termination of employment stated at the beginning of this
paragraph 3, during which the agreements and covenants of Executive made in this
paragraph 3 shall be effective, shall be computed by excluding from such
computation any time during which Executive is in violation of any provision of
this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall
immediately terminate this Agreement with no severance compensation due to
Executive's estate.
(b) DISABILITY. If, as a result of incapacity
due to physical or mental illness or injury, Executive shall have been absent
from his full-time duties hereunder for six (6) consecutive months, then thirty
(30) days after receiving written notice (which notice may occur before or after
the end of such six (6) month period, but which shall not be effective earlier
than the last day of such six (6) month period), the Company may terminate
Executive's employment hereunder provided Executive is unable to resume his
full-time duties at the conclusion of such notice period. Also, Executive may
terminate his employment hereunder if his health should become impaired to an
extent that makes the continued performance of his duties hereunder hazardous to
his physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall
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<PAGE> 6
have concurred in the conclusion of Executive's doctor. In the event this
Agreement is terminated as a result of Executive's disability, Executive shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
the lesser of the time period then remaining under the Term of this Agreement or
for one (1) year.
(c) GOOD CAUSE. The Company may terminate this
Agreement ten (10) days after written notice to Executive for "Good Cause,"
which shall mean any one or more of the following: (1) Executive's willful,
material and irreparable breach of this Agreement; (2) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder; (3) Executive's willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company or MarineMax which materially and adversely affects the operations or
reputation of the Company or MarineMax; (4) Executive's conviction of a felony
crime; or (5) confirmed positive illegal drug test result. In the event of a
termination for Good Cause, as enumerated above, Executive shall have no right
to any severance compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any
time after the commencement of employment, Executive may, without cause, and
without Good Reason terminate this Agreement and Executive's employment,
effective thirty (30) days after written notice is provided to the Company.
Executive may only be terminated without Good Cause by the Company during the
Term hereof if such termination is approved by a majority of the members of the
Board of Directors of MarineMax, excluding Executive if Executive is a member of
such Board of Directors. Should Executive be terminated by the Company without
Good Cause or should Executive terminate with Good Reason during the Term,
Executive shall receive from the Company, on such dates as would otherwise be
paid by the Company, the base salary at the rate then in effect for whatever
time period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater. Further, if Executive is terminated without Good
Cause or terminates his employment hereunder with Good Reason, (a) the Company
shall make the insurance premium payments contemplated by COBRA for a period of
eighteen (18) months after such termination, (b) the Executive shall be entitled
to receive a prorated portion of any annual bonus and other incentive
compensation to which the Executive would have been entitled for the year during
which the termination occurred had the Executive not been terminated, (c) all
options to purchase MarineMax Common Stock shall vest thereupon, and (d) the
Executive shall be entitled to receive all other unpaid benefits due and owing
through Executive's last day of employment. Further, any termination without
Good Cause by the Company shall operate to shorten the period set forth in
paragraph 3(a) hereof and during which the terms of paragraph 3 hereof apply to
one (1) year from the date of termination of employment. If Executive resigns or
otherwise terminates his employment without Good Reason, rather than the Company
terminating his employment pursuant to this paragraph 5(d), Executive shall
receive no severance compensation.
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Executive shall have "Good Reason" to terminate this Agreement
and his employment hereunder upon the occurrence of any of the following events:
(a) Executive is demoted by means of a reduction in authority, responsibilities
or duties to a position of less stature or importance within the Company than
the position described in paragraph 1 hereof; or (b) Executive's annual base
salary as determined pursuant to paragraph 2 hereof is reduced to a level that
is less than eighty percent (80%) of the base salary paid to Executive during
any prior contract year under this Agreement, unless Executive has agreed in
writing to that demotion or reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the
event of a "Change in Control" (as defined below) of MarineMax during the Term,
Executive may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided
above, Executive shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Executive only to the extent and in the manner expressly provided
above or in paragraph 11 hereof. All other rights and obligations of the Company
and Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 15 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce his rights hereunder. Further,
none of the provisions of paragraph 3 hereof shall apply in the event this
Agreement is terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
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<PAGE> 8
6. INVENTIONS. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one (1) year thereafter, and which are directly
related to the business or activities of the Company and which Executive
conceives as a result of his employment by the Company. Executive hereby assigns
and agrees to assign all his interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive and
his employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
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<PAGE> 9
may hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that he
has been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this
Agreement pursuant to subparagraph (c) below, Executive understands and
acknowledges that MarineMax may be merged or consolidated with or into another
entity and that such entity shall automatically succeed to the rights and
obligations of MarineMax hereunder or that MarineMax may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a pending Change in Control
wherein MarineMax and/or the Company and Executive have not received written
notice at least five (5) business days prior to the anticipated closing date of
the transaction giving rise to the Change in Control from the successor to all
or a substantial portion of MarineMax's and/or the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform MarineMax's and/or the Company's obligations under this Agreement in the
same manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation,
Executive may, at his sole discretion, elect to terminate this Agreement by
providing written notice to the Company and MarineMax at least five (5) business
days prior to the anticipated closing of the transaction giving rise to the
Change in Control. In such case, the applicable provisions of paragraph 4(d)
hereof will apply as though the Company had terminated the Agreement without
Good Cause during the Term; however, under such circumstances, the amount of the
lump-sum severance payment due to Executive shall be double the amount
calculated under the terms of paragraph 4(d) hereof and the non-competition
provisions of paragraph 3 hereof shall all apply for a period
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of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 4 hereof
under the circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments due
Executive must be paid in full by the Company at or prior to such closing.
Further, Executive will be given sufficient time and opportunity to elect
whether to exercise all or any of his options to purchase MarineMax Common
Stock, such that he may convert the options to shares of MarineMax Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" 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 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 United States
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control MarineMax, and
such offer is consummated for the equity securities of MarineMax representing
twenty percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall
approve a merger, consolidation, recapitalization, or reorganization of
MarineMax, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least seventy-five
percent (75%) of the total voting power represented by the voting securities of
the surviving entity outstanding immediately after such transaction being
beneficially owned by at least
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seventy-five percent (75%) of the holders of outstanding voting securities of
MarineMax 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
(iv) the stockholders of MarineMax shall
approve a plan of complete liquidation of MarineMax or an agreement for the sale
or disposition by MarineMax of all or a substantial portion of MarineMax's
assets to another person or entity which is not a wholly-owned subsidiary of
MarineMax (i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock
beneficially owned or controlled by MarineMax shall not be considered in
determining whether a Change in Control has occurred. Notwithstanding the
foregoing, none of MarineMax's initial public offering or the concurrent mergers
involving MarineMax and its various wholly-owned subsidiaries and affiliates
shall be deemed to be a Change in Control.
(g) Executive shall be notified in writing by
the MarineMax at any time that MarineMax or any member of its Board anticipates
that a Change in Control may take place.
(h) In the event that a Change in Control occurs
and the aggregate amount of any payments made to Executive hereunder, or
pursuant to any plan, program or policy of the Company in connection with, on
account of, or as a result of, such Change in Control constitutes "excess
parachute payments" as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), subject to the excise tax imposed by Section 4999
of the Code, or any successor sections thereof, Executive shall receive from the
Company, in addition to any other amounts payable under this Agreement, a lump
sum payment equal to the amount of (i) such excise tax, and (ii) the federal and
state income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term. This Agreement
hereby supersedes any other employment agreements
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or understandings, written or oral, between the Company and/or MarineMax and
Executive.
13. NOTICE. Whenever any notice is required hereunder,
it shall be given in writing addressed as follows:
To the Company: Gulfwind USA, Inc.
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: William H. McGill, Jr.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Notice shall be deemed given and effective on the earlier of three (3)
days after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement
is held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall be
submitted to binding arbitration (except for claims arising out of paragraphs 3
or 7 hereof), initiated by either Claimant or Respondent pursuant to this
paragraph. Such arbitration shall be
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conducted before a panel of three (3) arbitrators in Tampa, Florida, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association ("AAA") then in effect provided that the
parties may agree to use arbitrators other than those provided by the AAA. The
arbitrators shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Executive was
terminated without disability or without Good Cause, as defined in paragraphs
4(b) and 4(c) hereof, respectively, or that the Company has otherwise materially
breached this Agreement. A decision by a majority of the arbitration panel shall
be final and binding. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. The direct expense of any mediation or arbitration
proceeding shall be borne by the Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this
Agreement for the purpose of guaranteeing, and does hereby guarantee, the
performance by the Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive
acknowledges and agrees that the compensation and other benefits set forth in
this Agreement are and shall be in lieu of any compensation or other benefits
that may otherwise be payable to or on behalf of Executive pursuant to the terms
of any severance pay arrangement of the Company, MarineMax or any affiliate
thereof, or any other similar arrangement of the Company, MarineMax or any
affiliates thereof providing for benefits upon involuntary termination of
employment.
18. GOVERNING LAW. This Agreement shall in all respects
be construed according to the laws of the State of Florida, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be
executed by facsimile and in two (2) or more counterparts, each of which shall
be deemed an original and all of which together shall constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
COMPANY:
GULFWIND USA, INC.
By: /s/
-------------------------------------
Name:
-------------------------------------
Its:
-------------------------------------
MARINEMAX:
MARINEMAX, INC.
By: /s/
-------------------------------------
Name:
-------------------------------------
Its:
-------------------------------------
EXECUTIVE:
/s/
-------------------------------------
WILLIAM H. MCGILL, JR.
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Exhibit 10.3.C
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among
Bassett Boat Company of Florida, a Florida corporation (the "Company"), and a
wholly-owned subsidiary of MarineMax, Inc., a Delaware corporation
("MarineMax"), MarineMax, and Richard R. Bassett ("Executive") is entered into
and effective as of the _____ day of ____________, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience is such business.
B. Executive desires to be employed hereunder by the Company
in a confidential relationship wherein Executive, in the course of his
employment with the Company, has and will continue to become familiar with and
aware of information as to the customers of the Company and those of other
companies affiliated with MarineMax, their specific manner of doing business,
including, without limitation, the processes, techniques and trade secrets
utilized by the Company and MarineMax, and their future plans with respect
thereto, all of which has been and will be established and maintained at great
expense to the Company and MarineMax; such information being recognized by
Executive to be proprietary to the Company and MarineMax, and a trade secret and
constituting valuable goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive
desires to accept such employment, pursuant to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each, it
is hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and
Executive hereby agrees to act, as President of the Company, and as Senior Vice
President of Company's parent, MarineMax. As such, Executive shall have
responsibilities, duties and authority reasonably accorded to, expected of, and
consistent with Executive's position as, President of the Company and will
report directly to the Board of Directors of the Company (the "Board").
Executive hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote his best
efforts and substantially all of his business time and attention to promote and
further the business of the Company and MarineMax.
<PAGE> 2
(b) Executive shall faithfully adhere to, execute and
fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the Company or
in the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by Executive, the
Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the base
salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by a committee of the
Board based upon such factors as may deemed relevant by the Board, in its sole
discretion, including, without limitation, the performance of Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage for
Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
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(ii) Reimbursement for business travel and
other out-of-pocket expenses reasonably incurred by Executive in the performance
of his services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Executive upon submission of
any request for reimbursement, and in a format and manner consistent with the
Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive
with other executive perquisites as may be available to or deemed appropriate
for Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that
time, within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which
is, at that time, or which has been, within one (1) year prior to that time, a
customer of the Company, MarineMax or any of the subsidiaries of MarineMax,
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company, MarineMax or its subsidiaries
within the Territory;
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(iv) call upon any prospective acquisition
candidate, on Executive's own behalf or on behalf of any competitor, which
candidate was, to Executive's actual knowledge after due inquiry, either called
upon by the Company or MarineMax, or for which the Company or MarineMax made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring for investment purposes only not
more than three percent (3%) of the capital stock of a competing business, whose
stock is traded on a national securities exchange or on an over-the-counter or
similar market.
(b) Because of the difficulty of measuring economic
losses to the Company and MarineMax as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company and MarineMax for which they would have no other adequate
remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the Company or MarineMax, as the case
may be (including MarineMax's other subsidiaries) on the date of the execution
of this Agreement and the current plans of MarineMax (including MarineMax's
other subsidiaries); but it is also the intent of the Company and Executive that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and MarineMax, as the case may
be (including MarineMax's other subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment of
Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company or
MarineMax (including MarineMax's other subsidiaries), or similar activities or
business in locations the operation of which, under such circumstances, does not
violate clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Executive's obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the
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Company or MarineMax (including MarineMax's other subsidiaries) shall thereafter
enter the same, similar or a competitive (i) business, (ii) course of activities
or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against the
Company or MarineMax, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by MarineMax or the Company of such
covenants. It is specifically agreed that the period of two (2) years following
termination of employment stated at the beginning of this paragraph 3, during
which the agreements and covenants of Executive made in this paragraph 3 shall
be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall immediately
terminate this Agreement with no severance compensation due to Executive's
estate.
(b) DISABILITY. If, as a result of incapacity due to
physical or mental illness or injury, Executive shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the end
of such six (6) month period, but which shall not be effective earlier than the
last day of such six (6) month period), the Company may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall
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have concurred in the conclusion of Executive's doctor. In the event this
Agreement is terminated as a result of Executive's disability, Executive shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
the lesser of the time period then remaining under the Term of this Agreement or
for one (1) year.
(c) GOOD CAUSE. The Company may terminate this
Agreement ten (10) days after written notice to Executive for "Good Cause,"
which shall mean any one or more of the following: (1) Executive's willful,
material and irreparable breach of this Agreement; (2) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder; (3) Executive's willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company or MarineMax which materially and adversely affects the operations or
reputation of the Company or MarineMax; (4) Executive's conviction of a felony
crime; or (5) confirmed positive illegal drug test result. In the event of a
termination for Good Cause, as enumerated above, Executive shall have no right
to any severance compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any time
after the commencement of employment, Executive may, without cause, and without
Good Reason terminate this Agreement and Executive's employment, effective
thirty (30) days after written notice is provided to the Company. Executive may
only be terminated without Good Cause by the Company during the Term hereof if
such termination is approved by a majority of the members of the Board of
Directors of MarineMax, excluding Executive if Executive is a member of such
Board of Directors. Should Executive be terminated by the Company without Good
Cause or should Executive terminate with Good Reason during the Term, Executive
shall receive from the Company, on such dates as would otherwise be paid by the
Company, the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for one (1) year, whichever amount
is greater. Further, if Executive is terminated without Good Cause or terminates
his employment hereunder with Good Reason, (a) the Company shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination, (b) the Executive shall be entitled to receive a
prorated portion of any annual bonus and other incentive compensation to which
the Executive would have been entitled for the year during which the termination
occurred had the Executive not been terminated, (c) all options to purchase
MarineMax Common Stock shall vest thereupon, and (d) the Executive shall be
entitled to receive all other unpaid benefits due and owing through Executive's
last day of employment. Further, any termination without Good Cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) hereof
and during which the terms of paragraph 3 hereof apply to one (1) year from the
date of termination of employment. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating his
employment pursuant to this paragraph 5(d), Executive shall receive no severance
compensation.
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Executive shall have "Good Reason" to terminate this Agreement
and his employment hereunder upon the occurrence of any of the following events:
(a) Executive is demoted by means of a reduction in authority, responsibilities
or duties to a position of less stature or importance within the Company than
the position described in paragraph 1 hereof; or (b) Executive's annual base
salary as determined pursuant to paragraph 2 hereof is reduced to a level that
is less than eighty percent (80%) of the base salary paid to Executive during
any prior contract year under this Agreement, unless Executive has agreed in
writing to that demotion or reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the event of a
"Change in Control" (as defined below) of MarineMax during the Term, Executive
may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided
above, Executive shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Executive only to the extent and in the manner expressly provided
above or in paragraph 11 hereof. All other rights and obligations of the Company
and Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 15 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce his rights hereunder. Further,
none of the provisions of paragraph 3 hereof shall apply in the event this
Agreement is terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
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6. INVENTIONS. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one (1) year thereafter, and which are directly
related to the business or activities of the Company and which Executive
conceives as a result of his employment by the Company. Executive hereby assigns
and agrees to assign all his interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive and
his employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
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may hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that he
has been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this
Agreement pursuant to subparagraph (c) below, Executive understands and
acknowledges that MarineMax may be merged or consolidated with or into another
entity and that such entity shall automatically succeed to the rights and
obligations of MarineMax hereunder or that MarineMax may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a pending Change in Control
wherein MarineMax and/or the Company and Executive have not received written
notice at least five (5) business days prior to the anticipated closing date of
the transaction giving rise to the Change in Control from the successor to all
or a substantial portion of MarineMax's and/or the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform MarineMax's and/or the Company's obligations under this Agreement in the
same manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation, Executive
may, at his sole discretion, elect to terminate this Agreement by providing
written notice to the Company and MarineMax at least five (5) business days
prior to the anticipated closing of the transaction giving rise to the Change in
Control. In such case, the applicable provisions of paragraph 4(d) hereof will
apply as though the Company had terminated the Agreement without Good Cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Executive shall be double the amount calculated under
the terms of paragraph
<PAGE> 10
4(d) hereof and the non-competition provisions of paragraph 3 hereof shall all
apply for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 4 hereof under
the circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments due
Executive must be paid in full by the Company at or prior to such closing.
Further, Executive will be given sufficient time and opportunity to elect
whether to exercise all or any of his options to purchase MarineMax Common
Stock, such that he may convert the options to shares of MarineMax Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" 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 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 United States
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control MarineMax, and
such offer is consummated for the equity securities of MarineMax representing
twenty percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall
approve a merger, consolidation, recapitalization, or reorganization of
MarineMax, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least seventy-five
percent (75%) of the total voting power represented by the voting securities of
the surviving
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entity outstanding immediately after such transaction being beneficially owned
by at least seventy-five percent (75%) of the holders of outstanding voting
securities of MarineMax 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
(iv) the stockholders of MarineMax shall
approve a plan of complete liquidation of MarineMax or an agreement for the sale
or disposition by MarineMax of all or a substantial portion of MarineMax's
assets to another person or entity which is not a wholly-owned subsidiary of
MarineMax (i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock beneficially
owned or controlled by MarineMax shall not be considered in determining whether
a Change in Control has occurred. Notwithstanding the foregoing, none of
MarineMax's initial public offering or the concurrent mergers involving
MarineMax and its various wholly-owned subsidiaries and affiliates shall be
deemed to be a Change in Control.
(g) Executive shall be notified in writing by
MarineMax at any time that MarineMax or any member of its Board anticipates that
a Change in Control may take place.
(h) In the event that a Change in Control occurs and
the aggregate amount of any payments made to Executive hereunder, or pursuant to
any plan, program or policy of the Company in connection with, on account of, or
as a result of, such Change in Control constitutes "excess parachute payments"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such excise tax, and (ii) the federal and state
income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving
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the benefit of such term. This Agreement hereby supersedes any other employment
agreements or understandings, written or oral, between the Company and/or
MarineMax and Executive.
13. NOTICE. Whenever any notice is required hereunder, it
shall be given in writing addressed as follows:
To the Company: Bassett Boat Company of Florida
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: Richard R. Bassett
700 S. Federal Highway
Pompano Beach, Florida 33062
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement
is held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall be
submitted to binding arbitration (except for claims arising out of paragraphs 3
or 7 hereof),
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initiated by either Claimant or Respondent pursuant to this paragraph. Such
arbitration shall be conducted before a panel of three (3) arbitrators in Tampa,
Florida, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association ("AAA") then in effect provided
that the parties may agree to use arbitrators other than those provided by the
AAA. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Executive was terminated without disability or without Good Cause, as defined in
paragraphs 4(b) and 4(c) hereof, respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any mediation or
arbitration proceeding shall be borne by the Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this Agreement
for the purpose of guaranteeing, and does hereby guarantee, the performance by
the Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive
acknowledges and agrees that the compensation and other benefits set forth in
this Agreement are and shall be in lieu of any compensation or other benefits
that may otherwise be payable to or on behalf of Executive pursuant to the terms
of any severance pay arrangement of the Company, MarineMax or any affiliate
thereof, or any other similar arrangement of the Company, MarineMax or any
affiliates thereof providing for benefits upon involuntary termination of
employment.
18. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Florida, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
COMPANY:
BASSETT BOAT COMPANY OF FLORIDA
By: /s/
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
MARINEMAX:
MARINEMAX, INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
EXECUTIVE:
/s/
----------------------------------------
RICHARD R. BASSETT
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EXHIBIT 10.3.d
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among
11502 Dumas, Inc., a Texas corporation (the "Company"), and a wholly-owned
subsidiary of MarineMax, Inc., a Delaware corporation ("MarineMax"), MarineMax,
and Louis R. DelHomme ("Executive") is entered into and effective as of the
_____ day of ____________, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience is such business.
B. Executive desires to be employed hereunder by the Company
in a confidential relationship wherein Executive, in the course of his
employment with the Company, has and will continue to become familiar with and
aware of information as to the customers of the Company and those of other
companies affiliated with MarineMax, their specific manner of doing business,
including, without limitation, the processes, techniques and trade secrets
utilized by the Company and MarineMax, and their future plans with respect
thereto, all of which has been and will be established and maintained at great
expense to the Company and MarineMax; such information being recognized by
Executive to be proprietary to the Company and MarineMax, and a trade secret and
constituting valuable goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive
desires to accept such employment, pursuant to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each, it
is hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and
Executive hereby agrees to act, as President of the Company, and as Senior Vice
President of Company's parent, MarineMax. As such, Executive shall have
responsibilities, duties and authority reasonably accorded to, expected of, and
consistent with Executive's position as, President of the Company and will
report directly to the Board of Directors of the Company (the "Board").
Executive hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote his best
efforts and substantially all of his business time and attention to promote and
further the business of the Company and MarineMax.
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(b) Executive shall faithfully adhere to, execute and
fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the Company or
in the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by Executive, the
Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the base
salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by a committee of the
Board based upon such factors as may deemed relevant by the Board, in its sole
discretion, including, without limitation, the performance of Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage
for Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
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(ii) Reimbursement for business travel and
other out-of-pocket expenses reasonably incurred by Executive in the performance
of his services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Executive upon submission of
any request for reimbursement, and in a format and manner consistent with the
Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive
with other executive perquisites as may be available to or deemed appropriate
for Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that
time, within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which
is, at that time, or which has been, within one (1) year prior to that time, a
customer of the Company, MarineMax or any of the subsidiaries of MarineMax,
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company, MarineMax or its subsidiaries
within the Territory;
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(iv) call upon any prospective acquisition
candidate, on Executive's own behalf or on behalf of any competitor, which
candidate was, to Executive's actual knowledge after due inquiry, either called
upon by the Company or MarineMax, or for which the Company or MarineMax made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring for investment purposes only not
more than three percent (3%) of the capital stock of a competing business, whose
stock is traded on a national securities exchange or on an over-the-counter or
similar market.
(b) Because of the difficulty of measuring economic
losses to the Company and MarineMax as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company and MarineMax for which they would have no other adequate
remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the Company or MarineMax, as the case
may be (including MarineMax's other subsidiaries) on the date of the execution
of this Agreement and the current plans of MarineMax (including MarineMax's
other subsidiaries); but it is also the intent of the Company and Executive that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and MarineMax, as the case may
be (including MarineMax's other subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment of
Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company or
MarineMax (including MarineMax's other subsidiaries), or similar activities or
business in locations the operation of which, under such circumstances, does not
violate clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Executive's obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the
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Company or MarineMax (including MarineMax's other subsidiaries) shall thereafter
enter the same, similar or a competitive (i) business, (ii) course of activities
or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against the
Company or MarineMax, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by MarineMax or the Company of such
covenants. It is specifically agreed that the period of two (2) years following
termination of employment stated at the beginning of this paragraph 3, during
which the agreements and covenants of Executive made in this paragraph 3 shall
be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall immediately
terminate this Agreement with no severance compensation due to Executive's
estate.
(b) DISABILITY. If, as a result of incapacity due to
physical or mental illness or injury, Executive shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the end
of such six (6) month period, but which shall not be effective earlier than the
last day of such six (6) month period), the Company may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall
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have concurred in the conclusion of Executive's doctor. In the event this
Agreement is terminated as a result of Executive's disability, Executive shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
the lesser of the time period then remaining under the Term of this Agreement or
for one (1) year.
(c) GOOD CAUSE. The Company may terminate this
Agreement ten (10) days after written notice to Executive for "Good Cause,"
which shall mean any one or more of the following: (1) Executive's willful,
material and irreparable breach of this Agreement; (2) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder; (3) Executive's willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company or MarineMax which materially and adversely affects the operations or
reputation of the Company or MarineMax; (4) Executive's conviction of a felony
crime; or (5) confirmed positive illegal drug test result. In the event of a
termination for Good Cause, as enumerated above, Executive shall have no right
to any severance compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any time
after the commencement of employment, Executive may, without cause, and without
Good Reason terminate this Agreement and Executive's employment, effective
thirty (30) days after written notice is provided to the Company. Executive may
only be terminated without Good Cause by the Company during the Term hereof if
such termination is approved by a majority of the members of the Board of
Directors of MarineMax, excluding Executive if Executive is a member of such
Board of Directors. Should Executive be terminated by the Company without Good
Cause or should Executive terminate with Good Reason during the Term, Executive
shall receive from the Company, on such dates as would otherwise be paid by the
Company, the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for one (1) year, whichever amount
is greater. Further, if Executive is terminated without Good Cause or terminates
his employment hereunder with Good Reason, (a) the Company shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination, (b) the Executive shall be entitled to receive a
prorated portion of any annual bonus and other incentive compensation to which
the Executive would have been entitled for the year during which the termination
occurred had the Executive not been terminated, (c) all options to purchase
MarineMax Common Stock shall vest thereupon, and (d) the Executive shall be
entitled to receive all other unpaid benefits due and owing through Executive's
last day of employment. Further, any termination without Good Cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) hereof
and during which the terms of paragraph 3 hereof apply to one (1) year from the
date of termination of employment. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating his
employment pursuant to this paragraph 5(d), Executive shall receive no severance
compensation.
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Executive shall have "Good Reason" to terminate this Agreement
and his employment hereunder upon the occurrence of any of the following events:
(a) Executive is demoted by means of a reduction in authority, responsibilities
or duties to a position of less stature or importance within the Company than
the position described in paragraph 1 hereof; or (b) Executive's annual base
salary as determined pursuant to paragraph 2 hereof is reduced to a level that
is less than eighty percent (80%) of the base salary paid to Executive during
any prior contract year under this Agreement, unless Executive has agreed in
writing to that demotion or reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the event of a
"Change in Control" (as defined below) of MarineMax during the Term, Executive
may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided
above, Executive shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Executive only to the extent and in the manner expressly provided
above or in paragraph 11 hereof. All other rights and obligations of the Company
and Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 15 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce his rights hereunder. Further,
none of the provisions of paragraph 3 hereof shall apply in the event this
Agreement is terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
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6. INVENTIONS. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one (1) year thereafter, and which are directly
related to the business or activities of the Company and which Executive
conceives as a result of his employment by the Company. Executive hereby assigns
and agrees to assign all his interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive and
his employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
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may hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that he
has been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this
Agreement pursuant to subparagraph (c) below, Executive understands and
acknowledges that MarineMax may be merged or consolidated with or into another
entity and that such entity shall automatically succeed to the rights and
obligations of MarineMax hereunder or that MarineMax may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a pending Change in Control
wherein MarineMax and/or the Company and Executive have not received written
notice at least five (5) business days prior to the anticipated closing date of
the transaction giving rise to the Change in Control from the successor to all
or a substantial portion of MarineMax's and/or the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform MarineMax's and/or the Company's obligations under this Agreement in the
same manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation, Executive
may, at his sole discretion, elect to terminate this Agreement by providing
written notice to the Company and MarineMax at least five (5) business days
prior to the anticipated closing of the transaction giving rise to the Change in
Control. In such case, the applicable provisions of paragraph 4(d) hereof will
apply as though the Company had terminated the Agreement without Good Cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Executive shall be double the amount calculated under
the terms of paragraph
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4(d) hereof and the non-competition provisions of paragraph 3 hereof shall all
apply for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 4 hereof under
the circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments due
Executive must be paid in full by the Company at or prior to such closing.
Further, Executive will be given sufficient time and opportunity to elect
whether to exercise all or any of his options to purchase MarineMax Common
Stock, such that he may convert the options to shares of MarineMax Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" 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 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 United States
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control MarineMax, and
such offer is consummated for the equity securities of MarineMax representing
twenty percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall
approve a merger, consolidation, recapitalization, or reorganization of
MarineMax, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least seventy-five
percent (75%) of the total voting power represented by the voting securities of
the surviving
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entity outstanding immediately after such transaction being beneficially owned
by at least seventy-five percent (75%) of the holders of outstanding voting
securities of MarineMax 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
(iv) the stockholders of MarineMax shall
approve a plan of complete liquidation of MarineMax or an agreement for the sale
or disposition by MarineMax of all or a substantial portion of MarineMax's
assets to another person or entity which is not a wholly-owned subsidiary of
MarineMax (i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock beneficially
owned or controlled by MarineMax shall not be considered in determining whether
a Change in Control has occurred. Notwithstanding the foregoing, none of
MarineMax's initial public offering or the concurrent mergers involving
MarineMax and its various wholly-owned subsidiaries and affiliates shall be
deemed to be a Change in Control.
(g) Executive shall be notified in writing by
MarineMax at any time that MarineMax or any member of its Board anticipates that
a Change in Control may take place.
(h) In the event that a Change in Control occurs and
the aggregate amount of any payments made to Executive hereunder, or pursuant to
any plan, program or policy of the Company in connection with, on account of, or
as a result of, such Change in Control constitutes "excess parachute payments"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such excise tax, and (ii) the federal and state
income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving
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the benefit of such term. This Agreement hereby supersedes any other employment
agreements or understandings, written or oral, between the Company and/or
MarineMax and Executive.
13. NOTICE. Whenever any notice is required hereunder, it
shall be given in writing addressed as follows:
To the Company: 11502 Dumas, Inc.
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: Louis R. DelHomme
2551 S. Shore Harbour Blvd, Suite C
League City, Texas 77573
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement
is held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall be
submitted to binding arbitration (except for claims arising out of paragraphs 3
or 7 hereof),
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initiated by either Claimant or Respondent pursuant to this paragraph. Such
arbitration shall be conducted before a panel of three (3) arbitrators in Tampa,
Florida, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association ("AAA") then in effect provided
that the parties may agree to use arbitrators other than those provided by the
AAA. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Executive was terminated without disability or without Good Cause, as defined in
paragraphs 4(b) and 4(c) hereof, respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any mediation or
arbitration proceeding shall be borne by the Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this Agreement
for the purpose of guaranteeing, and does hereby guarantee, the performance by
the Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive
acknowledges and agrees that the compensation and other benefits set forth in
this Agreement are and shall be in lieu of any compensation or other benefits
that may otherwise be payable to or on behalf of Executive pursuant to the terms
of any severance pay arrangement of the Company, MarineMax or any affiliate
thereof, or any other similar arrangement of the Company, MarineMax or any
affiliates thereof providing for benefits upon involuntary termination of
employment.
18. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Texas, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
COMPANY:
11502 DUMAS, INC.
By: /s/_______________________
Name:_________________________
Its:__________________________
MARINEMAX:
MARINEMAX, INC.
By: /s/_______________________
Name:_________________________
Its:__________________________
EXECUTIVE:
/s/_________________________
LOUIS R. DELHOMME
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EXHIBIT 10.3.e
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among
Harrison's Boat Center, Inc., a California corporation (the "Company"), and a
wholly-owned subsidiary of MarineMax, Inc., a Delaware corporation
("MarineMax"), MarineMax, and Richard C. LaManna, Jr. ("Executive") is entered
into and effective as of the _____ day of ____________, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience is such business.
B. Executive desires to be employed hereunder by the Company
in a confidential relationship wherein Executive, in the course of his
employment with the Company, has and will continue to become familiar with and
aware of information as to the customers of the Company and those of other
companies affiliated with MarineMax, their specific manner of doing business,
including, without limitation, the processes, techniques and trade secrets
utilized by the Company and MarineMax, and their future plans with respect
thereto, all of which has been and will be established and maintained at great
expense to the Company and MarineMax; such information being recognized by
Executive to be proprietary to the Company and MarineMax, and a trade secret and
constituting valuable goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive
desires to accept such employment, pursuant to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each, it
is hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and
Executive hereby agrees to act, as President of the Company, and as Senior Vice
President of Company's parent, MarineMax. As such, Executive shall have
responsibilities, duties and authority reasonably accorded to, expected of, and
consistent with Executive's position as, President of the Company and will
report directly to the Board of Directors of the Company (the "Board").
Executive hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote his best
efforts and substantially all of his business time and attention to promote and
further the business of the Company and MarineMax.
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(b) Executive shall faithfully adhere to, execute and
fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the Company or
in the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by Executive, the
Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the base
salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by a committee of the
Board based upon such factors as may deemed relevant by the Board, in its sole
discretion, including, without limitation, the performance of Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage
for Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
(ii) Reimbursement for business travel and
other out-of-pocket expenses reasonably incurred by Executive in the performance
of his services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail
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by Executive upon submission of any request for reimbursement, and in a format
and manner consistent with the Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive
with other executive perquisites as may be available to or deemed appropriate
for Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that
time, within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which
is, at that time, or which has been, within one (1) year prior to that time, a
customer of the Company, MarineMax or any of the subsidiaries of MarineMax,
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company, MarineMax or its subsidiaries
within the Territory;
(iv) call upon any prospective acquisition
candidate, on Executive's own behalf or on behalf of any competitor, which
candidate was, to Executive's actual knowledge after due inquiry, either called
upon by the Company or MarineMax, or for
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which the Company or MarineMax made an acquisition analysis, for the purpose of
acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring for investment purposes only not
more than three percent (3%) of the capital stock of a competing business, whose
stock is traded on a national securities exchange or on an over-the-counter or
similar market.
(b) Because of the difficulty of measuring economic
losses to the Company and MarineMax as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company and MarineMax for which they would have no other adequate
remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the Company or MarineMax, as the case
may be (including MarineMax's other subsidiaries) on the date of the execution
of this Agreement and the current plans of MarineMax (including MarineMax's
other subsidiaries); but it is also the intent of the Company and Executive that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and MarineMax, as the case may
be (including MarineMax's other subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment of
Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company or
MarineMax (including MarineMax's other subsidiaries), or similar activities or
business in locations the operation of which, under such circumstances, does not
violate clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Executive's obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the Company or MarineMax
(including MarineMax's other subsidiaries) shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
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(d) The covenants in this paragraph 3 are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against the
Company or MarineMax, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by MarineMax or the Company of such
covenants. It is specifically agreed that the period of two (2) years following
termination of employment stated at the beginning of this paragraph 3, during
which the agreements and covenants of Executive made in this paragraph 3 shall
be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall immediately
terminate this Agreement with no severance compensation due to Executive's
estate.
(b) DISABILITY. If, as a result of incapacity due to
physical or mental illness or injury, Executive shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the end
of such six (6) month period, but which shall not be effective earlier than the
last day of such six (6) month period), the Company may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall have concurred in the
conclusion of Executive's doctor. In the event this Agreement is terminated as a
result of Executive's disability, Executive shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base
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salary at the rate then in effect for the lesser of the time period then
remaining under the Term of this Agreement or for one (1) year.
(c) GOOD CAUSE. The Company may terminate this
Agreement ten (10) days after written notice to Executive for "Good Cause,"
which shall mean any one or more of the following: (1) Executive's willful,
material and irreparable breach of this Agreement; (2) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder; (3) Executive's willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company or MarineMax which materially and adversely affects the operations or
reputation of the Company or MarineMax; (4) Executive's conviction of a felony
crime; or (5) confirmed positive illegal drug test result. In the event of a
termination for Good Cause, as enumerated above, Executive shall have no right
to any severance compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any time
after the commencement of employment, Executive may, without cause, and without
Good Reason terminate this Agreement and Executive's employment, effective
thirty (30) days after written notice is provided to the Company. Executive may
only be terminated without Good Cause by the Company during the Term hereof if
such termination is approved by a majority of the members of the Board of
Directors of MarineMax, excluding Executive if Executive is a member of such
Board of Directors. Should Executive be terminated by the Company without Good
Cause or should Executive terminate with Good Reason during the Term, Executive
shall receive from the Company, on such dates as would otherwise be paid by the
Company, the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for one (1) year, whichever amount
is greater. Further, if Executive is terminated without Good Cause or terminates
his employment hereunder with Good Reason, (a) the Company shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination, (b) the Executive shall be entitled to receive a
prorated portion of any annual bonus and other incentive compensation to which
the Executive would have been entitled for the year during which the termination
occurred had the Executive not been terminated, (c) all options to purchase
MarineMax Common Stock shall vest thereupon, and (d) the Executive shall be
entitled to receive all other unpaid benefits due and owing through Executive's
last day of employment. Further, any termination without Good Cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) hereof
and during which the terms of paragraph 3 hereof apply to one (1) year from the
date of termination of employment. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating his
employment pursuant to this paragraph 5(d), Executive shall receive no severance
compensation.
Executive shall have "Good Reason" to terminate this Agreement
and his employment hereunder upon the occurrence of any of the following events:
(a) Executive is demoted by means of a reduction in authority, responsibilities
or duties to a position of less
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stature or importance within the Company than the position described in
paragraph 1 hereof; or (b) Executive's annual base salary as determined pursuant
to paragraph 2 hereof is reduced to a level that is less than eighty percent
(80%) of the base salary paid to Executive during any prior contract year under
this Agreement, unless Executive has agreed in writing to that demotion or
reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the event of a
"Change in Control" (as defined below) of MarineMax during the Term, Executive
may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided
above, Executive shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Executive only to the extent and in the manner expressly provided
above or in paragraph 11 hereof. All other rights and obligations of the Company
and Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 15 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce his rights hereunder. Further,
none of the provisions of paragraph 3 hereof shall apply in the event this
Agreement is terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
6. INVENTIONS. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one (1) year thereafter, and which are directly
related to the business or activities of the Company and which Executive
conceives as
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a result of his employment by the Company. Executive hereby assigns and agrees
to assign all his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive and
his employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or may
hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
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10. ASSIGNMENT; BINDING EFFECT. Executive understands that he
has been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this
Agreement pursuant to subparagraph (c) below, Executive understands and
acknowledges that MarineMax may be merged or consolidated with or into another
entity and that such entity shall automatically succeed to the rights and
obligations of MarineMax hereunder or that MarineMax may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a pending Change in Control
wherein MarineMax and/or the Company and Executive have not received written
notice at least five (5) business days prior to the anticipated closing date of
the transaction giving rise to the Change in Control from the successor to all
or a substantial portion of MarineMax's and/or the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform MarineMax's and/or the Company's obligations under this Agreement in the
same manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation, Executive
may, at his sole discretion, elect to terminate this Agreement by providing
written notice to the Company and MarineMax at least five (5) business days
prior to the anticipated closing of the transaction giving rise to the Change in
Control. In such case, the applicable provisions of paragraph 4(d) hereof will
apply as though the Company had terminated the Agreement without Good Cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Executive shall be double the amount calculated under
the terms of paragraph 4(d) hereof and the non-competition provisions of
paragraph 3 hereof shall all apply for a period of one (1) year from the
effective date of termination.
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(d) For purposes of applying paragraph 4 hereof under
the circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments due
Executive must be paid in full by the Company at or prior to such closing.
Further, Executive will be given sufficient time and opportunity to elect
whether to exercise all or any of his options to purchase MarineMax Common
Stock, such that he may convert the options to shares of MarineMax Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" 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 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 United States
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control MarineMax, and
such offer is consummated for the equity securities of MarineMax representing
twenty percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall
approve a merger, consolidation, recapitalization, or reorganization of
MarineMax, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least seventy-five
percent (75%) of the total voting power represented by the voting securities of
the surviving entity outstanding immediately after such transaction being
beneficially owned by at least seventy-five percent (75%) of the holders of
outstanding voting securities of MarineMax
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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
(iv) the stockholders of MarineMax shall
approve a plan of complete liquidation of MarineMax or an agreement for the sale
or disposition by MarineMax of all or a substantial portion of MarineMax's
assets to another person or entity which is not a wholly-owned subsidiary of
MarineMax (i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock beneficially
owned or controlled by MarineMax shall not be considered in determining whether
a Change in Control has occurred. Notwithstanding the foregoing, none of
MarineMax's initial public offering or the concurrent mergers involving
MarineMax and its various wholly-owned subsidiaries and affiliates shall be
deemed to be a Change in Control.
(g) Executive shall be notified in writing by
MarineMax at any time that MarineMax or any member of its Board anticipates that
a Change in Control may take place.
(h) In the event that a Change in Control occurs and
the aggregate amount of any payments made to Executive hereunder, or pursuant to
any plan, program or policy of the Company in connection with, on account of, or
as a result of, such Change in Control constitutes "excess parachute payments"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such excise tax, and (ii) the federal and state
income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term. This Agreement
hereby supersedes any other employment agreements or understandings, written or
oral, between the Company and/or MarineMax and Executive.
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13. NOTICE. Whenever any notice is required hereunder, it
shall be given in writing addressed as follows:
To the Company: Harrison's Boat Center, Inc.
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: Richard C. LaManna, Jr.
1928 Twin View Blvd.
Redding, California 96003
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement
is held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall be
submitted to binding arbitration (except for claims arising out of paragraphs 3
or 7 hereof), initiated by either Claimant or Respondent pursuant to this
paragraph. Such arbitration shall be conducted before a panel of three (3)
arbitrators in Tampa, Florida, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration
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Association ("AAA") then in effect provided that the parties may agree to use
arbitrators other than those provided by the AAA. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Executive was terminated without disability or
without Good Cause, as defined in paragraphs 4(b) and 4(c) hereof, respectively,
or that the Company has otherwise materially breached this Agreement. A decision
by a majority of the arbitration panel shall be final and binding. Judgment may
be entered on the arbitrators' award in any court having jurisdiction. The
direct expense of any mediation or arbitration proceeding shall be borne by the
Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this Agreement
for the purpose of guaranteeing, and does hereby guarantee, the performance by
the Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive
acknowledges and agrees that the compensation and other benefits set forth in
this Agreement are and shall be in lieu of any compensation or other benefits
that may otherwise be payable to or on behalf of Executive pursuant to the terms
of any severance pay arrangement of the Company, MarineMax or any affiliate
thereof, or any other similar arrangement of the Company, MarineMax or any
affiliates thereof providing for benefits upon involuntary termination of
employment.
18. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of California, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
COMPANY:
HARRISON'S BOAT CENTER, INC.
By: /s/_______________________
Name:_________________________
Its:__________________________
MARINEMAX:
MARINEMAX, INC.
By: /s/_______________________
Name:_________________________
Its:__________________________
EXECUTIVE:
/s/__________________________
RICHARD C. LAMANNA, JR.
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<PAGE> 1
Exhibit 10.3.f
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among Harrison's
Marine Centers of Arizona, Inc., an Arizona corporation (the "Company"), and a
wholly-owned subsidiary of MarineMax, Inc., a Delaware corporation
("MarineMax"), MarineMax, and Richard C. LaManna III ("Executive") is entered
into and effective as of the _____ day of ____________, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience is such business.
B. Executive desires to be employed hereunder by the Company in a
confidential relationship wherein Executive, in the course of his employment
with the Company, has and will continue to become familiar with and aware of
information as to the customers of the Company and those of other companies
affiliated with MarineMax, their specific manner of doing business, including,
without limitation, the processes, techniques and trade secrets utilized by the
Company and MarineMax, and their future plans with respect thereto, all of which
has been and will be established and maintained at great expense to the Company
and MarineMax; such information being recognized by Executive to be proprietary
to the Company and MarineMax, and a trade secret and constituting valuable
goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive desires
to accept such employment, pursuant to the terms and conditions set forth in
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein and the performance of each, it is
hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and Executive
hereby agrees to act, as Secretary and Treasurer of the Company, and as Vice
President and Secretary of Company's parent, MarineMax. As such, Executive shall
have responsibilities, duties and authority reasonably accorded to, expected of,
and consistent with Executive's position as, Vice Secretary and Treasurer of the
Company and will report directly to the Board of Directors of the Company (the
"Board"). Executive hereby accepts this employment upon the terms and conditions
herein contained and, subject to paragraph 1(c) hereof, agrees to devote his
best efforts and substantially all of his business time and attention to promote
and further the business of the Company and MarineMax.
<PAGE> 2
(b) Executive shall faithfully adhere to, execute and
fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the Company or in
the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by Executive, the
Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the base
salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by a committee of the
Board based upon such factors as may deemed relevant by the Board, in its sole
discretion, including, without limitation, the performance of Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage for
Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
(ii) Reimbursement for business travel and other
out-of-pocket expenses reasonably incurred by Executive in the performance of
his services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail
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by Executive upon submission of any request for reimbursement, and in a format
and manner consistent with the Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive with
other executive perquisites as may be available to or deemed appropriate for
Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that time,
within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which is, at
that time, or which has been, within one (1) year prior to that time, a customer
of the Company, MarineMax or any of the subsidiaries of MarineMax, within the
Territory for the purpose of soliciting or selling products or services in
direct competition with the Company, MarineMax or its subsidiaries within the
Territory;
(iv) call upon any prospective acquisition
candidate, on Executive's own behalf or on behalf of any competitor, which
candidate was, to Executive's actual knowledge after due inquiry, either called
upon by the Company or MarineMax, or for
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<PAGE> 4
which the Company or MarineMax made an acquisition analysis, for the purpose of
acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Executive from acquiring for investment purposes only not more than
three percent (3%) of the capital stock of a competing business, whose stock is
traded on a national securities exchange or on an over-the-counter or similar
market.
(b) Because of the difficulty of measuring economic
losses to the Company and MarineMax as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company and MarineMax for which they would have no other adequate
remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the Company or MarineMax, as the case
may be (including MarineMax's other subsidiaries) on the date of the execution
of this Agreement and the current plans of MarineMax (including MarineMax's
other subsidiaries); but it is also the intent of the Company and Executive that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and MarineMax, as the case may
be (including MarineMax's other subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment of
Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event that
Executive shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or MarineMax
(including MarineMax's other subsidiaries), or similar activities or business in
locations the operation of which, under such circumstances, does not violate
clause (i) of this paragraph 3, and in any event such new business, activities
or location are not in violation of this paragraph 3 or of Executive's
obligations under this paragraph 3, if any, Executive shall not be chargeable
with a violation of this paragraph 3 if the Company or MarineMax (including
MarineMax's other subsidiaries) shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
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(d) The covenants in this paragraph 3 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against the
Company or MarineMax, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by MarineMax or the Company of such
covenants. It is specifically agreed that the period of two (2) years following
termination of employment stated at the beginning of this paragraph 3, during
which the agreements and covenants of Executive made in this paragraph 3 shall
be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall immediately
terminate this Agreement with no severance compensation due to Executive's
estate.
(b) DISABILITY. If, as a result of incapacity due to
physical or mental illness or injury, Executive shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the end
of such six (6) month period, but which shall not be effective earlier than the
last day of such six (6) month period), the Company may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall have concurred in the
conclusion of Executive's doctor. In the event this Agreement is terminated as a
result of Executive's disability, Executive shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base
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<PAGE> 6
salary at the rate then in effect for the lesser of the time period then
remaining under the Term of this Agreement or for one (1) year.
(c) GOOD CAUSE. The Company may terminate this Agreement
ten (10) days after written notice to Executive for "Good Cause," which shall
mean any one or more of the following: (1) Executive's willful, material and
irreparable breach of this Agreement; (2) Executive's gross negligence in the
performance or intentional nonperformance (continuing for ten (10) days after
receipt of written notice of need to cure) of any of Executive's material duties
and responsibilities hereunder; (3) Executive's willful dishonesty, fraud or
misconduct with respect to the business or affairs of the Company or MarineMax
which materially and adversely affects the operations or reputation of the
Company or MarineMax; (4) Executive's conviction of a felony crime; or (5)
confirmed positive illegal drug test result. In the event of a termination for
Good Cause, as enumerated above, Executive shall have no right to any severance
compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any time after
the commencement of employment, Executive may, without cause, and without Good
Reason terminate this Agreement and Executive's employment, effective thirty
(30) days after written notice is provided to the Company. Executive may only be
terminated without Good Cause by the Company during the Term hereof if such
termination is approved by a majority of the members of the Board of Directors
of MarineMax, excluding Executive if Executive is a member of such Board of
Directors. Should Executive be terminated by the Company without Good Cause or
should Executive terminate with Good Reason during the Term, Executive shall
receive from the Company, on such dates as would otherwise be paid by the
Company, the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for one (1) year, whichever amount
is greater. Further, if Executive is terminated without Good Cause or terminates
his employment hereunder with Good Reason, (a) the Company shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination, (b) the Executive shall be entitled to receive a
prorated portion of any annual bonus and other incentive compensation to which
the Executive would have been entitled for the year during which the termination
occurred had the Executive not been terminated, (c) all options to purchase
MarineMax Common Stock shall vest thereupon, and (d) the Executive shall be
entitled to receive all other unpaid benefits due and owing through Executive's
last day of employment. Further, any termination without Good Cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) hereof
and during which the terms of paragraph 3 hereof apply to one (1) year from the
date of termination of employment. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating his
employment pursuant to this paragraph 5(d), Executive shall receive no severance
compensation.
Executive shall have "Good Reason" to terminate this Agreement and his
employment hereunder upon the occurrence of any of the following events: (a)
Executive is demoted by means of a reduction in authority, responsibilities or
duties to a position of less
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<PAGE> 7
stature or importance within the Company than the position described in
paragraph 1 hereof; or (b) Executive's annual base salary as determined pursuant
to paragraph 2 hereof is reduced to a level that is less than eighty percent
(80%) of the base salary paid to Executive during any prior contract year under
this Agreement, unless Executive has agreed in writing to that demotion or
reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the event of a
"Change in Control" (as defined below) of MarineMax during the Term, Executive
may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided above,
Executive shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Executive only to the extent and in the manner expressly provided above or in
paragraph 11 hereof. All other rights and obligations of the Company and
Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the Company's
failure to pay Executive on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 15 below, the Company shall pay all amounts and damages
to which Executive may be entitled as a result of such breach, including
interest thereon and all reasonable legal fees and expenses and other costs
incurred by Executive to enforce his rights hereunder. Further, none of the
provisions of paragraph 3 hereof shall apply in the event this Agreement is
terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
6. INVENTIONS. Executive shall disclose promptly to the Company
any and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Executive, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of the Company and which Executive conceives as
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<PAGE> 8
a result of his employment by the Company. Executive hereby assigns and agrees
to assign all his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and warrants
to the Company that the execution of this Agreement by Executive and his
employment by the Company and the performance of his duties hereunder will not
violate or be a breach of any agreement with a former employer, client or any
other person or entity. Further, Executive agrees to indemnify the Company for
any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or may
hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
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10. ASSIGNMENT; BINDING EFFECT. Executive understands that he has
been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this Agreement
pursuant to subparagraph (c) below, Executive understands and acknowledges that
MarineMax may be merged or consolidated with or into another entity and that
such entity shall automatically succeed to the rights and obligations of
MarineMax hereunder or that MarineMax may undergo another type of Change in
Control. In the event such a merger or consolidation or other Change in Control
is initiated prior to the end of the Term, then the provisions of this paragraph
11 shall be applicable.
(b) In the event of a pending Change in Control wherein
MarineMax and/or the Company and Executive have not received written notice at
least five (5) business days prior to the anticipated closing date of the
transaction giving rise to the Change in Control from the successor to all or a
substantial portion of MarineMax's and/or the Company's business and/or assets
that such successor is willing as of the closing to assume and agree to perform
MarineMax's and/or the Company's obligations under this Agreement in the same
manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation, Executive may, at
his sole discretion, elect to terminate this Agreement by providing written
notice to the Company and MarineMax at least five (5) business days prior to the
anticipated closing of the transaction giving rise to the Change in Control. In
such case, the applicable provisions of paragraph 4(d) hereof will apply as
though the Company had terminated the Agreement without Good Cause during the
Term; however, under such circumstances, the amount of the lump-sum severance
payment due to Executive shall be double the amount calculated under the terms
of paragraph 4(d) hereof and the non-competition provisions of paragraph 3
hereof shall all apply for a period of one (1) year from the effective date of
termination.
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(d) For purposes of applying paragraph 4 hereof under the
circumstances described in (b) and (c) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change in Control
and all compensation, reimbursements and lump-sum payments due Executive must be
paid in full by the Company at or prior to such closing. Further, Executive will
be given sufficient time and opportunity to elect whether to exercise all or any
of his options to purchase MarineMax Common Stock, such that he may convert the
options to shares of MarineMax Common Stock at or prior to the closing of the
transaction giving rise to the Change in Control, if he so desires.
(e) A "Change in Control" 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 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 United States Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
which serve similar purposes; provided further that, without limitation, a
Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is made
whereby the effect of such offer is to take over and control MarineMax, and such
offer is consummated for the equity securities of MarineMax representing twenty
percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall approve
a merger, consolidation, recapitalization, or reorganization of MarineMax, a
reverse stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than any such
transaction which would result in at least seventy-five percent (75%) of the
total voting power represented by the voting securities of the surviving entity
outstanding immediately after such transaction being beneficially owned by at
least seventy-five percent (75%) of the holders of outstanding voting securities
of MarineMax immediately prior to the transaction, with the voting power of each
such continuing holder
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relative to other such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of MarineMax shall approve
a plan of complete liquidation of MarineMax or an agreement for the sale or
disposition by MarineMax of all or a substantial portion of MarineMax's assets
to another person or entity which is not a wholly-owned subsidiary of MarineMax
(i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock beneficially owned
or controlled by MarineMax shall not be considered in determining whether a
Change in Control has occurred. Notwithstanding the foregoing, none of
MarineMax's initial public offering or the concurrent mergers involving
MarineMax and its various wholly-owned subsidiaries and affiliates shall be
deemed to be a Change in Control.
(g) Executive shall be notified in writing by MarineMax
at any time that MarineMax or any member of its Board anticipates that a Change
in Control may take place.
(h) In the event that a Change in Control occurs and the
aggregate amount of any payments made to Executive hereunder, or pursuant to any
plan, program or policy of the Company in connection with, on account of, or as
a result of, such Change in Control constitutes "excess parachute payments" as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such excise tax, and (ii) the federal and state
income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Executive has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Executive and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This written Agreement may not be later modified
except by a further writing signed by a duly authorized officer of the Company
and Executive, and no term of this Agreement may be waived except by writing
signed by the party waiving the benefit of such term. This Agreement hereby
supersedes any other employment agreements or understandings, written or oral,
between the Company and/or MarineMax and Executive.
13. NOTICE. Whenever any notice is required hereunder, it shall be
given in
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writing addressed as follows:
To the Company: Harrison's Marine Centers of Arizona, Inc.
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: Richard C. LaManna III
1840 E. Broadway Road
Tempe, Arizona 85285
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall be
submitted to binding arbitration (except for claims arising out of paragraphs 3
or 7 hereof), initiated by either Claimant or Respondent pursuant to this
paragraph. Such arbitration shall be conducted before a panel of three (3)
arbitrators in Tampa, Florida, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") then in effect provided that the parties may agree to use arbitrators
other
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than those provided by the AAA. The arbitrators shall not have the authority to
add to, detract from, or modify any provision hereof nor to award punitive
damages to any injured party. The arbitrators shall have the authority to order
back-pay, severance compensation, vesting of options (or cash compensation in
lieu of vesting of options), reimbursement of costs, including those incurred to
enforce this Agreement, and interest thereon in the event the arbitrators
determine that Executive was terminated without disability or without Good
Cause, as defined in paragraphs 4(b) and 4(c) hereof, respectively, or that the
Company has otherwise materially breached this Agreement. A decision by a
majority of the arbitration panel shall be final and binding. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. The direct
expense of any mediation or arbitration proceeding shall be borne by the
Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this Agreement for
the purpose of guaranteeing, and does hereby guarantee, the performance by the
Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive acknowledges
and agrees that the compensation and other benefits set forth in this Agreement
are and shall be in lieu of any compensation or other benefits that may
otherwise be payable to or on behalf of Executive pursuant to the terms of any
severance pay arrangement of the Company, MarineMax or any affiliate thereof, or
any other similar arrangement of the Company, MarineMax or any affiliates
thereof providing for benefits upon involuntary termination of employment.
18. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Arizona, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
HARRISON'S MARINE CENTERS OF
ARIZONA, INC.
By:/s/
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
MARINEMAX:
MARINEMAX, INC.
By:/s/
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
EXECUTIVE:
/s/
-----------------------------------------
RICHARD C. LAMANNA III
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<PAGE> 1
Exhibit 10.3.G
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among
Harrison's Marine Centers of Arizona, Inc., an Arizona corporation (the
"Company"), and a wholly-owned subsidiary of MarineMax, Inc., a Delaware
corporation ("MarineMax"), MarineMax, and Darrell C. LaManna ("Executive") is
entered into and effective as of the _____ day of ____________, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience is such business.
B. Executive desires to be employed hereunder by the Company
in a confidential relationship wherein Executive, in the course of his
employment with the Company, has and will continue to become familiar with and
aware of information as to the customers of the Company and those of other
companies affiliated with MarineMax, their specific manner of doing business,
including, without limitation, the processes, techniques and trade secrets
utilized by the Company and MarineMax, and their future plans with respect
thereto, all of which has been and will be established and maintained at great
expense to the Company and MarineMax; such information being recognized by
Executive to be proprietary to the Company and MarineMax, and a trade secret and
constituting valuable goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive
desires to accept such employment, pursuant to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each, it
is hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and
Executive hereby agrees to act, as Vice President of the Company, and as Vice
President of Company's parent, MarineMax. As such, Executive shall have
responsibilities, duties and authority reasonably accorded to, expected of, and
consistent with Executive's position as, Vice President of the Company and will
report directly to the Board of Directors of the Company (the "Board").
Executive hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote his best
efforts and substantially all of his business time and attention to promote and
further the business of the Company and MarineMax.
<PAGE> 2
(b) Executive shall faithfully adhere to, execute and
fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the Company or
in the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by Executive, the
Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the base
salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by a committee of the
Board based upon such factors as may deemed relevant by the Board, in its sole
discretion, including, without limitation, the performance of Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage for
Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
(ii) Reimbursement for business travel and
other out-of-pocket expenses reasonably incurred by Executive in the performance
of his services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail
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<PAGE> 3
by Executive upon submission of any request for reimbursement, and in a format
and manner consistent with the Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive
with other executive perquisites as may be available to or deemed appropriate
for Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that
time, within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which
is, at that time, or which has been, within one (1) year prior to that time, a
customer of the Company, MarineMax or any of the subsidiaries of MarineMax,
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company, MarineMax or its subsidiaries
within the Territory;
(iv) call upon any prospective acquisition
candidate, on Executive's own behalf or on behalf of any competitor, which
candidate was, to Executive's actual knowledge after due inquiry, either called
upon by the Company or MarineMax, or for
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<PAGE> 4
which the Company or MarineMax made an acquisition analysis, for the purpose of
acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring for investment purposes only not
more than three percent (3%) of the capital stock of a competing business, whose
stock is traded on a national securities exchange or on an over-the-counter or
similar market.
(b) Because of the difficulty of measuring economic
losses to the Company and MarineMax as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company and MarineMax for which they would have no other adequate
remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the Company or MarineMax, as the case
may be (including MarineMax's other subsidiaries) on the date of the execution
of this Agreement and the current plans of MarineMax (including MarineMax's
other subsidiaries); but it is also the intent of the Company and Executive that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and MarineMax, as the case may
be (including MarineMax's other subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment of
Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company or
MarineMax (including MarineMax's other subsidiaries), or similar activities or
business in locations the operation of which, under such circumstances, does not
violate clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Executive's obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the Company or MarineMax
(including MarineMax's other subsidiaries) shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
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<PAGE> 5
(d) The covenants in this paragraph 3 are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against the
Company or MarineMax, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by MarineMax or the Company of such
covenants. It is specifically agreed that the period of two (2) years following
termination of employment stated at the beginning of this paragraph 3, during
which the agreements and covenants of Executive made in this paragraph 3 shall
be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall immediately
terminate this Agreement with no severance compensation due to Executive's
estate.
(b) DISABILITY. If, as a result of incapacity due to
physical or mental illness or injury, Executive shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the end
of such six (6) month period, but which shall not be effective earlier than the
last day of such six (6) month period), the Company may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall have concurred in the
conclusion of Executive's doctor. In the event this Agreement is terminated as a
result of Executive's disability, Executive shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base
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<PAGE> 6
salary at the rate then in effect for the lesser of the time period then
remaining under the Term of this Agreement or for one (1) year.
(c) GOOD CAUSE. The Company may terminate this
Agreement ten (10) days after written notice to Executive for "Good Cause,"
which shall mean any one or more of the following: (1) Executive's willful,
material and irreparable breach of this Agreement; (2) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder; (3) Executive's willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company or MarineMax which materially and adversely affects the operations or
reputation of the Company or MarineMax; (4) Executive's conviction of a felony
crime; or (5) confirmed positive illegal drug test result. In the event of a
termination for Good Cause, as enumerated above, Executive shall have no right
to any severance compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any time
after the commencement of employment, Executive may, without cause, and without
Good Reason terminate this Agreement and Executive's employment, effective
thirty (30) days after written notice is provided to the Company. Executive may
only be terminated without Good Cause by the Company during the Term hereof if
such termination is approved by a majority of the members of the Board of
Directors of MarineMax, excluding Executive if Executive is a member of such
Board of Directors. Should Executive be terminated by the Company without Good
Cause or should Executive terminate with Good Reason during the Term, Executive
shall receive from the Company, on such dates as would otherwise be paid by the
Company, the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for one (1) year, whichever amount
is greater. Further, if Executive is terminated without Good Cause or terminates
his employment hereunder with Good Reason, (a) the Company shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination, (b) the Executive shall be entitled to receive a
prorated portion of any annual bonus and other incentive compensation to which
the Executive would have been entitled for the year during which the termination
occurred had the Executive not been terminated, (c) all options to purchase
MarineMax Common Stock shall vest thereupon, and (d) the Executive shall be
entitled to receive all other unpaid benefits due and owing through Executive's
last day of employment. Further, any termination without Good Cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) hereof
and during which the terms of paragraph 3 hereof apply to one (1) year from the
date of termination of employment. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating his
employment pursuant to this paragraph 5(d), Executive shall receive no severance
compensation.
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<PAGE> 7
Executive shall have "Good Reason" to terminate this Agreement
and his employment hereunder upon the occurrence of any of the following events:
(a) Executive is demoted by means of a reduction in authority, responsibilities
or duties to a position of less stature or importance within the Company than
the position described in paragraph 1 hereof; or (b) Executive's annual base
salary as determined pursuant to paragraph 2 hereof is reduced to a level that
is less than eighty percent (80%) of the base salary paid to Executive during
any prior contract year under this Agreement, unless Executive has agreed in
writing to that demotion or reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the event of a
"Change in Control" (as defined below) of MarineMax during the Term, Executive
may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided
above, Executive shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Executive only to the extent and in the manner expressly provided
above or in paragraph 11 hereof. All other rights and obligations of the Company
and Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 15 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce his rights hereunder. Further,
none of the provisions of paragraph 3 hereof shall apply in the event this
Agreement is terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
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6. INVENTIONS. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one (1) year thereafter, and which are directly
related to the business or activities of the Company and which Executive
conceives as a result of his employment by the Company. Executive hereby assigns
and agrees to assign all his interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive and
his employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
8
<PAGE> 9
may hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that he
has been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this
Agreement pursuant to subparagraph (c) below, Executive understands and
acknowledges that MarineMax may be merged or consolidated with or into another
entity and that such entity shall automatically succeed to the rights and
obligations of MarineMax hereunder or that MarineMax may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a pending Change in Control
wherein MarineMax and/or the Company and Executive have not received written
notice at least five (5) business days prior to the anticipated closing date of
the transaction giving rise to the Change in Control from the successor to all
or a substantial portion of MarineMax's and/or the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform MarineMax's and/or the Company's obligations under this Agreement in the
same manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation, Executive
may, at his sole discretion, elect to terminate this Agreement by providing
written notice to the Company and MarineMax at least five (5) business days
prior to the anticipated closing of the transaction giving rise to the Change in
Control. In such case, the applicable provisions of paragraph 4(d) hereof will
apply as though the Company had terminated the Agreement without Good Cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Executive shall be double the amount calculated under
the terms of paragraph
9
<PAGE> 10
4(d) hereof and the non-competition provisions of paragraph 3 hereof shall all
apply for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 4 hereof under
the circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments due
Executive must be paid in full by the Company at or prior to such closing.
Further, Executive will be given sufficient time and opportunity to elect
whether to exercise all or any of his options to purchase MarineMax Common
Stock, such that he may convert the options to shares of MarineMax Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" 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 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 United States
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control MarineMax, and
such offer is consummated for the equity securities of MarineMax representing
twenty percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall
approve a merger, consolidation, recapitalization, or reorganization of
MarineMax, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least seventy-five
percent (75%) of the total voting power represented by the voting securities of
the surviving
10
<PAGE> 11
entity outstanding immediately after such transaction being beneficially owned
by at least seventy-five percent (75%) of the holders of outstanding voting
securities of MarineMax 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
(iv) the stockholders of MarineMax shall
approve a plan of complete liquidation of MarineMax or an agreement for the sale
or disposition by MarineMax of all or a substantial portion of MarineMax's
assets to another person or entity which is not a wholly-owned subsidiary of
MarineMax (i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock beneficially
owned or controlled by MarineMax shall not be considered in determining whether
a Change in Control has occurred. Notwithstanding the foregoing, none of
MarineMax's initial public offering or the concurrent mergers involving
MarineMax and its various wholly-owned subsidiaries and affiliates shall be
deemed to be a Change in Control.
(g) Executive shall be notified in writing by
MarineMax at any time that MarineMax or any member of its Board anticipates that
a Change in Control may take place.
(h) In the event that a Change in Control occurs and
the aggregate amount of any payments made to Executive hereunder, or pursuant to
any plan, program or policy of the Company in connection with, on account of, or
as a result of, such Change in Control constitutes "excess parachute payments"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such excise tax, and (ii) the federal and state
income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving
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<PAGE> 12
the benefit of such term. This Agreement hereby supersedes any other employment
agreements or understandings, written or oral, between the Company and/or
MarineMax and Executive.
13. NOTICE. Whenever any notice is required hereunder, it
shall be given in writing addressed as follows:
To the Company: Harrison's Marine Centers of Arizona, Inc.
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: Darrell C. LaManna
2159 El Camino Avenue
Sacramento, California 95821
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement
is held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall be
submitted to binding arbitration (except for claims arising out of paragraphs
3 or 7 hereof),
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<PAGE> 13
initiated by either Claimant or Respondent pursuant to this paragraph. Such
arbitration shall be conducted before a panel of three (3) arbitrators in Tampa,
Florida, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association ("AAA") then in effect provided
that the parties may agree to use arbitrators other than those provided by the
AAA. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Executive was terminated without disability or without Good Cause, as defined in
paragraphs 4(b) and 4(c) hereof, respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any mediation or
arbitration proceeding shall be borne by the Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this Agreement
for the purpose of guaranteeing, and does hereby guarantee, the performance by
the Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive
acknowledges and agrees that the compensation and other benefits set forth in
this Agreement are and shall be in lieu of any compensation or other benefits
that may otherwise be payable to or on behalf of Executive pursuant to the terms
of any severance pay arrangement of the Company, MarineMax or any affiliate
thereof, or any other similar arrangement of the Company, MarineMax or any
affiliates thereof providing for benefits upon involuntary termination of
employment.
18. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Arizona, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
COMPANY:
HARRISON'S MARINE CENTERS OF
ARIZONA, INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
MARINEMAX:
MARINEMAX, INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
EXECUTIVE:
/s/
----------------------------------------
DARRELL C. LAMANNA
14
<PAGE> 1
Exhibit 10.3.H
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), by and among
Stovall Marine, Inc., a Georgia corporation (the "Company"), and a wholly-owned
subsidiary of MarineMax, Inc., a Delaware corporation ("MarineMax"), MarineMax,
and Paul Graham Stovall ("Executive") is entered into and effective as of the
_____ day of ____________, 1998.
RECITALS
A. As of the date of this Agreement, the Company is engaged
primarily in the business of selling, renting and leasing, boating, nautical and
other related lifestyle entertainment products and services, and related
activities (collectively, the "Watercraft Business"), and Executive has
experience in such business.
B. Executive desires to be employed hereunder by the Company
in a confidential relationship wherein Executive, in the course of his
employment with the Company, has and will continue to become familiar with and
aware of information as to the customers of the Company and those of other
companies affiliated with MarineMax, their specific manner of doing business,
including, without limitation, the processes, techniques and trade secrets
utilized by the Company and MarineMax, and their future plans with respect
thereto, all of which has been and will be established and maintained at great
expense to the Company and MarineMax; such information being recognized by
Executive to be proprietary to the Company and MarineMax, and a trade secret and
constituting valuable goodwill of the Company and MarineMax.
C. The Company desires to employ Executive, and Executive
desires to accept such employment, pursuant to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each, it
is hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive, and
Executive hereby agrees to act, as President of the Company, and as Senior Vice
President of Company's parent, MarineMax. As such, Executive shall have
responsibilities, duties and authority reasonably accorded to, expected of, and
consistent with Executive's position as, President of the Company and will
report directly to the Board of Directors of the Company (the "Board").
Executive hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote his best
efforts and substantially all of his business time and attention to promote and
further the business of the Company and MarineMax.
<PAGE> 2
(b) Executive shall faithfully adhere to, execute and
fulfill all lawful policies established by the Company.
(c) Executive shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage if such activity interferes in any
material respect with Executive's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of paragraph 3 hereof.
(d) Executive shall not be required by the Company or
in the performance of his duties to relocate his primary residence.
2. COMPENSATION. For all services rendered by Executive, the
Company shall compensate Executive as follows:
(a) BASE SALARY. Effective the date hereof, the base
salary payable to Executive shall be One Hundred Fifty Thousand Dollars
($150,000.00) per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly. On at least an
annual basis, the Board will review Executive's performance and may make
increases to such base salary if, in its sole discretion, any such increase is
warranted. In no event shall Executive's base salary be reduced to a level below
One Hundred Fifty Thousand Dollars ($150,000.00).
(b) BONUS. Executive shall be eligible to receive an
annual bonus in such an amount, if any, to be determined by a committee of the
Board based upon such factors as may deemed relevant by the Board, in its sole
discretion, including, without limitation, the performance of Executive.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER
COMPENSATION. Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as specified
below:
(i) Payment of all premiums for coverage for
Executive and his dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company may have in
effect from time to time, benefits provided to Executive under this clause (i)
to be on terms no less favorable than the benefits provided to other MarineMax
executives at comparable levels of employment.
<PAGE> 3
(ii) Reimbursement for business travel and
other out-of-pocket expenses reasonably incurred by Executive in the performance
of his services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Executive upon submission of
any request for reimbursement, and in a format and manner consistent with the
Company's expense reporting policy.
(iii) Paid vacation in accordance with the
applicable policy of the Company as in effect from time to time, but in no event
shall Executive be entitled to less than four (4) weeks paid vacation per year.
(iv) The Company shall provide Executive
with other executive perquisites as may be available to or deemed appropriate
for Executive by the Board and participation in all other Company-wide employee
benefits as are available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Executive will not, during the period of his
employment by or with the Company, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any reason
whatsoever, other than a termination by the Company without Good Cause, or by
Executive for Good Reason (as hereinafter defined), directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director,
shareholder, owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any Watercraft Business in direct competition with the
Company, MarineMax or any of the subsidiaries of MarineMax, within one hundred
(100) miles of where the Company, MarineMax or any of MarineMax's subsidiaries
conducts business, including any territory serviced by the Company or MarineMax
or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that
time, within the Territory, an employee of the Company, MarineMax or any of the
subsidiaries of MarineMax, in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the Company,
MarineMax or the applicable subsidiary thereof;
(iii) call upon any person or entity which
is, at that time, or which has been, within one (1) year prior to that time, a
customer of the Company, MarineMax or any of the subsidiaries of MarineMax,
within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company, MarineMax or its subsidiaries
within the Territory;
<PAGE> 4
(iv) call upon any prospective acquisition
candidate, on Executive's own behalf or on behalf of any competitor, which
candidate was, to Executive's actual knowledge after due inquiry, either called
upon by the Company or MarineMax, or for which the Company or MarineMax made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring for investment purposes only not
more than three percent (3%) of the capital stock of a competing business, whose
stock is traded on a national securities exchange or on an over-the-counter or
similar market.
(b) Because of the difficulty of measuring economic
losses to the Company and MarineMax as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company and MarineMax for which they would have no other adequate
remedy, Executive agrees that the foregoing covenant may be enforced by
MarineMax or the Company in the event of breach by him, by injunctions and
restraining orders.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the Company or MarineMax, as the case
may be (including MarineMax's other subsidiaries) on the date of the execution
of this Agreement and the current plans of MarineMax (including MarineMax's
other subsidiaries); but it is also the intent of the Company and Executive that
such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and MarineMax, as the case may
be (including MarineMax's other subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment of
Executive. For example, if, during the term of this Agreement, the Company or
MarineMax, as the case may be (including MarineMax's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Executive will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within one hundred
(100) miles of its then-established operating location(s) through the term of
this covenant.
It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company or
MarineMax (including MarineMax's other subsidiaries), or similar activities or
business in locations the operation of which, under such circumstances, does not
violate clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Executive's obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the
<PAGE> 5
Company or MarineMax (including MarineMax's other subsidiaries) shall thereafter
enter the same, similar or a competitive (i) business, (ii) course of activities
or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against the
Company or MarineMax, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by MarineMax or the Company of such
covenants. It is specifically agreed that the period of two (2) years following
termination of employment stated at the beginning of this paragraph 3, during
which the agreements and covenants of Executive made in this paragraph 3 shall
be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this paragraph 3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for five (5) years, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis (the "Term") on the same terms and conditions contained
herein in effect as of the time of renewal. This Agreement and Executive's
employment may be terminated in any one of the followings ways:
(a) DEATH. The death of Executive shall immediately
terminate this Agreement with no severance compensation due to Executive's
estate.
(b) DISABILITY. If, as a result of incapacity due to
physical or mental illness or injury, Executive shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur before or after the end
of such six (6) month period, but which shall not be effective earlier than the
last day of such six (6) month period), the Company may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall
<PAGE> 6
have concurred in the conclusion of Executive's doctor. In the event this
Agreement is terminated as a result of Executive's disability, Executive shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
the lesser of the time period then remaining under the Term of this Agreement or
for one (1) year.
(c) GOOD CAUSE. The Company may terminate this
Agreement ten (10) days after written notice to Executive for "Good Cause,"
which shall mean any one or more of the following: (1) Executive's willful,
material and irreparable breach of this Agreement; (2) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder; (3) Executive's willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company or MarineMax which materially and adversely affects the operations or
reputation of the Company or MarineMax; (4) Executive's conviction of a felony
crime; or (5) confirmed positive illegal drug test result. In the event of a
termination for Good Cause, as enumerated above, Executive shall have no right
to any severance compensation.
(d) WITHOUT GOOD CAUSE; GOOD REASON. At any time
after the commencement of employment, Executive may, without cause, and without
Good Reason terminate this Agreement and Executive's employment, effective
thirty (30) days after written notice is provided to the Company. Executive may
only be terminated without Good Cause by the Company during the Term hereof if
such termination is approved by a majority of the members of the Board of
Directors of MarineMax, excluding Executive if Executive is a member of such
Board of Directors. Should Executive be terminated by the Company without Good
Cause or should Executive terminate with Good Reason during the Term, Executive
shall receive from the Company, on such dates as would otherwise be paid by the
Company, the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for one (1) year, whichever amount
is greater. Further, if Executive is terminated without Good Cause or terminates
his employment hereunder with Good Reason, (a) the Company shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination, (b) the Executive shall be entitled to receive a
prorated portion of any annual bonus and other incentive compensation to which
the Executive would have been entitled for the year during which the termination
occurred had the Executive not been terminated, (c) all options to purchase
MarineMax Common Stock shall vest thereupon, and (d) the Executive shall be
entitled to receive all other unpaid benefits due and owing through Executive's
last day of employment. Further, any termination without Good Cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) hereof
and during which the terms of paragraph 3 hereof apply to one (1) year from the
date of termination of employment. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating his
employment pursuant to this paragraph 5(d), Executive shall receive no severance
compensation.
<PAGE> 7
Executive shall have "Good Reason" to terminate this Agreement
and his employment hereunder upon the occurrence of any of the following events:
(a) Executive is demoted by means of a reduction in authority, responsibilities
or duties to a position of less stature or importance within the Company than
the position described in paragraph 1 hereof; or (b) Executive's annual base
salary as determined pursuant to paragraph 2 hereof is reduced to a level that
is less than eighty percent (80%) of the base salary paid to Executive during
any prior contract year under this Agreement, unless Executive has agreed in
writing to that demotion or reduction.
(e) CHANGE IN CONTROL OF MARINEMAX. In the event of a
"Change in Control" (as defined below) of MarineMax during the Term, Executive
may terminate this Agreement as provided in paragraph 11 below.
Upon termination of this Agreement for any reason provided
above, Executive shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Executive only to the extent and in the manner expressly provided
above or in paragraph 11 hereof. All other rights and obligations of the Company
and Executive under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 8 hereof and
Executive's obligations under paragraphs 3, 5, 6, 7 and 9 hereof shall survive
such termination in accordance with their terms.
If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 15 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce his rights hereunder. Further,
none of the provisions of paragraph 3 hereof shall apply in the event this
Agreement is terminated as a result of a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of the Company,
MarineMax or their representatives, vendors or customers which pertain to the
business of the Company or MarineMax shall be and remain the property of the
Company or MarineMax, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or MarineMax which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment.
<PAGE> 8
6. INVENTIONS. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one (1) year thereafter, and which are directly
related to the business or activities of the Company and which Executive
conceives as a result of his employment by the Company. Executive hereby assigns
and agrees to assign all his interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or
after the period of employment under this Agreement, disclose the specific terms
of the Company's or MarineMax's relationships or agreements with their
respective significant vendors or customers, or any other significant and
material trade secret of the Company or MarineMax, whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
8. INDEMNIFICATION. In the event Executive is made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
or MarineMax against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Company are made a party to the same third-party action, complaint, suit or
proceeding, the Company agrees to engage competent legal representation, and
Executive agrees to use the same representation, provided that if counsel
selected by the Company shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Company shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company or MarineMax for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and misconduct
or performed criminal and fraudulent acts which materially damage the business
of the Company or MarineMax.
9. NO PRIOR AGREEMENTS. Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive and
his employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
<PAGE> 9
may hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Executive and
such third party which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that he
has been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless Executive elects to terminate this
Agreement pursuant to subparagraph (c) below, Executive understands and
acknowledges that MarineMax may be merged or consolidated with or into another
entity and that such entity shall automatically succeed to the rights and
obligations of MarineMax hereunder or that MarineMax may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a pending Change in Control
wherein MarineMax and/or the Company and Executive have not received written
notice at least five (5) business days prior to the anticipated closing date of
the transaction giving rise to the Change in Control from the successor to all
or a substantial portion of MarineMax's and/or the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform MarineMax's and/or the Company's obligations under this Agreement in the
same manner and to the same extent that MarineMax and/or the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by MarineMax and/or the Company without Good Cause
during the Term and the applicable portions of paragraph 4(d) hereof will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be triple the amount calculated under the terms of
paragraph 4(d) hereof and the non-competition provisions of paragraph 3 hereof
shall not apply whatsoever.
(c) In any Change in Control situation, Executive
may, at his sole discretion, elect to terminate this Agreement by providing
written notice to the Company and MarineMax at least five (5) business days
prior to the anticipated closing of the transaction giving rise to the Change in
Control. In such case, the applicable provisions of paragraph 4(d) hereof will
apply as though the Company had terminated the Agreement without Good Cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Executive shall be double the amount calculated under
the terms of paragraph
<PAGE> 10
4(d) hereof and the non-competition provisions of paragraph 3 hereof shall all
apply for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 4 hereof under
the circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to the
Change in Control and all compensation, reimbursements and lump-sum payments due
Executive must be paid in full by the Company at or prior to such closing.
Further, Executive will be given sufficient time and opportunity to elect
whether to exercise all or any of his options to purchase MarineMax Common
Stock, such that he may convert the options to shares of MarineMax Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" 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 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 United States
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer
constitute a majority of the members of the Board of Directors of MarineMax: (A)
the individuals who, as of the closing date of MarineMax's initial public
offering, constitute the Board of Directors of MarineMax (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board of
Directors of MarineMax and whose election, or nomination for election, to the
Board of Directors of MarineMax was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election); and (C)
the individuals who are elected to the Board of Directors of MarineMax and whose
election, or nomination for election, to the Board of Directors of MarineMax was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control MarineMax, and
such offer is consummated for the equity securities of MarineMax representing
twenty percent (20%) or more of the combined voting power of MarineMax's then
outstanding voting securities;
(iii) the stockholders of MarineMax shall
approve a merger, consolidation, recapitalization, or reorganization of
MarineMax, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least seventy-five
percent (75%) of the total voting power represented by the voting securities of
the surviving
<PAGE> 11
entity outstanding immediately after such transaction being beneficially owned
by at least seventy-five percent (75%) of the holders of outstanding voting
securities of MarineMax 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
(iv) the stockholders of MarineMax shall
approve a plan of complete liquidation of MarineMax or an agreement for the sale
or disposition by MarineMax of all or a substantial portion of MarineMax's
assets to another person or entity which is not a wholly-owned subsidiary of
MarineMax (i.e., fifty percent (50%) or more of the total assets of MarineMax).
(f) Sales of MarineMax's Common Stock beneficially
owned or controlled by MarineMax shall not be considered in determining whether
a Change in Control has occurred. Notwithstanding the foregoing, none of
MarineMax's initial public offering or the concurrent mergers involving
MarineMax and its various wholly-owned subsidiaries and affiliates shall be
deemed to be a Change in Control.
(g) Executive shall be notified in writing by
MarineMax at any time that MarineMax or any member of its Board anticipates that
a Change in Control may take place.
(h) In the event that a Change in Control occurs and
the aggregate amount of any payments made to Executive hereunder, or pursuant to
any plan, program or policy of the Company in connection with, on account of, or
as a result of, such Change in Control constitutes "excess parachute payments"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such excise tax, and (ii) the federal and state
income taxes payable by the Executive with respect to any payments made to
Executive under this subparagraph (h). Such amount will be due and payable by
the Company or its successor within ten (10) days after Executive delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Executive.
12. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving
<PAGE> 12
the benefit of such term. This Agreement hereby supersedes any other employment
agreements or understandings, written or oral, between the Company and/or
MarineMax and Executive.
13. NOTICE. Whenever any notice is required hereunder, it
shall be given in writing addressed as follows:
To the Company: Stovall Marine, Inc.
c/o MarineMax, Inc.
18167 U.S. Highway 19 North, Suite 499
Clearwater, Florida 33764
Attention: President
To Executive: Paul Graham Stovall
Stovall Marine, Inc.
5840 I-75 South
Forest Park, Georgia 30030
Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement
is held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof.
15. MEDIATION; ARBITRATION. All disputes arising out of this
Agreement shall be resolved as set forth in this paragraph 15. If any party
hereto desires to make any claim arising out of this Agreement ("Claimant"),
then such party shall first deliver to the other party ("Respondent") written
notice ("Claim Notice") of Claimant's intent to make such claim explaining
Claimant's reasons for such claim in sufficient detail for Respondent to
respond. Respondent shall have ten (10) business days from the date the Claim
Notice was given to Respondent to object in writing to the claim ("Notice of
Objection"), or otherwise cure any breach hereof alleged in the Claim Notice.
Any Notice of Objection shall specify with particularity the reasons for such
objection. Following receipt of the Notice of Objection, if any, Claimant and
Respondent shall immediately seek to resolve by good faith negotiations the
dispute alleged in the Claim Notice, and may at the request of either party,
utilize the services of an independent mediator. If Claimant and Respondent are
unable to resolve the dispute in writing within ten (10) business days from the
date negotiations began, then without the necessity of further agreement of
Claimant or Respondent, the dispute set forth in the Claim Notice shall
<PAGE> 13
be submitted to binding arbitration (except for claims arising out of paragraphs
3 or 7 hereof), initiated by either Claimant or Respondent pursuant to this
paragraph. Such arbitration shall be conducted before a panel of three (3)
arbitrators in Tampa, Florida, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") then in effect provided that the parties may agree to use arbitrators
other than those provided by the AAA. The arbitrators shall not have the
authority to add to, detract from, or modify any provision hereof nor to award
punitive damages to any injured party. The arbitrators shall have the authority
to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Executive was terminated without disability or
without Good Cause, as defined in paragraphs 4(b) and 4(c) hereof, respectively,
or that the Company has otherwise materially breached this Agreement. A decision
by a majority of the arbitration panel shall be final and binding. Judgment may
be entered on the arbitrators' award in any court having jurisdiction. The
direct expense of any mediation or arbitration proceeding shall be borne by the
Company.
16. JOINDER OF MARINEMAX. MarineMax joins in this Agreement
for the purpose of guaranteeing, and does hereby guarantee, the performance by
the Company of its obligations to Executive hereunder.
17. NO PARTICIPATION IN SEVERANCE PLANS. Executive
acknowledges and agrees that the compensation and other benefits set forth in
this Agreement are and shall be in lieu of any compensation or other benefits
that may otherwise be payable to or on behalf of Executive pursuant to the terms
of any severance pay arrangement of the Company, MarineMax or any affiliate
thereof, or any other similar arrangement of the Company, MarineMax or any
affiliates thereof providing for benefits upon involuntary termination of
employment.
18. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Georgia, notwithstanding the
conflict of laws provisions of such state.
19. COUNTERPARTS; FACSIMILE. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
COMPANY:
STOVALL MARINE, INC., a Georgia
corporation
By: /s/
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
MARINEMAX:
MARINEMAX, INC., a Delaware
corporation
By: /s/
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
EXECUTIVE:
/s/
----------------------------------------
Paul Graham Stovall
<PAGE> 1
Exhibit 10.4
MARINEMAX, INC. 1998 INCENTIVE STOCK PLAN
ADOPTED BY THE BOARD OF DIRECTORS AS OF APRIL 5, 1998
APPROVED BY THE STOCKHOLDERS AS OF APRIL 30, 1998
1. PURPOSE. The purpose of this 1998 Incentive Stock Plan (the "Plan") is
to attract, retain and motivate employees, directors and independent
contractors by providing them with the opportunity to acquire a proprietary
interest in MARINEMAX, INC. (the "Company") and to link their interests and
efforts to the long-term interests of the Company's stockholders.
2. PLAN ADMINISTRATION
2.1 IN GENERAL. The Plan shall be administered by the Company's Board
of Directors (the "Board"). Except for the power to amend the Plan as provided
in Section 12, the Board, in its sole discretion, may delegate its authority and
duties under the Plan to a committee appointed by the Board, under such
conditions and limitations as the Board may from time to time establish. The
Board and/or any committee that has been delegated the authority to administer
the Plan shall be referred to as the "Plan Administrator". Except as otherwise
explicitly set forth in the Plan, the Plan Administrator shall have the
authority, in its discretion, to determine all matters relating to awards under
the Plan, including the selection of the individuals to be granted awards, the
type of awards, the number of shares of the Company's common stock ("Common
Stock") subject to an award, vesting conditions, and any and all other terms,
conditions, restrictions and limitations, if any, of an award. All decisions
made by the Plan Administrator pursuant to the Plan and related orders and
resolutions shall be final and conclusive.
2.2 RULE 16b-3 AND CODE SECTION 162(m). Notwithstanding any provision
of this Plan to the contrary, only the Board or a committee composed of two or
more "Non-Employee Directors" may make determinations regarding grants of awards
to officers, directors and 10% stockholders of the Company. (The term
"Non-Employee Directors" shall have the meaning set forth in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "1934
Act")). The Plan Administrator shall have the authority and discretion to
determine the extent to which awards will conform to the requirements of Section
162(m) Internal Revenue Code of 1986, as amended (the "Code"), and to take such
action, establish such procedures, and impose such restrictions as the Plan
Administrator determines to be necessary or appropriate to conform to such
requirements.
2.3 OTHER PLANS. The Plan Administrator shall also have authority to
grant awards as an alternative to or as the form of payment for grants or rights
earned or due under other compensation plans or arrangements of the Company,
including the plan of any entity acquired by the Company.
3. ELIGIBILITY. Any employee of the Company shall be eligible to receive
any award under the Plan. Directors who are not employees, proposed directors,
proposed employees and independent contractors shall be eligible to receive
awards other than Incentive Stock Options (as defined in Section 5.2). For
purposes of this Section 3, the "Company," with respect to all awards under the
Plan other than Incentive Stock Options, includes any entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Plan Administrator. With
respect to Incentive Stock Options, the "Company" includes any parent or
subsidiary of the Company as defined in Section 424 of the Code.
4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER AND SOURCE. The shares offered under the Plan shall be
shares of Common Stock and may be unissued shares or shares now held or
subsequently acquired by the Company as treasury shares, as the Plan
Administrator may from time to time determine. Subject to adjustment as provided
in Section 4.3, the aggregate number of shares that may be issued under the Plan
shall not exceed 4,000,000 shares; provided, however that awards shall not be
granted under the Plan if, at the time of such grant, the aggregate number of
shares of Stock that have been or may be issued under previously granted awards
or options under the Plan equal or exceed 15% of the total number of outstanding
shares at such time. The aggregate number of shares that may be covered by
awards granted to any one individual in any year shall not exceed 50% of the
total number of shares that may be issued under the Plan.
<PAGE> 2
4.2 SHARES AVAILABLE. Any shares subject to an award granted under
the Plan that is forfeited, terminated or canceled, or any shares that do not
vest, shall again be available for the granting of awards under the Plan. If a
stock appreciation right is settled in cash, the shares covered by such award
shall remain available for the granting of other awards. The payment of cash
dividends and dividend equivalents paid in cash in conjunction with outstanding
awards shall not be counted against the shares available for issuance.
4.3 ADJUSTMENT OF SHARES AVAILABLE. The aggregate number and type of
shares available for awards under the Plan, the maximum number and type of
shares that may be subject to awards to any individual under the Plan, the
number and type of shares covered by each outstanding award, and the exercise
price per share (but not the total price) for stock options, stock appreciation
rights or similar awards outstanding under the Plan shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from any split-up, combination or exchange of shares,
consolidation, spin-off or recapitalization of shares or any like capital
adjustment or the payment of any stock dividend.
4.4 TRANSFER OF CONTROL. In the event of a Transfer of Control, the
surviving, continuing, successor or purchasing corporation or parent corporation
thereof, as the case may be (the "Acquiring Corporation") shall either assume
the Company's rights and obligations under outstanding awards or substitute for
outstanding awards substantially equivalent awards for the Acquiring
Corporation's stock. In the event the Acquiring Corporation elects not to assume
or substitute for such outstanding awards in connection with the Transfer of
Control, the Board may, in its discretion, provide that any unexercisable and/or
unvested portion of the outstanding awards shall be immediately exercisable and
vested in full on or before the date of the Transfer of Control. The exercise
and/or vesting of any award that was permissible solely by reason of this
Section 4.4 shall be conditioned upon the consummation of the Transfer of
Control. Any awards that are neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised on or
before the date of the Transfer of Control shall terminate and cease to be
outstanding effective as of the date of the Transfer of Control. Unless
otherwise determined by the Board, a "Transfer of Control" shall be deemed to
have occurred in the event of any of the following: (a) the direct or indirect
sale or exchange by the stockholders of the Company of all or substantially all
of the stock of the Company if the stockholders of the Company before such sale
or exchange do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such sale or
exchange; (b) a merger or consolidation if the stockholders of the Company
before such merger or consolidation do not retain, directly or indirectly, at
least a majority of the beneficial interest in the voting stock of the Company
after such merger or consolidation (regardless of whether the Company is the
surviving corporation); (c) the sale, exchange or transfer of all or
substantially all of the assets of the Company; or (d) a liquidation or
dissolution of the Company.
5. AWARDS
5.1 TYPES OF AWARDS. Subject to the Plan, the Plan Administrator
shall have the authority, in its sole discretion, to determine the type or types
of awards to be granted to employees, directors and independent contractors
under the Plan. Such awards may include, but are not limited to, Incentive Stock
Options, Nonqualified Stock Options (as defined in Section 5.2), stock
appreciation rights or restricted stock awards. Such awards may be granted
either alone, in addition to or in tandem with any other type of award granted
under the Plan.
5.2 STOCK OPTIONS. The Plan Administrator may grant stock options,
designated as "Incentive Stock Options," which comply with the provisions of
Section 422 of the Code or any successor statutory provision, or "Nonqualified
Stock Options." The price for which shares may be purchased upon exercise of a
particular option shall be determined by the Plan Administrator; however, the
exercise price of an Incentive Stock Option shall not be less than 100% of the
Fair Market Value of such shares on the date such option is granted (110% if
options are intended to be Incentive Stock Options and are granted to a
stockholder who at the time the option is granted owns or is deemed to own stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary of the Company). For
purposes of the Plan, "Fair Market Value" as to a particular day equals the per
share closing price for the Common Stock as reported for the prior trading day
in the Wall Street Journal or in such other source as the Plan Administrator
deems reliable. The Plan Administrator shall set the term of each stock option,
but no Incentive Stock Option shall be exercisable more than 10 years after the
date such option is granted and, to the extent the aggregate Fair Market Value
(determined as of the date the option is granted) of Common Stock with respect
to which Incentive Stock Options granted to a
2
<PAGE> 3
particular individual become exercisable for the first time during any calendar
year (under the Plan and all other stock option plans of the Company) exceeds
$100,000 (or such corresponding amount as may be set by the Code) such options
shall be treated as Nonqualified Stock Options. An optionholder and the Plan
Administrator can agree at any time to convert an Incentive Stock Option to a
Nonqualified Stock Option.
5.3 STOCK APPRECIATION RIGHTS. The Plan Administrator may grant
stock appreciation rights, either in tandem with a stock option granted under
the Plan or with respect to a number of shares for which an option is not
granted. A stock appreciation right shall entitle the holder to receive, with
respect to each share of stock as to which the right is exercised, payment in an
amount equal to the excess of the share's Fair Market Value on the date the
right is exercised over its Fair Market Value on the date the right was granted.
Such payment may be made in cash or in shares of Common Stock valued at Fair
Market Value as of the date of the surrender, or partly in cash and partly in
shares of Common Stock, as determined by the Plan Administrator in its sole
discretion. The Plan Administrator may establish a maximum appreciation value
payable for stock appreciation rights.
5.4 RESTRICTED STOCK AWARDS. The Plan Administrator may grant
restricted stock awards under the Plan in Common Stock or denominated in units
of Common Stock. The Plan Administrator, in its discretion, may make such awards
subject to conditions and restrictions, as set forth in the instrument
evidencing the award, which may be based on continuous service with the Company
or the attainment of certain performance goals related to profits, profit
growth, profit-related return ratios, cash flow or shareholder returns, where
such goals may be stated in absolute terms or relative to comparison companies
or indices to be achieved during a period of time. The Plan Administrator may
choose, at the time of granting an award or at any time thereafter up to the
time of payment of the award, to include as part of such award an entitlement to
receive dividends or dividend equivalents, subject to such terms as the Plan
Administrator may establish. All dividends or dividend equivalents that are not
paid currently may, in the Plan Administrator's sole discretion, accrue interest
and be paid to the participant if, when and to the extent such award is paid.
5.5 PAYMENT; DEFERRAL. Awards granted under the Plan may be settled
through cash payments, the delivery of Common Stock (valued at Fair Market
Value) or the granting of awards or combinations thereof as the Plan
Administrator shall determine. Any award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits to
deferred stock unit equivalents.
5.6 INDIVIDUAL AWARD AGREEMENTS. Stock Options shall and other
awards may be evidenced by agreements between the Company and the recipient in
such form and content as the Plan Administrator from time to time approves,
which agreements shall substantially comply with and be subject to the terms of
the Plan. Such individual agreements may contain such provisions or conditions
as the Plan Administrator deems necessary or appropriate to effectuate the sense
and purpose of the Plan and may be amended from time to time in accordance with
the terms thereof.
6. AWARD EXERCISE
6.1 PRECONDITION TO STOCK ISSUANCE. No shares shall be delivered
pursuant to the exercise of any stock option or stock appreciation right, in
whole or in part, until qualified for delivery under such securities laws and
regulations as may be deemed by the Plan Administrator to be applicable thereto
and until, in the case of the exercise of an option, payment in full of the
option price thereof (in cash or stock as provided in Section 6.3) is received
by the Company. No holder of an option or stock appreciation right, or any legal
representative, legatee or distributee shall be or be deemed to be a holder of
any shares subject to such option or right unless and until such shares are
issued.
6.2 NO FRACTIONAL SHARES. No stock option may at any time be
exercised with respect to a fractional share. No fractional share shall be
issued with respect to a stock appreciation right; however, a fractional stock
appreciation right may be exercised for cash.
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6.3 FORM OF PAYMENT. An optionee may exercise a stock option using
as the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment
(as described below), (c) any combination of the above, or (d) such other means
as the Plan Administrator may approve. Any optionee who owns Common Stock may
use such shares as a form of payment to exercise stock options granted under the
Plan. The Plan Administrator, in its discretion, may restrict or rescind this
right by notice to optionees. A stock option may be exercised in such manner
only by tendering (actually or by attestation) to the Company whole shares of
Common Stock having a Fair Market Value equal to or less than the exercise
price. If an option is exercised by surrender of shares having a Fair Market
Value less than the exercise price, the optionholder must pay the difference in
cash.
7. AUTOMATIC GRANT PROGRAM
7.1 AMOUNT AND DATE OF GRANT. During the term of the Plan, the
Company shall make automatic grants of options ("Automatic Options") in the form
of Nonqualified Stock Options to each Board member ("Eligible Director") (or
proposed Board member pursuant to Section 7.1.3) who is not employed by the
Company, whether or not such person is a Non-Employee Director as referred to in
Section 2.2 as follows:
7.1.1 ANNUAL GRANTS. Each year on the Annual Grant Date, an
Automatic Option to acquire 2,500 shares of Common Stock shall be granted to
each Eligible Director for so long as shares of Common Stock are available under
Section 4.1 hereof. The "Annual Grant Date" shall be the date of the Company's
annual stockholders meeting commencing as of the first annual meeting occurring
after the date (the "Effective Date") the Plan is approved by the stockholders
of the Company. Any Eligible Director that was granted an Automatic Option under
Section 7.1.2 or Section 7.1.3 within 90 days of an Annual Grant Date shall be
ineligible to receive an Automatic Option pursuant to this Section 7.1.1 on such
Annual Grant Date.
7.1.2 INITIAL NEW DIRECTOR GRANTS. On the Initial Grant Date,
every new member of the Board, who is an Eligible Director and has not
previously received an Automatic Option under this Section 7.1.2 shall be
granted an Automatic Option to acquire 5,000 shares of Common Stock for so long
as shares of Common Stock are available under Section 4.1 hereof. The "Initial
Grant Date" shall be the date that an Eligible Director is first appointed or
elected to the Board. Any Eligible Director who previously received an Automatic
Option pursuant to Section 7.1.3 shall be ineligible to receive an Automatic
Option pursuant to this Section 7.1.2.
7.1.3 INITIAL PROPOSED DIRECTOR GRANTS. On the date that
shares of Common Stock first become registered under Section 12 of the 1934 Act,
the Company shall grant an Automatic Option to acquire 10,000 shares of Common
Stock to each non-employee whose election to the Board is proposed as of such
date .
7.2 EXERCISE PRICE. The exercise price per share of Common Stock
subject to each Automatic Option granted under Section 7.1.1 or Section 7.1.2
shall be equal to 100 percent of the Fair Market Value per share of the Common
Stock on the date such Automatic Option was granted as determined in accordance
with the valuation provisions of Section 5.2 hereof granted. The exercise price
per share of Common Stock subject to each Automatic Option granted under Section
7.1.3 shall be equal to the initial public offering price per share of Common
Stock.
7.3 VESTING. Each Automatic Option granted pursuant to Section 7.1.1
shall vest and become exercisable 12 months after the date of grant. Each
Automatic Option granted pursuant to Section 7.1.2 shall vest and become
exercisable in a series of three equal and successive installments with the
first installment vested on the date of grant and the next two installments 12
months and 24 months after the date of grant. Each Automatic Option granted
pursuant to Section 7.1.3 shall vest and become exercisable in a series of three
equal and successive installments with the first installment vested on the date
of the recipient's election to the Board and the next two installments 12 months
and 24 months after the date of grant. Each Automatic Option shall vest and
become exercisable only if the optionholder has not ceased serving as a Board
member as of such vesting date.
7.4 TERM OF AUTOMATIC OPTIONS. Each Automatic Option shall expire on
the tenth anniversary (the "Expiration Date") of the date on which such
Automatic Option was granted. Except as determined by the Plan Administrator,
should an Eligible Director's service as a Board member cease prior to the
Expiration Date for any reason while an Automatic Option remains outstanding and
unexercised, the Automatic Option term
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shall immediately be modified and the Automatic Option shall terminate and cease
to be outstanding in accordance with the following provisions:
7.4.1 The Automatic Option shall immediately terminate and
cease to be outstanding with respect to any shares that were not vested at the
time of the optionholder's cessation of Board service; provided, however, that a
proposed director who receives a grant pursuant to Section 7.1.3 shall not be
treated as ceasing to serve as a Board member for purposes of this Section 7
prior to such individual's election to the Board.
7.4.2 Should an optionholder cease, for any reason other than
death, to serve as a member of the Board, then the optionholder shall have 90
days measured from the date of such cessation of Board service in which to
exercise his or her Automatic Options that vested prior to the time of such
cessation of Board service. In no event, however, may any Automatic Option be
exercised after the Expiration Date of such Automatic Option.
7.4.3 Should an optionholder die while serving as a Board
member or within 90 days after cessation of Board service, then the personal
representative of the optionholder's estate (or the person or persons to whom
the Automatic Option is transferred pursuant to the optionholder's will or in
accordance with the laws of the descent and distribution) shall have a 90-day
period measured from the date of the optionholder's cessation of Board service
in which to exercise the Automatic Options that vested prior to the time of such
cessation of Board service. In no event, however, may any Automatic Option be
exercised after the Expiration Date of such Automatic Option.
7.5 OTHER TERMS. Except as expressly provided otherwise in this
Section 7, an Automatic Option shall be subject to all of the terms and
conditions of the Plan. Eligible Directors shall be entitled to receive other
awards under the Plan or other plans of the Company in accordance with the terms
and conditions thereof.
8. TRANSFERABILITY. Any Incentive Stock Option granted under the Plan
shall, during the recipient's lifetime, be exercisable only by such recipient,
and shall not be assignable or transferable by such recipient other than by will
or the laws of descent and distribution. Except as specifically allowed by the
Plan Administrator, any other award under the Plan and any of the rights and
privileges conferred thereby shall not be assignable or transferable by the
recipient other than by will or the laws of descent and distribution and such
award shall be exercisable during the recipient's lifetime only by the
recipient.
9. WITHHOLDING TAXES; OTHER DEDUCTIONS. The Company shall have the right
to deduct from any settlement of an award granted under the Plan, including the
delivery or vesting of shares, (a) an amount sufficient to cover withholding as
required by law for any federal, state or local taxes, and (b) any amounts due
from the recipient of such award to the Company or to any parent or subsidiary
of the Company or to take such other action as may be necessary to satisfy any
such withholding or other obligations, including withholding from any other cash
amounts due or to become due from the Company to such recipient an amount equal
to such taxes or obligations.
10. TERMINATION OF SERVICES. The terms and conditions under which an award
may be exercised following termination of a recipient's employment, directorship
or independent contractor relationship with the Company shall be determined by
the Plan Administrator; provided, however, that Incentive Stock Options shall
not be exercisable at any time after the earliest of the date that is (a) three
months after termination of employment, unless due to death or Disability (as
defined in Section 22(e)(3) of the Code); (b) one year after termination of
employment due to Disability; or (c) ten years after the date of grant.
11. TERM OF THE PLAN. The Plan shall become effective as of the date of
adoption by the Board, and shall remain in full force and effect through the
date that is ten years thereafter, unless sooner terminated by the Board. After
the Plan is terminated, no future awards may be granted, but awards previously
granted shall remain outstanding in accordance with their applicable terms and
conditions and the Plan's terms and conditions.
12. PLAN AMENDMENT. The Board may amend, suspend or terminate the Plan at
any time; provided that no such amendment shall be made without the approval of
the Company's stockholders (a) that would increase the number of shares
available for issuance under the Plan (other than in accordance with Section 4),
or (b) if such
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approval is required (i) to comply with Section 422 of the Code with respect to
Incentive Stock Options, or (ii) for purposes of Section 162(m) of the Code.
13. PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive
means by which the Company may issue awards to acquire its Common Stock.
14. BIFURCATION OF THE PLAN. Notwithstanding any provision of this Plan to
the contrary, the Board, in its sole discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
participants who are officers or directors subject to Section 16 of the 1934 Act
without so restricting, limiting or conditioning the Plan with respect to other
participants.
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Exhibit 10.5
MARINEMAX, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS AS OF APRIL 5, 1998
APPROVED BY THE SHAREHOLDERS AS OF APRIL 30, 1998
ARTICLE 1
PURPOSE
1.1 NAME. This Stock Purchase Plan shall be known as the MarineMax
1998 Employee Stock Purchase Plan (the "Plan").
1.2 PURPOSE. The Plan is intended to provide a method whereby employees of
MarineMax, Inc., a Delaware corporation (the "Company"), and one or more of its
Subsidiary Corporations will have an opportunity to acquire a proprietary
interest in the Company through the purchase of shares of the Common Stock of
the Company.
1.3 QUALIFICATION. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Code. The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
ARTICLE 2
DEFINITIONS
2.1 BASE PAY. "Base Pay" shall mean the estimated annual compensation of
an Employee and (a) with respect to a salaried Employee, shall be based on such
Employee's current annual salary and (b) with respect to a hourly Employee,
shall be based on such Employee's RHE times such Employee's regular
straight-time hourly rate. Shift premium, bonuses, "skill-based" pay, and other
special payments, commissions (unless such commissions represent the primary
source of compensation, as determined by the Committee) and other marketing
incentive payments shall not be included in Base Pay. For purpose of the
foregoing, "RHE" for a full-time Employee shall mean the sum of (a) 2080 and (b)
1.5 times the estimated number of overtime hours to be worked annually and "RHE"
for a part-time Employee shall mean 1040. If any Offering is a six-month
Offering, the Base Pay shall be divided by one-half.
2.2 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.3 CLOSING PRICE. "Closing Price" shall have the meaning set forth
in Section 6.2.
2.4 COMMITTEE. "Committee" shall have the meaning set forth in
Section 11.1.
2.5 EMPLOYEE. "Employee" shall mean any person who is customarily employed
on a full-time or part-time basis by the Company and is regularly scheduled to
work more than 20 hours per week.
2.6 OFFERING. "Offering" shall have the meaning set forth in Section
4.1.
2.7 OFFERING COMMENCEMENT DATE. "Offering Commencement Date" shall
have the meaning set forth in Section 4.1.
2.8 OFFERING TERMINATION DATE. "Offering Termination Date" shall
have the meaning set forth in Section 4.1.
2.9 OPTION. "Option" shall have the meaning set forth in Section 6.1.
2.10 OPTION PRICE. "Option Price" shall have the meaning set forth in
Section 6.2.
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2.11 PARTICIPATING COMPANY. "Participating Company" shall mean the
Company and such Subsidiary Corporations as may be designated from time to
time by the Board of Directors of the Company.
2.12 PARTICIPANT. "Participant" shall have the meaning set forth in
Section 3.4.
2.13 PARTICIPATION AMOUNT. "Participation Amount" shall have the
meaning set forth in Section 5.1.
2.14 STOCK. "Stock" shall mean the Common Stock of the Company, par
value one-tenth of one cent ($.001 per share).
2.15 SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean any
present or future corporation which would be a "subsidiary corporation" of
the Company, as that term is defined in Code Section 424.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 INITIAL ELIGIBILITY. Any Employee who shall have completed one year of
continuous employment with a Participating Company and is employed by a
Participating Company on the date such Employee's participation in the Plan is
to become effective shall be eligible to participate in Offerings under the Plan
that commence on or after such one-year employment period has concluded. Any
corporation that becomes a Subsidiary Corporation after the initial Offering
Commencement Date shall become a Participating Company only upon the decision of
the Board of Directors of the Company to designate such Subsidiary Corporation
as a Participating Company and to extend the benefits of the Plan to its
eligible Employees.
3.2 LEAVE OF ABSENCE. For purposes of participation in the Plan, a person
on leave of absence shall be deemed to be an Employee for the first 90 days of
such leave of absence and such Employee's employment shall be deemed to have
terminated at the close of business on the 90th day of such leave of absence
unless such Employee shall have returned to regular full-time or part-time
employment (as the case may be) prior to the close of business on such 90th day.
Termination by a Participating Company of any Employee's leave of absence, other
than termination of such leave of absence on return to full time or part time
employment, shall terminate an Employee's employment for all purposes of the
Plan and shall terminate such Employee's participation in the Plan and right to
exercise any Option.
3.3 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provision of
the Plan to the contrary, no Employee shall be granted an Option to
participate in the Plan:
(a) if, immediately after the grant, such Employee would own
Stock, and/or hold outstanding Options to purchase Stock, possessing five
percent or more of the total combined voting power or value of all classes of
Stock of the Company (for purposes of this paragraph, the rules of Section
424(d) of the Code shall apply in determining Stock ownership of any Employee);
or
(b) which permits such Employee's rights to purchase Stock
under all employee stock purchase plans of the Company and all Participating
Companies to accrue at a rate that exceeds $25,000 in fair market value of the
Stock (determined at the time such Option is granted) for each calendar year in
which such Option is outstanding.
3.4 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a
participant ("Participant") by completing the enrollment forms prescribed by the
Committee (including a purchase agreement and a payroll deduction authorization)
and filing such forms with the designated office of the Company prior to the
Offering Commencement Date for the next scheduled Offering. Payroll deductions
for a Participant shall commence on the next scheduled Offering Commencement
Date when such Participant's authorization for a payroll deduction becomes
effective and shall continue in effect for the term of this Plan, except to the
extent such payroll deduction is changed in accordance with this Section 3.4 or
terminated in accordance with Article VIII. Subject to Section 5.4, a
Participant may, at any time, increase or decrease the rate of, or cease, the
Participant's payroll
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deductions by filing the appropriate form with the designated office of the
Company and such change shall become effective as of the next applicable
Offering Commencement Date.
ARTICLE 4
OFFERINGS
4.1 ANNUAL OFFERINGS. The Plan will be implemented by up to ten annual
offerings ("Offerings") of the Company's Stock beginning on the 1st day of July
in each of the years 1998 through 2007, with each Offering terminating on June
30 of the next year; provided, however, that each annual Offering may, in the
discretion of the Committee exercised prior to the commencement thereof, be
divided into two six-month Offerings commencing respectively, on July 1 and
January 1, and terminating six months thereafter. As used in the Plan, "Offering
Commencement Date" means the July 1 or January 1, as the case may be, on which
the particular Offering begins and "Offering Termination Date" means the
December 31 or June 30, as the case may be, on which the particular Offering
terminates. Any decision of the Committee to adjust the number of shares of
Stock in an Offering must be made prior to the Offering Commencement Date of
that Offering.
ARTICLE 5
PAYROLL DEDUCTIONS
5.1 PERCENTAGE OF PARTICIPATION. At the time an Employee files
authorization for payroll deductions and becomes a Participant in the Plan, the
Employee shall elect to have deductions made from the Employee's pay on each
payday during the time the Employee is a Participant in an Offering. Such
deductions shall be an amount equal to the Employee's Participation Amount
divided by the number of payroll periods occurring during the Offering. An
Employee's "Participation Amount" shall equal the rate of 1, 2, 3, 4, 5, 6, 7,
8, 9 or 10 percent (as elected by the Employee) times such Employee's Base Pay
in effect at the Offering Commencement Date of such Offering; provided, however,
that prior to any Offering Commencement Date, the Committee shall have the
discretion to limit deductions to less than 10 percent (but no less than 5
percent) for any Offering.
5.2 CALCULATION OF BASE PAY. An Employee's Base Pay as of an Offering
Commencement Date and whether an Employee is "part-time" shall be determined in
the discretion of the Committee based on the provisions of this Plan. In
calculating an Employee's normal weekly rate of pay under this Section 5.2,
retroactive adjustments occurring during an Offering that are retroactive to the
last day prior to the Offering Commencement Date of that particular Offering
shall be taken into account. In addition, if an Employee's Base Pay includes
commissions, the Committee may set such Employee's Base Pay based upon
commission averages and standards as determined in the discretion of the
Committee.
5.3 PARTICIPANT'S ACCOUNT. All payroll deductions made for a Participant
pursuant to this Article V shall be credited to such Participant's account under
the Plan. A Participant may not make any separate cash payment into such account
except when on leave of absence and then only as provided in Section 5.5.
5.4 CHANGES IN PAYROLL DEDUCTIONS. A Participant may discontinue
participation in the Plan as provided in Article VIII, but no other change can
be made during an Offering and, specifically, a Participant may not alter the
amount of such Participant's payroll deductions for that Offering.
5.5 LEAVE OF ABSENCE. If a Participant goes on a leave of absence, such
Participant shall have the right to elect: (a) to withdraw the balance in such
Participant's account pursuant to Section 8.1 hereof, or (b) to discontinue
contributions to the Plan but remain a Participant in the Plan, or remain a
Participant in the Plan during such leave of absence, authorizing deductions to
be made from payments by the Company to the Participant during such leave of
absence and undertaking to make cash payments to the Plan at the end of each
payroll period to the extent that amounts payable by the Participating Company
to such Participant are insufficient to meet such Participant's authorized Plan
deductions.
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ARTICLE 6
GRANTING OF OPTION
6.1 NUMBER OF OPTION SHARES. On each Offering Commencement Date, a
Participant shall be deemed to have been granted an option ("Option") to
purchase a maximum number of shares of Stock equal to the Participation Amount
with respect to such Participant, divided by the Option Price, determined as
provided in Section 6.2 hereof.
6.2 OPTION PRICE. The "Option Price" of Stock for each Offering shall be
the lower of (a) 85% of the Closing Price of the Stock on the Offering
Commencement Date, or (b) 85% of the Closing Price of the Stock on the Offering
Termination Date. The "Closing Price" of the Stock as to a particular day shall
be the closing price of the Stock as reported for such day in the Wall Street
Journal or in such other source as the Committee deems reliable. If the Stock is
not traded on the New York Stock Exchange or other principal exchange or market
on which it is authorized or listed for trading on the Offering Commencement
Date and/or Offering Termination Date, as the case may be, the Closing Price for
the Stock as to either of such dates on which such trading did not occur shall
be the Closing Price on the nearest prior business day on which trading did
occur.
ARTICLE 7
EXERCISE OF OPTION
7.1 AUTOMATIC EXERCISE. Unless a Participant gives written notice to the
Company as hereinafter provided, such Participant's Option for the purchase of
Stock granted under Section 6.1 hereof will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering for
the purchase of the number of full shares of Stock that the accumulated payroll
deductions in such Participant's account at that time will purchase at the
applicable Option Price (but not in excess of the number of shares for which
Options have been granted to the Employee pursuant to Section 6.1 hereof).
7.2 FRACTIONAL SHARES. Fractional shares will not be issued under the Plan
and any accumulated payroll deductions that would have been used to purchase
fractional shares will be, at the option of the Committee, either (a) returned
(without interest) to the Participant promptly following the termination of an
Offering, or (b) added to the Participation Amount for such Participant and held
for the purchase of Stock in connection with the next Offering; provided,
however, that such amount (without interest) shall be refunded to any
Participant who provides the Company with a written request for a refund prior
to the use of such amount to purchase Stock at the end of the next Offering.
7.3 TRANSFERABILITY OF OPTION. During a Participant's lifetime, Options
held by such Participant shall be exercisable only by such Participant.
7.4 DELIVERY OF STOCK. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each Participant,
as appropriate, the Stock purchased upon exercise of such Participant's Option.
All Stock delivered to each Participant will contain a restriction stating that
such Stock is restricted from being transferred for a period of one year from
the date of issuance unless the Committee otherwise consents. The Committee may
withhold its consent to any such transfer in its absolute and sole discretion.
Any transfer in violation of the legend placed on each such stock certificate
shall be void ab initio. In no event, however, shall Stock be forfeited for
violation of the transfer restriction.
ARTICLE 8
WITHDRAWAL
8.1 IN GENERAL. At any time prior to the last five days of an Offering, a
Participant may withdraw payroll deductions credited to such Participant's
account under the Plan by giving written notice to the designated office of the
Company, which withdrawal notice shall be in form and substance as decided by
the Committee. All of the Participant's payroll deductions credited to the
Participant's account will be paid to the Participant promptly after receipt of
such Participant's notice of withdrawal, and no further payroll deductions will
be made from the Participant's pay during such Offering or during any subsequent
Offering unless the Participant re-enrolls as
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provided in Section 8.2 hereof. The Company may, at its option, treat any
attempt by a Participant to borrow on the security of such Participant's
accumulated payroll deductions as an election to withdraw such deductions.
8.2 EFFECT ON SUBSEQUENT PARTICIPATION. An Employee's withdrawal from any
Offering will not have any effect upon such Employee's eligibility to
participate in any succeeding Offering or in any similar plan that may hereafter
be adopted by the Company. In order to be eligible for a subsequent Offering;
however, an Employee who has withdrawn from an Offering must satisfy the
requirements of Section 3.4 hereof prior to the Offering Commencement Date of
such subsequent Offering.
8.3 TERMINATION OF EMPLOYMENT. Upon termination of a Participant's
employment for any reason, including retirement (but excluding death or
permanent disablement while in the employ of a Participating Company or
continuation of a leave of absence for a period beyond 90 days), the payroll
deductions credited to such Participant's account will be returned to the
Participant, or, in the case of the Participant's death subsequent to the
termination of such Participant's employment, to the person or persons entitled
thereto under Section 12.1 hereof.
8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH. Upon termination of a
Participant's employment because of death or permanent disablement, the
Participant or Participant's beneficiary (as defined in Section 12.1 hereof)
shall have the right to elect, by written notice given to the designated office
of the Company prior to the earlier of the Offering Termination Date or the
expiration of a period of 60 days commencing with the termination of the
Participant's employment, either:
(a) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan; or
(b) to exercise the Participant's Option on the next Offering
Termination Date and purchase the number of full shares of Stock that the
accumulated payroll deductions in the Participant's account at the date of the
Participant's cessation of employment will purchase at the applicable Option
Price, and any excess in such account will be returned to said beneficiary,
without interest.
In the event that no such written notice of election shall be duly received by
the designated office of the Company, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the Participant's
Option.
8.5 LEAVE OF ABSENCE. A Participant on leave of absence shall, subject to
the election made by such Participant pursuant to Section 5.5 hereof, continue
to be a Participant in the Plan so long as such Participant is on continuous
leave of absence. A Participant who has been on leave of absence for more than
90 days and who therefore is not an Employee for the purpose of the Plan shall
not be entitled to participate in any Offering commencing after the 90th day of
such leave of absence. Notwithstanding any other provisions of the Plan, unless
a Participant on leave of absence returns to regular full time or part time
employment with the Company at the earlier of: (a) the termination of such leave
of absence, or (b) three months after the 90th day of such leave of absence,
such Participant's participation in the Plan shall terminate on whichever of
such dates first occurs.
ARTICLE 9
INTEREST
9.1 PAYMENT OF INTEREST. No interest will be paid or allowed on any money
paid into the Plan or credited to the account of any Participant, including any
interest paid on any and all money which is distributed to a Participant or such
Participant's beneficiary pursuant to the provisions of Sections 7.2, 8.1, 8.3,
8.4 and 10.1 hereof.
ARTICLE 10
STOCK
10.1 MAXIMUM SHARES. The maximum number of shares of Stock that shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 12.4 hereof, shall be 500,000 shares. If the
total number of shares for which Options are exercised on any Offering
Termination Date in
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accordance with Article VI exceeds the maximum number of shares for the
applicable Offering, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in as nearly a uniform manner as shall
be practicable and as the Committee shall determine to be equitable, and the
balance of payroll deductions credited to the account of each Participant under
the Plan shall be returned to such Participant as promptly as possible.
10.2 PARTICIPANT'S INTEREST IN OPTION STOCK. A Participant will have
no interest in Stock covered by such Participant's Option until such Option
has been exercised.
10.3 REGISTRATION OF STOCK. Stock to be delivered to a Participant under
the Plan will be registered in the name of the Participant, or, if the
Participant so directs by written notice to the designated office of the Company
prior to the Offering Termination Date applicable thereto, in the names of the
Participant and the Participant's spouse, in the form and manner permitted by
applicable law.
10.4 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its
discretion, require as conditions to the exercise of any Option that the shares
of Stock reserved for issuance upon the exercise of the Option shall have been
duly listed, upon official notice of issuance, upon the New York Stock Exchange
or other principal exchange or market on which the Common Stock is authorized or
listed for trading, and that either:
(a) a Registration Statement under the Securities Act of
1933, as amended, with respect to said shares shall be effective; or
(b) the Participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is such
Participant's intention to purchase the shares for investment and not for resale
or distribution.
ARTICLE 11
ADMINISTRATION
11.1 APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a
committee ("Committee") to administer the Plan, which shall consist of no fewer
than two (2) members of the Board of Directors. Members of the Committee who are
Employees shall be eligible to purchase Stock under the Plan.
11.2 AUTHORITY OF COMMITTEE. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and regulations
for administering the Plan, and to make all other determinations deemed
necessary or advisable for administering the Plan. The Committee's determination
regarding the foregoing matters shall be conclusive. The Committee may delegate
its authority as it deems necessary or appropriate.
11.3 RULES GOVERNING ADMINISTRATION OF THE COMMITTEE. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephonic meetings. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The Committee may correct any defect or omission or
reconcile any inconsistency in the Plan, in the manner and to the extent it
shall deem desirable. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
6
<PAGE> 7
ARTICLE 12
MISCELLANEOUS
12.1 DESIGNATION OF BENEFICIARY. A Participant may file a written
designation of a beneficiary who is to receive any Stock and/or cash that such
Participant would be entitled to under the Plan. Such designation of beneficiary
may be changed by the Participant at any time by written notice to the
designated office of the Company. Upon the death of a Participant and upon
receipt by the Company of proof of identity and existence at the Participant's
death of a beneficiary validly designated by the Participant under the Plan, the
Company shall deliver such Stock and/or cash to such beneficiary. In the event
of the death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such Participant's death,
the Company shall deliver such Stock and/or cash to the executor or
administrator of the estate of the Participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Stock and/or cash to the spouse or to any
one or more dependents of the Participant as the Company may designate. No
beneficiary shall, prior to the death of the Participant by whom he has been
designated, acquire any interest in the Stock or cash credited to the
Participant under the Plan.
12.2 TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account nor any rights with regard to an Option granted under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the Participant, other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Article VIII.
12.3 USE OF FUNDS. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose and the
Company shall not be obligated to segregate such payroll deductions.
12.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any Options are outstanding, the outstanding
shares of Stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or type of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split
(whether or not effected in the form of a stock dividend), reverse stock split
or similar transaction, appropriate and proportionate adjustments may be made by
the Committee in the number and/or type of shares of Stock that are subject to
purchase under outstanding Options and to the Option Price applicable to such
outstanding Options. In addition, in any such event, the number and/or type of
shares of Stock which may be offered in the Offerings described in Article IV
hereof shall also be proportionately adjusted.
(b) Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the assets or stock of the Company to
another corporation, the holder of each Option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such Option for each share as to which such Option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of Stock was entitled to receive
upon and at the time of such transaction. The Board of Directors shall take such
steps in connection with such transactions as the Board shall deem necessary to
assure that the provisions of this Section 12.4 shall thereafter be applicable,
as nearly as reasonably may be determined, in relation to the said cash,
securities and/or property as to which such holder of such Option might
thereafter be entitled to receive.
12.5 AMENDMENT AND TERMINATION. The Board of Directors shall have complete
power and authority to terminate or amend the Plan; provided; however, that the
Board of Directors shall not, without the approval of the stockholders of the
Company (a) increase the maximum number of shares that may be issued under the
Plan (except pursuant to Section 12.4 hereof); or (b) amend the requirements as
to the class of Employees eligible to purchase Stock under the Plan. No
termination, modification, or amendment of the Plan may, without the consent of
a Participant then holding an Option under the Plan to purchase stock, adversely
affect the rights of such Participant under such Option.
7
<PAGE> 8
12.6 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create in any Employee or class of Employees any right with respect to
continuation of employment by any Participating Company, and it shall not be
deemed to interfere in any way with any Participating Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
12.7 EFFECT OF PLAN. The provisions of the Plan shall, in accordance with
its terms, be binding upon, and inure to the benefit of, all successors of each
Participant, including, without limitation, such Participant's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
12.8 GOVERNING LAW. The law of the State of Delaware will govern all
matters relating to this Plan except to the extent it is superseded by the
laws of the United States.
8
<PAGE> 1
Exhibit 10.6
SETTLEMENT AGREEMENT
between
MARINEMAX, INC.
and
BRUNSWICK CORPORATION
March 12, 1998
<PAGE> 2
SETTLEMENT AGREEMENT
AGREEMENT dated as of the 12th day of March 1998 by and among
MARINEMAX, INC., a Delaware corporation ("MarineMax"); and BRUNSWICK
CORPORATION, a Delaware corporation for itself and on behalf of the subsidiaries
set forth on the signature page hereof and 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 division or subsidiaries 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 (the "Dealer Agreements") between
the Merged Companies and the relevant Brunswick Affiliates as set forth in
Schedule A to this Agreement.
C. Brunswick believes that the Dealer Agreements require the
consent of Brunswick and the applicable Brunswick Affiliates to any changes in
the ownership of the Merged Companies as a result of the Mergers or otherwise
(the "Ownership Changes").
D. MarineMax does not believe that the Dealer Agreements
require the consent of Brunswick or the Brunswick Affiliates to the Ownership
Changes, but desires to avoid a long, costly, and disruptive dispute with the
principal supplier of boats and related boating products sold by the Merged
Companies in order to protect the business of the Merged Companies.
E. MarineMax and Brunswick have agreed to resolve their
disputes as provided herein.
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. PAYMENT TO BRUNSWICK. MarineMax shall pay to the order of
Brunswick an amount equal to $15.0 million (the "MarineMax Settlement Amount"),
payable on December 31, 1998 (the "Due Date"), together with interest on the
unpaid principal balance at a rate equal
1
<PAGE> 3
to LIBOR plus 125 basis points. The obligation of MarineMax is evidenced by a
promissory note in the form of Exhibit A to this Agreement.
2. CONSENT OF BRUNSWICK. Brunswick consents to the Ownership
Changes. Brunswick shall cause each Brunswick Affiliate to consent to the
Ownership Changes.
3. 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; THIRD-PARTY
BENEFICIARIES. 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 (including any party that acquires any Brunswick
Affiliate); provided, however, that no party hereto shall have the right to
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. The Merged Companies shall be deemed to be
third-party beneficiaries of this Agreement.
2
<PAGE> 4
(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. 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 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.
3
<PAGE> 5
(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 provisions of this Agreement.
(j) ATTORNEYS' FEES. In the event of any claim,
controversy or dispute arising out of or relating to this Agreement, or the
breach thereof, the prevailing party shall be entitled to recover reasonable
attorneys' fees incurred in connection with any arbitration or court proceeding.
(k) 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.
(l) 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.
4
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
MARINEMAX, INC.
By:______________________
Name:____________________
Title:___________________
BRUNSWICK CORPORATION
By:______________________
Name:____________________
Title:___________________
THE FOLLOWING BRUNSWICK SUBSIDIARIES
HEREBY APPROVE THIS AGREEMENT:
BAJA MARINE CORPORATION
By:________________________
Name:______________________
Title:_____________________
BOSTON WHALER, INC.
By:________________________
Name:______________________
Title:_____________________
5
<PAGE> 1
EXHIBIT 10.7
[Date]
Mr. Paul Graham Stovall
Mr. Robert S. Stovall
Mr. Jon M. Stovall
Stovall Marine
5840 I-75 South
Forest Park, GA 30030
RE: STOVALL MARINE, INC.
Gentlemen:
Pursuant to informal discussions between you and the
management of MarineMax, Inc., a Delaware corporation ("MarineMax"), we submit
to you for your consideration, as the sole shareholders of Stovall Marine, Inc.,
a Georgia corporation (the "Company"), this Letter of Intent relative to a
merger of a newly formed corporation and direct wholly-owned subsidiary of
MarineMax ("Acquisition") with and into the Company, upon the terms and subject
to the conditions hereinafter described (the "Merger").
This Letter of Intent is intended to set forth in summary form
the terms of the Merger. Except for the matters set forth in Sections 11(a),
11(b), 11(c) and 12 hereof, this Letter of Intent is not intended to be a
contract or evidence of a contract or any binding obligation. When accepted,
this Letter of Intent will set forth the preliminary understanding of the
parties and will be a statement of our mutual intentions to pursue the good
faith negotiation, execution and delivery of a binding, definitive Agreement and
Plan of Reorganization, by and among the Company, MarineMax, Acquisition and you
(the "Merger Agreement").
It is proposed that the Merger shall be effected on the
following terms and conditions:
1. The Company is a Georgia corporation, validly organized and
in good standing in each jurisdiction wherein it transacts business.
2. The parties will use their reasonable best efforts to
consummate the Merger Agreement at a closing (the "Closing"), to be held on or
before July 31, 1998, or as soon thereafter as the parties may mutually agree.
<PAGE> 2
Letter of Intent
[Date]
Page 2
3. The Merger shall be effective as of the date of the
Closing, or as of any later date agreed upon by the parties in the Merger
Agreement (the "Effective Date"). Upon the Effective Date, Acquisition shall be
merged with and into the Company, and the Company shall survive the Merger as
the surviving corporation (the "Surviving Corporation"), the subsisting name of
which shall be Stovall Marine, Inc.
4. The Bylaws and Articles of Incorporation of the Company in
existence prior to the Effective Date, shall be and constitute the Bylaws and
Articles of Incorporation of the Surviving Corporation, and the same may
thereafter be altered, amended or repealed in accordance with Georgia Business
Corporation Code and the Bylaws of the Company. The directors of the Surviving
Corporation shall be Paul Graham Stovall, Robert S. Stovall, Jon M. Stovall and
William H. McGill, Jr. The officers of the Surviving Corporation immediately
following the Effective Date shall be as follows:
Paul Graham Stovall President
Robert S. Stovall Vice President
William H. McGill, Jr. Vice President
Jon M. Stovall Treasurer/Secretary
Michael H. McLamb Assistant Secretary
5. The Merger Agreement shall be approved and adopted within
the provisions of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended, and the Merger shall be accounted for as a "purchase" for accounting
purposes and as a tax deferred exchange for tax purposes.
6. At or immediately prior to the Effective Date, all shares
of capital stock of the Company issued and outstanding (the "Company Stock")
shall be exchanged for 454,982 shares of the Common Stock of MarineMax, par
value $.001 per share (the "MarineMax Stock").
At the Effective Date, and upon the exchange of the Company Stock for
the MarineMax Stock, the Company Stock shall be free and clear of all liens,
claims, charges, encumbrances and security interests of whatsoever nature and
type.
7. Prior to the Closing, the Company shall have delivered to
MarineMax and Acquisition the audited financial statements of the Company,
including a Balance Sheet as of September 30, 1997, and operating statements for
the nine (9) month period then ended; and an unaudited Balance Sheet as of
December 31, 1997, and operating statements for the three (3)
<PAGE> 3
Letter of Intent
[Date]
Page 3
month period ended December 31, 1997. At the Closing, you shall deliver to
MarineMax and Acquisition an unaudited Balance Sheet through the latest
available date of the Company, and monthly operating statements from December
31, 1997 through the latest month end before the Merger. Upon the execution and
delivery of the Merger Agreement and at the Closing, you shall have represented
and warranted, in addition to the other warranties and representations contained
in the Merger Agreement, that such financial statements fairly present the
financial condition of the Company for the periods indicated and that there
shall have been no material adverse change in the condition, financial or
otherwise, of the business or business prospects of the Company, nor shall there
have been any transactions by the Company other than in the ordinary course of
the Company's business, from the date of such financial statements to the
Effective Date.
8. The Merger shall be entirely subject to the execution and
delivery by you and the Company of the definitive Merger Agreement, containing
customary warranties and representations with respect to the Company and its
capital stock, and such other documents as legal counsel to you and Acquisition
shall deem necessary. As soon as reasonably practicable following the date
hereof, Acquisition will prepare and approve the Merger Agreement containing
mutually agreed upon terms, which terms shall provide, among other things, that
Acquisition and the Company shall be indemnified and held harmless for, from and
against all liabilities or obligations related to or arising from any pending or
threatened litigation, claims, investigations, inquiries or other similar
proceedings against the Company, and/or any of its directors, officers,
shareholders, employees, agents or representatives, as well as any future
litigation, claims, investigations, inquiries or similar proceedings against the
Company, and/or any of its directors, officers, shareholders, employees, agents
or representatives that arise from a state of facts existing prior to the
Effective Date, and which are not fully covered and reimbursed by the Company's
insurance, such liabilities and obligations to be your liabilities and
obligations, jointly and severally. Each provision of this Letter of Intent
shall automatically terminate upon the earlier of the parties entering into the
Merger Agreement as contemplated herein, or July 31, 1998, whichever date occurs
first; provided, however, the provisions of Sections 11(a) and 12 hereof shall
survive such termination.
9. The MarineMax Stock referred to in Section 6 hereof and to
be exchanged for the Company Stock, has been arrived at by MarineMax based upon
financial information about the Company, its business and operations, financial
condition, assets and liabilities, and the results of its operations, which
information has been provided to MarineMax by you and others on your behalf.
Upon your acceptance of this proposal, MarineMax, its agents, employees and
representatives, including the independent certified public accountants serving
it, shall have the right to review and to prepare for MarineMax and Acquisition
an assessment
<PAGE> 4
Letter of Intent
[Date]
Page 4
of the revenues, net income, and other financial and operational, information
with respect to the Company for each of the fiscal years ended December 31, 1996
and September 30, 1997, and for the periods ended December 31, 1997 and through
the Effective Date. In connection with this review, the Company and its
employees, agents and representatives, including yourself and the independent
accountants serving the Company, shall fully cooperate with MarineMax and those
acting on its behalf and shall further provide MarineMax and those acting on its
behalf with access to, and the right to review and copy, the books of account,
records and supporting data and materials of the Company as they relate to the
review and assessment being conducted. MarineMax will complete its review and
assessment of financial information as contemplated in this section prior to the
execution and delivery of the Merger Agreement.
10. The Closing shall further be entirely conditioned
upon:
a. The Board of Directors and the shareholders
of the Company and Acquisition, respectively, shall have taken all necessary
actions to approve the Merger and the Merger Agreement.
b. The financial condition of the Company at
the Closing shall be no worse than that reported on the audited Balance Sheet
dated September 30, 1997.
c. All material service and customer contracts
in effect at the date hereof shall be in effect at the Closing, and the Company
shall have obtained all necessary consents and approvals of the Merger from
applicable customers, governmental authorities and other third parties.
d. Receipt by MarineMax, Acquisition, and the
Company of any and all regulatory, governmental and other approvals, permits,
consents and licenses deemed by each or any of them, their consultants or
lawyers to be necessary or appropriate with respect to the Merger and/or the
continued business of the Company by the Surviving Corporation.
e. Execution and delivery of mutually
satisfactory lease agreements, with respect to the real property used in the
operations.
f. Each of you entering into a mutually
satisfactory Escrow and Security Agreement with MarineMax and Acquisition,
pursuant to which you shall place ten percent (10%) of the MarineMax Stock in
escrow for a period of twelve (12) months following the Effective Date (the
"Restricted MarineMax Stock"), such stock to constitute security for any
<PAGE> 5
Letter of Intent
[Date]
Page 5
breach of the representations and warranties made in the Merger Agreement and
any of your obligations of indemnification.
g. Graham Stovall entering into a mutually
satisfactory employment agreement with the Surviving Corporation.
h. The key employees of the Company shall have
agreed to continue their employment on terms and conditions satisfactory to
MarineMax. Notwithstanding the foregoing sentence, neither MarineMax or
Acquisition shall have any obligation to enter into any employment agreement
with any employee of the Company, except as specifically set forth in this
letter of intent.
11. It is further agreed, that:
a. Except with the prior written consent of the
parties, MarineMax, Acquisition, the Company and each of you will each maintain
as confidential the discussions among us, and except as required by law or to
accomplish the transactions contemplated herein or in the anticipated Merger
Agreement, will not make any trade press or other announcement or disclosure in
relation to such discussions before Closing.
b. Upon the acceptance of this proposal, the
Company and you will negotiate the Merger, or sale of the Company Stock, and/or
sale of the assets of the Company only with MarineMax and Acquisition, and will
not directly or indirectly enter into any discussions or negotiations with, or
disclose any information in relation to, the Company to any other person or
entity prior to July 31, 1998, with a view toward the sale of the assets or
stock of the Company, or any merger involving such entity.
c. From the date of your acceptance of this
proposal to the Effective Date, or July 31, 1998, if no definitive Merger
Agreement has been entered into in accordance with this Letter of Intent, the
Company will continue to operate only in the normal course of business. In
addition, the Company will not during this time period, without MarineMax's
prior written consent:
i. Acquire any further businesses or
business operations;
ii. Make any amendments to contracts of
employment or to the terms and conditions of employment of any employee earning
an annual total compensation in
<PAGE> 6
Letter of Intent
[Date]
Page 6
excess of $25,000, provided that up to ten (10) of such employees may each
receive, respectively, a salary increase not in excess of four percent (4%) of
his or her current salary;
iii. Incur any indebtedness for borrowed
money; or
iv. Make or permit the Company to make
any distribution to any of you with respect to any of the Company Stock.
d. At the Closing, the Restricted MarineMax
Stock will be delivered into an escrow as directed in writing by you, as the
shareholders of the Company, and further, upon the termination or expiration of
the Escrow and Security Agreement referred to in Section 11(f) hereof, the
Restricted MarineMax Stock otherwise deliverable to you will likewise be
delivered into escrow as directed by you.
12. In the event that the proposed Merger shall fail to
consummate for any reason whatsoever, the shareholders, agents and
representatives of the Company shall return to MarineMax, and MarineMax and
Acquisition, its and their officers, directors, agents and representatives shall
return to the Company, all written material obtained in connection with the
proposed Merger, and shall keep confidential any confidential information
acquired and shall not use such confidential information to unfairly compete
with the other. Further, MarineMax and Acquisition shall destroy any internal
analyses and spreadsheet data compiled utilizing confidential or financial
information pertaining to the Company.
13. In the event of a failure of the parties to reach a
definitive Merger Agreement, as contemplated herein, unless such failure is
caused by a breach or violation of Section 11(b) of this Letter of Intent, you
shall be free of any liability whatsoever to MarineMax, Acquisition and the
Company, except for any violation or breach of Sections 11(a) or 12 of this
Letter of Intent.
14. In the event of a failure of the parties to reach a
definitive Merger Agreement, as contemplated herein, MarineMax and Acquisition,
and its and their shareholders, officers, directors, employees, agents and
representatives, shall each and all be free of any liability whatsoever to you,
the Company and its shareholders, officers, directors, employees, agents and
representatives, except for any violation or breach of Sections 12 or 13 of this
Letter of Intent.
<PAGE> 7
Letter of Intent
[Date]
Page 7
15. MarineMax, Acquisition, the Company and you shall not
be required, as a result of any act of the other, to pay any commission to any
broker or any other person in connection with the herein proposed Merger.
16. All of your costs, including legal and accounting services
incurred in connection with the herein proposed transactions, shall be borne by
you and no portion of such costs and/or expenses shall be borne, directly or
indirectly, by the Company. All of the costs of MarineMax and Acquisition,
including legal and accounting services incurred in connection with the herein
proposed Merger, shall be borne by MarineMax or Acquisition.
Very truly yours,
MARINEMAX, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
ACCEPTED this ____ day of _______________,
1998:
STOVALL MARINE, INC.
By: /s/
---------------------------------------
Name:
-------------------------------------
Its:
--------------------------------------
SHAREHOLDERS:
/s/
------------------------------------------
Paul Graham Stovall
/s/
------------------------------------------
Robert S. Stovall
/s/
------------------------------------------
Jon M. Stovall
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES
STATE OR OTHER
JURISDICTION OF
INCORPORATION
NAME
Subsidiaries of MarineMax, Inc. (Delaware):
Bassett Boat Company Florida
Bassett Realty, L.L.C. Delaware
Bassett Boat Company of Florida Florida
Gulfwind South, Inc. Florida
Gulfwind South Realty, L.L.C. Delaware
Gulfwind USA, Inc. Florida
Harrison's Boat Center, Inc. California
Harrison's Realty California, L.L.C. Delaware
Harrison's Marine Centers of Arizona, Inc. Arizona
Harrison's Realty, L.L.C. Delaware
11502 Dumas, Inc. Texas
Stovall Marine, Inc. Georgia
Subsidiaries of 11502 Dumas, Inc. (Texas)
DelHomme Realty, Inc. Delaware
9149 Wallisville Road Interests, Inc., dba DelHomme Service Center Texas
600 Del Lago Blvd., Inc., dba Louis DelHomme Marine-Del Lago Texas
7940 W. I-30 Interests, Inc. Texas
Airtex Interests, Inc., dba Louis DelHomme Marine--Airtex Texas
South Shore Interests, Inc., dba Louis DelHomme Marine-South Shore Texas
Nasa Road Interests, Inc., dba Louis DelHomme Marine--Nasa Road Texas
Reeder Road Interests, Inc., dba Louis DelHomme Marine Texas
Lake Lewisville Interests, Inc., dba Louis DelHomme Texas
Marine-Lake Lewisville
<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,
March 5, 1998
<PAGE> 1
Exhibit 23.3
I hereby consent to the use of my name as a director to be elected upon
consummation of the initial public offering of Marine Max, Inc.
/s/ R. David Thomas
------------------------------
R. David Thomas
<PAGE> 2
Exhibit 23.3
I hereby consent to the use of my name as a director to be elected upon
consummation of the initial public offering of Marine Max, Inc.
/s/ Stewart Turley
------------------------------
Stewart Turley
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS EXHIBIT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED SEPTEMBER
30, 1997 AND MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS. THIS EXHIBIT SHALL NOT BE DEEMED FILED FOR PURPOSES
OF SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF THE SECURITIES
EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS,
NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS
REPORT BY REFERENCE, UNLESS SUCH FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY
REFERENCE.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1998
<PERIOD-START> JAN-01-1997 OCT-01-1997
<PERIOD-END> SEP-30-1997 MAR-31-1998
<CASH> 11,014,090 5,308,153
<SECURITIES> 0 0
<RECEIVABLES> 7,365,089 8,813,767
<ALLOWANCES> 0 0
<INVENTORY> 50,404,178 70,185,101
<CURRENT-ASSETS> 69,842,593 92,889,954
<PP&E> 21,930,985 23,710,197
<DEPRECIATION> (8,191,842) (8,455,892)
<TOTAL-ASSETS> 83,722,478 108,275,173
<CURRENT-LIABILITIES> 49,181,527 91,698,540
<BONDS> 10,067,835 10,657,424
0 0
0 0
<COMMON> 994,020 2,898,918
<OTHER-SE> 24,583,205 1,964,029
<TOTAL-LIABILITY-AND-EQUITY> 83,722,478 108,275,173
<SALES> 169,675,293 103,509,879
<TOTAL-REVENUES> 169,675,293 103,509,879
<CGS> 127,417,846 80,438,155
<TOTAL-COSTS> 127,417,846 80,438,155
<OTHER-EXPENSES> 25,426,392 38,728,268
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,537,587 1,052,463
<INCOME-PRETAX> 15,293,468 (16,709,007)
<INCOME-TAX> 409,824 (4,580,862)
<INCOME-CONTINUING> 14,883,644 (12,128,145)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,883,644 (12,128,145)
<EPS-PRIMARY> 2 (1)
<EPS-DILUTED> 2 (1)
</TABLE>
